‘Minister of Finance Inc’ – A Political Economist’s Study of Minister of Finance Incorporated and GLICs in Malaysia–Terence Gomez


September 30, 2017

‘Minister of Finance Inc’ A Political Economist’s Study of Minister of Finance Incorporated and GLICs in Malaysia–Terence Gomez

by M Krishnamoorthy @www.malaysiakini.com

 

Dr. Terence Gomez, in his latest book, “Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia”, traces the government’s role in the corporate sector. He provides an assessment of Malaysia’s new political economy, with a focus on ownership and control of the corporate sector.

Gomez, who is a Professor of Political Economy at Universiti Malaya, is also the author of “Politics in Business: UMNO’s Corporate Investments”, a pioneering publication in 1990, which traced how UMNO secured a huge equity interest in Malaysia’s corporate sector.

 

In “Minister of Finance Incorporated”, Gomez (photo above) and his team of researchers offer another pioneering assessment of Malaysia’s corporate sector, though their focus is now government-linked investment companies (GLICs), a type of state enterprise that has long prevailed in the economy but has not been analysed.

Gomez argues that corporate power is now concentrated in these GLICs that are ultimately controlled by the Minister of Finance. Interestingly, Gomez admits that these GLICs are well-managed by highly qualified professionals, though these people can be subservient to the dictates of the Minister of Finance.

By focusing on the GLICs, “Minister of Finance Incorporated” ignites interesting debates about the role of the government in the economy, an issue that requires thoughtful consideration given their dominant presence in the corporate sector. Through in-depth research, novel insights are provided into this question of government ownership and control of corporate Malaysia.

This review is presented as a question-and-answer dialogue with the author, to draw attention to this study’s major findings. Much of what is outlined below is from this book.

The Interview

Professor Gomez, in your latest book, “Minister of Finance Incorporated”, what are your major findings?

Malaysia’s political economy has undergone a major transition since the 1990s that has escaped public attention.

Corporate power has shifted from UMNO and well-connected businessmen to the government. Huge business groups controlled by the government have emerged, seen in the dominance that a mere seven GLICs have over the corporate sector.

During this transition, one extraordinary outcome was the removal of UMNO, its members and the business associates of party leaders as owners of publicly-listed government-linked companies (GLCs).

 

UMNO now has direct equity ownership of only one quoted company, the media-based Utusan Melayu, while no UMNO member figures as a major corporate player.

UMNO’s absence from the corporate sector has major implications. The power nexus involving politics and business has fundamentally shifted at the federal level.

If this political-business nexus once involved numerous powerful UMNO politicians who had enormous influence over the corporate sector, economic power is now concentrated in the Office of the Minister of Finance.

Who are the GLICs?

Seven institutions have been classified by the government as GLICs. These are the Minister of Finance Incorporated (MoF Inc), the government’s holding company, which participates actively in corporate manoeuvres and owns a diverse range of firms known as government-linked companies (GLCs).

The sovereign wealth fund, Khazanah Nasional Berhad, is policy-based and implements major plans, including venturing abroad to support the government’s business internationalisation effort.

 

 

The investment trust fund, Permodalan Nasional (PNB, or National Equity Corporation), is portfolio-oriented, though with a policy agenda to redistribute wealth more equitably between the nation’s ethnic groups.

Two savings-cum-pension-based funds, the Employees’ Provident Fund (EPF) and the Kumpulan Wang Persaraan Diperbadankan (KWAP, or Retirement Fund Incorporated), are portfolio-based with an equity interest in a vast number of companies.

Lembaga Tabung Angkatan Tentera (LTAT, or Armed Forces Fund Board) is also a savings-cum-pension-based fund but is active in the management and development of large businesses in various sectors.

 

 

Lembaga Tabung Haji (LTH, or Pilgrims Fund Board), though portfolio-based, has an organic form of enterprise development, active in the development of Islamic-based products and services.

How are these GLICs owned and controlled?

The Ministry of Finance sits at the apex of a complex business group structure comprising its holding company, MoF Inc, as well as other GLICs, quoted GLCs and a huge number of unquoted private firms.

MoF Inc is the “super-entity”, given its enormous influence over the corporate sector through its substantial ownership and control of the other GLICs and the financial sector, comprising Malaysia’s leading commercial banks. Through its ownership of these commercial banks, the government can control the economy indirectly by acting as a lender to private firms.

