by M. Bakri Musa
(www.bakrimusa.com)
Beware of lecturing others; you may have to learn that same lesson. And sooner than you may think!
In 1983 when the Soviets shot down a Korean Airline 747 jet, there was outrage especially in America, and rightly so. How could those Russians be so barbaric? How could they not recognize a jumbo jet on a clear moonlit night? Barely five years later, an American missile cruiser shot down Iran Air Flight 655 on a clear morning, also killing hundreds of innocent passengers.
As an aside, the Soviet general who ordered the shooting was disgraced while the American commander was honored upon his retirement.
In 1997 with an economic contagion destroying much of Asia’s recently-gained prosperity, the ‘Washington consensus’ demanded, as the price for its much-needed assistance, greater transparency, end of crony capitalism, and “shock therapy” to wean citizens off subsidies.
A decade later, with America reeling from its humongous sub-prime mortgage mess that threatens its (and the global) financial edifice, there is little indication that America is willing to learn the very lessons it dogmatically preached earlier to Asia and the world.
Asian leaders, especially former Malaysian Prime Minister Mahathir, may be excused in being gleeful at America’s present economic plight. Alone among them, Mahathir bravely defied the then prevailing wisdom and stood up against the Washington consensus. The result of this unique economic ‘experiment of nature’ is now readily apparent: Malaysia emerged earlier and stronger than the other Asian countries that followed Washington’s prescription.
Mahathir could also be excused for being smugly satisfied, for many of the measures Washington is now taking in managing its economic mess are straight out of his 1997 playbook. There is the massive bailout of huge government-linked companies (Freddie Mac and Fannie Mae), the earlier ‘rescue’ of Bear Stearns, a major investment bank, and FDIC’s (a regulatory agency) nationalizing a major bank, Indymack.
Of course this is the 21st Century, and with it some new vocabulary for a new-fangled financial age. Granting massive and generous credit lines to the two financially-troubled giant mortgage companies is not a “bail out” but merely providing the necessary “liquidity backstop,” in the language of Treasury Secretary Paulson. Taking over Indy Bank is not nationalization, rather “regulatory supervision.”
Then, suffering Asian countries were forced to end subsidies for food and other essential goods as per the wisdom of Washington. Meanwhile in America, the tax-deductibility of mortgage interests (otherwise known as subsidy for homeowners) remains sacrosanct. No politician would even dare touch that, even in light of the current mortgage mess. At least with the Indonesians, the subsidies were for basic staples and benefited the poor.
Like Malaysia earlier, America is purposefully keeping its interest rates low and unhesitatingly going into massive deficits to keep its economic pump primed, even at the risk of igniting inflation and devaluing its currency.
Malaysia also anticipated the same potential negative effects then and wisely devalued its currency formally; America leaves it to the marketplace to determine the value of its dollar. There is orderliness and predictability to the former; the latter would be at the mercy of and subject to the herd mentality inherent in the marketplace. Yes, it is this same herd mentality that created the housing bubble in the first place.
Of course when Mahathir devalued the currency, kept interest rates low, and injected much-needed capital into government-liked enterprises (otherwise known as bailouts), he was accused of being reckless, anti-capitalistic, and ignorant of marketplace realities. When Paulson does essentially the same thing however, he is being prudent and responsible, to calm a jittery market and maintain its stability.
Cynicism aside, I hope (and the world too) Secretary Paulson would be successful.
The Relevant Lessons
Before Malayisans savor their sense of schadenfreud (glee in the misfortune of others), remember that America is, among other things, our biggest trading partner and source of foreign investments. Whatever that would cause America to sniffle could wreck a suffocating pneumonia upon Malaysia.
Besides, there is much that Malaysia could learn from the current American financial mess, and for America to tweak the lessons Malaysia so painfully learned during its tribulations of a decade earlier.
The Malaysian situation in 1997 was eased considerably in that the economic crisis was her only albeit heavy burden. America today faces the far more serious challenge of simultaneously fighting not one but two very expensive and bloody wars abroad.
