by M. Bakri Musa
It must be frustrating to be a leader of a developing country. Just as you are becoming convinced on the virtues of free trade and globalization, there emerges a countervailing viewpoint suggesting that those are nothing more than attempts by the developed world to maintain their economic dominance.
To me, the differences between the two viewpoints are more apparent than real. To former Prime Minister Mahathir however, this merely vindicates his conviction all along. And the man can speak with considerable authority.
He defied the then prevailing economic thinking – the so-called Washington consensus – and successfully steered Malaysia out of the treacherous 1997 Asian economic contagion. Mahathir made those brilliant economists at the IMF and US Treasury Department eat more than their share of humble pie with the success of his unique if unorthodox initiatives that were at variance to the accepted wisdom.
The surprise is that Mahathir’s remarkable achievement is not more analyzed or appreciated. The 1997 economic crisis and Mahathir’s bold and contrary approaches to solving it provided one of the rare “experiments of nature” in economics.
It is interesting that with America currently experiencing severe economic squeeze as a result of its sub-prime mortgage mess, many of the solutions adopted by the champions of free market in the Bush Administration bear remarkable resemblance to the methods of Mahathir. These include the government’s prompt and unhesitating “rescue” of a major Wall Street firm (Bear Stearns), the lowering of interest rates (with scant regards to its negative impact on the dollar), and the priming of the economic pump with generous tax rebates.
When Mahathir did similar “rescues,” he was accused of bailing out his cronies. Nobody would dare suggest that Treasury Secretary Paulson, a former major Wall Street figure, of doing the same thing. As for the decline of the dollar, the direct consequence of lower interest rates, it is deemed acceptable to avoid recession and unemployment! Exactly what Mahathir had uttered then!
Malaysia came out of the 1997 economic crisis much faster and with fewer scars than countries like Indonesia that followed the “severe but necessary” prescription of the Washington consensus. Mahathir was right then; I hope that Paulson would also be right.
Cause Versus Effect
This wind of change is also evident outside the corridors of power. Consider that a book by the Korean-born Cambridge University economist Ha-Joon Chang, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, is fast making the bestseller list. His provocative point is that the developed countries are preaching the very opposite of what they had practiced, with respect to economic development.
Unlike other economists who rely on complex econometric models and esoteric mathematics (no equations or Greek alphabets in his book!), Chang is into economic history. He studied what countries actually did, in contrast to what they now preach. He also reminds us that many economic conclusions are based on statistical correlations. Correlations are just that; they do not mean or even infer causation, nor do they differentiate between cause and effect.
Take the widely accepted notion of the poor: They are poor because they are lazy, so we are told repeatedly. This observation is of course made only by the rich, never by the poor.
Could it be, as Chang challenged us, that they are lazy because they are poor? The poor are more likely to be malnourished, unhealthy, and thus lack vigor to do hard work. Even if they are capable of hard work, because of their poverty they could not afford an education and thus their hard work is valued less. It is callous if not cruel to label those poor hardworking rice planters and fisherman in Kelantan as lazy. Try spending an hour in their day under the blazing Malaysian sun!
If we assume that they are poor because they are lazy, then we are dealing with basic human nature, very difficult to change. However if they are lazy because they are poor, then we are dealing with external conditions, and thus potentially solvable. It makes more sense to approach the problem from this perspective.
Today we are told that unfettered free trade and globalization are the recipe for economic development. We are lectured endlessly of this truism, most persuasively by Thomas Friedman of “The-World-is-Flat” fame.
Chang concluded that historically, trade liberalization has been the outcome rather than the cause of economic development. Many of today’s developed nations, in particular America, were once ardent advocates of protectionism. Indeed Alexander Hamilton coined the term “infant industries” and the need to protect them.
Chang refers to his own South Korea which made the remarkable transformation from a backward agrarian society to a modern industrialized one by resorting to unabashed protectionism and aggressive state interventions in the marketplace, all anathema to free market disciples. He remembers as a young man ostracizing those who would dare smoke foreign brands of cigarettes. Precious foreign exchange should be used to support local industries, not foreign ones! Of course now that the nation is developed, South Koreans have no compulsion buying expensive Gucci handbags.
