High-income economy,
sans the illusion of money,
some for you and me,
some more for the party’s crony.
Tag: New Economic Model
There is much stress on economic freedom these days. This is clear by the fact that the New Economic Model is advocating less government in various aspects. So excited are the document authors about the idea of free market that at its rhetorical climax, they highlight the phrase ”market-friendly affirmative action”, never mind the apparent contradiction that the phrase invites. That phrase is perhaps the hallmark of contradiction of the document in terms of economic freedom. The latter part of the document suggests various government interventions that do not tally with its rhetoric. Yet, the document does begin from a liberal point and that is a good starting line. It has to begin somewhere after all.
Truthfully, the goal of the document is development and not the creation of freer market. Without strong conviction to the idea of free market in pursuing its main goal, contradiction is only natural. To criticize the authors of such contradiction is an effort unlikely to impress them and others who share the same view on development vis-Ã -vis free market.
They primarily believe that the government has a role in development. Such idea is hardly a controversial one. The government can indeed play a role in development even while adhering to the concepts of limited government and free market.
The issue is that the goal of development set by the New Economic Model is unsatisfactorily limited in its scope. The document limits the idea of development to merely economic progress. It ignores the larger meaning of development, just as freedom takes a larger meaning well beyond the realm of business and economics.
Development is not merely about better infrastructures or higher income levels for us all. While income levels do indicate general well-being in many ways, it is not the only factor in development that needs to be taken into account.
Development must empower individuals in a comprehensive manner. More often than not, this means enhancing economic progress as well promoting individual liberty. Indeed, economic progress and individual freedom work hand in hand. Without the other, each feels empty even if each lifts one up from the gutter by a tiny margin. Both are required to catalyze the jump out of the gutter.
Without development as confined within self-limiting definition of economic progress, individual freedom itself is redundant. Individuals living in dire economic condition will be unable to reap the dividend of liberty for they are incapable of understanding virtues of freedom. Without such comprehension, they are unable to make full use of it for their benefits. As the Malay idiom goes, what is a flower to a monkey?
There are so many elementary concerns need to tend to that whatever freedom they have is meaningless. It is the excess capacity that will never be used up. For instance, what is free speech when the stomach growls endlessly? In fact, free speech with an empty stomach can easily descend into anarchy as the hungry and famished knock rule of law essential to the preservation of liberty down to the ground to satisfy their very basic desire while robbing somebody else’s rights and liberty.
Similarly, where there is economic progress without individual liberty, what use of those shinny sedans or overly big four-wheel drives, clean and smooth roads together with tall and richly decorated towers when they are merely a posh prison to keep the prisoners happy? After all, what is economic wealth while one is repressed, living in fear?
They have the all the means but if the means are prevented from reaching the ends by traditions or prejudices, economic progress become meaningless. Life must be one cruel joke if economic progress in the end only comes to naught.
Individuals have to become richer not only in monetary terms but also in terms of themselves. The set of what can be done must be enlarged and the set of what cannot be done must shrink for development to take its holistic meaning. Choices have to expand.
Their choices have to be well informed. That is only possible through the tradition of free enquiry that embedded in it the concept of free speech and free press, among others. They must be able to express themselves and to do so is to practice freedom of expression. We talk about how young graduates lack communication and social skills in general: can we blame them when the avenues for practice are limited and guided paternalistically?
This idea is not new. Nobel Prize Laureate economist Amartya Sen is the vanguard of the idea. Although it must be said that he goes farther than a classical liberal would, he articulated similar view much earlier and wrote Development as Freedom for wider consumption.
Development must focus on both fronts for it to be meaningful. It is in this sense that the New Economic Model is insufficient. Malaysia needs more than economic freedom.
This is not to say that the authors of the document are not doing their jobs. Their terms of reference are clear: focus on the economic front. And they are doing just that. They cannot be blamed for that.
The other focus on the social front where it involves individual freedom is the job of ordinary citizens.
And the government is in the way. Hopefully, the Prime Minister and his Cabinet embraces the wider meaning of development to enable Malaysia to progress at all fronts. Hopefully, they will realize that only a liberal democratic system can bring Malaysia forward in a convincing style.
First published in The Malaysian Insider on April 12 2010.
With over 200 pages, it will take some time to digest the so-called New Economic Model fully. I began by reading the speech delivered by the Prime Minister earlier today and I am only beginning to read the document proper just now. Given time constraint, I doubt I will able to able to go through the points presented comprehensively. At first past though, the NEM seems to suggest something favorable to me.
It appears to suggest the retreat of the state from the marketplace. The stress on frictions in the market due to subsidies and trade restrictions, the need of liberalization and reduction of government holding in some government linked enterprises are proofs for this. The term market is prominently used throughout the document.
There is more nuance than a simple retreat however. The speech itself suggests that entities like Khazanah and EPF will be allowed to invest abroad as part of effort to not crowd out the private sector.
That is good but it does not erase the fact that these entities still exist.
Affirmative action itself is still in force although the PM suggests that it will be reformed from race-based to need-based. Somewhere in the speech, the term market-friendly affirmative action appeared. I am not quite bought by that term. I rather hear the abolition of affirmative action but I am willing to give ground that need-based is far better than race based affirmative action.
The existence of national key performance indicators itself suggests a huge bureaucracy. It has been taunted as part of government transformation but I am not at all impressed with the idea of enlarged bureaucracy. Nevertheless, I am willing to give the administration a benefit of a doubt on this front.
Never mind the administration seeks to strengthen the public sector. How that strengthening will affect the size of the bureaucracy is something I hope to find out while reading the report.