Malaysia’s GE-14: Putting The Future on the Line

April 22, 2018

Malaysia’s GE-14: Putting The Future on the Line

by Nicholas Chan

“Chances are political fatigue has affected reform-minded Malaysians after two missed opportunities since 2008, which has led to centrifugal politics that generated even more social tensions. Not even Dr Mahathir’s surprise (re)emergence can mend those fractures in the short term.”–Nick Chan

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Malaysia Decides on May 9. 2018

Elections are about the future. And Malaysians will get to decide theirs on  May 9,  2018. What future are Malaysians are facing and voting for? And, to some extent, what bearing will electoral politics have on it?

For now, many Malaysians are voting for the immediate future, as bread-and-butter issues such as housing, cost of living, and jobs were found to be the major concerns of Malaysians. The palpable outpouring of anger most visible in social media in the lead-up to this election, including from the Malay-Muslim electorate that has been the bastion of the ruling coalition-Barisan Nasional (BN), suggests that it’s driven mainly by concerns of the immediate future.

Both the federal government and an opposition-held state government have been splashing benefits on civil servants who are predominantly ethnic Malays. Even the Islamist party Pas has shelved the ‘Islamic state’ debate to focus on more profane concerns, such as abolishing the Goods and Services Tax (GST) to curb inflation.

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UMNO’s Najib Razak or Pakatan Harapan’s Dr. Mahathir Mohamad

The impetus for change in this round of elections does not look to be as ideational as the previous two elections, where the incumbent’s ethnocentric conservatism was met with a loose consociationalist alliance between secularists, left-leaning progressives, and Islamists of various stripes.

Chances are political fatigue has affected reform-minded Malaysians after two missed opportunities since 2008, which has led to centrifugal politics that generated even more social tensions. Not even Dr Mahathir’s surprise (re)emergence can mend those fractures in the short term.

Devoid of a clear-cut ideational divide, the certainty of a graspable, common goal such as ‘Vision 2020’ is long gone now for most Malaysians. Even immediate aspirations vary depending on whom one asks.

This is reflected in both Pakatan Harapan (PH)’s and BN’s manifestos that run hundreds of pages thick. Part of the reason is that Malaysia is a highly centralised federation. Anyone aiming for federal power is expected to deliver a wide spectrum of public goods, including policing, education, and public transport planning that are usually reserved at the level of states and municipalities of other federations

But another part of the reason is that the development gap between states and regions remains stark. The GDP per capita in 2016 of Kuala Lumpur (RM101,420; A$33,566), for example, is more than double that of relatively industrialised Penang (RM47,322; A$15,662), not to mention the poorer states such as Terengganu (RM27,268; A$9,025) and Sabah (RM21,081; A$6,977). According to data from the Brookings Institution, Kuala Lumpur continues to outgrow the country in terms of GDP per capita and employment. Yet, even the Kuala Lumpur-Klang Valley region, which hosts one-fifth of Malaysia’s population, is a hotbed of inequality itself, as a study from UNICEF found.

In other words, there are two worlds politicians will have to speak to, the First and the Third. In one, even basic services are craved; but in the other, five-figure salary earners are comfortable enough to insist on non-material needs. To be fair, such inequalities have not escaped the government’s attention and redistributive interventions were made. According to the latest plan, cash aid is now disbursed to close to half the households in Malaysia if one goes by the data from the latest household income survey. An almost surreal fact for a country claiming to be achieving ‘high income nation’ status in two years’ time.

Granted, all nations are complex with their own identity, ideology, class, and developmental divides. Yet this ostensibly last election before the 2020 milestone also signals a wander into the unknown for there is no longer any developmental—teleological even—model that speaks of the choices and challenges for Malaysians ahead. There are at least two aspects to this.

First, while the end goal of the New Economic Policy (NEP) is to eliminate inter-ethnic inequality, the rather simplistic framework has led to a more complicated outcome. According to a World Bank report, most income inequality now exists within ethnic groups. Yet, the instruments aimed at boosting inter-ethnic equality have also resulted in public-private inequities that stemmed from the state’s ownership of the economy, an oversized civil service, and labour benefits accrued to said service (such as higher minimum wages as well as ostensibly higher purchasing power).

At the same time, Malaysia remains a low-wage society, even for university graduates. The kind of wages being afforded to fresh graduates in Singapore, even on a dollar-to-dollar basis, is almost unthinkable in Malaysia. Both of which combined to form a situation of over-reliance on state employment, low productivity, and the encouragement of talent outflow.

