Neither a command economy nor a government that knows best
by Ak47
The world bank has come up with a report saying that Malaysia is an extreme example of tepid investments. How do we reconcile this report with the glowing assessments of the NEAC's NEM? By the usual Malaysian way- rubbishing the report saying what do others know about us? Just like what the people are now rubbishing Richard's Branson's opinion on the Anwar Ibrahim Trial. By the way, I have written along the same lines just a few articles ago.
The linchpin of the ETP will be private sector investments. The NEM said it. The World Bank is saying the same also. The NEM forgot to mention, the old way of doing business was also and has always been private sector driven- privatize the profits and share the burden with the public.
Which private sector is the NEM talking about? The executive summary of the NEM says, income increases have improved vastly for the top 20%. The bottom 40% of society has suffered badly. Maybe the private sector makes the bulk of the top 20%.
This will further strengthen the arguments that economic and business models in Malaysia are actually from the top 20, by the top 20 and all about the top 20.
So we ask again, when the NEM talks about the private sector, what does it mean really or what does it mean in reality in Malaysia? public perception has it to mean those big players already cornering the businesses in Malaysia. it's a club of Rome fraternity engaged in friendly competition with each other, competing for favors from the top decision maker in this country. Members of that fraternity paints a picture of doom and gloom out there and they offer the out there a solution.
The NEM decried a lot of things. About the lack of innovation and R&D. why doesn't the government publish data on the performance of the top 20% in this respect. What proportion does Berjaya spend its revenue on R&D? what proportion do our top companies spend on RND?
The report also noted that 8% of our workforce has attained only SPM level qualifications.
Let me ask again- how do we improve our government delivery service if the majority of its workers are only SPM holders led by heads of department, who themselves have just so so qualifications? The government simply cant. Those SPM holders entering the job market in addition can only offer the less better SPM credentials.
Where are the bold reform measures that will unlock value the NEAC speaks about? It spoke about an average growth rate of 6.5% over the next 10 years in order to get us to a GDP per capital level of YSD 17k. It acknowledges we have a strong manufacturing sector dominated by electronics and electrical industries. Yet it is still espousing expanding on this industry which it has already admitted to having a large import content. We are just sub-contractors then; we haven't grown our own timber.
The basic solution to inclusiveness is social mobility without which, social frictions and antagonism will take over. The inclusiveness that we are actually talking about is creating accessibility. The social mobility that we must talk about is the mobility of the bottom 40% getting into the foyer of the club of Rome fraternity. When we continue to have sharp class divisions, animosity will build up and eventually boil over.
At the root of social mobility and inclusiveness talked but by the NEAC must be a reward system- a system that rewards the more intelligent, the more talented and the more hardworking with better incomes and rewards. Otherwise, the slogan of bold reform measure remain what they are- just empty slogans justifying the high fee in preparing the various labs across the country.
Which leads us to the important market friendly affirmative actions offered by the NEM. What are these? These are actions designed to enhance the capacity of the bottom 40%. These are actions designed to meet needs as opposed to meeting of quotas or some legislative defined status.
What does the term market friendly affirmative actions mean operationally? In order to know and understand the term, we have to know what it DOES NOT mean first. Unfriendly affirmative actions are the product of an eco-system. Bug sounding word no? the main features of the unfriendly ecosystem?- vested interests, market distortions and rent seeking activities. All these combined to undermine productivity and entrepreneurship.
So where are the bold audacious moves to remove these? We dare not move beyond the NEPish demands reflecting the lack of political will which the NEAC underscores as sine qua non for the success of the NEM and ETP. We have not moved beyond the encirclement of vested interests which submitted many of the EPPs and the BOs in the ETP.
What do you put in place in the ecosystem? One central command type with other central command types? Privatize the economic planning? Privatize the role of government? The government steps aside and let the private sector ( not free market) takes over? Then you replace one type of command centre with another. This is what the NEAC says:-
The NEAC advocates a new, bold approach to obtain the right eco-system where efficient markets can operate to produce equitable outcomes. The vicious cycles of vested interests have to be broken to remove distortions and rent-seeking activities, all of which undermine productivity and entrepreneurship so vital in creating a vibrant economy.
As to the enabling environment, the NEAC proclaims:-
The private sector will be the main driver of growth in a market environment that rewards innovation and creativity while the government will generally be the provider of public goods and the custodian of public interests through an effective regulatory framework. Well-governed and leaner government institutions will be held accountable to performance-based outcomes in line with the GTP. They will be staffed with highly qualified, flexible, dynamic individuals with multi-tasking capabilities. Private firms, non-government entities and the civil society will aspire to internationally accepted governance.
