The Philippines: Land Reform through Tax Reform
address by Mason Gaffney
Conference on Land Reform and Development in the Philippines
World Affairs Council, San Francisco
(20 Oct 87)
I. The Philippines Suffer Extreme Poverty
Personal observations as an American GI in 1945: We thought we
were badly fed, but local children were salvaging our garbage.
Also pilfering, mooching and -- tragically -- pandering for a
living. "C'est la guerre", we explained -- the easy answer. But now 42
years later, the poverty and degradation remain. Now we see, Ce
n'est pas la guerre: c'est la propriété foncière" -- it's
property in land.
Extremely high concentration of land ownership. e.g., in 1955, just 600 entities
held 13% of the farm area, with larger holdings on best land
(Sorongon, 1955). Throw
in the Pentagon and the Philippine Department of Forestry and the
top few have much more than 13%.
Low per capita income: $772.
Few job opportunities. "Education" is an easy answer,
beloved by those who educate for a living. Education has
improved dramatically, but is not a sufficient solution: it
simply leads to frustration and brain drain. Education for
effective reform and public policies for job creation would solve
many problems, but that's not the kind of education they get.
Dense population: 490 per square mile, higher than Switzerland! This
density is lower than some urbanized countries, but in this
country population pressure is not relieved by labor-using urban
development (commerce, manufacturing).
This is a truly colonial economy, with plantation
agriculture on the best lands. Export-orientation, another easy
explanation, is an incidental aspect; the heart of the problem is
low capacity to absorb labor productively. Sugar, copra, rice:
the wage is a low share of gross output, rent is a high
Plantations are economically sterile, generating no creative
towns and cities to serve local agriculture. Look at the ante-bellum
south, U.S.A., in contrast to ante-bellum New England.
Contrasts of intensity of land use: the fertile lowlands
around Tarlac are underused; marginal hill-lands (Ilocos, Baguio)
There are corresponding contrasts of wealth, and size of
farm enterprises. There is a common wage level, but a highly
skewed distribution of lands, with larger holdings on better
lands. This is concealed by overt data doctoring: The Robert
Hardie Report, 1952, under the U.S. Special Technical and
Economic Mission (STEM) brought it out sharply. President
Elpidio Quirino, representing the plutocratic oligarchy of big
landowners, suppressed it; U.S. politicos went along.
This is a class society, without concealment or apology. I
drive my mess-boy to his home barrio to see his sick mother, and
he anxiously demands we must check in with a person whom the
mess-boy insists on calling "The Spanish Master", a Spanish
citizen with plans to return to Spain and marry after age 40.
Meantime, he has a special claim on virgins of the barrio; for
"to own the land is to own the people" -- Henry George.
Complexions of the children on the terrace suggest The Spanish Master does not study
Manila, "Pearl of the Orient", is where absentee owners live
and spend their rents. It is a sterile city, generating little
industry. Commerce thrives mainly in foreign enclaves.
II. Foreign Domination Persists
7,000 islands are vulnerabe to marine invasion. Major world
naval powers covet the harbors. Same time, the unsophisticated
native religions yield to Arab and Spanish missionaries. But
where in The Bible does one find land title in fee simple?
Mosaic land law in Leviticus 25 reads more like possessory
interest, terminated by semi-centennial "Year of Jubilee".
The fractionated natives, with over 100 dialects, and many
quarrels, were easy prey for foreign intervention. Even Magellan
was tempted: he was killed interceding in a native quarrel.
Unfortunately for the Filipinos, later Spaniards survived better.
Spanish missionaries founded Manila, and spread out.
Spanish Puritanism and the chivalric conscience created a need
for a persuasive hypocrisy to rationalize exploitive imperialism,
and salve the chivalric conscience.
To the rescue came the Encomienda, a colonizing institution
blending three imperialisms: cultural, military and economic. It
made natives pay rent to finance their own suppression, and
instruction in The Faith.
Lands were granted by Spanish Kings. (Cf. California
missions.) Spanish holdings validated by
Treaty of Paris (cf. Treaty of Guadelupe-Hidalgo, 1848).
Undisturbed, they ripen into fee simple titles. With social
obligations reduced, they rise in value.