This happens at the same time as Malaysia reports encouraging GDP growth figures, as well as visibly high income consumerist patterns (and housing prices), creating a confounding situation—high growth data with little personal wealth increase; high consumerist options matched by low income— interlocutors stuck in old race-based paradigms are unwilling and unable to articulate.

Tearing apart the old consensus of racial progress as Progress also contributed to the proliferation of political parties and movements in Malaysia as there is no longer a grand narrative to adhere to. Insecurity seeps in. Protectionist sentiments increase. Interest groups multiply, more so in a political economy touched by the many hands of the state.

Second, not only have First World countries such as Japan (via the Look East Policy) expired as role models for Malaysia, the country has, whether by choice or not, begin to experience ‘First World Problems’ of its own. Urban-rural, intra-urban income and opportunity gaps plague Malaysia as much as it plagues Britain. The aforementioned urban poverty might make some uncomfortable for its comparison to African countries, but the same problem has occurred in the United States and New Zealand. Youth un- and underemployment is as much a Malaysian problem as it is a South Korean one.

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Disruptive change brought on by artificial intelligence and social media will reach Malaysian shores like any technological change: rapid, revolutionary, and ruthless. Climate change will impose its effects (for some, it already has) and like most countries, probably with the exception of Europe, it will be an issue that has long-term effects but almost zero short-term incentives for politicians to act on it, more so in a time of climate change denying and anti-vaxxers.

It’s worth noting that out of the manifestos of the three major contenders (BN, PH, and PAS), only PH’s has explicitly addressed the issue of climate change.

To be clear, I am not saying Malaysia is similar to other First World countries. For example, it will have to deal with the problem of growing old before growing rich (enough), unlike Japan which only needs to deal with first half of the problem. Malaysia’s educational institutions are still lagging far behind its First World counterparts, which is probably why Singaporean fresh graduates can fetch salaries Malaysia’s graduates can’t.

Elections are good for deciding pathways of change, only if those pathways are carefully thought-out, comprehensively debated, and creatively sold. For too long Malaysians have strived for a dream to go from Third World to First. It may now need to figure out a way to connect First World and Third.–Nick Chan

What is for sure for Malaysia is that it cannot spend its way out of it. The decline of humanities and social science in universities also means that the state has hoarded much of the critical thinking to its own – a fact to be dealt with regardless of the outcome of the elections. The passing of the anti-fake news bill and the populist streak dispensed by unpopular parties are not promising signs. Like the world writ large, Malaysia has entered terra incognita. It will need to devise ways and philosophies of managing a hyperconnected yet fragmented world. And it needs to do so now not as a nation catching up, but as a member within a global incubator.

Elections are good for deciding pathways of change, only if those pathways are carefully thought-out, comprehensively debated, and creatively sold. For too long Malaysians have strived for a dream to go from Third World to First. It may now need to figure out a way to connect First World and Third.

PSM and GE-14: On Principle,Go It Alone, Michael

April 3, 2018

PSM and GE-14: On Principle, Go It Alone, Michael

by Michael Jeyakumar Devaraj

Read :

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With PRU 14 fast approaching there are many Malaysians, especially urbanites, who feel that a change of government is at hand. Several among them urge the PSM not to “create 3-corner contests” but to take stock of the big picture and go along with the Pakatan Harapan. This would mean standing down all PSM candidates except for myself – I alone will be allowed by PH to contest Sg Siput under PKR logo.

To our friends and supporters who urge this course of action, I would like to point out three facts. The first is that the 3 corner scenario has been foisted upon us by the PH itself as they went ahead and apportioned all the seats in Semenanjung amongst themselves. The PSM, which has indicated since 2011 that we wished to work with the Pakatan Rakyat (as they were then) to bring a change in government, was never invited to any seat negotiations. As a result, wherever we stand in Semenanjung there will be a 3-corner situation. But is it fair to say that the PSM has “created” these?

The second point is even more important – what happens to the Reformasi agenda in the aftermath of  PRU 14? (The day after – the 2 years after). This is I think, the even bigger picture that people who want genuine change must take into account. Can the Pakatan Harapan, which is making a number of tactical compromises, in a good position to oversee the reform agenda, or do we need other political parties around to help push that forward? Reading the PH Manifesto might give some clues –

–          There is no mention of Local Council elections;

–          They seem to be backing away from Free Education at varsity level;

–          Ethnic based policy pitches seem to be making a comeback;

–          Several of their economic policies have a strong neo-liberal flavor.