Treasury Secretary Paulson’s remarks that the bailouts would cost “at most two month’s war in Iraq” betrayed his callousness on the plight of hundreds of thousands of Americans evicted from their homes through foreclosures, and the consequent devastations on their loved ones. He also dishonored the sacrifices of hundreds of thousands of civilians and soldiers, Americans as well as Iraqis.
Quite apart from the huge expense, the wars divert attention and resources of American leaders and institutions. The economic crisis is challenging enough even without the two ongoing wars. Ending the war would simultaneously ease the global oil market and remove a huge financial burden, two steps that could only help the financial strain, quite apart from the humanitarian considerations of ending the killings and sufferings.
Had Malaysia still been fighting its communist insurgency in 1997, or had to contend with ethnic unrest as with 1969, that would have definitely slowed if not aborted the recovery. Economists in their analyses of the slower recovery in the other Asian countries ignore this important element. Indonesia was bogged down fighting a bloody secessionist movement in Aceh; the Philippines its Moro Independence movement; and Thailand its rebellion in the south.
Malaysia also had a strong leader then; Mahathir could and did push whatever stern measures he needed and the populace would comply, if not grudgingly. Had Abdullah been in charge, he would be flip-flopping from one policy to the next, and Malaysia would still be mired in the mess. To say that President Bush is weak is a gross understatement; besides, the Democrats control Congress. Thus any initiative would have to satisfy both parties and their respective lobbyists, meaning it would more likely be diluted and ineffective, with the taxpayers carrying the final tab.
Malaysia could take comfort in that the blights of crony capitalism and political corruption, in their infinite variations, are universal. In America, the transfer of money from interested parties to politicians is ‘political contributions;’ in Malaysia, outright corruption. The intent is the same in both. Presumably when the transfer of money is receipted and duly claimed as ‘business expense,’ it all miraculously becomes legitimate.
America may swallow its capitalistic pride and adopt barely-concealed socialistic remedies in managing its current crisis, nonetheless it does not lack for strong dissenting views. These are expressed vigorously in open congressional hearings, the editorial pages, and in academic symposia.
There will also be lawsuits, civil and criminal. Rest assured that accounting and other shenanigans will be uncovered, and appropriate punishments meted out. The Enron scandal of a few years ago took the venerable accounting firm of Arthur Andersen with it, together with some hitherto powerful corporate figures. More than a few are now behind bars.
More importantly, new legislations were adopted that would hopefully prevent future recurrences. The consequence of the Savings and Loans scandal of the late 1980s saw the demise of that entire financial sector.
Contrast that to the many financial debacles in Malaysia, from the London Tin fiasco to the collapse of Bank Bumiputra. No one was held accountable. There were no parliamentary hearings or royal commissions, and our academics have showed minimal inclination in studying them.
If in our haste in gleefully criticizing the American style of crony capitalism we overlook these other important lessons, then we would have missed a splendid learning opportunity. It is always dyspeptic to acknowledge our mistakes and to learn from them, but ultimately that is the best safeguard against repeating them. That is the crucial lesson Malaysia could take from America, regardless of whether America is preaching it or not.
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Our country are bless and rich in resources, yet we’re located in “equator”(khatulistiwa) and we have the finest “white sand” located in Kuala Abang Dungun, Terengganu. It’s high-grade silica oxide(the main raw material to produce solar cells).
If we could developed and produce the solar chips in our own country with help or join venture with Japanese Technology.
We can create vast opportunist of investors coming into our country without doubt because they could cut down mass electricity cost in productivity throughout the day.
This also can create vast opportunity for our RAKYAT to have a great job and lowered the threat of unemployment in our country as well.
Why do we need to fear inflation if we fully utilised our resource in our own country, the solar power are going to be one of the future energy source in development, our country has more then 10 hours of day light throughout the year and best of all it is eco-friendly.
I seriously hope our govern look in to this matter’s and why would the european or american would spent billions of dolars to developed Terengganu as the host of the world’s Largest Solar plant? Think about it.
it should not be limited to learning from America , infact malaysia should learn from the whole world….
look at our neighbour Singapore , why are they so successful today , coz they took the intiative to learn from the whole world , collating all ideas from around the world , choose the best & fine tune it before implementing it in singapore.
our neighbour is also successful because they always plan ahead….for the next 10-15yrs ahead….