The key word here is effective regulatory framework. I have already talked about the inconsistency of rejecting collectivism by pushing individualist values, but in the end, coming out with collectivist solutions.
Posted by sakmongkol AK47 at 9:05 PM
4 COMMENTS:
OneMalaysian, 28 September 2010 22:30
Dear Sakmongkol
“At the root of social mobility and inclusiveness talked but by the NEAC must be a reward system - a system that rewards the more intelligent, the more talented and the more hardworking with better incomes and rewards”.
That’s the only way to go for any country that wants to progress. But let’s temper that idealism with a social safety net that would catch the bottom 40%, so that they too in time can climb the economic ladder closer to the Club of Rome fraternity. For if we don’t do this “we (will) continue to have sharp class divisions, (and) animosity will build up and eventually boil over”. I fully agree with this sentiment.
However, we must not think this is easy to do. It entails the complete over-haul of the current education system; we need to change mind-sets so that those people will have confidence in their own abilities to compete (politicians keep telling them they can’t); we urgently need to raise their incomes to lessen their suffering (minimum wages will help); and we must do much more to bring them basic modern amenities that urban folks take for granted – access to basic medical care, better schools, and portable water and electricity in deep rural areas. This is the perpetual poverty trap that many in the bottom 40% find themselves.
The paragraphs you quoted from the NEM sound like they were written in heaven by some economic angel. How much better can they be? But when these beautiful ideas meet the harsh and cruel reality, it is the reality that prevails. Getting rid of vested interests and rent-seeking behavior? We are just seeing more with the introduction of the ETP and the entry point projects (MRT, etc). And what about allowing efficient markets to thrive and the government to only concentrate on providing public goods? Well, if the ETP is not another piece of central planning in disguise, as you have pointed out, what is it? So there is a lot of cross-talking here. I am a bit confused. I would dearly want to believe, if a little naïve, the outcomes the NEM promise.
Anonymous, 28 September 2010 23:16
as Warren Buffet puts it: "It is a class war alright and my class is winning!"
Anonymous, 29 September 2010 01:14
Don't fool ourself that if the Malays are united, there will be utopia. Politics in Malaysia from the days of the Malacca Sultanate up to the present age is not about the ordinary Malay people. It's about the elites. The ordinary Malays are just cannon fodder regarded merely as material to be expended in wars between the elitist themselves.
UMNO is a party still teetered to a feudalistic and tribalistic mentality. UMNO's struggle in the beginning was mostly inspired by teachers but when Mahathir became the leader, UMNO was transformed into a party for businessmen and cronies. Matters came to a head when the original UMNO was disbanded. The present UMNO is a bastardised party comprising of selfish rent-seekers and rabble-rousers. The founders of the original UMNO, Tunku Abdul Rahman and another former PM Tun Hussein Onn was prevented from joining the new UMNO. It is no secret that within UMNO Baru there are serious divisions and factionalism. It is the only party in this country where territorial rivalries between different factions has resulted in murders and practice in witchcrafts. Recall the Mona Affendi and Sports Minister cases and you will find that the party is all about the struggle for power and riches between the elites.
The NEP that was supposed to benefit the poor of all races was hijacked and diverted by UMNO Baru to create a club of UMNOputra billionaires with the help of non-Malay supercronies. If the NEP have been implemented properly, the country would have peace and prosperity for all races, but unfortunately the elites are getting richer and despotic while the ordinary Malays are struggling and becoming more insecure.
Now coming back to my earlier assertion that the elitist Malays have never known to have unity among themselves. Prior to the advent of the colonists, the Malay elites had been waging wars and killing themselves and the poor and ordinary Malays served as cannon fodders. There was no peace in the land and there was a time when a neighbouring state like Thailand were controlling a third of the Malay Peninsular. Even during the Sultanate days wars were the preoccupation of the Malay elites that they had to turn to the Chinese emperor to protect them. And when the British came the Malay elites were willing to surrender their powers to the British for their own protection. Let's be frank about it: if not for the British, there would never be a Malaysia. What would happen is that the Malay elites will just control a diminishing two-thirds of the Malay peninsular but never united. But now with independence from the British, Malaysia is now more than 160% of its original territorial size. So colonialism is a blessing in disguise, actually.