 Now don’t get me wrong –  the PSM is calling on the people of Malaysia to support the PH in PRU 14 (except in the few seats that the PSM is standing – at this point in time 5/222 Parliament and 11/545 State seats). The PH is the better of the 2 alternatives available at present.

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 But the question that Malaysians who want to see politics moving in a more healthy direction need to ask themselves is – will the PH be able to deliver what we hope for, on their own? Or is there a need for a party like the PSM that keeps reminding all of us that

–          Poverty in Malaysia cannot be comprehensively tackled without addressing the massive transfer of profits out by the 500 richest Multi National Corporations which control the “global chains”;

–          We need to call out the World Bank and the IMF who would like us all to believe that poverty in developing countries is due to our low “productivity”. We are the only political party in Malaysia that is pointing out there is a problem with how productivity of our workers is measured. Consider – the selling price of an electronic chip produced in Bayan Lepas is about a fifth of the selling price of an identical chip produced in California. Based on the current formula, the “productivity” of the Californian worker is five times that of our worker – for the same product, and the same volume of output! The oligopolistic position of the MNCs enables them to suppress the prices of good that they subcontract out to us and other 3rd world countries. So the root problem is not productivity but the excessive market power of the biggest MNCs.

–          We need to counter the perception that liberalizing the economy and giving more scope to businesses is the best way to tackle bureaucracy and inefficiencies in the Public Sector. We believe that such an approach would tend to push costs up and further marginalize the bottom 80% of the population.

–          We are keenly aware that increasingly, the richest business groups in Malaysia have great influence over the political process in the country as they fund both sides of the political divide. Our democracy is being undermined by massive political funding by the business elites. The PSM has been calling for public funding for political parties, and we have suggested mechanisms for doing this in a way that enhances the peoples’ influence;

–          We seem to be the only party that feels there are concrete reasons why the rural Malays are apprehensive about regime change. We have been studying the rural economy for the past few years to ascertain why rural poverty persists despite the billions of ringgit the government has thrown at it. We have the framework of a program to address this problem – a program that has great potential to allay the fears of the rural Malay voters and get them to support our reform agenda.

–          We believe that political leaders have to be more accountable regarding their wealth accumulation. We advocate that those who want to amass wealth should choose some other profession and not come into politics and rip off the people.

–          We are against populist policies like toll-free highways, lower prices for cars and cheaper petrol. Concern for the environment cannot be limited to speeches on Earth Day! We need to cut our carbon footprint – we should use economic incentives to shift to public transport and develop more electric powered vehicles while working on electricity generation from renewables.

–          We believe that automation and AI should be a boon for humankind and not a cause of unemployment and gloom. The rapidly increasing productivity of our global economy means that we do not need to work 12 hours a day to make ends meet. But at present, those who can’t find work can’t consume – its painful both for them and the global economy as aggregate demand will remain sluggish if people do not consume. The solution, as we see it, is a massive increase in the hourly wage rate coupled a 32 hour working week – so people will be able to get a living wage for working less, and all families will have work and businesses will have adequate markets to sell to. We all will then have more time for ourselves, our families, the community, religion the arts sports etc – the full flowering of human potential. I doubt if any other party in Malaysia has a similar vision of a better society if we could order our economy on the basis of social solidarity and not the avariciousness of the Forbes 500.


People might say we are deluded, but we in the PSM really believe that we have a great deal to contribute to the political process in Malaysia – and I haven’t yet touched on the commitment and selflessness of our frontline activists who stand each day with the marginalized groups in our society. That is why we will not quietly “close shop” and retreat to the sidelines of politics.

We remain committed to bring regime change – and we agree that at this point in time, only the Pakatan Harapan is big enough to do this. We are prepared to work with them. We would be quite prepared to compromise and stand down half the seats that we are preparing to stand in – if we are given the remainder as 1:1 contests against the BN (ie the PH backs out of these). Which seats? – That can be settled through discussions and we called for these more than 24 months ago. Only now, at the 11th hour are representatives from the PH reaching out to us. We have replied that we are ready to meet asap.

 I would like to appeal to all Malaysians who support the Pakatan Harapan – you too have a role to play in the resolution of this problem. Tell your PH leaders to deal fairly with the PSM – convince them that the PSM can add value to the reform movement. Sometimes, (and this is the third point I want to raise) it’s your uncritical support for them that leads to a touch of arrogance in the way they deal with others!


Jeyakumar Devaraj

Voodoonomics: How successive governments impoverished Malaysians

March 15, 2018

Voodoonomics: How successive governments impoverished Malaysians

by P.

