The EDSA Revolution: Useless for the masses

First of a series on Inequality

FOR all the adulation heaped on the 1986 People Power Revolution, for which we devote a holiday today, it was useless for the masses: It hardly changed the inequitable distribution of wealth in the country, among the most unfair in the world.

In the 10 years after “EDSA,” as the accompanying chart shows, the share to national wealth of the richest 10 percent of Filipinos increased from 61.5 percent to 67.3 percent, while the bottom 50 percent’s share decreased from 4.2 percent to 3.3 percent — even lower than that in 1820 during Spanish colonial times.

The raison d’être of a nation as an association is the betterment of the majority of its members. If its wealth is cornered only by a few — the richest 10 percent, 1 percent — what is the nation for? A capitalist machine to extract unpaid labor from the masses, and its huge market.

This is not me giving an opinion, but is the incontrovertible fact established from time-series data on the distribution of wealth since the eve (1820) of the end of Spanish colonization to 2024.

I extracted the data for certain years for the Philippines from the remarkable World Inequality Database (WID), the most comprehensive global source of data on income and wealth inequality. It was started in 2001 by the acclaimed French economist Thomas Piketty — author of several books debunking the myths of capitalism, among them Capitalism in the 21st Century — and his colleagues French American Emmanuel Saez and the British Anthony Atkinson.

Look at the time-series depicted in the chart, and it would seem that the Philippines as a nation has existed since its independence first from Spanish and then US colonialism merely as a vehicle for the extraction of wealth by a small elite. The share to total Philippine wealth of the richest 10 percent of the adult population has always been over 60 percent in the past two centuries. The share of the top 1 percent has always been a quarter of the total wealth.

In sharp contrast, the bottom 50 percent of the population’s share to total wealth has never been bigger than 4.4 percent.

Myth

The data debunk the myth of capitalism being a progressive system. The share of the richest 50 percent increased form 68.2 percent in 1820, at the height of the feudal-colonial order, to 74.6 percent in 1940, after the US imposed a capitalist system on the country. From 1950 to 1970 as the capitalism under Independence rolled out, the share of the 10 percent richest increased from 63.9 percent to 75.9 percent, the highest in the country’s modern history.

Indeed, the country in 1970 was, as a popular metaphor at that time put it, a “social volcano at the brink of eruption” because of the extremes of poverty and wealth. That actually gave Marcos the excuse to impose authoritarian rule, to undertake what he claimed was a “revolution from the center” to create a more equitable Philippines.

Marcos haters wouldn’t like the data. By the end of the authoritarian regime in 1986, the share of the top 10 percent was reduced to 62 percent, and the 1 percent to 27 percent. The share of the of the masses, the bottom 50 percent, nearly doubled from 2.6 percent in 1970 to 4.2 percent at the end of Marcos’ rule

In our entire history, this was the largest decrease in inequality ever, the reasons for which I will discuss in coming instalments of these series.

The People Power Revolution, based on the data, totally reversed the martial law reduction of inequality. By 1996, the share of the top 10 percent increased from 62 percent to 67.3 percent and the richest 1 percent from 27.1 to 32.1 percent. The masses’ share decreased from 4.2 percent to 3.3 percent.

Democracy

Why did democracy fail to reduce inequality more decisively after 1986? After all, democracy should, in theory, produce redistribution. Voters outnumber elites. Elections empower the majority. Legislatures can tax and reform. If inequality persists, it is not because democracy lacks the tools. The Philippine experience suggests a more complicated reality.

First, democracy restored political freedoms — but it did not dismantle economic concentration. The oligarchic structure of asset ownership survived the transition. The same conglomerates, landed interests and business families remained dominant in banking, utilities, real estate and retail. The political order changed faster than the economic order.

Second, post-1986 governments prioritized macroeconomic stabilization over redistribution. The late 1980s and early 1990s were dominated by debt restructuring, fiscal repair and restoring investor confidence after the 1983-1985 crisis. Policy attention focused on growth, not wealth redistribution. The Philippines did not adopt the kind of confiscatory taxation or aggressive structural reform comparable to those in mid-20th century Western Europe which reduced inequality in these countries, despite their capitalist systems.

The Philippines in the 1990s embraced the so-called “Washington Consensus” notion concocted by the world’s hegemonic powers and imposed by the World Bank and the International Monetary Fund as conditions for their loans. They claimed and that liberalization, privatization and deregulation would lead to growth that would trickle down to the masses. It didn’t: it only made the rich richer.

Tax

Tax policy reflects this shift. In 1997, the Comprehensive Tax Reform Program reduced the top personal income tax rate to 32 percent, where it remained for more than two decades. With corporate dividends being their biggest source of wealth tycoons here paid a low 10-percent tax, a third of the 35 percent imposed on the West’s rich. The emphasis was on attracting investment, not compressing wealth accumulation.

Dividends, capital gains and property transfers faced lower effective rates than wage income. In a modern economy where the wealthy earn increasingly from assets rather than salaries, this structure limits redistribution. A democracy can hold elections regularly and still operate within a tax system that favors capital accumulation.

Fourth, globalization strengthened the bargaining power of capital relative to labor. Democratic governments operate under constraints. Investors can move capital across borders. Firms can relocate. Governments wary of capital flight often avoid aggressive taxation of wealth. The Philippines, seeking foreign investment and overseas remittances, had limited appetite for policies that might discourage capital inflows.

Fifth, labor power weakened in the democratic era. While political freedoms expanded, union density did not surge. A case in point here is the near extinction of the militant Kilusang Mayong Uno, a Leftist-led labor federation.

The structure of employment shifted toward services and informal work. Overseas migration accelerated. Remittances supported household consumption, but they did not build domestic industrial capital. Without strong labor institutions pushing for wage compression, income dispersion gradually widened.

Growth

Sixth, growth itself can increase inequality if its gains are uneven. The Philippine economy expanded steadily after the 1990s, but much of that growth was concentrated in urban real estate, finance and conglomerate-led sectors. Asset prices rose sharply. Land values increased. Corporate profits grew. Those who already owned capital benefited disproportionately.

There is also a deeper institutional factor. Democracies do not automatically produce equality. They reflect the balance of organized interests within society. If economic elites remain politically influential — through campaign financing, business networks or family political dynasties — policy outcomes may preserve existing structures. In other words, democracy is a political mechanism. Redistribution is a political choice.

The mid-20th century Western countries achieved better wealth distribution not because they were democratic. It did so because democratic governments with socialist agendas imposed extraordinarily high taxes on the rich, built expansive welfare states and undertook focused industrial policy.

Electoral competition but did not fundamentally reset wealth ownership. The result is insignificant inequality reduction in the immediate post-authoritarian transition, followed by gradual re-concentration as growth resumed and capital accumulated.

Without deliberate structural redistribution — through taxation, education, asset-building or institutional reform — inequality will not disappear simply because elections return. That is the clearest lesson of the post-1986 period: political democracy and economic equality are not the same thing.

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The EDSA Revolution: Useless for the masses
Source: Breaking News PH