American ally Emilio Aguinaldo presses for
independence, presumably leading to nationalization of large
estates, possible anti-clerical emphasis. American military
invades to suppress Aguinaldo in long, bloody, war, followed by
indefinite occupation. Governor Leonard Wood is a "ruthless
Who won the Spanish-American War of 1898, and who lost? America's first duty
was to protect Spanish tenures. American taxpayers and Filipino
What is the effect on the U.S.? The Philippines has been a
playing-field and training ground for American men on horseback,
with repressive, anti-democratic attitudes which they then
brought home: Frederick Funston; Leonard Wood; Henry L. Stimson;
Douglas MacArthur -- the kind for whom we name boulevards and
The price of power is that Washington is besieged by foreign
lobbyists, a corrupting influence. Sugar lobbyists are among the
worst. Chief lobbyist in U.S. was Manuel Quezon. Washington
picked him as chosen instrument, or cacique. Quezon moved the
capital to a private estate outside Manila, named for himself
(owned by who? -- it must be an illuminating story, parallel to
cases of Willows, Alaska; Westwood and Irvine campuses of UC,
During the Japanese occupation, Spanish titles were
undisturbed. One case is the Azucaréra Centrál de Tarlac, where
the Spanish Master held sway, 1945. Cf. French real estate in
South Viet Nam. All-out war is just for soldiers who bleed and die; the unwritten
transnational comity of property protects the landholders. The last
time the U.S. confiscated lands from the losers was during and
after the American Revolution, and that was done by the colonial
governments, not the U.S.
In the U.S. re-occupation of the Philippines, land titles of Spanish
collaborators were still undisturbed. Priority went to putting
down Huks. In 1972,
problem still unsolved, Fredinand Marcos declares martial law. 1986 -- the Aquino presidency, again promises land reform.
Promises, promises! In 1987, there is still no progress on land
reform, 42 years after "saving" Filipinos from Japanese. Cf.
progress in enforcing Reclamation Act of 1902 in U.S. How long
will these stalling games be tolerated?
U.S. presence manifests the "Cacique" syndrome: U.S. pays
the Philippines for defense, so they needn't tax themselves. This is
landlordship in its purest form, free even of military
obligations. The Army focuses on suppressing Filipinos, making
them pay rent.
III. Role of church
The R.C.C. was totally implicated in the Spanish conquest,
as Yale missionaries were in the conquest of Hawaii. Encomienda
financed cultural conquest, conversion and submission. Jesuits
acquired vast lands, too, 19th cent. We surmise clergy
restrained worst excesses of landholders, as today, but offered
no preventive therapy.
who bind up wounds develop a vested interest in wounds? "I
helped the poor and they called me a saint; I ask why they are
poor and they call me a communist."
José Rizal, martyr of struggle for independence from Spain.
Wrote books attacking religious orders, was executed, 1896, a
sequence suggesting a church militant to protect its privileges.
Upper Catholic hierarchy has generally supported the prevailing
land dispensation and system. Liberal popes criticize worst
abuses and indirect results (like poverty and unemployment and
death squads) but uphold the core concept of private collection
of rents and unearned increments. Historical tradition of church
as major landholder.
Can Church be changed? The runaround we economist-pilgrims
got in Rome in 1986 suggests the Vatican apex is as immovable as
any other bureaucracy. There is change in the field, among brave
and dedicated priests on the firing line, but it is poorly
supported at top, and vulnerable to local bravos in the field.
Cardinal Sin? He supports Cory Aquino, who has emerged as just
another political hypocrite who promised reform but backed off
from her window of opportunity, and passed the buck to an
Philippine society needs radical, wrenching reforms. But
the church, trying to be liberal, has lost its radical mission.
Trying to conciliate, the church has not led. Trying to
participate, the church has been coopted. Trying to make
religion easy, the church has made it trivial.
IV. Role of the U.S.A.
The Pentagon wants bases.
None dare call
it imperialism, and ask why have the whole regional presence.
There is oil in S. China Sea; maybe someday Manila will be
leasing some of it. But on the whole there are there for us no
strategic resource benefits to justify the cost of military
spending. Sugar and rice simply add to our surpluses.
Why there in first place? There were few prior U.S.
holdings when Adm. Dewey said "You may fire when ready, Gridley".
More general answer: there were "potential absentees", the
sort who grabbed Hawaii about the same time, following the
imperialist formula: get land cheap, then call the Marines to
firm up precarious tenures and get preferential political
treatment. Henry L. Stimson, a Skull-and-Bones Yale man with
prior service in Nicaragua, was no stranger to this formula; his
protege McGeorge Bundy also tried it later in Viet Nam.