A QUESTION OF BUSINESS | At least two ways – both very wrong in the longer term – were used to support the export sector in Malaysia in believing that growth through exports was the right thing for a developing country like Malaysia.

Even though there was economic growth, which means more wealth was created, there was impoverishment too. But how could that be? Basically, those who were rich got richer and those who were poor got poorer.

How did the government achieve export competitiveness over the years? Through two measures. First, they reduced the number of things Malaysians generally could buy by opting for a policy which weakened the ringgit. And two, they imported poverty by allowing the uncontrolled import of cheap labour.

Both improved Malaysia’s competitiveness not by raising productivity, although there was some of that, but by cutting down the cost of labour through the import of cheap labour (imported poverty) and lowering the relative value of the currency or currency depreciation, effectively lowering costs in US dollars.

Let’s look at these measures in turn.

1. Currency Depreciation

The ringgit fell in value from around as strong as around RM2.2 to the US dollar in 1980 to around RM4.0 now. The US dollar appreciated by over 80% during the period and the ringgit lost over four-tenths of its value relative to the US dollar.

Consider what that does: if an imported food item cost US$1, it was RM2.2 in 1980. But it rises to RM4 now, an increase of some 82%. But consider it now from the exporter’s perspective: If he sells something for US$1 overseas now, he gets RM4 versus RM2.2 then, again 82% more.

Unless he shares this benefit equitably with the worker – and in practice, he does not – a depreciated currency is a subsidy to exporters and a tax on workers because everyone depends on imported goods and even services for a good part of what they consume. Think in terms of food, clothing and buying from foreign chains.

While a depreciated currency improves the appearance of export figures in ringgit terms, it is still not a long-term solution for the betterment of people because it directly impoverishes a major part of the public by reducing their purchasing power – the amount they can buy with the ringgit.

2. Importing poverty through cheap foreign labour

The next major stupid move successive governments did was to import cheap labour from overseas. Until today, this is largely from Indonesia, Philippines, Bangladesh and India.

In the 1980s, this happened in the plantations affecting mainly Indian Malaysians who were displaced from the estates due to cheap Indonesian legal and illegal labour. Soon, this imported cheap labour spread into all areas, heavily depressing labour wages, affecting all Malaysian labour including Malays.

Was wealth ever created?

How terribly short-sighted! While developed countries were importing skilled and white-collar workers from developing countries, Malaysia, still very much a developing country then (and still is despite what others say), was importing cheap labour from other countries, depressing wages of a large section – probably as much as 50% – of its own workforce.

What kind of a madness was this that at the same time inhibited improved productivity by opening the tap to cheap labour and delayed the invention and adoption of new processes to reduce labour input while improving productivity per person through training and automation?

Till this day, when employers complain of labour shortage, it irritates one to see imported labour at car parks, for instance, being used to hand out parking tickets even after the process has been automated at the entry points.

Drive further in and you see others directing traffic and blowing loudly on whistles. The price of labour is so cheap that imported labour is used for such menial tasks. Are Malaysians so illiterate that they can’t read and follow signs?

As if the whole situation is not ridiculous enough, government officials and ministers regularly regurgitate garbage by saying that labour imports are necessary because Malaysians do not want to do these jobs. Pay them enough and Malaysians will do the job. Perhaps the ministers should send their daughters and sons to do this kind of work for a pittance.

And as many millions of workers are imported, a thriving business sanctioned by the government sprouts up living off the blood and sweat of workers and exploiting employers by making both parties pay ridiculous amounts for legal import, driving them towards employing illegal workers.

One may ask, what then is the alternative? If you want a broad section of the public to get richer and more affluent, the only way is to create wealth for everyone.

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That means improving the overall productivity or output per person so that he or she deserves a higher wage. Not by creating wealth for some and impoverishing most via currency depreciation and depressing wages.

Ah, yes but how do you do that? There is only the hard way. First, improve the quality of education for all and focus on the right kind of education which will make people employable.

Next promote the kind of industries which will increase the dollar value of output per person and ensure that productivity gains drive wealth creation, not cost-cutting.

Third, ensure that as much as possible of the resources go towards improving educational opportunities and building the necessary infrastructure for continuing productivity improvements with as little leakage as possible.

How much of this has been done since independence? Little.

The frightening part

According to Khazanah Research Institute’s (KRI) ‘State of Household Report’ dated November 2014 and Employees Provident Fund (EPF) data on individual incomes which includes salary or wages, overtime payments and bonus in 2013:

  • 96 percent of active EPF members earned less than RM6,000 a month
  • 85 percent less than RM4,000
  • 62 percent less than RM2,000

That’s a telling figure – 62 percent of workers earn less than RM2,000 a month. How can many of them live comfortably with such an income, especially when they have children to support?

