Remembering Merdeka


August 30, 2014

Remembering Merdeka

by Tunku Abdul Aziz@www.nst.my.com

tunku-azizMANY of the 300 young Malayans, men and women, who heard the news first-hand ahead of the official announcement in Malacca, that their country would be an independent nation on August 31, 1957 are, sadly, no longer with us to celebrate the 57th Merdeka anniversary tomorrow. The years have taken their toll: the survivors have not been spared the ravages of time.

Those of us who took our places in the Kirkby College Hall on that grey, overcast and bitterly cold February afternoon to welcome Tunku Abdul Rahman Putra, our honoured visitor and future Prime Minister of independent Malaya, had expected nothing more momentous than the standard homily about “working hard and playing hard” that distinguished visitors always seemed to be armed with. The Tunku quickly got into his stride and spoke without notes, in a tone of voice that gave not the slightest hint of what he had in store for his listeners.

He began by telling us that he and his colleagues had been in London holding constitutional talks at Lancaster House with Her Majesty’s Government on Malayan independence. He went on to say that they were extremely pleased with the outcome of the meeting which had paved the way for the country’s independence. He attributed the success of his Merdeka Mission to the “trust and goodwill on all sides”.

He paid special tribute to the people of Malaya for their unstinting support in the quest for freedom. This had proved to be an important point in convincing the British that the various Malayan races were at one in their demand for independence.

Then, without warning, he broke the welcome news that stunned us. Merdeka would be granted on August Tunku31, 1957, God willing. The date until then had been a closely-guarded secret, and how privileged we felt to be the first Malayans to hear the glad tidings.

It took a second or two for the full import of the momentous announcement to sink in before the assembly, as if on cue, broke into a restrained round of applause.Understated would aptly describe our reaction: British reserve had triumphed over our traditional Malayan exuberance. I suppose the freezing English winter weather was partly to blame for the less than wildly boisterous reaction to the historic occasion.

What tangled thoughts ran through our minds as we began the process of bringing them into some semblance of order, I could only guess? It would be fair to say that most of us harboured, albeit secretly, grave doubts about the country’s future.

We wondered whether the two major communities, the Chinese and the Malays, would be able to find accommodation and live in peace and harmony. Continuing, the Tunku reminded us that the fight for freedom without democracy would be quite meaningless. He talked about our duties and responsibilities as citizens of a free country, and how important it was for all Malayans to live in harmony so as to ensure lasting peace and prosperity for all. It was a message that continues to be relevant and, perhaps, even more so in today’s political climate.

We were not too sanguine about the country’s long-term prospects for racial harmony having read enough about what the coming of independence had done, a decade earlier, to India. The spectre of widespread ethnic and religious violence that so marred and blighted India’s independence was very much in the forefront of our collective consciousness.

Jawaharlal Nehru’s famous speech to the Indian Constituent Assembly on Aug 15, 1947, Tryst with Destiny, containing that memorable line, “At the stroke of the midnight hour, as the world sleeps, India will awake to life and freedom” made a deep impression on most of us young people.

Nehru more than Mahatma Gandhi was my inspiration. Tunku came later as a leader I admired greatly. Even as the great Indian statesman was speaking, India was engulfed in flames: the streets of that ancient land were awash with Hindu, Sikh and Muslim blood. Religious violence still breaks out in parts of India with regular monotony. We had every reason to fear for the future of our country, and that was only natural. Were we ready for independence with all that this implied in social, political and economic terms? It was a question that loomed large for us then.

For all the apprehension about what the future might bring, none of us would ever forget the event that unfolded in that little corner of rural Lancashire on February 7, 1956. It was in a very real sense the beginning of a dramatic spiritual journey into the unknown for all Malayans, and unlike most journeys, there was no turning back when the Union flag finally came down past the midnight hour on the Selangor Club Padang. It might have signalled the imminent end of empire for the British, but for us it was the dawn of a new life, the life that we were at long last free to live as we chose.

merdekaWhen we reacquired our country in 1957 through negotiations, we set to with a will to confound our detractors and prove how wrong they were all along. Few thought we would survive the first few years on our own, and yet, 57 years later, despite the teething problems and birth pangs of a new nation, we remain a people deeply committed to multiracialism as a way of life.

