Sunday, 17 June 2007

Malaysia's Demise

Hoisted from my previous post; my response to a reader’s comment.

Hi Anon,

I am very sorry about the exclusivity of the post. About North's idea: economists have been increasing technical, relying on model building (equations), mathematics and statistics, to explain economics phenomenons. In a sense it is getting more like physics (disclaimer - this is an extreme oversimplification).

But according to North, while technical constructs are important, to truly appreciate how a country's economy performs, it is absolutely crucial to understand two things: history (what happened before really matters) and institutions (laws, regulations, political structures, social cohesion, mindset of the people, governance, education, corruption).

The more you look at Malaysia, the more you realise how truly true this is - mathematics and models explain very little about economic performance in Malaysia (and when they do explain scenarios, they are always not very interesting). Understanding the true fate of the nation does not lie in looking at the interest rates BNM sets, the exchange rates regime, the inflation rates and so on.

But rather, the fate is determined by what happened before (history) which shaped the institutional structures (institutions) the way we have now. Sometimes history shapes good institutional structures - sometimes it shapes very negative ones. Malaysia, I am increasing convinced, is stuck in a very negative path - we are having a crisis of institution, shaped by our history.

My greatest fear is that this problem is faceless and everywhere - there is no single source. The problem is in all of us, all our organisations, all interlinked together, feeding on each other and giving strength to the decline of our nation. Institutional crisis in Malaysia - the extremely racist mindset, the prevalence of corruption, the need to separate performance-reward structure and replace it with ethnicity/connection-reward structure, the lack of social cohesion, the decline in educational quality - are all linked together, feeding on each other and are not promoted by a single source. No, it is not due to the ruling political party or the oppositions but by our history, our society and every single one of us.

As an example, even without government's direction, our companies have racist policies by themselves - Maybank, and the call by the Bumiputera 'intelligentsia' to retain the racist policies that makes no business/economics-sense is a case in point. The decline is self-sustaining.

If the problem has a single source, the solution is clear - if it is faceless, the solution is… … sigh.

I do not have an answer for that. That is why it is my greatest fear - watching my country's slow but painful demise.


PS: Akerlof's latest works is on how to systematically analyse economics by including identity - that is, instead of assuming everyone acting rationally, we have to consider how people will actually act based on their belief on how they should act based on society's expectation of how they should behave. Basically by making economics more personal again.


Alpha said...

Well said!

feliz said...

Economic models and theories of economic development will not be successful if the government of any developing country is not agreeable to provide negotiable condusive incentives for foreign investments / skills to come and provide technological training and established international markets for the country's products.

Very well explained, elanor..

zcer said...

Mathematical and formal models need to be fed raw data. Unfortunately, the elegance of these mathematical systems the economists construct lead them to unjustified assumptions on what the raw data is. I think there was an article somewhere on how economics has already worked out all the technical tools it needs. And that economics now is about careful, systematic and specific application of these tools to the situations and circumstances of various individual economies.

Watch House? He is always only wrong because of his assumptions. Economics need only to revise it assumptions. But that is in itself one heck of a job...

rational thinker said...

Hi Eleanor,

Firstly, nice blog. It's my first time, and i am hooked. I probably spent about my past 2-3 hours reading it. :)

Unlike you, I am an economist with no practical dealing with the so-called "real industry. Perhap as such, it gives me a very academic thinking, but perhaps it also allow me to think things little more carefully.

While Douglass North was right about the effects of time (history) and institutions (societal effect), we have to understand why mainstream economic is the way they are today too. Assumptions are firstly made to simplify matters. The best economists in the world are those that are able to look through shrouds of complexity, and make rational assumptions, and therefore postulate proper models for the behaviour - be it stock market, election, or hypermarkets pricing. Therefore, while economics models and their elegant calculus might not be able to tell you why dissatisfied voters keep voting in the ruling government, it would still tell you alot of about the effect of petrol subsidy, controlled pricing and racial-quota effect on quality of university graduates.

By failing to analyze and see the problem in a structure way, you re not thinking like an economist anymore. While the "institutional crisis in Malaysia" you mentioned is indeed prevalent, i believe there's an economics solution to it - based on incentives. Undoubtly, existing economics/behavioural models, originated from oversea are not really suitable for us, malaysians to understand the problem/solution. Sometimes the environment in which our status quo is, can perhaps be an economics equilibrium? You re right that our problem is multi-facet, and it is the task of politicians, leaders, economists, sociologists, religious leaders, etc, to consider each aspect and find a solution for it. The issue is then, the willingness of our leaders to embrace the changes. These "historical" and "instutitional" effects are real, but i still think it will boil down to incentives-behaviour. Human will always be human...unless us malaysians began to think irrationally (i would like them to buy off some $500 water bottles from me).

:) Keep posting. it's very interesting.

Anonymous said...