Meantime, the median monthly salaries and wages per month for individuals was RM1,700 in 2013 (see chart below). That means half of all workers get this much or less, KRI explains.

And what does an illegal Indonesian worker earn in a month these days? In March, there are 27 working days including Saturdays on which they typically work as well. Industry employers say Indonesian illegal workers cost RM70 a day, casual, that means not contracted. Multiply that figure by 27, we get RM1,890 for the month of March.

Now, the frightening part is that this is more than the RM1,700 median salary for Malaysia which means that 50% of Malaysians earn less than casual Indonesian workers!

Clearly, the majority of the country lives in poverty. Income gains for the wage-earner have not gone up enough. And for a country like Malaysia with abundant resources and which once had the highest income in Asia after Japan, that reflects a failure of government.

If one needs an example of successful economic development, you just need to look across the Causeway which started pretty much from where Malaysia did and look where it is now with the adoption of the right policy mix coupled with an incorruptible government.

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The currency–the Singapore Dollar– is now valued at three times Malaysia’s against about parity in 1980 and its per capita income is among the highest in the world.

We are not saying that Singapore is the perfect state but in terms of economic development, they have beaten us by far and continue to do so.

P GUNASEGARAM still hopes that sometime in the future (perhaps soon?) there will be a government not only of the people but for the people. E-mail him at

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

Enlightenment Now: A Manifesto for Science, Reason, Humanism and Progress by Stephen Pinker –Review

February 27, 2018

Enlightenment Now: A Manifesto for Science, Reason, Humanism and Progress by Stephen Pinker –Review

On economic matters, and especially the question of inequality, he comes perilously close to defending the status quo

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Manifestos are meant to be short and punchy. The first edition of The Communist Manifesto ran to just 23 pages. Martin Luther’s Ninety-five Theses were thin enough to be nailed to the door of the castle church in Wittenberg. So Steven Pinker is stretching the genre with his 450-page doorstopper Enlightenment Now: A Manifesto for Science, Reason, Humanism and Progress.

A respected linguist and cognitive scientist, Pinker has emerged in recent years as prominent defender of the West and allied scientific values, blending rhetoric and data like Christopher Hitchens with a PhD. His 2011 book The Better Angels of Our Nature is a bible of the New Optimists movement, a loose coalition of academics and tech-heads who think the public is far too negative about current affairs.

The first half of Englightenment Now develops that theme further. A barrage of statistics, graphs and listicles shows how life is improving under numerous headings. There are fewer wars, improved living standards and more freedoms. What’s more, a lot of the problems we complain about are symptoms of progress, eg life expectancy has risen by about 10 years in half a century (so, the implication is, stop whining about the pensions “time bomb”).

If Pinker went into politics his slogan would be along the lines of: Keep the recovery going

The stats are persuasive and quite sobering for a journalist. The media comes in for stinging and justified criticism, although Pinker makes clear negativity runs deeper in society.

A little experiment: Imagine all the good things that could happen to you today, and you’d come up with a modest list. Now, think of all the bad things; “it’s endless”, Pinker sighs. “The English language has far more words for negative emotions than positive ones”, and there is a much greater market for curmudgeons than the sort of experts Michael Gove famously disparaged in the Brexit campaign. “Experiments have shown that a critic who pans a book is perceived as more competent than a critic who praises it, and the same may be true of critics of society.”

On major world challenges, like climate change, the threat of nuclear war and the march of the robots, Pinker advocates “radical incrementalism” rather than blind faith in progress. Rejecting the doom-mongers whom he believes are paralysing the public with fear, he steals a line from Swedish academic Hans Rosling to declare: “I am not an optimist. I’m a very serious possibilist.”

That said, on economic matters, and especially the question of inequality, he comes perilously close to defending the status quo. Some may be alarmed to hear that Microsoft founder Bill Gates has described Englightenment Now as his “new favourite book of all time” (having got an advance copy from the author). [] And if Pinker went into politics his slogan would be along the lines of: “Keep the recovery going”. Or as he puts it, in a concluding remark on financial justice: “In some ways the world has become less equal, but in more ways the world’s people have become better off.”