However, MoF Inc’s vast network of business interactions constitutes only one part of the government’s complex system of control over the corporate sector. State governments have a similarly sizeable interest in the corporate sector.

In this system, the Board of Directors are important. Directorships function as a primary avenue through which the government can dictate decision-making within GLICs and GLCs.

Our comparison of ownership and directorate patterns in 1996 (prior to the 1997 currency crisis) and 2013 revealed a new phenomenon.

 

Only a small number of UMNO members remain as directors of these government-owned enterprises. These findings are particularly astonishing as Umno remains a party riddled with money politics, patronage and rent-seeking.

How did Malaysia get to this point?

Three major events have contributed to these transitions where the Prime Minister and GLICs have emerged as economic powerhouses. The first was the implementation of the New Economic Policy (NEP) in 1971, which allowed these enterprises to gradually acquire a major presence in the corporate sector.

The involvement of the GLICs in the corporate sector diminished with the active promotion of privatisation from the mid-1980s. With this spate of privatisations, major enterprises fell under the ownership and control of UMNO and well-connected businesspeople.

The second defining event was the 1997 currency crisis and the momentous intra-elite political feuding that ensued the following year. The GLICs’ bailout of ailing well-connected companies and their takeover of firms associated with ousted Umno leaders led to their re-emergence as major actors in the corporate sector.

 

The third defining moment was when reform of the GLICs and GLCs was initiated by Dr. Mahathir Mohamad in the late 1990s, though actively implemented by Abdullah Ahmad Badawi (photo) from 2003. Najib Abdul Razak continued these reforms when he took office in 2009 as Prime Minister.

The current concentration of economic power in the office of the Prime Minister is particularly salient because when Najib took office in 2009 he voiced his intention to transfer GLCs to the private sector, arguing that the private sector should function as the primary engine of growth.

Unlike Mahathir, Najib appeared personally uninterested in business as a government tool for economic and corporate development when he came to power. Najib, however, soon came to realise the significant economic influence that the GLICs have over the corporate sector.

Why was this type of corporate control structure created?

This complex system of ownership and control of the corporate sector is not one that was designed or envisioned by ruling elites.

In fact, since the 1980s, all Prime Ministers – Mahathir, Abdullah and Najib – have persistently advocated privatisation of the GLCs on the assumption that these enterprises would function far more effectively and productively if under private ownership.

Even when the NEP was conceived, the plan was to transfer corporate equity acquired by the GLICs to bumiputeras, in order to redistribute wealth more equitably among the ethnic groups.

When Mahathir’s vision of creating business groups led by corporate captains was dismantled by the 1997 currency crisis, the GLICs and GLCs were deployed to bail out well-connected ailing, debt-ridden enterprises.

 

When a bitter feud ensued between Mahathir and his Minister of Finance, Anwar Ibrahim, over these bailouts, Anwar was ousted from public office and his business allies lost control of their corporate assets.

When a similar feud ensued between Mahathir and Daim Zainuddin, Anwar’s replacement as minister of finance, companies controlled by his allies and UMNO were channelled to the GLICs. Having had persistent feuds with his trusted allies who he had appointed as Minister of Finance, prime minister Mahathir then took charge of this ministry.

The new structure of Malaysia’s political economy has also arisen out of the need for the UMNO President to reduce the influence of party warlords.

UMNO’s major businesses now under the GLICs include media companies that own the major newspapers, The New Straits Times and Berita Harian, as well as TV3, the party’s cooperative KUB, the huge construction-based UEM Group, the hotel-based Faber Group (now UEM Adgenta) and the Bank of Commerce, now a part of Malaysia’s third largest banking enterprise, CIMB Group. Control of these companies ultimately falls under MoF Inc.

If UMNO members once had many sources of patronage, what is the situation now?

UMNO members now have only one source if they wish to obtain access to federal government-generated economic concessions. This is profoundly problematic in terms of public governance as the minister of finance concurrently holds the position of prime minister, a situation that does not prevail in democracies.

In this governance structure, there is the possibility of checks and balances being deeply undermined, opening space for abuse of power that can have serious implications on the economy and the corporate sector.

Who is accountable for the running of the companies?

The board of directors of these companies are accountable. While most of these directors are professionals who manage the GLCs in a productive manner, since they are appointed by the minister of finance, they can be compelled to follow his dictates.