We never learn from ourselves or from others.We only know how to destroy ourselves and then forget about the destruction as though it never happened.
Totally agree with AsalUsuLMalaysiaHacked
http://biz.thestar.com.my/news/story.asp?file=/2008/6/3/business/21431772&sec=business
After some googling.. Malaysia maybe on the way
to become the World Largest PV Solar Panel producer !
Investment in Selangor, Kedah & Terengganu would
help realize the vision.
Our disadvantage could be our greatest ADVANTAGE.
Malaysia is indirectly becoming world leading green technology
with such humongous investments.
Malaysia has the brain & raw material to be
on the forefront of green technology.
We could either choose to atrophy (self destruct)
or gather as a team to build Malaysia into
the World Green Tech Park !
Malaysia has the experience, resources, brain
to plan and work synergistically as a team
in a creative ways.
There is always a hope even we could not foresee the future.
imPOSSIBLE ?
Remove the character “im” & we will see POSSIBLE
in a world of possibilities!
Though it cannot be denied that TDM’s “look East policy” had helped the country to progress, better results could have been achieved had he been bold to also adopted the “look Singapore policy” – at least there won’t be so much corruption and cronyism in the Cabinet.
CORRECTION
“……to also adopted……” should be “…….to also adopt…….”
“The result of this unique economic ‘experiment of nature’ is now readily apparent: Malaysia emerged earlier and stronger than the other Asian countries that followed Washington’s prescription.”
Wrong, Malaysia felt economically behind Thailand, Indonesia and most noticeably South Korea. All these countries fare much better 10 years later. The anti-west UMNO government under the then PM TDM was protecting some “Towering Cronies” when he had choose not to bite the bait dished out by IMF.
“Like Malaysia earlier, America is purposefully keeping its interest rates low and unhesitatingly going into massive deficits to keep its economic pump primed, even at the risk of igniting inflation and devaluing its currency”
Wrong again. Unlike Malaysia where the politicians called the shot as to where the country interest rate should be heading, the US financial structure is independent and answerable to the congress and senates. Every month interest rate decision is announced by Federal Reserves Chairman based on a voting process and the minutes of their meeting is published for all to see.
M. Bakri Musa, you talk rubbish.
UzMiNoOnist
malaysia’s unothorodx way of curing it economy is rather short on term basis , wherelse other nations who follow washington’s prescriptions is rather long term basis.
Bakri,
I generally agree with the thrust of your argument that those who live in glass houses shouldn’t ….
… make love without drawing the curtains.
However, I do disagree with this assertion:
/// The result of this unique economic ‘experiment of nature’ is now readily apparent: Malaysia emerged earlier and stronger than the other Asian countries that followed Washington’s prescription. ///
This is clearly at variance with reality and facts. Malaysia did enjoy a temporary respite earlier, but it certainly did not emerge stronger. Look at South Korea, Thailand and Indonesia – they rebounded equally well and were much stronger. Korea is now streaking ahead. Thailand rebounded strongly in the past decade, but it almost self-destruct with the coups and counter coups and the ineffective governments in the last few years. Indonesia is now in much better shape economically, politically and socially than Malaysia.
America failure is that it is a democratic representative republic with all its flaws of special interest. But its greatest strength is because its democratic and representative.
No doubt the subprime crises seem to be idiotic in hind sight. The current over spending especially on defense when there is a looming social cost deficit looming seems recalcitrant, irresponsible.
But crises is not new to America. As Warren Buffett says, it has not paid to bet against the US since 1778 and now is not the time to do so.
However, for many Malaysians, for example Hindraf and Indians and Sabah and Sarawak, it has not paid to bet with Malaysia. It is even clear now that for the Malays it has not been the best bet to go with UMNO and the NEP.
When we carefully and objectively analyse what MM did during his 20+ years of PMship, then we will realise that MM did more harm than good to the nation. Many things that MM did could and should have been done in a proper, transparent, and sustainable way, that truly benefits the people and the nation on a long term.
MM had introduced irreversibly the practice of political patronage, cronyism, pseudo- and artificial meritocracy, money politics, racial politics, and corruption. MM had also sodomised the judiciary, police, AG chambers, and ACA.