Hi Eleanor,
I see your fear and it cause me a lot of grieve too, as a die hard Malaysian. However, I do not agree to blaming it on history eventhough history plays a part, the bigger blame has to be placed on us and the leadership. It is no accident that the newly industrialized economies of Asia started with economies with very little natural resources.
What we are seeing in no difference than a family where siblings fighting over inheritance.
When you are in such a situation, you have few options, convince the siblings not to fight, join in the fight or leave the family. There is a bigger world out there with opportunities abound.


samp said...

I actually admire the guts of Namewee to sing out this Negarakuku. True, the language used is a bit rough but at the end of day it sings out nothing but the truth about how most Chinese Malaysians and the other races see this country. Marginalisation, corruption, civil service bureaucracy, etc.

If the song is nothing but praises of Malaysia, then it is just another lame song. A lame song that is usually being sung by our Umno to deceive all Malaysians. Is Namewee song seditious? How about the keris waving incident? That was not seditious? Disrespect for Islam just because it was said that some of them were 'out of tune' when praying?

How about demolishing of those Hindu temples? Isn't that total disrespect for other religions? I hope someone from the ruling parties can enlighten me on these issues.

If the government intends to strip Namewee of his citizenship, then first strip off the citizenships of Umno members, the arrogant keris waving minister and also those who authorized the demolishing of Hindu temples.

Until I see that, I don't see any reason why we should strip off the citizenship of a young Malaysian who is frustrated with the way Malaysia turned out after 50 years of independence.

reek said...

In Malaysia we have the crony group. They continuously recommend new rules and regulations to be implemented and legalised by their front liners, a.k.a. the government, to squeeze the normal folk of their pennies.

Surprised? I am not.

The Public Services Department (PSD) and their scholarship awarding criteria is a yearly event. It is an annual drama during which the non-malay students protest after which the government will intervene and award them PSD scholarships.

Why couldn't these deserving students been given scholarships in the first place? That is a question never answered. The drama will be played out again next year. Same play, different players.

And imagine the horror when it was revealed that of the 12000 Approved Permits (APs) that were awarded in 2003, one single deserving human being in our beloved country was given 6000.

He must be an immensely blessed human being to be granted such a privilege. But hey, the government is not answerable to you or to anyone. Our Barisan Nasional government is not concerned enough to come out and explain why such a privilege was granted to this one person in Malaysia. Never has, never needed to.

Why do we have to work harder for a smaller share of the pie?

Why do we keep paying a higher toll for the use of our highways? Where does all the money go?

Why are the ministers children attending international schools instead of national schools?

Why are the privileged ones getting away with criminal acts?

Why was the Penang Outer Ring Road project given to a company without a background in constructing highways? Along with the privilege to develop prime locations on Penang island?

And why do we now need to pay extra for a hologram label on our medicine? Who gets to make the contract to supply the hologram?

Why? Because we live in Malaysia, and Malaysia Boleh.

fargowin said...

Many many years ago, my brothers, cousins and friends, all top students applied to local university to be computer and electrical engineers. None of us got in.

We all went abroad, many of us made a killing but all of us had a good career and was in the centre of the IT revolution.

Recently some of us were approached to return to Malaysia but even at million ringgit salary, we unanimously said - No.

Cheated once, it is a pity, cheated twice is your fault.

"Only a quarter of Malaysians is Chinese while more than half of the population is malays. Yet Chinese control half of the economy while malays only about 20%."

Whether there is NEP or not, don't make much difference in the long run. When you walk with crutches for too long, you lose the ability to stand on your own legs.

Drug abuse, hate, incest, liberal extremism (culture of miniskirts and gay marriages), murder, parochialism, racism, rape, religious fanaticism, snatch theft, spoilt-bratty behavior, tribalism, wife abuse, child abuse, all that is associated with the malay race.

To them, malay is the biggest impediment towards building a truly Malaysian nation, and should be chucked into the dustbins of history.

Sad. Sad. Sad. The question asked by many of my fellow Chinese is this - Why can't you just tell the malay peoples to adopt Chinese culture which is superior?

History always repeats itself. And nature is cruel. Any race of lower intelligence gets wiped out eventually.

See what is happening to indigenous tribes and their lands, always taken over by smarter people from elsewhere. Look at Singapore, who owned it in the first place and who came and took it over?

America was taken by Europeans from the Red Indians. Even British convicts and unwanted lowlifes managed to grab Australia from the aborigines and reduced them to what they are today. They may become extinct one day.

However, Malaysians still have hope as they are learning fast. Just hope it is fast enough. Problem is that some of them are still crying for bumi policy as a crutch. The smarter ones know that it is just prolonging the agony. Anyway, the smarter ones actually are not from Malaysia originally.

You can only survive if you are able to stand on your own two legs. Shouting "Malaysia Boleh" is no use - if you can, you can.