What kind of preferential treatment? Putting down Aguinaldo
firmed up land tenures. After that, land is worth more with
preferential access to the U.S. sugar market. Sugar is a
favorite enterprise for absentee landholders because it needs
lots of land with little labor or management.
Land is worth more if you get police protection without
paying taxes. U.S. Aid in 1985 was $334 millions, to a country
whose GNP is only $16 billions. There are also loans and grants and
base rentals and Pentagon spending, and the shelter of U.S.
forces. Result? Little pressure on holders of Philippine land
to pay taxes, direct or otherwise.
Ironically, it is now proposed that U.S. taxpayers finance
Philippine land reform by buying back the same land their
spending makes valuable, to return to the Filipinos from whom it
was stolen. Who lost the Spanish-American War? The American
taxpayer seems to be the ultimate patsy.
The American taxpayer is stupefied by The Great Secular Superstition that
unearned income and stolen property are sacred, and protecting
them is an obligation owed to God and country. He holds it a
moral and social lapse to challenge The Superstition, which he
wraps in the flag, democracy, freedom, church and country --
anything to hide its nakedness.
An occasional American does, to be sure, preach land reform.
First, the Bell Report. Then Robert Hardie, 1952, fresh from the
heady success of reshaping Japan under MacArthur, now with STEM
of MSA. Hardie expelled, his report recalled and suppressed
Or consider Adm. Raymond Spruance, U.S. Ambassador, 1952-55, a believer
in Henry George. As hero of Midway Island, dealt from some
strength. Demonstration effects spill over from Japan, Taiwan.
Land Reform popular with U.N., World Bank, IMF, etc.
Charismatic, popular President Ramon Magsaysay, 1953-57,
dedicated to land reform. But Spruance, appointed by Harry
Truman, was quickly made a lame duck by another hero, President
Eisenhower. It was also the sick and sinister age of Joseph R.
McCarthy and Edward Lansdale, who prevailed. No reform, to the
shame of Republicans.
V. Role of Philippine nationalism
Dr. Sun Yat-sen's classic testament, the San Min Chu I,
builds the reform state on three legs: nationalism, democracy and
right livelihood. Nationalism has a bad odor for its abuses, and
yet every egalitarian polity we know is national.
Philippine nationalism is underdeveloped. The sentiment and
rhetoric are there, but not the practise. The U.S. defends
their shores, rents their bases, suppresses their rebels, buys
their exports, obviates their taxes -- who needs nationalism? A
shell of nationalism has developed, nonetheless. All natural
resources "belong to the state" (it says here). Exploitation is
limited to citizens, or corporations 60% citizen-owned. Florid,
pompous language abounds in official documents. It is the
language of hypocrisy. De facto and de jure are far apart. Cf.
British Columbia, 95% owned by the Crown Provincial but leased on
easy terms to MacMillan Bloedel et al. Cf. water rights in
California, owned by "the people", the State Constitution
alleges. Imagine -- no, observe -- Ferdinand and Imelda in
charge of Philippine national property in resources. Net result:
lots of sweetheart deals, no resource revenues.
VI. Role of the rebels
Huks originally concentrated around Tarlac, the lands of
Cory and the Spanish Master of the Azucaréra Centrál. Extremes
of wealth and poverty generate rebels.
Hill lands produce fewer rebels, more ambitious opportunists
like Quirino and Marcos, both of them Ilokanos.
Rebels role is to keep extracting concessions. Classical
economists like Thomas Malthus and David Ricardo said that
tyranny (which they called population pressure) drove wages down
to the minimum at which labor would consent to live and
reproduce. They should have said, will consent not to rebel.
But rebellion without a program or vision of viable reform
is not sufficient to attract a majority, who still prefer frying
VII. Role of Filipino-Americans
These parties with the most direct human interest are rarely
consulted in making U.S. policy. They would do better to lead, finance
and give reasonable direction to reform, as Irish-Americans once
Their numbers are growing fast. 1971-80, 8% of all
immigrants to U.S. were Filipinos. (Cf. Mexico, 14%.) Fastest-
growing stream of immigrants, after Koreans.
But Filipino-Americans are nearly invisible. In L.A., there
are 2.5 times as many Philippine natives as Japanese natives, but
who knows where to find Little Manila?