The country is paying the high price of the mess MM created!
Look at the mess we are in now economically. Our SMEs the backbone of the ecomony are barely surviving and as a country we are not competitive because we didnt learn anything from the crisis. Our leaders are still talking about quota for this and that and everything. The world doesnt owe us a living and there plenty of other countries to invest in without having to deal with our quota system and the corruption that goes with it.
Even our own businessmen and enterpreneurs are looking to invest and relocate outside the country because of the stifling conditions of doing business here. Time wait for no one. Neither we change or get left behind.Neither are we using our best brains and resources to the fullest for the benefit our country.Politicians leave the running of the ecomony to the experts and half the problem is solved immediately.
The most important resource for an organization be it a country or company is its human resource or manpower.
No matter how rich you are in resources or financial wealth it amounts to nothing if you are uneducated as fools part with their wealth easily.
Therefore, any available natural resources or financial wealth of the country should be directed towards developing its own human resources; the rakyat. Education, health and crime prevention are the important factors of developing the human resource.
With natural resources, the country would prosper as long as the natural resources remain but with a strong educated citizens, the country can prosper forever.
The curse of Singapore is also its blessing. With a small land mass and no natural resources to tap, it has to rely on its citizens to work and to work smart. Therefore, a major emphasis is placed on education, health and internal security of the country to enable its people to achieve the maximum they can.
The result is obvious. By developing their human resources, Singapore have exceeded many larger countries with tonnes of natural resources like crude oil, minerals like gold, precious stones etc.
Natural resources is a curse to developing countries but a blessing to developed countries. Developing countries lacked the expertise and maturity to utilize their natural resources effectively. Compare Nigeria and Norway in their approach to manage their crude oil reserves.
Nigeria is a developing third-world country and the discovery of oil destroyed their country. Instead of prospering, the economy of Nigeria was destroyed. Their leaders was more interested in counting the commission and oil royalties than developing their country. Meanwhile, unemployment and illiteracy went up to record highs and yet the Nigerians are stuck and unable to change their destinies because they dun have the necessary exposure and education.
As for Norway, before the discovery of oil in the Norwegian seas, the Norwegians have a highly educated and sophisticated society. Instead of being greedy and killed the golden goose for short-term benefits, they’ve invested and saved away their oil money, using only the interests earned from the oil money invested. This provided a steady income to the national reserves for perpetuity.
Applying this to Malaysia, I am very sad that instead of saving away the oil revenue for future use, we are squandering away the money while ignoring the need to develop our human resources.
Why have we allowed the government to ignore this important aspect of nation building ?
US govt is the biggest hypocrite around.
Not fair to compare Norway & Nigeria, Norway had a small, highly educated population (4.9 million), while Nigeria had a big, lowly educated population (147 million), 30 times
And China has a tiny population of 1330,044,
And China has a tiny population of 1,330,044,605 (oops another 1,234 were born during the time I am typing this…)
Mr. Bakri – one of your less enlightening articles. Could have been much better if more research had been put into it. But thanks anywhere, as a starter.
It is clearly the tumour in our Nation that needs to be remove before it turns into concerous cells,
a developed country does not live double standards and harvest its resources in full use for the Nation.
But we are selling out our prosperity and our future instead.
NEP was created to fight poverty in 1970 but today it has become poised for the young generation, our leader should start working on it or our nation future shall remains mirage.
Stop exporting “White Sand” in Terengganu, start developing a team and start working on proposal for Solar Energy in Malaysia beyond 2020.
Its our only chance revive “MALAYSIA” future as energy are the main sources of development, forget about nuke energy plan we already have the bluechip in our hands!
Any sincere and credible government, given 40 years to fight poverty with all the national resources at its disposal, should have achieved the goal.
Just see how China transformed itself within 30-40 years of coming out of its communist cocoon.
After almost 40 years of implementing NEP, our BN government is still wallowing in self-proclaimed ‘belum cukup’, ‘belum sampai ??%’ lies and more lies – while Umnoputras and their cronies get filthy rich and richer!
