The Challenge to the Business Community By: Christian S.

Monsod BBC General Assembly July 11, 2011

More than 40 years ago, in September 1971,35 bishops and 30 businessmen established the BBC and issued a Consensus Statement committing themselves to pursue total human development where the material needs of people are provided while justice and Christian love are made to prevail in the national community. The timing of BBC was propitious. The ominous clouds of martial law were looming in the horizon. But the context of the Statement was timeless it was about justice. It called on both ecclesiastics and laymen to speak out against injustice and to see to it, by practical and persevering action, and by the witness of their lives, that justice is done to every man , a phrase which is part of the oath of office of the President. There was, in the words of the Statement, exploitation of the many by man, unjust economic relationships that engenders dependence of tenant to landlord and of employee to employer, inequitable distribution of burdens and benefits, graft and corruption. And it seemed then that the country was faced with two false choices liberal capitalism where man is a mere economic commodity and communism that generates hatred of man for man. Thus, the challenge to business was to combine the criterion of profit from the point of view of private enterprise with the criterion of social desirabilityfrom the point of view of the well-being of the national community. The challenge was to make the common interest of the whole community its own self- interest. In the end, the Statement said - justice and liberation is development and development is justice and liberation.

Well, as they say, it is time for the business community to pay the piper. These challenges are as valid today as they were 40 years ago, and paradoxically, even more challenges are called for by the times. In 1986, fifteen years later at EDSA, that glorious defining moment when bishops and businessmen in overwhelming numbershelped restore democracy, it felt like a new dawn had come, that justice and liberation were finally within our grasp. We even wrote a new Constitution whose heart, according to its President former justice Cecilia Munoz Palma, was its provisions on social justice. Then we went our separate ways to our separate causes. And as we left it to those we elected to carry out the lofty promises for social reform, we lost something of the dream of a nation. Occasionally, we came together on political issues, as in 1992 to assure the peaceful electoral transfer of presidential power and again in the 2006 campaign against a constitutional change whose agenda was suspect as more self-

aggrandizement than national interest. Butthe social reform agenda was no longer at the forefront of a joint advocacy, certainly not on the same terms and urgency that EDSA meant to the poor. The forces of the status quo proved to be too wellentrenched in the leadership elite, even in the white knights and joan of arcs of our deliverance from a dictatorship. Thus, in 1992, anotherSocial Pact was entered into by the BBC, Makati Business Club, the Council of the Laity, the Asian Institute of Management and the Center for Research and Communications, in response to the call of Pope John Paul II during his visit to the Philippines in 1991 for a new form of solidarity that ..applies the principle of stewardship in the management, use and sharing of earth s resources .
But the Social Pact died a quiet death despite the impressive names of itssignatories and despite the many legislative measures and programs that,we are told,it inspired. Maybe it failed because stewardship was more than what the businessmen could accept with respect to their entitlements, Maybe it was because they believed too much in the now-discredited paradigm that economic progress will ultimately address poverty and that a market-driven approach to development will make it happen efficiently. It was not until later that it sank into our consciousness what Kenneth Arrow, a Nobel Peace Laureate in Economics said about markets that the efficient outcomes of the market were preconditioned on adjusting the starting positions of the stakeholders. 1 Not only the obvious ones like the redistribution of property, but also the quality of the education and the health care that would truly empower the poor to compete in the open market. Otherwise, the poor wouldcontinue to be locked in the vicious cycle of property and the gross disparities of income, wealth and power would likely become worse before it is corrected,hopefully over the long-run. But as Lord John Maynard Keynes, the father of modern economics reminds us - over the long-run, we are all dead. Moreover, the Social Pact gave equal time to the ordinary concerns of business, which may be legitimate but have no place in an agenda for social change. The Pact considered as equal in urgency the Central Bank losses, high interest rates, intermediation problems, the flyover vs. public transport systems, exchange rate policy. That these concerns in 1992 have since been successfully addressed but the poverty and gross disparities are still with us shows how inconsequential these were to the substantive changes that are central to any social pact. Finally, the Social Pact died a quiet death because the poor, which should be its ultimate beneficiaries, were not part of the process. Its formulation was left to Business and Academe with no grounding at the level where poverty and functional justice are daily and deadly challenges. Hence, the rather simplistic solution in the Pact that addressing poverty boils down to the Economic Man
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Social Choice by Kenneth Arrow and The Undercover Economist by Tim Harford