San Diego and San Francisco have highest mix, 1.5% of
Why are Filipino-Americans invisible and powerless? a) They
are below a critical mass; there may be an explosion when they
reach it. b) They have no distinctive church, melt in with other
Catholics, who are settled and conservative. c) They have only a
weak entrepreneurial tradition, like African-Americans.
d) They are poor.
Should reformers help organize and motivate this group?
Earlier Irish experience gives pause. Ethnic groups are just
that, and later fall away from reform as such.
VIII. What can we do?
A. Reduce American support, in reasonable stages but with
firm direction and sustained resolution. To defend their own
nation they must: a) Tax their own lands, especially the
absentees; b) Placate dissident population; let their fear of
Marxism drive them, not ours; c) Foster development at home,
following Japan, Taiwan, Singapore, Korea, Hong Kong.
We must give up illusion of cultural superiority -- cf.
Alfred Russel Wallace on Malay folkways; and give up illusion of
control. You may sometimes impose on an occupied nation a better
system than it would produce itself.
But The Philippines have their own Congress, firmly controlled by
Philippine landholders, whose power derives from their long
history of collaboration with occupying foreigners like
ourselves. Hoover may not have handled the stock collapse
wisely, but he was smart enough to veto the 1930 Independence Act
for The Philippines because it left us with Responsibility
without Power. Yet that is where we are today!
B. Limit foreign aid to one kind alone: technical
assistance assessing land, avoiding regressive assessment, and
collecting taxes based on market value of land. Philippine tax
administration is advanced enough to benefit from aid, and
backward enough to need it.
Tax reform of this kind obviates other land reform because
the market reforms itself under this stimulus. The landholder is
the successor-in-interest to those who stole the land from the
majority. He now compensates them in three ways: by supporting
government; by hiring workers to put the land to its highest use;
and by producing goods for the workers to buy with their new
wages. Supply-side and demand-side economics work together to
raise real output and income.
Land reform of this kind is free of defects that have made
most other land reforms exercises in mere tokenism, stalling,
graft and CIA militarism. Land taxation raises money, and that
without burdening any useful activity; by contrast, Liberal "land reform"
buyouts cost money, raised, if at all, by taxing commerce,
industry and labor in the cities and aborting urban development,
the very thing this country needs most.
Liberal "land reform" benefits at best the handful of lucky
ones who get farms; land taxation helps everyone by lowering
other taxes, making jobs and increasing output. Liberal "land
reform" accepts and validates the extreme concentration of wealth
that curses the Philippines; land taxation strikes its root.
Liberal "land reform" is strictly agrarian; land taxation deals
with urban, mineral, forest and other lands and, properly
construed, deals with all economic land including fisheries,
radio spectrum, air rights, water rights, amenity rights,
recreational values, etc.
Of course, the very virtues of land taxation guarantee it
will arouse powerful opposition. Greed and fear often have their
way; it was ever thus. But let that be their problem, not yours:
no reason for you to be bamboozled or deterred.
C. Reject hypocrisy and stalling, when words are vague and
w/o specific procedures for early implementation.
a) Don't believe that "all natural resources belong to
the people" in practise, just because that's what "it says here";
b) Avoid liberals, clerical and other, who sympathize
and patronize without tangible results. Look elsewhere for
c) Avoid touting free trade in colonial settings, it
has become a code-word of Spanish-Master types for a land-using,
unbalanced, labor-evicting, foreign-enclave sterile economy --
(cf. the ante-bellum cotton South). Rather, settle the land
(including urban land) and free trade will flourish, as in
D. Focus efforts where cataclysms have happened or are
credibly threatened, as in environs of Soviet Union, Nicaragua,
Cuba, or in Nicaragua itself. Principle of Challenge and
Response makes things happen.
E. How did Henry George wield such influence? First he
allied with radical rebels, 1879-86. Only thus did he develop
power to frighten landholders and become worth coopting. Was
cooptation death? No, it was a golden age of constructive reform
in America, 1886-1917, the Progressive Era. First you rebel,
then ally, have real impact.
It is a dynamic process, however, and must be repeated
regularly because each cycle ends in decadence. It's time to
F. What can honest people do now? They can combat The
Great Secular Superstition in schools and churches, move into
influential positions in the screening processes that generate
ideas and select leaders. They can keep their faith by
continuing association and good will.