Our leaders are just plain not interested in the problems of the rakyat. Period. Their only interest is to gather as much wealth as possible. Their only ‘concern’ for its rakyat is to develop policies that only impress conceptually, knowing that the bulk of the rakyat have not learnt to use their brains and prefer to live with the little crumbs that are dished out through the NEP. The idea of “never having to work hard and teh govt. will always help you” mentality has become so deeply entrenched among the Malays that even those who have had some success through the NEP would prefer to perpetuate the use of the policy on their next generation.
Bigjoe is absolutely right. It doesn’t pay for the Malays to “bet with Umno and teh NEP”.
With AI voted back as an MP with an increased majority and with the wind of change sweeping across the land (despite all the dirty tricks thrown at AI and PR), the days of the BN are numbered.
Umnoputras and their cronies are packing their ill-earned RM and riches and sending them overseas (Swiss accounts), just in case PR takes over the Federal Government!
1. Affirmative action by its very nature must involve discrimination.
2. Affirmative action is about correcting imbalances between groups. But in the process, the interest of individuals would have to be sacrificed. It is unfortunate for the individual concerned but if no one’s interest is to be sacrificed then corrections cannot be made. The status quo would remain and this would mean there would be no affirmative action. Simply said, no corrective action would be possible unless there is some discrimination against someone.
3. Golf is a great game. But like other games the poorer players would be given handicaps. Otherwise golf would be very boring as the good golfers win every time.
4. In boxing we cannot match a heavyweight against a lightweight. The latter would be hammered to a pulp.
5. In horse racing the lighter horse would carry weights so that the race is between evenly matched horses and riders.
6. Globalisation has been promoted by the rich countries.
7. The essence of globalisation is open borders or a borderless world. With this, the rich and the well-endowed will have unrestricted access to the countries of the poor in order to exploit them. Of course the poor can have access to the rich countries too. It sounds fair. The playing field seems to be level.
8. But what will certainly happen is that the rich will go into the poor countries and with their capital, their managerial skills, and their technology, would overwhelm the people in the poor countries with their small businesses, limited skills and limited capital.
9. The end result would be that the poor countries would effectively be owned and exploited by the rich countries and the local people would be mere workers in the big enterprises of the rich, earning a pittance for themselves. Essentially colonisation of the poor by the rich would again take place.
10. But the rich countries will claim that the people of the poor countries are free to do business in the rich countries, buy over the banks, the industries and anything they like. But they know and we know that it would be impossible for the people of the poor countries to do this.
11. This is why the WTO has been rejected by poor countries. The people of the poor countries know they cannot compete; know that in the end they would be colonised. They are not being selfish. It is simply that they want to exploit their wealth for themselves.
12. Effectively the poor countries want to discriminate in their favour by rejecting the borderless world of Globalisation. Exploitation by the rich would most likely enrich the poor countries. But they would rather be poor than be exploited.
13. We take the relative peace and stability in our country for granted. But look at other multi-ethnic countries. In most cases the indigenous people, if given power would not just discriminate against what they consider to be non-indigenous people but would want to expel them. Look around us and you will understand what I mean. Look at the Tamils of Sri Lanka, and the Indians in Burma. There are other examples which I will not mention here.
14. But the indigenous people of this country actually welcome the non-indigenous and expressed their willingness to share the wealth and the opportunities that this great country has to offer between them. But the sharing must be fair. That was the kind of sharing our founders agreed upon. The Malays would not have agreed if in this country they would be reduced to being the hewers of wood and drawers of water.
15. When the sharing did not really take place, the anger lead to the 1969 race riots.
16. Following that our wise leaders from all the communities agreed on how to carry out the sharing. They agreed on what is basically affirmative action. They agreed that they would eradicate poverty irrespective of race and that there should be no identification of race with economic function.
17. It is only a small sacrifice. But the peace and stability that came with the NEP had enriched the country which in turn had contributed towards peace and stability even during the recession caused by the financial crises. We know that racial riots occurred in other countries at that time. Contributing to the fairness of the NEP was the decision that discrimination should not be by expropriation of what already belonged to others but through the distribution of new wealth and opportunities. Thus, the sense of deprivation would be reduced.
