Wednesday, July 27, 2005

Are The Malays Able To Catch Up? part II

Why, why, WHY?

Alright, I know in my previous post I said that I'll touch more on how we can help the Malays and our country as a whole. However, after talking to certain people and reading certain blogs, I've realised that there are still a lot of Malaysians out there who are asking, 'Why even bother implementing the NEP/NDP in the first place? Why do the Malays need help since they are perfectly capable? Why did Tom Cruise ditch beautiful Nicole Kidman for plain-jane Katie Holmes?'.

Oh the questions!

Faced with such questions, I think it is my duty as a patriotic, Negaraku-singing, flag-waving Malaysian to share a little on why I think it is crucial to help the Malays increase their overall standard of living. And how by doing so, we can help our country avoid obsolescence in todays globalized world.

Ahhh...I like the sound of that last sentence, Joseph Stigiltz would have been proud.


Crash, Bang, Boom - A History Lesson

In order to understand why help is needed, let's take a little detour.

Anybody remember the Great Depression of 1929? Call it what you want - Black Friday, the Great Stock Market Crash, the Great Depression - the fact is, it happened and it wiped out more than one third of America's wealth and equity. This severely affected not only America, but the world as a whole.

The Great Depression can be attributed to several factors. The after effects of World War I, over-protectionist policies by the US Government and an over-inflated stock market being some of the factors. However, one of the main factors which caused the Great Depression, in my opinion, is this - the unequal distribution of wealth. The huge gap between the have's and the have-nots. When a country faces such a situation - as America did during the 1900's and Malaysia, during the mid 20th century where less then 30% of the country held 98% of the wealth - it risks becoming an economic basket case.

Why is that so? Basically because for a country to grow, it needs to rely on 2 basic drivers, or catalysts if you may. One would be an export driven growth, and the example would be Japan which grew at an astonishing pace during the period after World War II due to its amazing ability to manufacture and export must-have goods such as the walkman, colour TVs and soiled female underwear. The second would be growth driven by domestic consumption, as exemplified by the USA. A country which by the way, is famous not only for its horrendously obese population and ostentatious, gas-guzzling, environment polluting SUVs; but for its population's insatiable appetite for all things material.

These are the 2 main drivers of growth, however history has taught us that in the long run, it is better to rely more on domestic consumption than on exports. I won't go into the details on why it is so, but if you need proof, just take a look at what happened to Japan during the 80s and 90s. Not pretty indeed.

So okay, we've decided that growth via domestic consumption is desirable. What has this got to do with the gap between the rich and the poor? Look at it this way, a person who earns RM1 million a year can't be expected to consume 100 times more than a person who earns RM10,000 a year. He can't be expected to eat 100 times more rice, to buy a hundred times more clothes and accessories and to buy a hundred times more cars. Makes sense right? So what happens when all the wealth in the country is concentrated in the hands of a few groups of people? The consumption of the poorer segment of the country will decrease, but the consumption of the richer segment cannot be expected to rise in tandem. The result? A country which consumes less and less as time goes by.


Malaysia in the 1950s and 1960s

Now that we're done with the history lesson, lets just imagine for awhile that you are the Prime Minister of Malaysia during the fragile era of the 50s and 60s. Your finance minister approaches you with a socio-economic report, and it doesn't look good. The income gap between the top 20% with the bottom 40% of the country is growing ever wider. Not only will this affect the domestic consumption of your country, making it an unattractive destination for foreign capital, but you also fear (rightly so) that it will lead to social and political unrest. You feel your head begin to ache as you struggle with the situation. You know that if this continues on, all Malaysians irregardless of race and wealth will be screwed in the long run. You realise that you in your capacity as a Prime Minister, have to create a sustainable and viable middle-class society in your country, and to do so, the living standards of the bottom 40% have to be increased.

After further discussions with your advisors, and countless hours spent poring over demographics charts, you realise that the bottom 40% of your country was made up almost entirely of Malays. Past records show that this trend isn't improving.

You can feel it now, a tightness in your chest. It was never going to be easy. You have two options to choose from. Either you leave things be, and risk your country becoming an economic backwater in a few decades time, or you take steps to rectify the situation.

Imagine if you are put in that situation. What would you do?

I know what you would do, and frankly speaking, you know it too.

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17 Comments:

Blogger MotherChicken said...

Your argument is flawed because there really isn't any basis for racial discrimination in economic policies anymore. IMHO if there are Malays who still think the Chinese are stealing wealth owed to them it's only because UMNO keeps telling them so.

There are many rich Malays now and there are also many poor people of other races. Why not help all Malaysians instead? Let's imagine that the rich are all Malays and every other race is poor... did we solve any problems? No in fact we are creating more social unrest.

11:24 AM  
Blogger Bernard Yong said...

True, there are no basis for racial discrimination anymore. Who said that I am advocating racial discrimination? All I'm saying is, when the bottom portion of your country's economical ladder is made up almost entirely of a single race (as Malaysia was in the 50's), and when you know that there is growing dissent amongst the races, what would the logical choice be? Honestly.