Friend, you have a place there. Find your own niche in the food chain. (If you leave for greener pastures, you are repeating what your forefathers did when they left China and ended up in oversea.)

People with brains can overcome all sorts of man-made obstacles or unfairness. Those with brains but do not use them will cry for help.

You can decide which type you want to be.

coolooc said...

I am very please Badawi admits that Muslim countries are among the world most-corrupted. Look no further, just look at Malaysia. Want to learn corruption? Come to Malaysia. We will set up universities to teach that.

It is the Muslims (those ignorant and confused) that are corrupt. Their leaders show very bad example and stop calling their countries Islamic countries. They are not Islamic countries - they are just countries run by false leaders - they are not Muslim leaders.

Right on, man. Could not agree with you more. Malaysia indeed is one of the few top corrupt countries in the world. Soon it will put Nigeria and Indonesia into shame! Using religion as a fascist front to enrich the BN gangs is sub-human and evil.

In fact, the whole religion set up in Malaysia is a direct duplication of the Hitler regime, with the Hitler youth now reemerging. Using this power to enrich the gangsters, as history shows it, will not last.

The World Bank has shown that reducing corruption by a small percentage will yield a 3 to 4 times rise in GDP per head. That talking about reducing poverty is a lot of bullshit. By just talking about reducing corruption in international arena to make fame without any knowledge of corruption's implication is sheer stupidity and we have it in Malaysia, time and again.

Islam itself is a corrupted religion. They copy Jews and Christianity religions. Then stole Pagan Temple and take away Hajar Aswad the Pagan God. Hmm what a shame?

Our prime minister is full of shit. When Israel attacked Lebanon, he voiced out. But when Umno Youth attacked MCA, he didn't know about it!

When corruption is so blatantly happening in Malaysia, he keeps quiet but can talk in conference about other Islamic countries. What! Look at the speck in your own eye first! Don't close one eye and peep through the other.

Why worry about others when our very own "half-past-six" ministers are worst than the armed-robbers, because they rob the whole nation under the pretext of helping the malays.

yuking said...

If only the malays are a bit smarter, then BN won't win. The problem is malays are too damn stupid that they keep voting for BN. I don't know what poison BN gave to make them in this state.

San said...

Is it any wonder that our universities are not even listed in the 1000 in the world! The education minister is too busy politicking to give some time to his allotted duties in the ministry.

Having said that I would urge political parties to refrain from politicizing the issue further as it would do no good - eventually it would only worsen the polarizing process now driving the races poles apart.

What is happening in the country campuses is a mirror image of what is happening in the community at large. Much as I am disinclined to repeat the oft repeated statement, "We reap what we sow" - it is still very much so in this case.

What do you expect from a university which is not even in the radar screen of the top 300 universities in Asia? When you have an uncivilised vice chancellor who is incapable of disciplining his students, that correctly reflects how badly our university has deteriorated.

The acceptance of fascism among students is a reflection of the Umno acceptance of fascism itself. It is the latest proof to show how easily Umno leaders are willing to exploit their own suppose BN partners for their own personal gains.

The same goes for those Umno Youth in Penang demanding administrative change. All these are about selfish personal gains and got not much to do with issues and it is institutionally accepted.

A civilised person knows his/her rights end, when someone else rights begin. A civilised person does not use threat, intimidation and fear to achieve his/her goals.

This is a case of gross lack of respect and of discipline for the rights of others. One could only blame on the leadership and environment in the university.

The BN government again has failed to protect the public. BN has failed to protect the public university. BN has failed to protect the public in public areas and in the areas of residence. BN has failed to protect the poor. BN has failed to build a quality of life to the public.

BN failed……….BN failed……….BN failed……….And what do we do when someone fails! We don't reward them with another vote.

Thugs, road hooligans and gangsters are now recognized by BN as national assets. Why? Because the BN ministers themselves behave like thugs, road hooligans and gangsters. They even refuse to pay their traffic fines. Malaysia needs a change in government urgently!

jodie said...

I am not trying to show off with my qualification. What I am trying to say is that Malaysia will lose out if all these highly qualified and educated people do not want to go home.

Frankly, I have start up my family in the UK and also a very successful business. I have been working towards my success starting from zero. Not even 1 cent or penny from the Malaysia government.

I am fed up with the corruption and discrimination in Malaysia. I agree with somebody "if we disagree with Malaysia government policies that are based on race and religion then we should move out of the country" and I did.

Some people might say I am coward or traitor but why should I stay if the government treats me as nothing? I feel human living in the UK and everyone is being treated the same no matter what is the colour of your skin.

Imagine living in a country which people like Haji keep calling "this is Islamic country, if you don't like it, get out". Or the future leader like Khairy saying something unreasonable.

I feel ashamed and insecure. I cannot see the future for the next generation. Therefore, sorry to say but I am a proud "British" now.

ruyom said...

