Princeton economist Alan Blinder provides an interesting description of what he calls the Lamppost Theory: Politicians typically use economics the way a drunk person uses a lamppost—for support, not illumination. This means that politicians, for better or worse, decide their positions on political criteria, and then they sometimes seek economists to bless those positions.
That decisions are made politically in a democracy is hardly shocking, and neither is it inherently wrong. The real problem, though, as Blinder argues, is that good economics often makes bad politics, and good politics often makes bad economics.
It is because politicians have a different—and well-known—objective: getting elected and reelected. Thus, politicians often strive to appeal to ordinary people who feel that their concerns are disregarded by established elite groups—the very meaning of populism.
By contrast, economists, particularly those who are not employed by special interest groups, generally support policies they deem to be in the national interest. They realize that virtually every policy change creates some losers, but they instinctively favor the ones likely to create the most benefits for the most people.
Of course, since politics rules, economic policy often goes astray, and Blinder cites some examples in the US context. Most US economists would align strongly behind using congestion tolls to ease traffic burdens on crowded bridges, tunnels and city streets, and yet almost all US politicians would shun them. In 2007, Mayor Michael Bloomberg of New York recommended such fees, but the idea died in the state legislature.
Blinder goes on to mention that most US economists think that a carbon tax is, by far, the best way to fight global climate change, and yet it is difficult to find a single US politician who would advocate such a tax. In 2009, an effort to implement a cap-and-trade system, the first cousin of carbon tax, crashed and burned in the US Senate.
While it might be hard to refute Blinder’s generally cynical view of policy-making, at least here in the Philippines, there appears to be a promising exception from the recent elections. In a campaign likened to the biblical story of David and Goliath, first-term city councilor Victor Ma. Regis Nubla Sotto—more popularly known as Vico Sotto—was able to defeat reelectionist Pasig City Mayor Robert Eusebio, whose political clan’s decades-long hold on the city has finally come to an end.
Vico, who turns 30 on June 17, graduated from Ateneo de Manila University with a bachelor’s degree in political science and a master’s degree in public management. After college, Vico worked as a legislative staff officer at the Sangguniang Panlungsod of Quezon City from 2013 to 2015, and then as a project associate at the Ateneo School of Government. In 2016, he garnered the highest number of votes when he ran for councilor of Pasig City.
Despite being the son of popular celebrities Vic Sotto and Coney Reyes, Vico ran a no-frills campaign that focused on issues. Eager to apply his knowledge, Vico organized his plan of action into three basic questions: Where is Pasig City now? Where should it be? How can it get there? In answering these, Vico has demonstrated a keen understanding of scarcity, choice and opportunity cost in the handling of public resources.
In assessing the current state of Pasig City, Vico acknowledges the existence of two starkly different realities: a more affluent side of Pasig that includes Ortigas and Kapitolyo, and an impoverished side right across the river. He envisions a city where the benefits of income growth are more widely shared.
Although Pasig has a hefty budget of about P10.7 billion, wasteful spending is evident. Vico cites examples in extravagant celebrations, fireworks displays, pricey elevated walkways and repairs of roads that are not even damaged. To achieve his vision, the newly elected mayor would rather spend on projects with lasting impact, such as health care (human capital investment) and livelihood programs (multiplier effects). As he sharply notes, “What use does a fancy-looking hospital have when it cannot even provide basic stuff like medicines?”
Vico also appears to have no hesitation in trading off goals. He cites the handling of Pasig traffic enforcers as an example. Under the previous leadership, the main thrust was income generation, which meant that traffic enforcers would aggressively hand out traffic tickets. Generating income may not be bad in and of itself, but ensuring the smoother flow of people, goods and services seems to be a more important goal. Income generation can be given up for better mobility management. Ultimately, better mobility management unleashes more income, which eventually increases the tax base.
Longing for change, Pasigueños have clearly bought into their young mayor’s simple yet compelling use of economic logic. This goes to show that good economics and good politics need not be mutually exclusive.
Dr. Ser Percival K. Peña-Reyes teaches economics at the Ateneo de Manila University.