(meaning the poor) should produce more so he can earn more so he can spend more for his needs. Today, we cannot make the same mistakes in defining our challenges. Twenty-five years after EDSA, poverty and gross inequalities continue to confront us. Our society is still feudalistic, dominated by a leadership elite that manages to rotate among themselves the levers of power regardless of whose turn it is in government. Today, we are still two different worlds in one nation the world of the few with gated communities, access to superior education, first world health care, private parks and leisure areas; and the world of the many with urban hovels and rural huts, inferior public schools, playgrounds that double as public streets and highways, poorly-equipped and poorly-manned public health centers and marginal access to public office. Until those two worlds become one, we cannot speak of solidarity. Until we share the same common spaces, until the children of the poor get the same quality education and health care as ours and have a better than even chance to get out of the vicious cycle of poverty and inequality, we cannot speak of solidarity.This vision is beyond the voluntary community social projects representing 1/3 of 1% of our net profits. It is more than the call for more government expenditures for classrooms and books. It is about schools that are so good that the rich want to enroll their children in them. About health care at the barangays whose services compare favorably with Makati Medical Center. About parks where the children of the rich and poor can play together in harmony and about housing of more than thirty square meters for a family of five with a ten sq. meter vegetable garden patch to provide nutrition. To paraphrase Michael Sandel in his inspired book on Justice, until there is a larger purpose to what we do, when citizens finally bring the habits of the heart to public life and find a way to cultivate civic virtue, we cannot speak of solidarity and of ourselves as one nation. We may never get there in our lifetime but making the journey is half the battle won. How do we start? First of al, we must listen to the poor. The poor are not asking for equality, but only for more equity, and for justice. That is, after all, a moral duty of those who make the decisions and establish the priorities of our society. In the words of Pope Benedict the XXVI 2 - charity goes beyond justice because to love is to give but I cannot give what is mine to the other, without first giving him what pertains to him in justice. The same spirit of social justice is the heart of our Constitution which is contained in many of its provisions but is encapsulated in the phrase of Article XIII, Section 1 equitably diffusing wealth and political power for the common good.

Caritas en Veritate

The poor have expressed their concerns and aspirations in many papers, fora and consultations, but there are two sources that the business community might find instructive, namely (1) the National Rural Congress II of CBCP in 2007 and (2) the National Consultations in 2010 of the Climate Change Congress of the Philippines with the DAR, DA, DENR and CCC in 2010. By next month, we will have an update on these concerns from the soon to be launched Summit on Poverty, Inequality and Social Reform that adds the dimension of climate change poverty and an assessment of the first year of the Aquino administration. Secondly,we must listen to our hearts. Do we believe that what we are doing now, if any, for the poor really makes a difference in winning the war against poverty and inequality?Do we even know that there are the four asset reform programs for the poorest of the poor agrarian reform, urban land reform and housing, ancestral domain,fisheries - that successive administrations from Cory Aquino up to today have not and are not being fully funded or implemented? Thirdly, if our hearts tell us we are not doing enough, let us be open to discarding certain long-held beliefs that, we are told by the UNRISD in its 2010 study Combating Poverty and Inequality , have been proven to be wrong or inadequate to the task. Such as the notion that it is possible to address poverty without addressing inequality, that it is enough to provide equ ality of opportunity or a fair process without being too concerned about outcomes or in engaging in voluntary corporate social responsibility activities. On the contrary, the study says: a socially inclusive structural changeis what makes for sustainable development, reducing income inequality is essential for poverty reduction and, more germane to our discussions today, the corporate social responsibility agenda remains limited in its scope and effectiveness and far more attention must be paid to the notion of corporate accountability and the way business interests influence public policy. There are important implicationsto this agenda: (1) there is the challenge ofspecific cases that call for the support of the business community simply because justice demands it or because they represent issues of transcendental consequences to the social reform agenda such as the future of agrarian reform. For example, the Hacienda Luisitacase. (2) there is the challenge that call for the business community to give massively of their resources (funds, expertise and networks) to help in the implementation of government programs. If not, then excess profits should be taxed because massive expenditures are needed for real social change. Engaging in community development with 1/3 of 1% of our net income is tokenism. Channeling by 270 companies of some P7 billion to the Philipp ine Business for Social Progress is tokenism if given over 40 years (P200m/year), when it takes over P40 billion a year to put some 5.5 million families over the poverty threshold. I am sorry to say that, with some exceptions, CSR in the Philippines has, by and large, been a palliative that has achieved very little by way of real change.