Time and again, our Malaysia leaders refuse to take unpopular measures to solve problems.

Umno president Pak Lah's speech is commendable in being frank and acknowledging the problems at hand, but we have to wait and see whether it is going to be implemented or whether it will remain just rhetoric like the others.

The so-called meritocracy for university entrance seems farcical when there is a dual system in place at the entry level.

Yet, after so many years, we seem to be still grappling with meritocracy. Any lower percentage of acceptances of malay students will be taken as discriminatory. Of course, it is discriminatory, but not based on race, only on merit, which should be the case.

In spite of the political power and resources at their disposal, Umno leaders have failed in their educational policies. The correct approach should be to raise the standards in schools, in particular, malay students performance and not take the easy way out of manipulating entry requirements to please the masses.

This short-term solution will only postpone the problems and not solve them. Lowering entry requirements only lowers the standard, and the graduates will find difficulties in getting jobs later.

We had been experimenting with educational policies. We now discover there is a generation of students and graduates not proficient in English and as a result, lack skills in information communication technology (ICT) and international communications, and generally unemployable without further re-training.

The significant drop in standard of English was also due to the relegation of English to an optional subject, when formerly it was a compulsory subject for obtaining a full certificate.

If we have politicians that cannot differentiate between national and party objectives, we have people who do not know what is right or wrong, then we have a problem.

shinwee said...

I agree with one that the media in Singapore is controlled. In fact, arguably more controlled than ours Malaysia.

However, take a look at their qualifications and the results they have delivered! Until today, there is yet a single shoddy and blatantly outrages personal business deal involve any of them. Don't they qualify on their own rights?

Is the grass greener on the other side?

Let us ponder:

They are in the first world category. Ours?
They don't have racial discriminatory policies. Ours?
They don't have ministers who act more like circus clowns. Ours?
Their country's coffer is loaded with money despite having no oil. Ours?
Their citizens don't have bread and butter issues. Ours?

The grass is indeed greener on the other side.

kok said...

Lee Kuan Yew said recently the relationship between Malaysia and Singapore has not always been smooth sailing, and so investing in the Iskandar Development Region (IDR) may not always be smooth sailing for Singaporean companies.

This is simply a statement of fact that nevertheless appears to have gotten local Umno leaders into a tizzy.

Every local Umno politician hopes to be in a position to be approving investment flows into the country because to stand as gatekeeper is a very lucrative position, and when public squabbles erupt between Umno politicians about who is the better "protector of malay privileges and rights", it usually means someone just wants a bigger cut of the investment action for himself.

Go figure that one.

Of course, the relationship between Malaysia and Singapore is special because of the race relations issue.

Singapore has been the favourite whipping boy of the Umno-controlled malay vernacular press for the last 50 years, and if anything are seen as even bigger devils than the local Chinese and Indian citizens of Malaysia in the eyes of Malaysia's malay Muslims.

The fact is Singapore's development model has meant that Singapore's malays are far better educated, far better equipped, far better paid, far more self-confident, and self-reliant to deal with globalisation than malay Muslims in Malaysia.

This makes Ketuanan Melayu, the malay Agenda, and the NEP look like failed racist apartheid policies that have impoverished everyone except Umno cronies. Of course, Umno must demonise Singapore to maintain the illusion that Umno politicians are nationalists and not parasites, and more so if Singapore happens to be better educated, meritocratic, richer, and safer than Malaysia.

Malay Muslims in Malaysia have been brainwashed by Umno for the last 50 years into thinking that the Chinese and Indians both Malaysians and Singaporeans have gotten rich at their expense, and this perception probably won't change anytime soon because Umno does not have another elections winning formula if it dumps the present demonisation formulas.

Every time Singapore's first world achievements are compared with the sluggish technological, competitiveness, economic, educational, professional, scientific, and social standard in apartheid Malaysia, there is the predictable keris waving, baying for blood, and frothing at the mouth in every Umno up and down the country in Malaysia

Although Chinese and Indian Malaysians have simply accepted the gross racial discrimination in business, education, and job as a fact of life in Malaysia, the non-apartheid non-NEP meritocratic Singaporean mindset may not have the stomach for this particular type of nonsense in the IDR.

I think Lee Kuan Yew is way too smart to think the demonisation process of the Chinese and Indians in the Umno-controlled malay vernacular press is going to stop anytime soon. How else is Umno going to win elections except by continuing to perpetrate the lie that the orang asing minorities in Malaysia are a threat to the malays?

Nevertheless Lee Kuan Yew may be hoping Chinese and Indian Singaporean investors will not be discriminated against in the IDR in comparison with investors from countries like China, Europe, India, Hong Kong, Taiwan, United Kingdom, and United States.

In the meantime, I am sure it will simply be business as usual for the rest of us in racial and religious apartheid Malaysia.