18. But even when the discrimination is to be based on growth the rich would still feel a sense of deprivation because they cannot get all the wealth and opportunities that they believe they were qualified for.
19. If contracts or licences or permits are to be given out why should someone less qualified get them when they, the qualified could make better use of these things.
20. In the case of university admission and scholarships, why should someone less qualified get admitted when the better qualified cannot.
21. So even when the corrective action is based on new opportunities and wealth and not by expropriation of what is already in the possession of the rich, there would still be a sense of deprivation by the richer communities.
22. Accepted that the richer communities also have poor members among them and the New Economic Policy’s first prong clearly proposed poverty eradication irrespective of race, the fact remains that there is more poverty among the poorer community than among the richer communities.
23. If we eliminate poverty among the rich without regard to the level of poverty, then the richer community would be rid of poverty while the poorer community would still be saddled with extensive poverty.
24. Today we have reduced poverty to 5 percent. If we care to do a study, we will find that the majority of those still under the poverty line would be from the deprived community.
25. Still, despite the alleged discrimination, our poverty eradication is regarded as being very successful. It is nearly impossible to find hard core poverty among the better-off race in the urban areas. There are more in the rural areas.
26. Fifty years is a short period in the history of nations. We have not reached menopause yet. In fact we are in our youth still. Whether we succeed to overcome our present difficulties depends on us. If we fail, pointing fingers will not save us.
27. I will readily admit that the NEP had been abused. But we are so ready to blame that we pick on the wrong target. Of course the way the affirmative action was carried out, and the abuses, were picked on by the opposition to condemn the whole policy.
28. UMNOputra, like cronyism, was a word invented by politicians and the detractors of this brash country which dared to thumb its nose at the powers that be. Unable to condemn blatant corruption as they do to other countries, they came up with cronyism and UMNOputra. When there is real cronyism and corruption they deliberately ignore them because these are committed by their favourite people.
29. Before making these criticisms against the affirmative action of the NEP, why not make a real study. Are most of the Malays getting the scholarships and entries into the universities the children of UMNO people? If they are, why was it necessary to have the Universities and University College Act to stop students from demonstrations against the UMNO-led Government? How did the doctors and lawyers in PAS get their education? Are the students all from rich families with connections?
30. I will be the first to admit that there have been abuses in the promotion of business among the bumiputeras. Given opportunities, given licenses, permits, contracts etc, they disposed these for immediate gains. This frustrates the efforts to help them. Some degree of abuses may be excused but the degree of abuse of the opportunities created by the NEP is far too much. They cannot all be excused.
31. I also admit that there has been unfairness in the award of scholarships and Government jobs.
32. I will not try to defend these abuses. We must try to reduce them. But affirmation is about discrimination. And those discriminated against will never understand the big picture, the benefits of an increasingly egalitarian society.
33. The Malays must accept that this discrimination cannot be forever. If they fail to respond properly to what is being done for them, they should accept this policy would be taken away.
34. When Malay youngsters, especially boys, failed to study and qualify for university education, when they preferred to play and not study, we cannot expect the non-Malays to patiently wait and give up their opportunities until the Malays decide to become serious and study. That would not be fair.
35. That was why we introduced merit in the selection of students for the universities. Unfortunately, the implementers of Government decisions chose to interpret it differently. By requiring Bumiputeras to sit for the matriculation and the non-Bumiputeras to sit for higher school certificates, they managed to give the impression that the Bumiputeras were actually better qualified than the non-Bumiputeras. With this, the intention of the Government to make the Bumiputeras become more serious about their education failed.
36. There is a tendency among Malays to regard the discrimination in their favour as a privilege, as a recognition of their superior status. I think this is wrong. The discrimination is in order to give them a kind of headstart so that they can catch up with other races. To me, it is shameful to have to be protected because we do not have the capacity to compete. We are not Red Indians to live on reserves. We should regard it as a temporary expedient to be done away with once we have achieved the capacity to compete on our own.
37. However, we must give time for ending the NEP and it should be done in stages. I hope that the time will not be too long. In the meantime, serious efforts by the Bumiputeras must be made to avail themselves of the opportunities. If this is obviously not being done, then, as with entrance into the universities, the discrimination must end.
mahathir