Had South Korea been diligent in enforcing copyright laws as per WTO dictates, Chang would not have become an economist as practically all his textbooks were pirated versions!
South Korea proves that active participation in international trade does not require free trade. In economics as in other areas of human endeavors, dogmas should never come in the way of pragmatism. Extremism in the pursuit of a truism is a vice. A familiar hadith says it better: In everything, moderation.
As Chang wisely noted, “The secret of success is in a judicious mix of protection and open trade, with areas of protection constantly changing as new infant industries are developed and old infant industries become internationally competitive.”
Sifting Concept From Content
Globalization makes the world smaller, with physical distance reduced to irrelevance. At the same time other distances – cultural, institutional, and linguistic – become more pronounced. Indonesia is physically, culturally, and linguistically close to Malaysia, while America is far away in all dimensions. Yet trade between Malaysia and America greatly exceeds that between Malaysia and Indonesia. Malaysians are more likely to have heard of or even visited San Francisco than Surabaya.
Trade benefits its participants; we should encourage and facilitate it. While the benefits may never be equal or perceived to be so, there is no such thing as unfair trade, only that we can make it fairer. The best way to achieve this is not to discourage trade but to increase it even more. As the participants get more sophisticated and more engaged, they are more likely to make compromises lest they would lose their now valuable relationships. Exploitative trade, like other exploitative relationships whether business or personal, rarely endures.
In the past, jute farmers in Bangladesh were at the mercy of middle men. Nonetheless both benefited more by trading than by not partaking in it. Through globalization, specifically modern technology like cell phones, jute farmers now have access to market information. This liberates them; they are now no longer dictated by the middlemen. Information makes the playing field more level.
Technology destroyed the monopoly and monopsony of the middlemen far more effectively than any rigid communist mandate. The middlemen can still make their profits but not through the ignorance of their clients but by providing better services, as it should be.
The recent electoral humiliation of Barisan Nasional would not have been possible if not for the Internet, an accoutrement of globalization. Globalization is liberating. We should not ignore globalization or discourage trade in our purist pursuit of fairness. We should instead focus more on preparing our citizens for both.
Protection maybe necessary but it is only good if you use that opportunity to enhance the competitiveness of your people and infant industries. Otherwise it would be the surest and quickest route to complacency and mediocrity. If you cannot provide indigenous competition, introduce some from outside.
Trade must be actively promoted; it does not happen spontaneously, as revealed by our trade figures with Indonesia. For this reason, I am optimistic on the future of the Taiwan-China conflict because of the increasing trade and other economic ties between the two countries.
Globalization also brings the reality of a diverse world closer to each of us. A plural society like Malaysia is uniquely positioned to prepare its citizens for this new reality than those from culturally and ethnically homogenous societies. Our diversity is an asset, not a liability in this era of globalization.
I see no conflict in the truth and wisdom expressed by Friedman and Chang as they both offer relevant lessons for Malaysia.
Life is so unfair. The Malaysian Govt under Mahatir presented a scholarship costing thousands to a Pakistani girl to Oxford. But she dropped her studies (and panties) to become a hooker.
[deleted]
I think Mahathir deserves a Nobel economics prize. Without resorting to IMF, he could let Malaysia get over with the economic crisis. The issue is if his way of handling this emergency can be useful for other countries or not?
Uganda President Idi Amin once suggested that differences with Tanzania President Julius Nyerere be settled by a boxing match between them. So Mahathir and Dollah should do the same
http://www.channelnewsasia.com/stories/afp_asiapacific/view/339766/1/.html
TM did it because his primary objectives is to save his sons and cronies from going down under. Bankrupt billionaires (only bankrupt in msia) have plundered the nation’s wealth and transfered its wealth elsewhere. Even if TM sleeps well at nite the cries of the oppressed continues to haunt him.