If all the rich are Malays and every other race is poor, then the policies would logically have to be reversed to 'help the chinese and indians' instead.

You don't seem to grasp the basics of socio-economics. Take for example the nation of South Africa. The majority of the wealth is still in the hands of the minority (the whites), with many blacks still struggling to eke out a decent living. Now tell me, faced with such a situation, would you condone offering the blacks a helping hand to get them on their feet? Please do not confuse aide with racial discrimination.

People can go on to say that, why not reward people solely on merit instead of on their race? In an ideal utopian environment, such an approach would work. Opportunities will always go to the people who are best suited for it. However, as many economists are beginning to realise, this is not the case due to the fact that the market place is not perfect. If it were, there wouldn't be a need for anti-discrimination policies, antitrust regulations, and anti-monopoly watchdog organizations.

So you think that the NEP is creating more social unest? Think again, our country's past track record for stability speaks for itself. True, the Chinese and Indians had to pay a small price for the privilege to live our lives and conduct our businesses in a peaceful environment. The question is, was the price worth it? To me, the answer is a resounding yes.

11:49 AM  
Blogger Bernard Yong said...

And please, before you go on to say my argument is flawed, please do some research and support your arguments with valid, substantiated facts.

For example, you say there are many rich malays and there are many poor chinese and indians. True, there are more rich bumis now than ever before, but do you know the ratio of rich malays to poor malays as compared to the other races? How many per cent of our population do they make up? Try not to base your understanding on 'facts' which have no underlying fundamentals.

11:56 AM  
Blogger pooh said...

Do you think Colonel Sanders is GOD?

Some people are such nutheads.
Catholics especially.

The need to eat golfballs for dinner.

Bernard, you maestro.
Did you know Matthew Perry was invited to my friend's wedding?

XD

2:39 PM  
Blogger shells said...

frankly speaking, i don't think the upper class malays are helping their lower class breed enough.

if they did, i'm sure the nep/ndp would have been removed by now.

btw, it's Crash, Boom, Bang. kiddin!

3:02 PM  
Blogger Bernard Yong said...

michelle : I agree with you. The whole point of the NDP/NEP is to help the entire Malay population improve their standards of living, NOT to make a handful of them extremely rich.

The worst thing is, these so called 'towering malays' accumulate their wealth at the expensve of their fellow Malays. Just take a look at all the hoo-hah surrounding the AP issue. Gross negligence on the part of the govt if you ask me..Sighh. These people should work hand-in-hand to help their fellow countrymen.

3:41 PM  
Blogger ::Lord Apprentice:: said...

so what are the facts? what is the CURRENT situation? You're basis of maintaining the NEP is based on the PAST situation, that the large percentage of the poor population are Malays.

Is this still the case?

What is the percentages of higher- earning income population based upon race?


pooh: u must be a nuthead too

4:05 PM  
Blogger shells said...

funny. the thing is, they keep saying that they're not strong enough to stand alone, they themselves aren't doing anything, and they complaint when we bring up this topic!

i don't care if the malays don't help the chinese. just friggin help the poor malays, so that these schemes can be removed, and this conversation will never have to occur again:

ali: eh. so amacam? got the study loan from JPA?
ah chin: no lah of course. the chances memang very low wan. all the offers, sure given to bumis lar.

no more. no more.

4:10 PM  
Blogger FlirtinFelicity said...

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4:23 PM  
Blogger Bernard Yong said...

lord apprentice : On average for each dollar a chinese earns, a Malay only makes 57 cents. (Indians on the other hand, weigh in at around 80 cents). That's the current figure, so based on that, for every rich, multi-millionaire Malay you see on the news and on TV, there must be loads of others who are pulling the average down.

4:33 PM  
Blogger ::Lord Apprentice:: said...

interesting. i doubt it basic averages would be an effective way of measuring this. im sure u agree

it would be interesting though, so know what the averages were like ...say...20 years ago?

where'd u get this info anyway? isnt there somekinda dept of statistics where i can just send em en email and they would do my bidding like loyal slaves?

wats with flirtin felicity? give her a good spanking outta yer blog man!! so damned off topic!! hahaha...damned foreigners...

7:41 PM  
Blogger Bernard Yong said...

True. The averages basically show that the number ratio of rich malays to poor ones is lower than for the other races. It does not show the total number of Rich malays in Malaysia. However, based on our superb add maths classes back in high school... I am sure we can calculate a rough approximation..hahahah.

20 years ago, Malays made around 18-20 cents for every dollar a chinese made. Anyway, I agree with you. The NEP is supposed to increase the average wages of Malays as a whole, not to make a few well-connected morons filthy rich (which is sadly the case today. Abuse of the system, anyone?)

yea lah, this flirtinfelicity is shamelessly plugging her blog. Yeesh, these kwai lous :P

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