There are also serious concerns in some GLICs. In LTH, a number of its directors, including its chairperson, are UMNO members who are elected representatives but hold no position in government. LTAT is led by Lodin Kamaruddin (photo), a longstanding close business associate of Prime Minister Najib.

 

There is sufficient evidence that these GLICs could be vulnerable to political interference unless sufficient oversight measures and institutional reforms are introduced to ensure they are well-insulated from such abuse.

In the boards of directors of the GLICs and GLCs, what has also increased is the number of former bureaucrats. These ex-civil servants, like the professional elite, have no political influence. However, they also appear to function as mere figureheads.

The most influential decision-makers are the chairpersons of these boards and the managing directors who, when necessary, take the cue from the Minister of Finance, further indicating his overwhelming influence over the corporate sector.

There is evidence of “inner circles” among the GLICs. One inner circle revolves around Nor Mohamad Yakcop, until recently the deputy chairperson of Khazanah. Professional managers groomed by him lead the GLICs and GLCs.

An inner circle is also evident in the media sector. An obscure private firm, Gabungan Kesturi, controls the leading media enterprise, Media Prima, along with PNB.

The directors and shareholders of Gabungan Kesturi are Shahril Ridza Ridzuan and Abdul Rahman Ahmad, both groomed by Nor Mohamad. Shahril is the CEO of EPF, which also owns a huge interest in Media Prima. Rahman was appointed the CEO of PNB in 2016.

The use of private companies like Gabungan Kesturi obscures the identity of the ultimate shareholder, the Minister of Finance, as well as the extent of the state’s control over major media companies.

Did our leaders groom and place executives in GLICs for their vested interests?

Daim Zainuddin (photo) groomed and placed professionals he had trained as executives and owners of companies associated with UMNO.

 

A similar practice of grooming young professionals as executives and CEOs emerged in the late 1990s after well-connected firms came under the control of the GLICs. Professionals trained by Nor Mohamed took over the management of these enterprises.

However, while Nor Mohamad and Daim groomed and placed professionals in control of major quoted enterprises, their reasons for doing so differed.

As Minister of Finance, Daim, also UMNO’s Treasurer and a longstanding businessperson, appeared intent on securing enormous control over the corporate sector to serve his vested business interests. The professional-managerial team groomed by Nor Mohamed was not necessarily trained to manage the GLICs and GLCs.

What are the possible repercussions of this ownership and control mechanism?

Through this pyramiding system, with the Minister of Finance at the apex, the GLICs and GLCs can be subjected to considerable abuse. This pyramiding system allows the minister to secure numerous political and business benefits from the GLICs and GLCs, as well as abuse them.

It is noteworthy that MoF Inc has ownership and control of controversial companies such as 1MDB and the National Feedlot Corporation (NFC).

The GLIC-based business groups have control over companies through majority equity ownership, which accords them significant voting rights. This has serious implications for minority shareholders, and the economy, in the event of abuse of the companies.

Our study noted that the EPF appears to have been forced to take control of RHB Capital from a firm linked with the former Chief Minister (and now Governor) of Sarawak, Abdul Taib Mahmud (photo above ). This financial institution has long been an enterprise that has come under the control of a number of well-connected people and GLCs.

Politics evidently matters, influencing how these enterprises are run. Policies also matter as they shape the different ways in which these institutions are managed.

There can be a link to between politics and policies, especially redistributive policies and enterprise development strategies when determining how these enterprises are employed.

After his party fared badly in the 2013 General Election, Najib announced that contracts and other concessions would be channeled through GLICs and GLCs to bumiputeras, justified by his new ethnically-based affirmative action policy that targeted this ethnic group. This was evidently to consolidate the political support of this ethnic community. 

What reforms are required to deal with this issue?

These powerful GLICs are a clear manifestation of high concentration of corporate ownership in the state. This concentration of corporate wealth is justifiable only if GLICs are managed in an accountable and transparent manner.

Inevitably, to inspire confidence among private investors, political reforms are imperative to enforce stringent institutional checks and balances by independent oversight institutions.

 

The technocratic professional elite at the epicentre of this GLIC-GLC network can remain, but must be subjected to close scrutiny by parliamentary action committees led by the Opposition. And the Prime Minister cannot also serve as the Finance Minister since it is an obvious case of conflict of interest.