Perhaps it has escaped Pinker’s attention that one of the world’s most prominent critics of relativism today is Pope Francis

Had Pinker finished the book at page 345 he would have got five stars from this reviewer but, in the last section he embarks on a proselytising mission to proclaim “humanism” as the only legitimate moral framework. Pinker concedes that by humanism he means utilitarianism, and thus ignores vast swathes of secular moral theory. He then goes on to blame Friedrich Nietzsche for the emergence of both relativism (the idea that truth is whatever you want it to be) and the Nazis – committing the kind of jump in logic that he’d be quick to criticise in others. Pinker is right to highlight the “liberal” left’s infatuation with Nietzsche but his treatment of the subject is superficial compared, for example, to Richard Wolin’s excellent The Seduction of Unreason (2004).

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Another black mark against Pinker is his claim that theistic morality is an “enemy of humanism”, a bit of rhetoric that he doesn’t back up with convincing evidence. Perhaps it has escaped Pinker’s attention that one of the world’s most prominent critics of relativism today is Pope Francis, a religious leader who has also spoken positively about humanism and the value of the secular state.

Religions have endured because they are stubbornly adaptive and tend to accommodate scientific truths after a time lag. If Pinker wants the revolution in reason to come about – and God knows we all need it – he and other New Enlightenment champions need to build alliances. Progress depends on talking to people outside one’s own peer group.

Soft Barriers to Malay Participation In Commerce

February 12, 2018

Soft Barriers to Malay Participation In Commerce

by Dr. M. Bakri Musa, Morgan-Hill, California
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The Malays are not hardworking, says Dr. Mahathir

Soft barriers to active participation in the money economy are especially pronounced in societies that still exist in or have just exited from the peasantry and subsistence living. That is Malay society at the time of colonization. It is still true for a vast segment even today. The concept of money and the “money economy” is alien to them. Money was equated with greed and unbridled materialism, not a suitable topic in polite conversations. To ask for the monetary value of anything or service was tantamount to insulting its owner or provider. Monetary value was only for showing off your social status as with how much was your dowry or car.

The traditional trading activities in such societies are primitive, restricted to bartering. The worth of such exchanges, as with trading a few coconuts for fixing a leaky roof, is not with the economic value of the coconuts or the repairing of the roof, rather the goodwill generated, one fellow villager helping another.

One can imagine the difficulty members of such a society would have in adjusting to a money economy. If this were to be imposed from the outside world, as with colonialism, free-flow immigration, or unrestrained globalization, the difficulties in adjusting would be compounded.

Typically that society would react in one of two ways. It either withdraws, effectively declaring that it does not want anything to do with this alien value system, or else it blindly embraces the new system enthusiastically and uncritically.

The first reaction is seen in many Muslim countries, and I will pursue this further in the section, “Imprisoned by Religion.” We also see this with North American Indians, India under Nehru, and today’s Myanmar.

With the second, what typically happens is the absorption of only the superficialities and excesses, as can be seen in the immediate post-Mao period of China. After spurning the outside world, China suddenly changed under Deng Xiaoping. In mature capitalistic societies such as America and Western Europe, there is an effective taxation system with redistributionist elements, and where philanthropy is an honored tradition which have evolved and been perfected over time.

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A Towering Malay–A Role Model for Young Malays on how to lie and be utterly corrupt

In China (as in many Third World societies) you are considered stupid if you do not conceal your income from the government and cheat on your taxes. As for charity, when Warren Buffet and Bill Gates, two billionaires known for their charitable deeds as much as their capitalistic instincts, visited China to interest its newly rich in philanthropy, the pair were greeted with silence if not derision. America has its Dukes and Stanfords, elite universities that are testaments to the generosities of their capitalist titans. China has none as yet, and possibly never will.

It is the rare society that gets it right immediately. The hope is that it will learn and stabilize eventually. Otherwise those excesses would lead to instability. The Chinese leadership today is very much aware of the severe negative consequences to the excesses and flamboyance of its politburo members and their children, especially when displayed abroad. There is as yet no such abhorrence with the excesses, corrupton, and flamboyance of the Malay elite–our sultans and UMNOputras.

It was only a generation or two ago that Malay society was deep in its subsistence and agrarian mode, typical of the kampong lifestyle. Most Malays lived off the land, and gotong-royong (communal effort) was the norm; bartering or trading of goods and services were strange concepts. Instead you helped each other, with no financial considerations.

With the coming of colonial rule and with it, capitalism, Malays were thrown into the money economy precipitously without any transition. The later influx of immigrants further compounded the issue. The immigrants by default and out of necessity had to adapt to the money economy to survive; they had no social or physical support system as with Malays and our kampong lifestyle. This earlier entry into the money economy by the immigrant population conferred significant advantages vis a vis the native peasant population.