When we think of the complexity of our society, what we have achieved for our country borders on the miraculous. As we stride out proudly to celebrate our many achievements tomorrow, let us remember that the key to our future is racial harmony and unity of purpose. We have much to be grateful for: the future is in our hands.

Many Happy Returns of the Day, Malaysia.

57 Years of Trials, Tribulations and Successes


August 30, 2014

57 Years of Trials, Tribulations and Successes

by Tan Sri Johan Jaaffar@www.nst.com.my

Merdeka--57

THE number “57” has a significant meaning. Malaysia, born in 1957, will be 57 this year. So far, this year has not been easy. Too many things have happened in the last eight months. There was never a dull day in the world in 2014 so far.

Perhaps it is true, the Year of the Wooden Horse under the Chinese zodiac is not going to be an easy one. Some believe calamities, turmoil and uncertainties will be the order of the year. There is simply too much “energy” out there.

So far not so good. Malaysia, too, has its share of problems. The national airline, already crippled by financial burden, endured two incidences that will definitely redefine the aviation industry — the spectacular disappearance of MH370 and the shooting down of MH17. Malaysians were united in those tragedies.

We have come this far. It wasn’t an easy journey though. We had our fair share of trials and tribulations. Six Prime Ministers and 57 years later, we have our proud moments and some bad ones. Our leaders are not perfect. But they have tried their best. We will not be where we are today had it not been for their vision, tenacity and commitment. There are countries that became independent about the same time but are still struggling economically.

6 PMs of MalaysiaLeft to Right: Tunku, Tun Razak, Tun Hussein, Tun Dr. Mahathir, Tun Abdullah,  Dato Seri Najib  Tun Razak

This is not an easy country to govern. Diversity has its perils. Multiculturalism sounds good as a discourse but is not easy to manage. Religion can divide and the division can be severe. Voices of reason can easily be silenced by the noisy few.

People of different races can simply drift apart. We can see some cracks on unity. We are acutely aware of some segments of our society promoting bigotry and hate in the name of religion and race. Left unchecked, it will destroy us.

Where were we when the clock struck 12 midnight, August 31, 1957? We were not even sure of our destiny yet we were proud and the pride was contagious. Sceptics were saying, we can’t even manufacture a jarum (needle) what good was merdeka? The people were largely poor, especially the Malays.

1957 was the year of Semerah Padi, the second film helmed by P. Ramlee for the Malay Film Productions company and Pontianak starring the stunningly beautiful Maria Menado at Cathay Keris Films.

The newspaper Berita Harian was published that year, 10 years ahead of Utusan Malaysia, the Romanised edition of Utusan Melayu, the flag bearer of the company of the same name. That was the year of The Bridge on the River Kwai, directed by supremo David Lean. That was the year when James Agee wrote A Death in the Family, and The West Side Story became a hit Broadway Show.

The first truly soap opera, Peyton Place was featured on TV. A Frenchman, hailed as one of the pioneers of “absurd literature”, Albert Camus won the Nobel Prize for Literature. Tough action hero and notorious romantic Humphrey Bogart of Casablanca fame died. The population of the world was 2.8 billion.

Things were less complicated back then in this country. The kentung called the villages for prayers and emergencies in the villages. The price of kuih was 2 sen. And a ringgit could buy a lot of things. A kati (before the measurement was in kilogram) of rice was the price of a day’s work. I was in my fourth year in a primary school when Tunku Abdul Rahman saw the lowering of the Union Jack in Kuala Lumpur.

What is merdeka to us? What does it mean to Malaysians? Besides the parade, the rituals, the celebration, Hari Kemerdekaan (Independence Day) should be a reflection of all things past and the need to move forward. We have achieved great things, our economic success is the envy of many and our infrastructures are world-class. We need to identify areas of weakness. Let’s ask some serious questions on unity and equality. Let’s talk about the quality of life. Let’s relook at our education system that is supposed to bind us, and the national language that is the denominator of unity.

“Di sini bermulanya sebuah cinta” (where love grows) adopted as the tagline for this year’s Hari Kemerdekaan was a line from a hugely popular Sudirman song. Independence Day is also about national consciousness, patriotism and the sense of belonging — the values that many believe are eroding in the making of a nation.