Twenty years on: The Asian Financial risis and Asian Monetary Fund (AMF)


September 28, 2017

Twenty years on: The Asian Financial risis and Asian Monetary Fund (AMF) 

David Nellor

http://www.eastasiaforum.org

 

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Proposals for an Asian Monetary Fund (AMF) dominated corridor conversations at the 1997 IMF–World Bank annual meetings in Hong Kong. The Asian financial crisis had erupted a few months earlier and was engulfing the region.

The United States vetoed the idea, framing the proposal as the ‘IMF versus AMF’ where any type of AMF would undermine the IMF’s central role in the global financial system. Twenty years on, the circle has been closed, with the IMF launching a framework for collaborative action with regional arrangements.

 

Arguably, at that early stage of the crisis, the US position was not unreasonable. The mood of Asian finance officials was one of denial. Set against the backdrop of the Asian miracle, it was inconceivable, they thought, that self-inflicted policy distortions — quasi-fixed exchange rates combined with independent monetary policy — as well as compromised financial sector supervision helped drive the crisis. The idea of unconditional financing — not tied to reform — that would avoid reform was, they thought, a defendable proposition.

Still, the push for an AMF did suggest gaps in the global and regional financial architecture. What followed was a struggling ASEAN seeking to catch up, stop gap consultative groups like the Manila Framework Group, and a sequence of ad hoc parallel financing arrangements from the ‘Friends of Thailand’ to Indonesia’s so-called ‘second line of defence’.

The crisis broke on 2 July 1997. By late July, plans led by Japan and in cooperation with the IMF were underway for a regionally based meeting on Thailand. This informal grouping hosted by Japan in Tokyo on 11 August, became the ‘Friends of Thailand’. The concrete outcome of the meeting was a series of financial commitments by seven countries and the multilaterals, with the United States notably absent. The absence of the United States was perhaps shaped by congressional dissatisfaction with the Clinton Administration’s financial support of Mexico, which had been provided directly by the US Treasury without congressional approval during Mexico’s 1994 crisis.

Almost remarkably, this rushed US$17.2 billion collaborative financing arrangement was the regional success story from a sequence of ad hoc efforts to provide funding to mitigate the consequences of the crisis. The support was structured as a series of bilateral arrangements between Thailand and each country. Each drawing under these agreements was triggered in parallel with Thailand’s drawings under the IMF supported program. Commitments were credible as they were both conditional and fulfilled step by step.

By contrast, Indonesia’s more than US$40 billion package — including an US$18 billion ‘second line of defence’ through bilateral support — failed. The enormous scale of the funding, especially at that time, was intended to be a ‘shock and awe’ approach signalling to financial markets that stability was assured.

Some thought the second line would never need to be drawn and perhaps commitments were made with that expectation. But markets saw through this and in short order sufficient questions arose about the willingness of countries to follow through on commitments. This triggered uncertainty at best and arguably made the situation worse.

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The South Korean experience of international support was different. The concentration of external debt through the South Korean banking system enabled the coordination of a relatively effective capital control mechanism, creating a window to develop a market-based debt restructuring in the first half of 1998. Here the US Federal Reserve played a leading role, along with other central banks, supported by the technical contributions of IMF and South Korean officials.

Asia’s leaders were unanimous in supportive statements about the need for a regional crisis response mechanism including funding. Yet there were issues that continue to pose a challenge for the credibility of arrangements, such as the ASEAN+3 Chiang Mai Initiative, today. Lee Kuan Yew, while not opposed to an AMF, cautioned that such an arrangement would need to do more than provide funding that might enable crisis countries to avoid essential reform. He went on, ‘I do not see any Asian group of governments in the AMF strong enough to tell … President Suharto, “You will do this or we will not support you”. If you don’t say that and you support him, that’s money down the drain’.

The Manila Framework Group was established in a November 1997 meeting as the direct result of the failed AMF discussions in Hong Kong. It would serve as a surveillance forum of 14 APEC economies meeting regularly and on an ad hoc basis through to the end of 2004. It played an important role by, for example, triggering a June 1998 Tokyo meeting with the G7 to respond to destabilising global currency moves. The G20 would also start in the aftermath of the Asian financial crisis.

ASEAN was a participant but not a driver when the crisis broke. Its most concrete response came a few years later when, along with the ASEAN+3 countries, the Chiang Mai Initiative was launched in 2000. It was a modest first step especially as operational modalities remained to be defined for at least a decade and only in 2016 was there a ‘dry run’ to test the Chiang Mai Initiative’s capacity to respond to crisis.