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The Wira Melayu (The Malay Hero) heading towards extinction


It was no surprise that Malays, specifically those in UMNO, at the dawn of our country’s independence were clearly anti-capitalistic, except for its top leader, Tunku Abdul Rahman, who remained unabashedly committed to capitalism. To those in UMNO during its infancy, the term kaum kapitalis was derogatory, comparable and perhaps synonymous with kaum kolonialist (colonialist class/hordes). That soon changed when they saw the tangible results of profits and wealth. This Malay embrace of capitalism was accelerated under Mahathir.

Like the Chinese in China today, Malays embrace only the primitive or animalistic form of capitalism, its raw and exploitative version, and the associated quick bucks and short-term mindset. Also akin to modern China, corruption, collusion, and influence peddling rapidly became the norm.

If those are not formidable enough obstacles, then there is yet another significant “soft” barrier to Malay entry into commerce–our religion, or more accurately our particular and myopic interpretation of the Koran and Hadith (sayings and practices of Prophet Muhammad, s.a.w.).

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The New Malay (as defined by the Malaysian Constitution)

I believe that Islam is fully consistent with and supportive of the ideals and practices of capitalism. Nothing in my reading tells me otherwise. After all, our Prophet Muhammad, s.a.w. (May Allah bless his soul) was a successful trader before receiving his prophethood. That reflected the profession’s high standing with Allah as much as His appraisal of the man.

One thing is certain; Islam cannot be supportive of atheistic communism or its close cousin, socialism. It is true that the egalitarian ideals of socialism may appeal and indeed have to many Muslims and can be construed as being consistent with those of Islam. On closer reading however, equality is not the ideal of Islam; indeed that would be against human nature. Allah in his wisdom has created us in all our diversities, with different skin colors, speaking different languages, and having diverse cultures. He has also endowed us with different talents and abilities.

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Equality in such a setting would be an elusive goal, as well as a cruel illusion. Those in power would determine what equality would mean. In America at the time of the declaration of independence, the “We, the people” phrase in the preamble of its constitution for whom “equality” would apply were restricted to only tax-paying white males. They alone were entitled to vote and have the protection of the constitution. Slaves, women, and those who did not own land were excluded. Only later was that “equality” extended to them.

Likewise with meritocracy; those already in power would determine what attributes are considered meritorious.  Meritocracy as a concept could easily be used to justify continued suppression and denial of opportunities to others not currently favored.

Islam emphasizes justice, not equality. We cannot treat an orphan in the same “equal” manner as the son of a privileged family. That would be the height of injustice. Indeed to be just, we should do more for the orphan, which would also be the right thing to do. The great American jurist Oliver Wendell Holmes said it best, “It is a wise man who said that there is no greater inequality than the equal treatment of people who are unequal.”

It is easy for today’s observers, Muslims included, to conclude that Islam is against capitalism, or at least wealth creation and accumulation. Muslim countries, even those blessed with abundant natural resources like oil and gas, are over represented in the poor and deprived category. In Malaysia, Malays, who by statutory definitions are Muslims, lag behind the other races in all socioeconomic indices. That there was a time when Muslims were ahead of the curve has been all but forgotten, and if recalled, only for syok sendiri (self-gratification) exercises and not as a learning opportunity.

Capitalism is not un-Islamic. On the contrary, many of the practices and consequences of capitalism are very much in tune with the aspirations of our faith. Both capitalism and Islam are very adaptive. If the communist Chinese could adopt capitalism and imbue it with Chinese characteristics and sensibilities, and in the process emancipate hundreds of millions of its people out of poverty, I fail to see why we cannot do the same. Meaning, imbue capitalism with Islamic characteristics.

Wealth Concentration Continues to Increase

January 23, 2018

Wealth Concentration Continues to Increase

SYDNEY and KUALA LUMPUR, January 23, 2018 (IPS) – As the ‘masters of the universe’ gather for their annual retreat at Davos, the World Economic Forum (WEF) has just published its Inclusive Development Index (IDI) for the second time.

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After moderating from the 1920s until the 1970s, inequality has grown with a vengeance from the 1980s as neoliberal ascendance unleashing regressive reforms on various fronts.

Sensing the growing outrage at earlier neo-liberal reforms and their consequences, as well as the financial sector bail-outs and fiscal austerity after the 2008-2009 global financial crisis, politicians and business leaders have expressed concerns about inequality’s resurgence.

The record is more nuanced. While national level inequalities have grown in most economies over the last four decades, international income disparities between North and South have actually narrowed, largely due to growth accelerations in much of the latter.