Let’s just remind ourselves of the challenges ahead as a people and a nation — together we shall prevail as one. Dirgahayu Malaysiaku!

 

Ethnic Inequalities in Malaysia remain after 57 Years of Independence


August 27, 2014

Ethnic Inequalities in Malaysia remain after 57 Years of Independence

by Jenni Dixon (received via e-mail)

Mahathir and his wards

Ethnicity has played a major role in Malaysian political and economic policy since the inception of the federation in 1963. The launching of the New Economic Policy (NEP) in 1971, with the primary aim of promoting economic growth, with particular emphasis on exports, had another important objective: to promote unity and harmony in one of the most ethnically diverse of nations.

The laudable idealism of the project, which attempted to raise incomes and reduce unemployment in all ethnic groups, to reduce poverty and create a restructured society in which race played no part may have kept ethnic differences, prejudices and jealousies at bay while the country prospered, but the simmering tensions below the surface of society were bound to boil over as the country’s economy began to decline.

However, while many observers do accept that the NEP reduced overall poverty, it has to be said that it was only partially successful in achieving its goals. The policy of Bumiputera, which gives preferential treatment to the Malay ethnic majority, has gone some way towards reducing disparities in income and wealth, but has sharpened the rift between Malays and the other main ethnic groups, the Chinese and Indians. New policies following on from the NEP after 1990 have adhered to its philosophy of affirmative action. These have targeted education, employment and the development of new enterprises.

Programmes aimed at halting the decline of standards in primary and secondary education, increasing the manufacturing base and stimulating regional development have benefited some sectors of the urban population while neglecting the problems of the Malay rural and urban poor. While the reality of Malaysia’s social problems may be seen more clearly from a perspective of class, as a division between rich and poor, the country’s more visible ethnic differences colour much political analysis so that the division between the Malay/Muslim sector and the rest of the population has perhaps been allowed to dominate more than it should.

Playing the percentages

In 1971, over 66% of the Malaysian corporate sector was foreign-owned, while the indigenous Bumiputera, who made up 60% of the population, owned only around 2%. The NEP target was to increase Bumiputera holdings to 30%, that of other Malaysians to 40%, and reduce foreign holdings to 40% by 1990. The outcome was disadvantageous to the Bumiputera, who increased their holdings to only 20.4%, while the other Malaysians, mainly Chinese, benefited most with a rise to 46.8% that exceeded expectations, against a decline of foreign holdings to 25.1%. However, a booming economy during the 1990s and the early years of the 21st century ensured that all sectors increased the value of their holdings, which went some way to disguising ethnic resentments.

The current slowdown in the economy has only deepened the distrust between Chinese and Malays. Prime Minister Najib Razak has appeared to ignore these rising ethnic tensions in favour of strengthening his Malay support base. For several years he had been pressing for a review of Bumiputera policy. His recent close election victory, with his ruling National Front coalition winning a majority in the lower house with only 47% of the popular vote, compared to the 51% who voted for the opposition Pakatan Rakyat coalition, has put into sharp relief his lack of support among the ethnic Chinese, causing him to consider the benefits of pursuing policies favourable to the ethnic Malays. Indeed, in the autumn of 2013, he announced a new low-price housing policy aimed only at Malays.

Prejudices and disadvantages

Over the decades since 1970, when Dr. Mahathir bin Mohamed delineated the controversial ‘Malay Dilemma’, which helped to create the political climate for the instigation of the NEP, political rhetoric has only accentuated the fallacious negative image of Malays as struggling to overcome their ethnic inferiority. For those who want to believe these prejudices, Bumiputera policies that introduced quotas for education, scholarships and business contracts only seemed to confirm their validity. The false logic of this argument says that because Malays needed help in these areas, they were clearly lazy, uneducated and lacking in the business acumen for which the Chinese and Indians were renowned. Malays happen to make up the majority of the rural population, where there is a lower per capita income and more people live in poverty.

Social problems associated with poverty are necessarily more common among Malays; for example, the percentage of people needing help for drug abuse is far higher for Malays, which in 2008 was 74.97% against 12.61% for Chinese and 9.75% for Indians, and drug rehabilitation programmes show a recidivism rate of over 50%. On Anti-Drug day 2014 Prime Minister Najib Razak urged Malaysian families to do everything in their power to prevent their children becoming prey to drug addiction. These sorts of problems associated with poverty are better remedied in this way, in giving general encouragement and advice and relieving poverty than targeting a particular ethnic group.