Indonesia’s hastily developed Deferred Drawdown Option, with multilateral and bilateral support during the Global Financial Crisis, was another ad hoc instrument showing that gaps in the regional financial architecture persisted well into the 2000s.

Twenty years on, the IMF has spelled out plans for how to make the global financial safety net more effective through collaboration with regional financial arrangements — an outcome that seemed remarkably distant in the midst of the Asian financial crisis.

David Nellor is a Jakarta-based consultant. He was based in Asia for the IMF throughout the Asian financial crisis and participated in discussions on regional arrangements.

 

ADB Predicts Stronger 2018 for Developing Economies


September 28, 2017

ADB Predicts Stronger 2018 for Developing Economies

by  http://www.asiasentinel.com

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Asia’s developing economics have performed better than forecast earlier, according to the latest assessment by the Asian Development Bank in its mid-term review of the 2017 Asian Development Outlook. Some further slight improvement is forecast for 2018. However, much depends on external circumstances which have largely driven better-than-forecast 2017 performance.

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Among Southeast Asian countries, Malaysia’s public finances look less healthy than most of its peers.

 

Most notable has been a strong pickup in electronics exports after a weak 2016. This has been the main driver of the sharpest growth pick, Malaysia, where the forecast for GDP growth for the full year has been raised by a full percentage point to 5.4 percent, with electronics and palm oil exports as drivers plus consumption growth driven by higher wages.

Malaysia’s economy had appeared to shrug off negative effects of the sharp fall in the ringgit in 2015-16, though there was an inflation spike. Now stable, the currency seems unlikely to rebound much further unless the current account surplus surges. The ADB’s one and rather understated caveat looking ahead is the government deficit, which has surged to over 5 percent of GDP against an official target of 3 percent. Much of the government debt is foreign owned. A tax increase is necessary before long, the outlook warns.

Among Southeast Asian countries, Malaysia’s public finances look less healthy than most of its peers. Government deficits in the Philippines, Indonesia and Thailand are all around 2 percent of GDP as revenues have been rising almost fast enough to accommodate increased infrastructure spending. Progress in the Philippines in particular has brought investment up to 25 percent of GDP. This is not the result of a particularly strong 2017 but of a continuing surge since 2012. However, ambitious further spending on infrastructure will be dependent on revenues, and on progress in implementing public/private partnerships (PPPs).

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In theory, according to the development outlook, the Philippines has an advanced framework for such projects, but few have been realized. Much too will depend on the progress of proposed tax reforms and whether the reforms have a positive net impact on revenues and investment. Private sector credit growth will also have to slow down after an 18 percent leap this year.

The development outlook is silent on the costs of rebuilding Marawi City after the recent battle but will inevitably set back other spending. It also avoids mentioning foreign investor disquiet over President Rodrigo Duterte’s drug war and threats of martial law. Meanwhile a continuing rise in remittances up 8.7 percent in the first half of 2017 is underpinning consumption and feeding through to the food processing and building materials sectors of manufacturing.

While manufacturing in the Philippines is performing adequately by its own modest standards, Indonesia’s manufacturing sector is a drag on an economy continuing to jog along at 5 percent growth. The development outlook’s 2017 forecast is unchanged at 5.1 percent despite a fall in the current account deficit and increased government spending on infrastructure which could push the budget deficit close to its 3 percent of GDP ceiling. Inflation remains low by local standards at 4 percent. Foreign investment has been flowing strongly but its impact on manufacturing remains modest and investment in mining is restrained by policy uncertainties.

The ADB outlook warns of the need to maintain flexible exchange rate policy to absorb possible shocks from international markets, be they commodity prices or interest rates.

Slightly higher GDP growth is forecast for 2018 partly to a spending boost from the Asian Games to be held in Jakarta and Palembang but there is not much sign of the 6.5-7.0 percent growth which Indonesia should be able to achieve.

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Thailand should in principle be able to do a lot better than its 3.5 percent growth. Tourism, agricultural prices and other exports have done well and created a massive current account surplus of 8.5 percent of GDP this year and probably over 6 percent in 2018. The surplus has underpinned a strong currency and inflation below 1 percent. But private investment remains very weak, reflecting political and other uncertainties.