But while income inequality trends have been mixed, wealth concentration has picked up steam, recently enabled by the low cost of credit, thanks to ‘unconventional monetary policies’ in the North.

According to the World Inequality Report 2018, the top 1% in the world had twice as much income growth as the bottom half since 1980. Meanwhile, income growth has been sluggish or even flat for those with incomes between the bottom half and the top 1%. Oxfam’s new Reward Work, Not Wealth report reveals that the world’s wealthiest 1% got 82% of the wealth generated in 2017, while the bottom 50% saw no increase at all!

The world’s 500 richest, according to Bloomberg Billionaires Index, became US$1 trillion richer during 2017, “more than four times” the gain in 2016, as their wealth increased by 23%, taking their combined fortunes to US$5.3 trillion. According to the UBS/PwC Billionaires Report 2017, there are now 1,542 US dollar billionaires in the world, after 145 more joined their ranks in 2016.

Worsening wealth inequality

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Meanwhile, the latest Credit Suisse Report found that the world’s richest 1% increased their share of total wealth from 42.5% at the height of the 2008-2009 global financial crisis to 50.1% in 2017, or US$140 trillion.

It shows that the bottom half together owned less than 1% of global wealth, while the richest 10% owned 88% of all wealth, and the top 1% alone accounted for half of all assets. Thus, global household debt rose by nearly 5% in 2017 despite total wealth increasing by US$16.7 trillion, or 6.4%.

The Report attributes this to uneven asset price inflation with financial asset prices growing much faster than non-financial asset values. Recent unconventional monetary policies of the world’s major central banks contributed to such asset price inflation.

The European Central Bank has acknowledged that quantitative easing (QE) has fuelled asset price inflation. Kevin Warsh, a former US Federal Reserve Board member, has argued that QE has only worked through the ‘asset price channel’, enriching those who own financial assets, not the 96% who mainly rely on income from labour.

An IMF study found that ‘fiscal consolidation’, typically involving austerity, has significantly worsened inequality, depressed labour income shares and increased long-term unemployment.

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MOZAMBIQUE, Beira, Grande Hotel, opened 1955 during portuguese colonial time, today some thousand homeless people living here.

Another IMF research report shows that capital account liberalization — typically recommended to attract foreign capital inflows without due attention to the consequences of sudden outflows — has generally significantly and persistently increased national-level inequalities.

The World Inequality Report 2018 also observed that rising income inequality has largely been driven by unequal wealth ownership. Privatization in most countries since the 1980s has resulted in negative ‘public wealth’ — public assets minus public debt — in rich countries, even as national wealth has grown substantially. Over recent decades, countries have become richer as governments have become poorer, constraining governments’ ability to address inequality by increasing public provisioning of essential services.

An earlier IMF study also noted that the neoliberal reforms — promoting privatization, cutting government spending, and strictly limiting fiscal deficits and government debt — have also increased economic inequality.

On average, net private wealth in most rich countries rose from 200–350% of national income in 1970 to 400-700% recently as marginal tax rates for the rich and super-rich have fallen. The Oxfam report identifies tax evasion, corporate capture of public policy, erosion of workers’ rights and cost cutting as major contributors to widening inequalities.

The IMF’s recent Fiscal Monitor acknowledges that regressive tax reforms have caused tax incidence to be far less progressive, if not regressive, while failure to tax the rich more has increased inequality. Besides new tax evasion opportunities and much lower marginal income tax rates, capital gains are hardly taxed, encouraging top executives to pay themselves with stock options.


It is quite remarkable how increasing wealth concentration has been described and presented to the public. For example, the Allianz Global Wealth Report 2016 has described the trends as ‘inclusive inequality’, claiming a growing global middle class even as inequality has been rising.

Similarly, the Credit Suisse Report argues that wealth distribution is shifting as the world becomes wealthier, thus lowering barriers to wealth acquisition. Increasing wealth and income inequality are thus merely reflecting faster asset accumulation, including the pace at which new millionaires are being created.

Josef Stadler, UBS head of global ultra-high net worth and lead author of the UBS/PwC Billionaires Report 2017, decries “the perception that billionaires make money for themselves at the expense of the wider population” as incorrect, attributing billionaires’ fortunes to the strong performance of their companies and investments.

Besides their philanthropic contributions and patronage of the arts, culture and sports, 98% of billionaires’ wealth are said by him to contribute to society as the world’s super-rich employed 27.7 million people. Rather than making money from their employees’ efforts, billionaires apparently make private welfare payments to them out of the goodness of their hearts!