What Happens When Institutions Do Not Work What Happens When Institutions Do Not Work: Jueteng, Crises of Presidential Legitimacy, and Electoral Failures in the Philippines* Raul V.Fabella Abstract School of Economics In the Millennium Development Goals discussion, the question of University of the Philippines how we eliminate bad institutions that perpetuate global poverty Dillman, Quezon City 1101 Philippines often arises. Democracy and participatory institutions are pro-
[email protected] posed as meta-institutions that are meant to create better ones. Democracies, however, also stumble. We study two episodes of crisis of presidential legitimacy in the Philippines: one arising from perceived electoral failure and the other from involvement in an illegal numbers game called Jueteng. A crisis of legitimacy can arise because the “declared winner” may not be the “true winner” be- cause of the compromise of mechanisms of recall and account- ability, or because the “true winner” reveals himself or herself ex post to be the “incorrect choice,” or both. The ensuing crisis of le- gitimacy, in turn, robs the executive of political mandate and mo- mentum for reform. In the struggle to survive, executive auton- omy is traded away as the power brokers of the status quo are enlisted for the defense. Thus, democracy’s march to good institu- tions may be blocked or even reversed. 1. Introduction That “institutions matter” has become virtually canonical in economics due to evidence from numerous conªrming country and cross-country studies (e.g., Acemoglu, John- * The author is grateful to the Philippine Long Distance Tele- phone (PLDT) Foundation for ªnancial support.