“Take care of the basics and the rest would take care of itself”
– Lee Kuan Yew
This phrase means a thousand more than the vague Islam Hadhari spouted by AAB or the Wawasan 2020 touted by Dr. M.
The problem did we do so ?
– Crime is on the rise
– Education standard is going down across the board
– Problems in healthcare
How can a society which is facing unsafe streets with suspect leve l of education and unhealthy be more productive ?
Dr. M did have his flashes of brilliance whether at solving economic or socio-political issues however, the main point remains. He is building Malaysia on an unstable platform. Too many of the crucial issues have been swept aside in favor of strong economic growth.
It is not the business of governments to do business but to provide the environment conducive for doing business.
To build roads and buildings, you need engineers and architects.
To write books and literature, you need authors and philosophist.
To teach, you need teachers and lecturers.
To enforce justice, you need policemen and judges.
To cure, you doctors and nurses.
To make money, you need businessmen and entrepreneurs.
To create policies and a good environment for all, you need bureaucrats and government official who keep to themselves and not meddle with others except to listen and learn.
Most if not all governments in the world are grossly inefficient yet we can’t make do without one as all hell would break loose. However, a slight difference in quality makes the difference between a developed or developing country.
When you mix politics with business, you practically destroy the healthy competitive business environment that would benefit the country and consumers.
Had the country invited IMF to assist in the 1997 financial crisis, there would not be major rampant corruption and gross excesses and abuses destroying the country as seen today. IMF would have put in place sound financial fundamentals to ensure the government stick to their policies and good financial management.
Decades of gross financial incompetent are causing a lot of hardship and suffering to the ordinary people…..imagine if our country do not have oil revenue?
Its easier said than done to say infant industries deserve protection while maturing ones don’t. The problem is govt is notoriously bad at picking industries and players.
More accurately even if there is justification for infant industry protectionism, it should be sparingly used.
To say Dr. M proved the IMF and others wrong is to say just because you did not fail miserably, others were not right about you. People forget that there were others like Jeffrey Sachs that pointed out Dr. M NEED NOT be wrong. The IMF and World Bank was not wrong, they cannot recommend a solution where it depends on govt to take a way a solution when it could fail when a solution that would work better and in the long run while more painful is available.
The same is true of the US currently which is bailing out Wall Street with lower interest rates and lower dollar. Its not the best solution but the least painful one for now. It need not be disastrous AND contingent on the US fixing its fiscal position in the next decade which is possible but most agree will be limited even.
Like most BN UMNO leaders, most financially incompetent, they are prepared to take big and irresponsible risks by gambling on the future of the people….if it works they will take all the credits, if not, they blame it on Soros or others.
Has anyone read Soros’ letter in Bangkok Post? Can someone verify whether true copy? That’s interesting. Like to read the reply.
US intervention in sub-prime mortgage and Bear Stearns involves the global financial market.
Our 1997 financial crisis is local and it has to do with gross lack of sound financial fundamentals and gross financial incompetent…….S’pore with her sound financial fundamentals was not significantly affected by the crisis.
Even US protects its farmers through subsidies/tariffs. Same as Japan There is always some need for protectionism in order to buffer the country from external economic effects.
Malaysia’s problem is that of cronies being provided monopolies in order to line their own pockets. And these cronies and inefficient companies are protected for the ‘good’ of the people.
Btw, enough with rhetorics. I would like to see DAP start working on concrete and practical plans in the coalition states to solve the problems of the common Malaysian: the decline of our economy, loss of jobs, decline in health care and education, poverty etc.
“The poor are poor because they are lazy or they are lazy because they are poor”.
So, do you think we could be better if we took up the IMF offer? Nobody knows the answer. Who knows, Mahathir could have made a terrible mistake for not accepting the IMF. We might not have so much problem like today if he accepted it.
sotong said:
“Had the country invited IMF to assist in the 1997 financial crisis, there would not be major rampant corruption and gross excesses and abuses destroying the country as seen today. IMF would have put in place sound financial fundamentals to ensure the government stick to their policies and good financial management.”