New Bumiputera policies

In March 2014, Prime Minister Najib Razak launched the new Bumiputera Business Expansion Fund worth RM200 million, which is designed to help Bumiputera technology companies to expand internationally. These will be flexible loans offered without the need for collateral with a generous payment period of six years, beginning two years after the beginning of the loan. Another RM25 million has been given to the Bumiputera Agenda Steering Unit, to be managed by the Malaysian Technology Development Corporation, and a further RM1.4 billion in Facilitation Fund Grants had already been approved for Bumiputera companies to develop 132 projects, creating about 23,000 new local jobs. The Prime Minister said that the loans were aimed at businesses in the cutting edge of a wide range of technological industries, and stressed that each proposed project must have a clear prospect of profitability and expansion.

The downside of Bumiputera is that while it is an attempt to stimulate the economy by preferential loans, it also by definition ignores other important sectors of the population. It has caused many Chinese Malaysians to emigrate as well as put off Chinese nationals from coming to study in Malaysia. The signs of a new ‘Malay Dilemma’ are already there to see, which may not be easy to remedy. In Kuala Lumpur, for example, preferential treatment is given to Malays for jobs and University places, and Malay shop owners and restaurateurs enjoy lower rents and ease of access to premises. Chinese resentment over these inequalities has created increased ethnic tension.

Sources

http://asia.nikkei.com/Politics-Economy/Policy-Politics/Malaysias-ethnic-tensions-rise-as-its-economy-declines

http://www.freemalaysiatoday.com/category/opinion/2012/06/21/nep-the-good-and-the-bad/

http://www.freemalaysiatoday.com/category/opinion/2012/06/21/nep-the-good-and-the-bad/

http://www.academia.edu/531386/Rethinking_the_Malay_Problem_in_Singapore_Image_Rhetoric_and_Social_Realities

https://my.news.yahoo.com/najib-announces-rm200-million-bumiputera-business-expansion-fund-112631364.html

http://www.thestar.com.my/News/Nation/2014/02/19/PM-urges-families-to-unite-against-drug-abuse-Establish-a-happy-and-trusting-home-environment-says-N/

http://hornbillunleashed.wordpress.com/2013/09/21/50340/

http://www.malaysia-today.net/how-to-criticize-bumiputera-policies-101/

DISGRACE


August 2, 2014

DISGRACE

by Tariq Ali (07-31-2014)

http://www.lrb.co.uk/blog/2014/07/31/tariq-ali/disgrace/

Tariq AliThe United Nations Secretary-General, Ban Ki-moon, denounced the bombing of the UN school in Gaza as ‘outrageous’ and ‘unjustifiable’. His officials have described the massacres as a ‘disgrace to the world’. Who stands disgraced? The UN General Assembly has regularly voted in favour of an independent Palestine. It is the Security Council that has vetoed the very thought and the Security Council, as everyone knows, is dominated by the United States; on this issue, Russia and China have remained on message.

What of the broader ‘international community’, in other words the United States/EU/Nato? They have backed Israel. As for the ideologues of the human rights industry, Samantha Power, the queen of ‘humanitarian interventions’, is the US representative on the Security Council and staunchly pro-Israel. Both the House and the Senate have unanimously written Israel a blank cheque; the French Socialist government banned demonstrations against the Gaza horrors in Paris on the grounds that they would encourage anti-semitism (not well received by French Jewish organisations who co-sponsored the march); the British Foreign Office is compliant as usual; the Germans too busy imposing sanctions against Russia while turning a blind eye to Gaza and refusing to accept that the Palestinians are the indirect victims of the judeocide the Third Reich unleashed during the Second World War and for which successive democratic governments in Germany have been paying ever since. The US satellite states in Eastern Europe have followed suit. Scandinavia, too, with this exception: Carl Bildt, the Swedish Foreign Minister and veteran NATO hack, supports US policies, but the Swedish king and queen donned Palestinian scarves and joined a public demonstration against Israeli atrocities.

