In our world, even science cannot explain everything. That’s true with respect to human life. And that phenomenon extends to economics, which Dondon knew pretty well. Call it fate, luck or chance.
To elaborate, economists and other pundits tend to present with confidence factors or variables to explain, say, growth in the Philippines or in a set of countries. But it is very possible that such growth is not a result of good policy or good institution but of random variation or luck. (See William Easterly et al, for example.)
Luck, however, deserted Dondon.
His loss saddens the economics profession.
He will be remembered for being the economist who had extensive experience in the academe, government, and the private sector. He was a close witness to and a direct participant in the erratic shaping of contemporary Philippine history.
An alumnus of De La Salle University, Dondon earned his doctorate in economics at Stanford University. He was a professor at the University of the Philippines School of Economics.
Like Winnie Monsod, as a teacher, he had the knack for explaining abstract economic concepts in way that could be easily digested even by non-economists.
For instance, Dondon can clarify esoteric game theory by giving illustrations from Mario Puzo’s The Godfather.
Dondon was twice appointed as Director-General of the National Economic and Development Authority (NEDA). His other stints in government included being a member of the Monetary Board of the Bangko Sentral ng Pilipinas, being the Executive Director for the Philippines at the Asian Development Bank, and more recently, being the chair of the Development Academy of the Philippines.
The late President Corazon C. Aquino appointed him as NEDA Director-General during the latter part of her term. The appointment came in the wake of the intense debate among the economic managers, especially on the issue of managing the foreign debt.
Dondon served as NEDA Director-General from 1990 to 1992. That was a most difficult time to preside over economic planning. It was a time of boom and bust, and Dondon had the misfortune of joining the Cabinet during the bust period. The economic downturn arose from the foreign debt overhang and the political instability, especially the repeated coup d’etat attempts.
President Benigno S. C. Aquino III appointed Dondon to once again become NEDA Director-General in 2010. This time, the economic and political situation was favorable, leading to high growth rates. Arguably, the main driver of growth under the current administration is the ignition of investor and consumer confidence resulting from the convincing victory and legitimacy of Mr. Aquino.
Dondon’s appointment as head of NEDA for the second time was expected, despite his reluctance. He was a friend of the Aquino family, and he convened a group of economists with diverse backgrounds who joined Mr. Aquino’s campaign for the presidency.
Dondon stayed as NEDA Director-General for two years. He then opted to return to the academe and to pursue other endeavors. He cited health reasons for his resignation.
Dondon held high positions in the private sector, including a directorship at the Bank of Philippine Islands and the presidency of the Philippine Stock Exchange. Being president of the stock exchange was a most stressful job. The tension in dealing with nasty characters and big egos at the stock exchange wearied Dondon.
Yet, his calm and jocular appearance did not reveal a sign of frailty.
In his last few months and weeks, he was his usual self — giving time to friends, engaging them in light conversation, and teasing them.
The last time I saw Dondon was at my wife Mae’s memorial. Mae and Dondon were friends. Both were chatty, although Mae could not understand Dondon’s economics.
Mae and Dondon were likewise connected through Cynch Bautista, Mae’s close friend. Cynch, the sociology professor and current Commissioner of the Commission on Higher Education, was Dondon’s favorite non-economist academic. Dondon could not resist baiting her to debate about the superiority of economists to sociologists. He would nonetheless concede that Cynch had a good grasp of the dismal science and had a better grasp of the real world. Cynch told me that the same teasing Dondon visited her two weeks before his passing.
Dondon’s economics was liberal or to use a more provocative word, neo-liberal. Dondon was a product of his times.
In the 1970s, stagflation — a deadly combination of rising prices and unemployment became a serious problem. Keynesian economics seemed exhausted at that point. Meantime, the inherent problems attendant to the command economy of “actually existing socialism” became pronounced, eventually leading to glasnost, perestroika, and the crumbling of the Berlin Wall. The economics of Reagan and Thatcher became triumphalist. Friedman and Hayek replaced Keynes and Marx as the economic icons of that period.
It was at this time that Dondon and many others absorbed ideas like rational expectations and efficient markets, which became en vogue.
But economic history is like a pendulum.
By the late 1990s, in the aftermath of a series of crises, the ideology of the free market — as expressed in the so-called Washington Consensus — faltered and retreated.
Further, evidence has shown that irrational behavior is normal. The works of Daniel Kahneman, Amos Tversky, Richard Thaler and others on behavioral economics debunked the unquestioned assumption in economics and other social sciences of human rationality. (Before the more recent advances in behavioral economics, Herbert Simon criticized the assumption of rationality by introducing what he called bounded rationality.)
Curiously, at that time Dondon was studying at Stanford, Kahneman (who in 2002 was co-awarded the Nobel Memorial Prize in economics) and his associates were fellows at the Center for Advanced Study in the Behavioral Sciences, also at Stanford. Did their paths cross? Be that as it may, Dondon followed the convention.
Nevertheless, it is unfair to label Dondon a doctrinaire of neo-liberalism. To reiterate, the dominant economic thought at that time shaped him and many others.
Moreover, Dondon sincerely thought his worldview was not far off from the Left. He was proud to say that he was more “Left” than Alex Magno (who was once an activist of the Left.)
In fact, Dondon related well with activists and scholars of the Left. One noteworthy project wherein he collaborated with radical academics like Ed Tadem, Tesa Encarnacion Tadem, and Temy Rivera was about the technocrats of the Marcos dictatorship. Their study yielded interesting insights such as the tension between the free-market believers like Cesar E. A. Virata and those who subscribed to industrial policy such as Vicente “Ting” T. Paterno.
As the head of the Aquino’s economic policy group during the 2010 election campaign, Dondon welcomed different ideas, including the unorthodox ones.
Dondon’s colleagues will remember him for his credentials as an economist and technocrat.
But I will not forget Dondon as a jolly friend of ordinary mortals like my wife Mae, as the boy from Camiguin who made good, and as a democrat who contributed to the dismantling the Marcos fascist regime and the protection of the post-dictatorship democratic gains.
Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.
This article was first posted on BusinessWorld last February 1, 2016.