Although Thailand’s own population increase is now almost static, workers from Cambodia and Myanmar continue to undergird the labor force and Bangkok’s service industries to benefit from growth in Myanmar and Vietnam. But capital is leaving for better or safer projects elsewhere. Government infrastructure spending will continue to rise. The budget deficit, now 2.8 percent of GDP, has room to rise as government debt is only 32 percent of GDP. But, though the development outlook doesn’t say so,  the traditionally conservative finance ministry is likely to keep a  rein on spending regardless of the pronouncements of the political leaders.

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Fiscal conservatism can also go too far in Singapore, suggests the ADB’s outlook in one of its rare critiques of government. It states: “policy makers should consider placing a high priority on reining in persistent current account surpluses, which are primarily the product of an unusually high savings rate. Even a modest adjustment to this perennial macroeconomic imbalance would boost domestic demand and raise the economy’s potential growth rate. To this end, the government has ample resources for fiscal expansion.”

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Fiscal austerity remains a necessity in Vietnam.

Fiscal austerity however remains a necessity in Vietnam. This year the government deficit will be about 4 percent of GDP but with total debt over 65 percent there is scant room for a surge in public spending and a repeat of past cycles of inflation and devaluation.

There is pressure for more spending to offset what has been a slightly disappointing year so far, with GDP growth likely to be 6.3 percent against an earlier 6.5 percent projection with a small pickup in 2018. Vietnam has been hit by declining coal and oil output and prices partly offsetting strong manufacturing growth driven by foreign investment, and tourism. However both may ease off in 2018. The currency has been firm despite a small deterioration in the current account, and inflation is only around 4.5 percent.

Failure to resolve old non-performing loans remains a drag on the financial sector. There has been no consolidation in the banking sector and sale of equity by state firms has been slow despite a buoyant stock market driven in part by foreign portfolio flows.

Rethinking Government–It ain’t bad after all, says Fareed


September 11, 2017

Rethinking Government–It ain’t bad after all, says Fareed

by Dr. Fareed Zakaria

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We are living in an age of revolutions, natural and human, that are buffeting individuals and communities. We need government to be more than a passive observer of these trends and forces. It needs to actively shape and manage them. Otherwise, the ordinary individual will be powerless. I imagine that this week, most people in Texas, Florida and Puerto Rico would be delighted to hear the words “I’m from the government, and I’m here to help.”–Fareed Zakaria

https://www.washingtonpost.com

Seeing the devastating effects of Hurricanes Harvey and Irma and of wildfires out West, one cannot help but think about the crucial role that government plays in our lives. But while we accept, even celebrate, the role of government in the wake of such disasters, we are largely blind to the need for government to mitigate these kinds of crises in the first place.

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Ever since President Ronald Reagan, much of the United States has embraced an ideological framework claiming that government is the source of our problems. Reagan famously quipped, “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.”

Reagan argued for a retreat from the vision of an activist state and advocated instead a strictly limited role for government, one dedicated to core functions such as national defense. Outside of these realms, he believed, government should simply encourage the private sector and market forces.

Reagan’s worldview grew out of the 1970s — a period marked by fiscal mismanagement, government overreach and slowing growth. It might have been the right attitude for its time. But it has stayed in place for decades as a rigid ideology, even though we have entered a new age in which America has faced a very different set of challenges, often desperately requiring an activist government. This has been a bipartisan abdication of responsibility.

For decades now, we have watched as stagnant wage growth for 90 percent of Americans has been coupled with supercharged growth for the richest few, leading to widening inequality on a scale not seen since the Gilded Age. It has been assumed that the federal government could do nothing about this expanding gap, despite much evidence to the contrary.

We have watched China enter the global trade system and take advantage of its access to Western markets and capital, while still maintaining a massively controlled internal economy and pursuing predatory trade practices. And we have assumed that the U.S. government can’t do anything about it, because any action would be protectionist.

We watched as financial institutions took on more and more risk, with other people’s money, effectively gambling in a heads-I-win, tails-you-lose system. Any talk of regulation was seen as socialist. Even after the system blew up, causing the worst economic crisis since the Great Depression, the calls soon came to deregulate the financial sector once again because, after all, government regulation is obviously bad.