King and Queen of SwedenKing and Queen of Sweden

In the Arab world there is great anger below, but the Wahhabi monarch in Riyadh, the Israeli-protected king in Jordan and General Sisi in Egypt have effectively backed Israel’s assault on Gaza. They loathe Hamas and make no secret of the fact that they would rejoice if the Israelis exterminated the organisation. And what about those who vote for it? Dissolve the people and elect another? In Turkey, Recip Erdoğan makes a lot of noise, mostly ineffective and over-the-top, but refuses to break diplomatic relations with Israel. Turkey is after all a longstanding member of Nato and if Iraqi Kurdistan becomes ‘independent’ as a US-Israeli protectorate, Erdoğan will need their help to prevent a spillover in eastern Turkey.

While Asia is effectively silent – China thinks trade, India is close to Israel, Japan is still not allowed its own foreign policy – in South Africa there is growing support for the BDS campaign (boycotts, divestment and sanctions) led by Desmond Tutu and others. The apartheid analogies are not taken lightly and the ANC in the South African parliament voted unanimously to expel the Israeli ambassador, a demand ignored by President Zuma.

gaza-under-attack_pictures_2012_free_gaza_gaza_4_by_palsun1The strongest political reaction has come from a continent where Muslim populations are either non-existent or tiny. Venezuela and Bolivia broke relations with Israel after the attack on Gaza in 2009. The Israeli Ambassadors in Ecuador, Peru, Chile, Salvador and Brazil have now been asked to pack their bags.

In the Occupied Territories themselves there is strong unity from below and Mahmoud Abbas, who initially remained silent and refused to visit Gaza, is now talking of ‘Israeli war crimes’, but his security apparatus and the PLO leadership has been collaborating with the IDF ever since the Oslo Accords. Hamas might have been drawn to this position with the help of the Muslim Brotherhood in Egypt, whose elected leaders were willing to capitulate to Washington like the PLO. Sisi’s coup put paid to all of that and Hamas was, as a result, able to reassert its independence.

There is no military solution in the region. Israel is a nuclear state and has the sixth largest army in the world (so talk of parity with Hamas – moral, political or military – is grotesque). It is threatened by itself, not by an outside force. The only solution left is the creation of a single state with equal rights for all and till this is achieved the only way to help the Palestinians in the medium-term is via the BDS campaign. It is not enough, I know, but it is the very least we can do.

BOOK REVIEW: Shankaran Nambiar’s The Malaysian Economy: Rethinking Policies & Purposes


July 30, 2014

BOOK REVIEW: Shankaran Nambiar’s new book, The Malaysian Economy: Rethinking Policies & Purposes 

by Tricia Yeoh@ http://www.thesundaily.com.my

FEW writers and analysts are able to both identify precisely the challenges facing the Malaysian economy as well as communicate these in a manner easy to digest. Shankaran Nambiar’s new book, The Malaysian Economy: Rethinking Policies & Purposes does so with bold and relevant commentary. Dating from 2003 to the present, this compilation of writings focuses on six broad themes including the need to strengthen institutions, the importance of competitiveness, regional trade, fiscal reform and finally, the reality that is the influence of elections and politics over economic policy.

?????????????????????What is prevalent throughout the book is the clear economic position he takes, arguing for a more open and free economy, one in which companies and traders would be able to compete without the shackles of a large and interventionist government. He takes cognisance that our neighbours are moving at a rapid pace, and mentions specifically China in its ability to out-compete many in the region, but that Malaysia would need to “develop our human capital and readjust our institutional framework to align it with global requirements.”

Of course, on the economic ideological continuum, criticisms often abound of the far-right leaning liberal position. More specifically, public sentiment in Malaysia has weighed heavily against the free market and privatisation. This is not surprising, since the Malaysian version of “free market” and “privatisation” is anything but. It has been but a muddied example of what a free market could actually do to improve the quality of goods and services.

Nambiar does not shy away from this oftentimes-controversial debate. He states explicitly, “privatisation, in theory, implies giving markets a bigger role … privatised companies have to be efficient … and cannot rely on the government to bail them out.”

Theoretically, yes. But in the execution of it – and Malaysia has done a poor job at this – privatisation has not been done in a fair, competitive way. In fact, what took place in our context is that when public entities were privatised, instead of improving efficiency, things got worse. Again, Nambiar hits it squarely on the head: “What was once a government monopoly now becomes a private monopoly. One form of inefficiency is substituted with another.”

