[1477] Of an inclusive NEP

There are many kinds of bias but one of the most common comes in kind of loss aversion through endowment effect. The bias describes a tendency to avoid any kind of loss even when the final outcome is a net gain. The endowment effect is a specific form of loss aversion which an individual values a good in possession more than the exactly similar good that he does not own. I do suffer from this bias from time to time and I have observed how others exhibit the same idiosyncrasy as well. Lately, within the context of loss aversion and Malaysian society, I have been thinking that, perhaps, an appeal to the bias may help turn our society into one of egalitarian in nature.

The Bumiputras form a majority of the Malaysian society. The group exerts strong influence over Malaysian politics and under majoritarian democratic means, anyone that wishes to mold the Malaysian society as a whole would have to consider the Bumiputras into his equations. With the absence of liberal democratic tradition, one ignores or insults the Bumiputras at his own perils. This is especially so if one’s goal is a creation of an egalitarian society, where all are equal before the law; no favoritism. What could be viewed as traditional Bumiputra — or really, Malay — interest is affected by any move to create a fairer society.

Our society is anything but egalitarian. Through the path that our predecessors have taken, the Bumiputras enjoy unrivaled benefits compared to other groups with all else being equal. Cover it with a blanket of roses and it is called affirmative action. Unvarnished it and it becomes outright apartheid.

The Bumiputra group, which is mainly comprised of the Malays, enjoys affirmative action which is actively supported by the state. It has been so for decades now and it has been as good as since the beginning of Malaysia. A person with an advantage would not be willing to relinquish the advantage to another person. He would defend it instead. That may be the case how certain Bumiputras felt about the affirmative action introduced by the New Economic Policy. Those discriminative policies however are outdated in the face of closer global integration and to some extent, freer market. Those policies are unable to attract talent that Malaysia needs to develop its economy further.

Yes, there are various other factors that may have stronger claim to the clinging to the outdated policies but regardless, the affirmative action now signifies substance abuse. The Bumiputras are addicted to it even when the NEP-related policies have outgrown its usefulness. A majority of the Bumiputras refuses to place the policy into a trash can for something better that would stand the onslaught of globalization. The majority is afraid of losing something in return for something far greater promised by free trade. Thus, the cognitive bias of loss aversion; thus, the endowment effect.

If the loss aversion through the endowment effect is the main reason why so many Bumiputras are reluctant to let the NEP die as it was supposed to years ago, perhaps it would be wise for opponents of the NEP — and egalitarians in a wider scope — to not seek the abolition of the NEP and its related policies. Strategically, the better maneuver is to expand it instead.

By expansion, I mean to make the philosophy that drives the NEP to be more inclusive as opposed to being an exclusive policy as it is now. An inclusive NEP would recognize more groups as Bumiputras. As with all things thing of concern to any society, the modification has to be done diplomatically as to not unnecessarily agitate fractions within the Malays that might actually support an inclusive policy.

To the skeptics, the expansion is not impossible. There are many Bumiputras that have ancestors whom were of recent migrants. For instance, Bumiputras of Indian, Arab, or even Chinese origin are not a rare sight. The expansion could eventually cover all Malaysians and in the end, turning the definition of Bumiputras almost synonymous to citizenship. In one way or another, the expansion appeals to the concept of Malays as citizenship instead of ethnicity as once presented in the 1940s.

The greatest obstacle to the expansion is religion. All other prerequisites — Malay language and culture — are easily digested without coercion. It is because of this, I think, for such expansion to be successful, secularism must prevail so that the issue of religion could be overlooked and overridden. Else, such expansion would suffer the flaws worse that what had been done in Indonesia in the past, when forced assimilation was the order of the day.

Through expansion, one would circumvent loss aversion bias to reach an egalitarian society. The mean may be superficial, meandering and possibly appeal to irrational fear but if it leads the egalitarian end, so be it.

The issue with the expansion of NEP is that it may turn Malaysia into a welfare state.