In this same period, technology companies have grown in size and scale, often using first-mover advantage to establish quasi-monopolies and quash competition. The digital economy was supposed to empower the individual entrepreneur, but it has instead become one in which four or five companies utterly dominate the global landscape. A new technology company today aspires simply to be bought by Google or Facebook. And we assume that the federal government should have had no role in shaping this vast new economy. That would be activist and bad. Better for government to simply observe the process, like a passive spectator watching a new Netflix drama.

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And then there is climate. These hurricanes have not been caused by global warming, but their frequency and intensity have likely been magnified by climate change. Particularly calamitous hurricanes have their names retired, and in the last 20 years there have been about as many names retired as in the preceding 40 years. California has had more than 6,400 wildfires this year. The 17 hottest years on record have all taken place in the past two decades.

And yet, we have been wary of too much government activism. This is true not just in tackling climate change but in other areas that have contributed to the storms’ destructive power. Houston chose not to have any kind of zoning that limited development, even in flood-prone areas, paving over thousands of acres of wetlands that used to absorb rainwater and curb flooding. The chemical industry has been able to persuade Washington to exercise a light regulatory touch, so there is limited protection against fires and contamination, something that was made abundantly clear in the past couple of weeks. And now, of course, low-tax and low-regulation Texas has come to the federal government, hat in hand, asking for more than $150 billion to rebuild its devastated state.

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We are living in an age of revolutions, natural and human, that are buffeting individuals and communities. We need government to be more than a passive observer of these trends and forces. It needs to actively shape and manage them. Otherwise, the ordinary individual will be powerless. I imagine that this week, most people in Texas, Florida and Puerto Rico would be delighted to hear the words “I’m from the government, and I’m here to help.”

 

Malaysia’s Education: Shooting ourselves in the Foot with more Sound and Fury


August 23, 2017

Malaysia’s Education: Shooting ourselves in the Foot with more Sound and Fury

by Dr. Lim Teck Ghee

Image result for malaysia education blueprintWhere is this UMNO Minister of Education now? Well, he got himself fired by Najib Razak. He has since joined the opposition trying to make a comeback

 

The outcry over the disclosure that 402 schools in the country have been classified as “hotspots” with disciplinary and drug issues is yet another distraction from what should be the major priority of our politicians and bureaucrats managing the education system – that is, implementing deep reform of the national primary and secondary school system, especially beginning with the national schools of the Bahasa Malaysia or Malay medium, and predominantly Bumiputra attended, stream (SK and SMK).

Although the furore when set against the larger and more important backdrop of the overall deplorable state of the national schooling system is misplaced, what is revealing is that almost all the problematic schools (396) found in the black list come from the SMK stream as against 6 from the sekolah jenis kebangsaan stream (SMJK).

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Minister of Education Mahdzir Khalid -As Menteri Besar he messed up Kedah, He is doing the same with our Education System

This is yet another clear indication of the appaling mess left by zealots pushing the racial and religious agenda in our educational system.

The main victim of this mess is a lost generation of Malay and Bumiputra school kids who paradoxically, despite being overwhelmingly favoured in resource allocation in the national system during the past 40 years, have ended up with low attainment levels as well as are generally lacking in the important outcomes that the educational system is supposed to be imparting in knowledge, skills, strong ethics, and the drive to succeed.

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The Messed Up Commander-in-Chief and his Minister of Education: We can’t go wrong with these guys at the helm.

The critical problems affecting schools in the SK stream have been known for a long time. But they have been ignored or let unresolved by the Barisan government and the Ministry of Education with little attempt made at comprehensive reform until the last few years.

Repeated complaints have been raised of the quality of these schools including their low teaching standard, the obsession with single-race dominance and management, the narrowly nationalistic, rote-learning-oriented and behind-the-times curricula, increasing Islamization, poor leadership, disciplinary issues (which are now the subject of public attention) and a host of other shortcomings but to little avail. The inaction by the authorities has resulted in non-Malay parents shunning these schools and sending their children to the SJK or mother tongue stream, and English language private schools when they can afford it.

Targeting Mother Tongue Education as a Convenient Scapegoat

At the same time – diverting attention away from the failure of the politically favoured SK stream to provide quality and progressive education for all young Malaysians – was a hostile and virulent campaign accusing mother tongue or vernacular schools (SRJK and SMJK stream) of being responsible for dividing the young of the different races and being the cause for the lack of national unity in the country. The campaign, although unable to produce any evidence to support its claims, succeeded all too well in muddying the waters of educational reform discourse in the country during the last two decades.