Reading the book, one would initially conclude that he is a hard-hitting liberal – libertarian in American circles – and based on many principles, indeed this is so: his firm belief in competition, economic freedom, strong institutions and a legal framework, property rights and so on.

But what is refreshing to note is that he does not blindly accept what would typically be a liberal’s position, but views all subjects with a critical mind. Instead, he agrees with the need for a minimum wage because based on empirical research, this would transform the economy into one that is technologically advanced and contribute towards high value-added growth. A hardcore liberal economist would usually argue against the minimum wage as it is a false and forced imposition by government, which does put many small and medium companies out of business.

 

Finally, as many things seem to be in Malaysia, economic policy is subject to political influence, and this is evident in the many examples Nambiar provides, such as how the federal government transfers revenue to individual state governments, Najib’s electoral position determining whether or not the goods and services tax is introduced, and other “inappropriate policies” that are introduced “because of the polls”, which is “as if we have an economy balancing on the tip of a pin”, which is dangerously accurate.

Many proposals have been expressed elsewhere, on the need for fiscal reform and discipline, addressing structural issues (income distribution, corruption, crime, education), and so on. But the book’s beauty lies in its concise and deft articulation of problems and solutions. The commentaries are candid, and arguments tight. He also comes across as rational and fact-based, criticising or praising whenever necessary. This neutral, non-partisan position of analysing economic (or any other) conditions in the country is rare and must be valued.

As Malaysia enters into its final year of the 10th Malaysia Plan in 2015, and draws up its next set of policies for what would be the last five-year plan before the year 2020 – the 11th Malaysia Plan (2016 – 2020) – it is certainly worth examining Nambiar’s publication that spans the last decade or so. Where exactly are we going? Will the problems raised in his book 10 years ago start to manifest themselves in the next 10? What happens to an economy that pays little attention to such recommendations, and fails to strengthen its institutions?

Policymakers, politicians, academics and students ought to pick up this slim and thoroughly readable volume to gain a historical perspective of good and bad policy. History may not repeat itself, but its leaders may very well do – so it is up to the electorate like us to know which pressure points to press, well before the alarm bells start ringing.

Has GDP outgrown its use?


July 7, 2014

Has GDP outgrown its use?

By David Pilling, July 4, 2014@ http://www.ft.com

Governments and the media obsess about it while statisticians endlessly fiddle – but what is the real point of GDP and can it ever be accurately measured?

GDPWhat do the price of hair-salon services in Beijing and sexual services in London have in common? The answer is that, depending on how you measure them – or indeed whether you measure them at all – the size of the Chinese and British economies will expand or contract like an accordion.

In April, statisticians working under the aegis of the World Bank determined that China’s gross domestic product was far bigger than they had previously realised. China was, in fact, just about to overtake the US as the world’s largest economy, many years earlier than expected. The reason? Statisticians had been overestimating the prices of everything from haircuts to noodles. As a result, they were underestimating the purchasing power of Chinese people and thus the size of the economy.

Last month, British statisticians worked some magic too. They declared that the UK economy – admittedly only a fraction of China’s size – was 5 per cent bigger than previously thought. It was as if they had suddenly discovered billions of pounds in annual revenue at the back of the nation’s couch. Here the explanation was simpler. Among other tweaks to their methodology, statisticians started counting the economic “contribution” of prostitution and illegal drugs.

Diane CoyleGross domestic product has become a ubiquitous term. It is how we measure economic success. Countries are judged by how much they have of it. Governments can rise and fall according to how effectively their economies create it. Everything from debt levels to the contribution of manufacturing is measured against it. GDP is what makes the world go round. Yet what exactly does it mean? Outside a few experts, most people have only a shaky understanding. In fact, the more you delve into the whole concept of GDP – one of the most centrally important ideas in modern life – the more slippery it becomes. In the words of Diane Coyle, an economist who recently wrote an entire book on the subject, “GDP is a made-up entity.”