This is exactly why Mahathir could not afford to have the IMF interfere in the country’s affairs. Mahathir could not afford to have the IMF declare an end to cronyism and nepotism. He did what he did because he could not let Mokhzani, Mirzan, Vincent Tan go down the drain.
The Badawi administration is no better when it comes to cronyism and nepotism. Government contracts and government funding became even more opaque with Badawi. For instance, how many people know that these jokers came up with an ingenious scheme to promote Visit Malaysia Year 2007 – the government paid RM5 million to any individual who could start a business overseas that was deemed to promote Malaysia. Could Badawi tell us how many cronies and UMNOputras opened batik shops in Australia and UK, received the RM 5 million grants each, and then closed their shops in 6 months ? Could Badawi tell us if his relatives’ Nasi Kandar shop that closed after 6 months in Perth did receive the RM5 million ?
To UMNO, the world is flat, but how flat it is depends on their interpretation. The courts will also support their interpretation – the legacy left behind by Mahathir in 1988.
Datuk Seri Anwar Ibrahim wanted to invite the IMF this will crushed Tun Dr. Mahathir regime (Vincent Tan of Berjaya Group, Mokhzani) he accused DSAI of talking bad behind his back, but if you go to most of the ceramah, DSAI very seldom said anything bad abt Tun Dr. Mahathir, it is Tun that’s allergy to it. DSAI will touch on facts, and relevant issues.
Dr. M deserves the TUN (but spelt backwards)
Godfather and cto,
Since I was always, I did not have the opportunity to respond to your wild accusations. But I guess those who had read the whole thread “political tsunami is for change to restore justice, freedom, democracy and good governance and not for Islamic state or hudud laws” will know who is egoistic, extremist and fanatic.
Just a quick response to you: why must DAP leave PR. If PAS is insistence to form Islamic State, why don’t PAS leave PR to pursue their own ambition? Why must they ride on PR to achieve their parochial agenda? It is obvious you can’t see your own irony. I wish I am that powerful to make “fair-minded” people leave this blog. So why don’t you leave since both of you can’t stand me?
What happened ? Banned from the other thread ? Poor Mr Know-it-all…now hijacking other threads to put his condemnations across…
“So why don’t you leave [this blog] since both of you can’t stand me?”
Errr….One slight problem here! This is not your blog.
that is because people like you, cto and syndcbasher83 have totally contaminated that thread/
during Mahathir :
1) minyak tak naik 4 kali setahun
2) bekalan gula ada
3) bekalan tepung ada.
4) Kes jenayah tak menonjol
5) harga barang x naik 110%
after election during pak lah
1) Minyak naik 4 kali setahun
2) Tepung, gula,beras sudah naik
3) Even bawang pun mahal
4) Jenayah
5) Rasuah ..
Mungkin kerana masa Mahathir, harga petrol dunia belum naik.
Harga petrol tak naik, harga gula, tepung dan barang juga tak naik begitu cepat.
Masa Mahathir, kes jenayah/rasuah tak menonjol kerana Mahathir sangat pantang orang cetak apa-apa berita yang mungkin mencerminkan kelemahan kerajaannya. (Ingat, akhbar the Star merupakan kepunyaan kroni Mahathir)
can someone ,say an ex-Petronas bloke sincerely tell us,how much money has been generated by Petonas since it was founded? rm 1 trillion or 2 trillion or more. Based on this, we can really judge both TDM [ for 22 years] and AAB[ 4year+] and how they have had squandered those cash.
I believe without the cash flows from Petronas, whatever we did in the economic melt-down would not have save Malaysia. No magic was needed. The issue was the cost of those mega projects, way above the market rates and they were all listed under OSA!!! Even today they are still people trying to convince us that TDM did a good job! Yes, a good job in taking us for a ride!!
Just came back from today ceramah at Dewan Besar Sg. Dua, Butterworth. There are approximately more than 5,000 ppl. the stadium is pack inside and outside. Most of the muslim bring their praying mats, i’m lucky, a friendly muslim allowed me to sit on his praying mats although i’m a chinese. The atmosphere is pretty good, i’ve had the chance to hear great speakers talking abt. Factors that caused BN to lost the 5 states. Mat Sabu, is quite interesting and creative speaker, he’s witty in his speech and is the best crowd pullers, i’ve the most laugh so as the crowds when he speak.