Now the Malay and their dependent non-Malay elites are making a lot of noises that the immigrant races such as the Chinese and Indians are depriving them of the unity that they never have. The fact of the matter is that the immigrant races are being scapegoated for all the problems of the country. Okay expel all the Chinese and Indians back to China and India so that an utopia of peace and prosperity will ascend on this land. Fat hopes: Malays will fight against Malays and finally the Indonesians will colonised the country. So for the ordinary Malays, don't ever trust the elites. They have never had a place for the ordinary people.
Whether you are an ordinary Malay, Chinese, Indian or others, we are not at war. It is the elites from the ruling parties and their super non-Malay super-cronies that are fanning the flames of distrust for their own selfish interests.
Anonymous, 29 September 2010 01:17
… continued:
Now coming back to my earlier assertion that the elitist Malays have never known to have unity among themselves. Prior to the advent of the colonists, the Malay elites had been waging wars and killing themselves and the poor and ordinary Malays served as cannon fodders. There was no peace in the land and there was a time when a neighbouring state like Thailand were controlling a third of the Malay Peninsular. Even during the Sultanate days wars was the preoccupation of the Malay elites that they had to turn to the Chinese emperor to protect them. And when the British came the Malay elites were willing to surrender their powers to the British for their own protection. Let's be frank about it: if not for the British, there would never be a Malaysia. What would happen is that the Malay elites will just control two-thirds of the Malay peninsular but never united. But now with independence from the British Malaysia is now more than 160% of its original territorial size. So colonialism is a blessing actually.
Now the Malay and their dependent non-Malay elites are making a lot of noises that the immigrant races such as the Chinese and Indians are depriving them of the unity that they never have. The fact of the matter is that the immigrant races are being scapegoated for all the problems of the country. Okay expel all the Chinese and Indians back to China and India so that an utopia of peace and prosperity will ascend on this land. Fat hopes: Malays will fight against Malays and finally the Indonesians will colonised the country. So for the ordinary Malays, don't ever trust the elites. They have never had a place for the ordinary people.
Whether you are an ordinary Malay, Chinese, Indian or others, we are not at war. It is the elites from the ruling parties and their super non-Malay super-cronies that are fanning the flames of distrust for their own selfish interests.
The world bank has come up with a report saying that Malaysia is an extreme example of tepid investments. How do we reconcile this report with the glowing assessments of the NEAC's NEM? By the usual Malaysian way- rubbishing the report saying what do others know about us? Just like what the people are now rubbishing Richard's Branson's opinion on the Anwar Ibrahim Trial. By the way, I have written along the same lines just a few articles ago.
The linchpin of the ETP will be private sector investments. The NEM said it. The World Bank is saying the same also. The NEM forgot to mention, the old way of doing business was also and has always been private sector driven- privatize the profits and share the burden with the public.
Which private sector is the NEM talking about? The executive summary of the NEM says, income increases have improved vastly for the top 20%. The bottom 40% of society has suffered badly. Maybe the private sector makes the bulk of the top 20%.
This will further strengthen the arguments that economic and business models in Malaysia are actually from the top 20, by the top 20 and all about the top 20.
So we ask again, when the NEM talks about the private sector, what does it mean really or what does it mean in reality in Malaysia? public perception has it to mean those big players already cornering the businesses in Malaysia. it's a club of Rome fraternity engaged in friendly competition with each other, competing for favors from the top decision maker in this country. Members of that fraternity paints a picture of doom and gloom out there and they offer the out there a solution.
The NEM decried a lot of things. About the lack of innovation and R&D. why doesn't the government publish data on the performance of the top 20% in this respect. What proportion does Berjaya spend its revenue on R&D? what proportion do our top companies spend on RND?
The report also noted that 8% of our workforce has attained only SPM level qualifications.
Specifics please. What level SPM? The passable? With 2-3 credits? That means, the majority are mono-linguists. They are unable to compete in the open market and by extension, limits Malaysia's competitiveness in the open economy. The bulk of this 80%- where do they end up? Probably they end up as clerical service providers in government departments or some low level paid employee in the private sector.
Let me ask again- how do we improve our government delivery service if the majority of its workers are only SPM holders led by heads of department, who themselves have just so so qualifications? The government simply cant. Those SPM holders entering the job market in addition can only offer the less better SPM credentials.
Where are the bold reform measures that will unlock value the NEAC speaks about? It spoke about an average growth rate of 6.5% over the next 10 years in order to get us to a GDP per capital level of YSD 17k. It acknowledges we have a strong manufacturing sector dominated by electronics and electrical industries. Yet it is still espousing expanding on this industry which it has already admitted to having a large import content. We are just sub-contractors then; we haven't grown our own timber.