Coyle is a defender of GDP as a tool for understanding the economy so long as we grasp its limitations. When I spoke to her by phone, she was nevertheless amused at what she called “the regular fandango” and “public ritual” that accompanies the quarterly release of GDP data. Even though those numbers are often within the margin of error and routinely revised, we invest them with as much meaning as a priest does his liturgies.

The title of Coyle’s book, GDP: A Brief But Affectionate History, makes clear her basic allegiance to the concept. Yet, she warns, “There is no such entity as GDP out there waiting to be measured by economists. It is an artificial construct … an abstraction that adds everything from nails to toothbrushes, tractors, shoes, haircuts, management consultancy, street cleaning, yoga teaching, plates, bandages, books and all the millions of other services and products.” The people who measure GDP, then, are not involved in a scientific enterprise, such as discovering the mass of a mountain or the longitude of the earth. Instead, they are engaged in what amounts to an act of imagination.

GDP is a surprisingly new idea. The first national accounts that resemble modern ones were produced in the US in 1942. It is not particularly odd that governments didn’t bother much about sizing up their economies before then. Until the industrial revolution, agricultural societies barely grew at all. The size of an economy was thus almost entirely a function of national population. In 1820, China and India made up roughly half of global economic activity by sheer virtue of the number of people who lived there.

Simon Kuznets (right), the Belarusian-American economist often credited with inventing GDP in the 1930s, had severekuznets reservations about the concept right from the start. Coyle told me, “He did a lot of the spade work. But conceptually he wanted something different.” Kuznets had been asked by US president Franklin Delano Roosevelt to come up with an accurate picture of a post-crash America that was trapped in seemingly interminable recession. Roosevelt wanted to boost the economy through spending on public works. To justify his actions, he needed more than just snippets of information: freight-car loadings or the length of soup-kitchen lines. Kuznets’ calculations indicated that the economy had halved in size from 1929 to 1932. It was a far more solid basis on which to act.

When it came to data, Kuznets was meticulous. But what, precisely, should be measured? He was inclined to include only activities he believed contributed to society’s wellbeing. Why count things like spending on armaments, he reasoned, when war clearly detracted from human welfare? He also wanted to subtract advertising (useless), financial and speculative activities (dangerous) and government spending (tautological, since it was just recycled taxes). Presumably he wouldn’t have been thrilled with the idea that the more heroin consumed and prostitutes visited, the healthier an economy.

Kuznets lost his battle. Modern national income accounts include both arms sales and investment banking services. They don’t distinguish between social “goods” – say, spending on education – and social “bads” (or necessities) – say, gambling, repairing the damage after hurricane Katrina or preventing crime. (Countries without much crime miss out on related economic activity such as security guards and repairing broken windows.) GDP is amoral. It is defined simply as the total monetary value of everything that has been produced in a given period.

The first thing to understand about GDP is that it is a measure of flow, not stock. A country with high GDP might have run down its infrastructure disastrously over years to maximise income. The US, with its ageing airports and less-than-pristine roads, is sometimes accused of precisely that.

…At the heart of the GDP debate is an anxiety that our societies have been somehow hijacked by pursuit of a single data point. No one seriously imagines that simply making an abstract number bigger and bigger can be a worthy goal in its own right. Yet GDP has become such a powerful proxy for what we do hold dear that we find it hard to see past it. Few economists are blind to its many limitations. Most, nevertheless, give the impression of wishing to maximise it at all costs.

Coyle argues that we should invent new ways to reflect economic reality. She advocates what she calls the “dashboard approach”. The Better Life Index, developed by the Organisation for Economic Co-operation and Development, for example, allows users to compare the performance of countries according to 11 criteria ranging from income and housing to health and work-life balance. By plugging in the criteria you value most you can see how a particular economy performs. If, say, employment is your priority, then Switzerland and Norway are best. If, on the other hand, you’re more interested in a combination of high income and education, then the US is the place to be.

In theory, this approach would allow voters to decide what is important and politicians to craft policies to achieve desired results. In practice, the combination of multiple criteria measured according to multiple yardsticks renders the exercise subjective and fuzzy. GDP may be anachronistic and misleading. It may fail entirely to capture the complex trade-offs between present and future, work and leisure, “good” growth and “bad” growth. Its great virtue, however, remains that it is a single, concrete number. For the time being, we may be stuck with it.

David Pilling is the FT’s Asia editor