(3) there is the challenge of accountability and transparency in our agreements and operations involving public entitlements and natural resources, such as in mining; (4) there is the challenge of using our social power and political capital to influence public policy towards an agenda that puts the poor, as families according to Bhp. Bagaforo, at the center of our development, even when it is against our own business interests, which is the most difficult condition of all; (5) And finally there is the challenge of a vision of a society finally rid of feudalism of which those in business and politics are the main beneficiaries and rebuilding from its ashes a nation of civic virtue that recognizes the moral limits of markets in the formulation of development policy. This is more in keeping with the commitment in the 1971 Consensus Statement of BBC that :Business has a responsibility in advancing the social development of the nation if social development is defined to mean that field of investment which combines (1) relatively low economic (read financial) returns with (2) high social returns. It is more in keeping with the commitment for both ecclesiastics and layman tospeak out against injustice and to see to it, by practical and persevering action, and by the witness of their lives, that justice is done to every man wherever and whenever it is found. As my good friend, the late HaydeeYorac used to say, let justice be done though the heavens fall. Such is the case with Hacienda Luisita, about which the business community has chosen to remain silent. We can only surmise that investing its political capital in favor of the farmers might involve too much risk to displeasing a President who clearly sides with his family on the issue, despite his election promises. It is not the first time that business has given its interests precedence overa social reform. It happened as well in the campaign for the passage of CARPER in 2009. But with all due respect to the bishops, it is harder for the farmers to understand why the CBCP has also chosen to remain silent on the case. The farmers have been waiting since September for a statement of support. The facts and arguments on the case are available for study. While the CBCP-Nassahas made up for that disappointment by its active leadership on the campaign of the farmers,the silence of the CBCP in the face of a highly questionable Supreme Court decision is deafening. And if the CBCP is going to make a statement, it should be now as we prepare a Motion for Reconsideration that will result in a final resolution of the case.3
3Briefly, I believe that the position of the farmers is this: (1) since the SC revoked and declared the Stock Distribution Option invalid, the plantation under the law must be subjected to compulsory acquisition. The so-called principle of operative facts does not apply. This is not an issue of equity; if at all an equity decision should be in favor of the farmers; (2) Compulsory acquisition should be exercised over the original area of about 6400 hectares and not just on 4,915 hectares; (3) There is no basis for a referendum because the option to exchange land for shares of stock no longer exists under CARPER. Moreover, a referendum before distribution is unimplementable. (4) There is no obstacle to the farmers deciding what

There is another issue of social consequence awaiting further study by the business community andthe bishops the issue of mining. It is a complex issue and it is not the first time that the business community and CBCPare being asked to take a stand on it because no consensus was reached the last time and it is an issue of intergenerational and environmental justice. We urge that the issue be re-studied and a stand be taken as soon as possible because government decisions are forthcoming that have longterm irreversible consequences to our environment , biodiversity and development programs.4 Some details on Hacienda Luisita and on mining are foot-noted in the copy of this talk for your reference. I leave you with two thoughts as you contemplate your responses to the challenges of today: (1) From Him who made the supreme sacrifice that we may enjoy the bounty of his creation: Whatever you do to the least of my brethren, you do it to me; (2) The creed worth embracing which paraphrases a statement of Albert Camus when he received the Nobel Peace Prize we must place ourselves at the service not of those who make history, but of those who suffer it. Thank you and good day.

they want to do with their land AFTER they have received their individual CLOAs, including a leaseback to HLI, a joint venture agreement, a service contract, and similar modalities that are still allowed under CARPER. But that decision is theirs to make when they are truly empowered by a title to their property.

4The debate on mining boils down to three issues: (1) financial benefits vs environmental and social costs, (2) the institutional capability of the government to evaluate the economic costs of, and to regulate, mining projects, and (3) whether the country is getting a full and fair share of the value of the extracted non-renewable resources when alternative sources of raising development financing by conserving those resources for future generations are available or forthcoming, i.e. carbon trading, eco-tourism. Without accounting for environmental and social costs, without accounting for full costing in determining the fair share of government in the profits, our poor are effectively subsidizing the consumerism of developed countries.