When institutions work

Until just a couple of days ago, Eliot Spitzer was the governor of New York.  Young and adorned with Ivy League credentials (he graduated from Princeton and Harvard Law School), he became one of the rising stars of the Democratic Party, widely whispered about as possible presidential timber.  Time magazine hailed him as “Crusader of the Year” for going after various forms of financial wrongdoing on Wall Street when he was New York state attorney general.  In humiliation, he has resigned as governor following revelations that he had regularly patronized a high-end prostitution service.

The dimming of Spitzer’s political star began when the bank in which he kept an account noticed unusual and frequent transfers to three corporate accounts.  Such payments could be innocent, or they could signify money laundering or extortion.  The bank referred the matter to the Internal Revenue Service (IRS), which sent detectives to find out more about the companies that held the accounts.  Two of the addresses turned out to be fictitious.  The only one that was genuine had an office that received mail, but had no staff.  With the help of the Federal Bureau of Investigation (FBI), the three mysterious accounts were all traced to an expensive “escort” agency.

Armed with a court authority to tap the agency’s phone lines, the FBI managed to link the payments made from the Spitzer account to the services provided to “Client 9,” none other than Spitzer.  On the eve of Valentine’s Day this year, “Client 9” again required an escort, and he was given “Kristen,” for whose services he was charged $1000 per hour.  The FBI followed him at his hotel and documented the tryst.  In the face of a federal criminal complaint, Spitzer was forced to apologize and resign.  He had been in office for just over a year.

Four institutions quietly coordinated with one another on this case – the banking system, the Treasury department, the FBI, and the courts.  It did not matter at all that the person they would take down was a valued depositor, a prominent citizen, the celebrated governor of a state no less, and a powerful politician.

When institutions work, the codes and procedures they embody override whatever personal stature the individuals that lead them may possess.  That is how it is in modern society.  Institutions are the evolutionary achievements of society, the means by which stable collective life is assured.  They begin to malfunction when they get corrupted, when allow themselves to become the extensions of personal power.

Pre-modern societies had it the other way around: institutions served as the personal tools of the sovereign.  They drew their authority from the wisdom or whim of the ruler.  The latter not only had the final say, he could also intervene at any point in the decision-making process. Yet, even here, there were checks on the sovereign’s power.  Fear of God was one of these.  The last of them was the aristocrat’s own sense of personal pride, to which we might trace the cultural basis of what is today called “delicadeza.”

The transition to modernity has been the movement towards the establishment of impersonal and autonomous ways of doing things. The legal system represents this in the form of a blindfolded lady holding the scale of justice.  The law weighs the evidence, but is blind to the social standing or power of those appearing before it.

Today, “delicadeza” is all but gone. The old restraints on power and greed have faded, yet the institutional controls of modern governance have not fully taken root.  This transitional limbo has become the breeding ground of a Mafia-style governance system that is mostly based on money and coercive power. That is where we are today. Hopefully, things are changing, and this may be part of the reason why a feeling of general crisis seems to grip our society.  The times are telling us that we cannot continue to govern ourselves in this manner without compromising our future survival in the modern world.  That is why young Filipinos are especially up in arms.

We have very modern institutions. They were part of the legacy of Western colonialism; they did not spring organically from the soil of our own traditions. But this does not mean we cannot make them our own.  Indeed, the conditions that would compel them to work as they should are taking shape – universal education, modern mass media, the globalization of financial markets, the emergence of international legal instruments and standards, the rise of a scientific culture, just to name a few.  Our optimism however must be cautious. The persistence of mass poverty and of extremes in wealth and power among or people continues to block all efforts to make our institutions work.  Unless this obstacle is lifted, there is no way we can free ourselves from the scourge of dysfunctional governance and its twin – patronage politics.

We may see from this analysis that while Gloria Macapagal-Arroyo has become the face of political dysfunction, the movement for social change has to look beyond her regime. This is not just about Ms Arroyo; this is about the whole Philippine social system that nurtured leaders like her. It is thus with great hope that we welcome the substantive intervention in the current crisis of the group of former senior government officials unpretentiously calling themselves “FSGO.”  As past heads of key government agencies, they are familiar with the structural strains of Philippine governance. They have earned the right, and they have the duty, to speak in the name of our institutions.


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