YAB Haji Hadi Awang has clearly stated and inform, abt. the rights of all races, and religions as well as praising the chinese & indian to vote for “Pakatan Rakyat”
According to some statistics from GE12, the Malay vote swing is 5%, chinese vote swing 31% and Indian vote swing 37% as per the speakers. Hence, it give a very clear indication that more education is require to deliver the message to the Malays as many villages & estates rely on RTM1, TV3 and Govt. newspapers.
Mat. Sabu has made an interesting speech on this topic abt. the internal fights within UMNO.
I’m looking forward to attend more ceramah, i think there is one arrange this coming 15th, April, tentatively at Batu Kawan Stadium.
Before the 1997 Asia financial crisis, with globalisation, almost every country in the region is doing well – you do not need a good economist to do well.
Our country, with oil, very small population, strong focus on moral and religion and hard working INDIVIDUALS, could have achieved better than any country…..but the people are now left with rampant corruption, crime, gross excesses and abuses, a society more divided, break down in moral and family values and etc..
limkamput Says:
Yesterday at 19: 30.05
Godfather and cto,
[snip]
I wish I am that powerful to make “fair-minded” people leave this blog. So why don’t you leave since both of you can’t stand me?
——————————————–
If I may, I shall answer your question to me by answering yet another question – why am I here?
I am here because
1. this blog provides me with information about the political landscape in Malaysia. It also provides a forum where readers can debate issues and I do find some of the discussions intellectually stimulating.
I do write on the odd occasions but in general, I am a firm believer that God gave almost all of us two ears and one mouth. As such, one should listen twice as hard as one talks. So, generally I do not write or talk that much unless I have something beneficial to say and contribute. This is done also out of respect for the Kit and the other readers.
2. I do enjoy a few laughs every now and then. I do find some of the postings here rather humourous. For example, you once wrote
“Chinese are like a basket of carrots. Each one is a head”.
I thought that was really funny and witty. I almost fell off my chair when I read it. It reminded me of an older movie that I watched years old where the main character Forrest Gump said “Life is like a box of chocolate, you never know what you are going to get till you open it”. Please do not be offended cos’ I really do like Forrest Gump.
Lastly I should let you know that I do have the remarkable ability to walk away from any thread. At the end of the day, I am a firm believer that I do not possess the power and the patience to teach a pig how to fly. I have learned over the years that it is impossible to make a pig fly. I will fail and I will even get dirty. Furthermore, the pig will get angry with me.
So I might tease the pig every now and then but I will walk away before I get dirty.
Tun Dr. M Releases Statement Against Advise.
This statement was released to local papers today. News has it that it was against advise from his lawyers as it will expose himself further.
(The Sun) AS I had anticipated, my comment on (Minister in the Prime Minister’s Department) Datuk Zaid Ibrahim’s suggestion that the government should apologise for the action taken against Tun Salleh Abas would draw accusations against me for my alleged misdeeds during my tenure of office.
Visit http://www.wagthedog-malaysia.blogspot.com for details.
…usaha menyaman UMNO adalah dirancang oleh Dato Seri Abdullah Badawi sendiri.
Mesyuarat pertama untuk membincang usaha ini dilakukan di rumahnya di Jalan Medan Kapas, Bangsar, Kuala Lumpur. Antara yang hadhir adalah Marina Yusof, Dato Radzi Shiekh Ahmad, Zawawi Zin, dan lain-lain.
Di dalam mesyaurat itu yang dihadhiri oleh mereka-mereka yang boleh digelar sebagai orang-orang Musa (Hitam) dan orang-orang Dolah, Abdullah sendiri yang membuat keputusan untuk menyaman UMNO di mahkamah dan dipersetujui oleh mereka yang hadhir.
http://anotherbrickinwall.blogspot.com/2008/04/fikir-fikirkan-abdullah-perancang.html
Waah,cannot reply in
[b]March 8 “politic al tsunami” is for change to restore justice, freedom, democracy and good governance and not for Islamic state or hudud laws[/b]anymore huh??