The basic solution to inclusiveness is social mobility without which, social frictions and antagonism will take over. The inclusiveness that we are actually talking about is creating accessibility. The social mobility that we must talk about is the mobility of the bottom 40% getting into the foyer of the club of Rome fraternity. When we continue to have sharp class divisions, animosity will build up and eventually boil over.
At the root of social mobility and inclusiveness talked but by the NEAC must be a reward system- a system that rewards the more intelligent, the more talented and the more hardworking with better incomes and rewards. Otherwise, the slogan of bold reform measure remain what they are- just empty slogans justifying the high fee in preparing the various labs across the country.
Which leads us to the important market friendly affirmative actions offered by the NEM. What are these? These are actions designed to enhance the capacity of the bottom 40%. These are actions designed to meet needs as opposed to meeting of quotas or some legislative defined status.
What does the term market friendly affirmative actions mean operationally? In order to know and understand the term, we have to know what it DOES NOT mean first. Unfriendly affirmative actions are the product of an eco-system. Bug sounding word no? the main features of the unfriendly ecosystem?- vested interests, market distortions and rent seeking activities. All these combined to undermine productivity and entrepreneurship.
So where are the bold audacious moves to remove these? We dare not move beyond the NEPish demands reflecting the lack of political will which the NEAC underscores as sine qua non for the success of the NEM and ETP. We have not moved beyond the encirclement of vested interests which submitted many of the EPPs and the BOs in the ETP.
What do you put in place in the ecosystem? One central command type with other central command types? Privatize the economic planning? Privatize the role of government? The government steps aside and let the private sector ( not free market) takes over? Then you replace one type of command centre with another. This is what the NEAC says:-
The NEAC advocates a new, bold approach to obtain the right eco-system where efficient markets can operate to produce equitable outcomes. The vicious cycles of vested interests have to be broken to remove distortions and rent-seeking activities, all of which undermine productivity and entrepreneurship so vital in creating a vibrant economy.
As to the enabling environment, the NEAC proclaims:-
The private sector will be the main driver of growth in a market environment that rewards innovation and creativity while the government will generally be the provider of public goods and the custodian of public interests through an effective regulatory framework. Well-governed and leaner government institutions will be held accountable to performance-based outcomes in line with the GTP. They will be staffed with highly qualified, flexible, dynamic individuals with multi-tasking capabilities. Private firms, non-government entities and the civil society will aspire to internationally accepted governance.
The key word here is effective regulatory framework. I have already talked about the inconsistency of rejecting collectivism by pushing individualist values, but in the end, coming out with collectivist solutions.
Posted by sakmongkol AK47 at 9:05 PM
4 COMMENTS:
OneMalaysian, 28 September 2010 22:30
Dear Sakmongkol
“At the root of social mobility and inclusiveness talked but by the NEAC must be a reward system - a system that rewards the more intelligent, the more talented and the more hardworking with better incomes and rewards”.
That’s the only way to go for any country that wants to progress. But let’s temper that idealism with a social safety net that would catch the bottom 40%, so that they too in time can climb the economic ladder closer to the Club of Rome fraternity. For if we don’t do this “we (will) continue to have sharp class divisions, (and) animosity will build up and eventually boil over”. I fully agree with this sentiment.
However, we must not think this is easy to do. It entails the complete over-haul of the current education system; we need to change mind-sets so that those people will have confidence in their own abilities to compete (politicians keep telling them they can’t); we urgently need to raise their incomes to lessen their suffering (minimum wages will help); and we must do much more to bring them basic modern amenities that urban folks take for granted – access to basic medical care, better schools, and portable water and electricity in deep rural areas. This is the perpetual poverty trap that many in the bottom 40% find themselves.
The paragraphs you quoted from the NEM sound like they were written in heaven by some economic angel. How much better can they be? But when these beautiful ideas meet the harsh and cruel reality, it is the reality that prevails. Getting rid of vested interests and rent-seeking behavior? We are just seeing more with the introduction of the ETP and the entry point projects (MRT, etc). And what about allowing efficient markets to thrive and the government to only concentrate on providing public goods? Well, if the ETP is not another piece of central planning in disguise, as you have pointed out, what is it? So there is a lot of cross-talking here. I am a bit confused. I would dearly want to believe, if a little naïve, the outcomes the NEM promise.
Anonymous, 28 September 2010 23:16
as Warren Buffet puts it: "It is a class war alright and my class is winning!"