Today, only a few hardliners are still clamouring for the closure of SRJKs. It is clear that their ill-founded politically driven campaign to close down Chinese and Tamil medium SRJKs has ground to a halt. The final blow to this campaign ironically has come from middle and upper class Malay parents who have enrolled their children in increasing numbers in the Chinese language medium schools because of the perceived higher standard of teaching and discipline in these schools, and the loss of faith in the quality and performance of the Bahasa Malaysia stream.

At last count, the enrollment of non-Chinese students in the SJKCs could be as high as 20% of the total enrolment of over 500,000 students in this stream. It is possible that if SJKCs are not discriminated against and are provided with equitable resources to grow, we may have a majority of Malay and Bumiputra parents preferring to send their children to this stream instead of SK schools.

Why have so many parents – Malays and non-Malays – given up sending their children to SK schools? What are the deeper and more serious problems and shortcomings that afflict these schools, besides that of bullying, gangsterism, smoking, drugs and other behavioural related issues that hog the headlines to divert our minds away from focusing on more critical reform concerns?

The answers are not difficult to arrive at. But throwing more money into these schools is not the solution. According to one estimate, SK schools during the 6th to 9th Malaysia Plans (1991-2010) received from 5 to 10 times more public finding on a per capita basis compared with SJK schools. Per capita expenditure allocations during the four Malaysia Plans amounted to RM 614, 483, 2,131 and 2,000 for SK primary schools compared with RM 176, 44, 217 and 274 for the Chinese medium primary schools with Tamil medium schools slightly less disadvantaged than their Chinese counterparts.

Logically, we should expect that this skewed expenditure over the prolonged period of the NEP (and until today) should have produced a higher quality of educational performance across the board in the SK stream, in its principals, teachers and other school leaders, and in the performance outcomes of its student population. This has not happened.

In October 2011, the Ministry of Education embarked on a comprehensive review of the education system to develop a new National Education Blueprint. In the Blueprint report which emerged in 2013, it was pointed out that Malaysia may not be getting the highest return on educational investment. The report also noted that the best available data on unity suggest that student and teacher diversity in SKs is decreasing and called for a renewed commitment to ensuring that the nation’s funds are efficiently used.

It also concluded that “it is important to understand what drives these outcomes so that the Malaysian educational system can scale up its successes, and reduce, if not eliminate, its areas of shortfall.” (Chapter3-28). Unfortunately the Blueprint, in attempting to be politically correct, failed to provide a blunt, indepth and critical analysis of why SK schools have failed.

Why have SKs failed to perform and what policy changes are needed to bring about real – and not cosmetic- improvements needs to be put on the national agenda priority, and not the ones put out that are generating “sound and fury” and likely to signify little or nothing.

Malaysian parents and their children especially those enrolled in the SK stream, as well as the country as a whole deserve better than the present Ministry-initiated hullabaloo over schools with disciplinary issues.

Capitalism’s excesses belong in the dustbin of history


August 2, 2017

Capitalism’s excesses belong in the dustbin of history.

by Martin Kirk

https://www.theguardian.com/commentisfree/2017/aug/01/capitalism-excesses-dustbin-history

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Back in February, a college sophomore called Trevor Hill stood up during a televised town hall meeting in New York and put a simple question to the House minority leader, Nancy Pelosi.

Citing a study by Harvard University that showed that 51% of Americans between the ages of 18 and 29 no longer support capitalism, Hill asked if the Democratic party would contemplate moving farther left and offering something distinctly different to dominant rightwing economics? Pelosi, visibly taken aback, said: “I thank you for your question,” she said, “but I’m sorry to say we’re capitalists, and that’s just the way it is.”

The footage went viral on both sides of the Atlantic. It was powerful because of the clear contrast: Trevor Hill is no hardened leftwinger. He’s just your average millennial – bright, well-informed, curious about the world and eager to imagine a better one. By contrast, Pelosi, a figurehead of establishment politics, seemed unable to even engage with the notion that capitalism itself might be the problem.

It’s not only young voters who feel this way. A YouGov poll in 2015 found that 64% of Britons believe that capitalism is unfair, that it makes inequality worse. Even in the US it’s as high as 55%, while in Germany a solid 77% are sceptical of capitalism. Meanwhile, a full three-quarters of people in major capitalist economies believe that big businesses are basically corrupt.