By the way,who says according to the constitution a PM and DPM has to be a Malay Muslim?
You are invited to a dinner with two others. At the dinner table, you realise that one of the two at the table is completely at odds with your philosophy and principles. The other person, however, has no problem with you being at the dinner table.
So you ask that person to leave the table – even though the table doesn’t belong to you.
If that’s the “logic” that is being followed by some of the DAP hardcore supporters, I really feel sorry for the DAP, and for Pakatan Rakyat.
However, one should not bring the debate from another thread into this thread, and there will be no further comment from me here.
The Chinese & the indian are beginning to embrace PAS, if PAS continue to accept their religion.
By the way, i would like to continue the comments from previous pertaining to Teresa Kok being the sole person to garner the most votes in GE12. If she quit political i’m hoping she will become Malaysian idols, actress or singers.
Get on to her blog, and tell her lah !
“So I might tease the pig every now and then but I will walk away before I get dirty.” cto
Whaaat!! How dare you call me a pig?? Don’t you know that pigs do fly? If you don’t fly it does not mean that I don’t fly.
Dear Godfather, i think i’m not the 1st person to admire Teresa there are perhaps more than 30K or at least more than that amount of Teresa fans in DAP so don’t think she will have time to read all the admirer letters & blogs. Not sure what basic criteria of man as husband she liked, If any Malaysian have the chance to be her husband no doubts he will be the luckiest Malaysian in the world.
lakilompat Says:
Today at 10: 30.13 (34 minutes ago)
Dear Godfather, i think i’m not the 1st person to admire Teresa there are perhaps more than 30K or at least more than that amount of Teresa fans in DAP so don’t think she will have time to read all the admirer letters & blogs. Not sure what basic criteria of man as husband she liked, If any Malaysian have the chance to be her husband no doubts he will be the luckiest Malaysian in the world.
———————
Be careful. Teng might get jealous. :)
cto, Elder Teng or young one. Both still Bachelor? sadly, i’m married but i still have very good bachelor friends who admired her.
Godfather Says:
“You are invited to a dinner with two others. At the dinner table, you realise that one of the two at the table is completely at odds with your philosophy and principles. The other person, however, has no problem with you being at the dinner table. ”
Are you sure this is an apropriate example?As far as I can see,the three of them invite each other.set up a date whom each agreed upon.Oh yeah,and the meals they’ve got,mostly stolen from the other table of 14.82 meals.what about the indipendant?For one thing there is no dinner politics.
“So you ask that person to leave the table – even though the table doesn’t belong to you.”
The table belong to the restaurant owner:The Rakyat.So you dont have problem sitting with someone who’s got very different opinions with you.The problem is:the guys action,as it also involves the restaurant owner.the guys keep making rules which are disturbing and hurt the owner of the restaurant.eg:If the food aint good your hands gonna get the chop.Furthermore he also order the meals according to his own preference .He even ordered something for you in which you had allergy of.Now will you accept his action and risk harming yourself as well as the owner?What if the food aint bad at all,its just didnt suit his appetite?Still got the chopp eh??
“”If that’s the “logic” that is being followed by some of the DAP hardcore supporters, I really feel sorry for the DAP, and for Pakatan Rakyat.””
Your example are certainly flawed and could not be incorporated in politics.For one thing,the rakyat should be served not served.Dont use dinner logic.politics and dinner are separate things that could not be synchronised with.
Why would PAS drop from Islamic states from its election manifesto I wonder?I think the best way to go,is for everyone to keep quiet about this issue right now.And hopely it will disapear……Its better not to mantion anything,if it wouldnt help anyone.
I will go to Kelantan probably this weekend, to survey and take some pictures of Islamic state. Also prepare some questionnaires to ask the local race.
I will also visit the market, cinema, shopping complex, 2nd hand car dealer, and local foods stalls.