Anonymous, 29 September 2010 01:14
Don't fool ourself that if the Malays are united, there will be utopia. Politics in Malaysia from the days of the Malacca Sultanate up to the present age is not about the ordinary Malay people. It's about the elites. The ordinary Malays are just cannon fodder regarded merely as material to be expended in wars between the elitist themselves.
UMNO is a party still teetered to a feudalistic and tribalistic mentality. UMNO's struggle in the beginning was mostly inspired by teachers but when Mahathir became the leader, UMNO was transformed into a party for businessmen and cronies. Matters came to a head when the original UMNO was disbanded. The present UMNO is a bastardised party comprising of selfish rent-seekers and rabble-rousers. The founders of the original UMNO, Tunku Abdul Rahman and another former PM Tun Hussein Onn was prevented from joining the new UMNO. It is no secret that within UMNO Baru there are serious divisions and factionalism. It is the only party in this country where territorial rivalries between different factions has resulted in murders and practice in witchcrafts. Recall the Mona Affendi and Sports Minister cases and you will find that the party is all about the struggle for power and riches between the elites.
The NEP that was supposed to benefit the poor of all races was hijacked and diverted by UMNO Baru to create a club of UMNOputra billionaires with the help of non-Malay supercronies. If the NEP have been implemented properly, the country would have peace and prosperity for all races, but unfortunately the elites are getting richer and despotic while the ordinary Malays are struggling and becoming more insecure.
Now coming back to my earlier assertion that the elitist Malays have never known to have unity among themselves. Prior to the advent of the colonists, the Malay elites had been waging wars and killing themselves and the poor and ordinary Malays served as cannon fodders. There was no peace in the land and there was a time when a neighbouring state like Thailand were controlling a third of the Malay Peninsular. Even during the Sultanate days wars were the preoccupation of the Malay elites that they had to turn to the Chinese emperor to protect them. And when the British came the Malay elites were willing to surrender their powers to the British for their own protection. Let's be frank about it: if not for the British, there would never be a Malaysia. What would happen is that the Malay elites will just control a diminishing two-thirds of the Malay peninsular but never united. But now with independence from the British, Malaysia is now more than 160% of its original territorial size. So colonialism is a blessing in disguise, actually.
Now the Malay and their dependent non-Malay elites are making a lot of noises that the immigrant races such as the Chinese and Indians are depriving them of the unity that they never have. The fact of the matter is that the immigrant races are being scapegoated for all the problems of the country. Okay expel all the Chinese and Indians back to China and India so that an utopia of peace and prosperity will ascend on this land. Fat hopes: Malays will fight against Malays and finally the Indonesians will colonised the country. So for the ordinary Malays, don't ever trust the elites. They have never had a place for the ordinary people.
Whether you are an ordinary Malay, Chinese, Indian or others, we are not at war. It is the elites from the ruling parties and their super non-Malay super-cronies that are fanning the flames of distrust for their own selfish interests.
Anonymous, 29 September 2010 01:17
… continued:
Now coming back to my earlier assertion that the elitist Malays have never known to have unity among themselves. Prior to the advent of the colonists, the Malay elites had been waging wars and killing themselves and the poor and ordinary Malays served as cannon fodders. There was no peace in the land and there was a time when a neighbouring state like Thailand were controlling a third of the Malay Peninsular. Even during the Sultanate days wars was the preoccupation of the Malay elites that they had to turn to the Chinese emperor to protect them. And when the British came the Malay elites were willing to surrender their powers to the British for their own protection. Let's be frank about it: if not for the British, there would never be a Malaysia. What would happen is that the Malay elites will just control two-thirds of the Malay peninsular but never united. But now with independence from the British Malaysia is now more than 160% of its original territorial size. So colonialism is a blessing actually.
Now the Malay and their dependent non-Malay elites are making a lot of noises that the immigrant races such as the Chinese and Indians are depriving them of the unity that they never have. The fact of the matter is that the immigrant races are being scapegoated for all the problems of the country. Okay expel all the Chinese and Indians back to China and India so that an utopia of peace and prosperity will ascend on this land. Fat hopes: Malays will fight against Malays and finally the Indonesians will colonised the country. So for the ordinary Malays, don't ever trust the elites. They have never had a place for the ordinary people.
Whether you are an ordinary Malay, Chinese, Indian or others, we are not at war. It is the elites from the ruling parties and their super non-Malay super-cronies that are fanning the flames of distrust for their own selfish interests.
Katrina Kaif in an item song from Tees Maar Khan
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