PKR President Datin Seri Wan Azizah Ismail launched an alternative Budget Day yesterday at Parliaament House (preluding the Prime Minister Datuk Seri Abdullah Ahmad Badawi's Budget on Friday...) where she spelt out a NEEDS-BASED economic agenda to replace the out-dated National Economic Policy much maligned because of rampant abuse and exploitation by the elite and well-connected politicians in UMNO.
In other words, while the concept and objectives of the NEP -- planned to run only for 20 years from 1970 -- were good and noble, the implementation was defective, ending with disastrous results.
Desipte being an affirmative action instrument, the NEP has failed to redistribute wealth equally in order to improve life for the middle and lower-income groups in Malaysia. Instead, a disproportionate amount of wealth is in the hands of the polically well-connected and elite high-income group.
Wan Azizah said it was time to cut a "New Deal". The battle is against Class Warfare, not across Racial Lines. Under the New DEal. affirmative action must be needs-based, not race-based. "Everybody must acknowledge that for the sake of national security and prosperity, we must take up arms against class warfare, not remain defensive or become aggressive to reserve tight racial boundaries."
In an analysis Paper written by PKR Secretary-General Tan Sri Khalid Ibrahim, he lamented: "Unfortunately, the country (after gaining Independence from British colonialists' yoke) was then hijacked by economic imperialists in the name of affirmative action under the guise of the NEP and its successors. Today, the poor are getting poorer, while the middle classes are stagnant, and the reins of the economy are held fast by the elite."
And as a catch-up, mGf TERENCE NETTO wrote a piece perhaps for us to learn some lessons from the financial crisis ten years ago. Malaysians must wake up to the new realities. Let's act in concert to Strive For Change. IT's TIME FOR CHANGE!
LESSONS OF 1997 CRISIS: ANWAR ESPOUSES GOLDEN MEAN
by Terence Netto
Former Finance Minister Datuk Seri Anwar Ibrahim espoused a line of thinking on economic development that showed a preference for a synthesis of the major schools rather than rigid adherence to one theory.
In a speech (recently) on the lessons learned from the 1997 Asian financial crisis at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore, Anwar rejected economic monism in favour of an eclectic combination.
He said the cardinal lesson learned from the 1997 crisis was that the International Monetary Fund’s prescription for privatisation was a recipe for banditry if the pre-requisites of good governance, transparency and accountability were not already in place.
“I make no apologies for criticising the neoliberal Washington Consensus and the IMF’s standard formulae for borrowing countries,” he said in a speech that nimbly sifted nuggets from theorists ranging from Adam Smith to Maynard Keynes in pursuit of a golden mean conveyed by the Islamic concept of awsatuha, akin to chung yung in Confucianism.
He said it was pointless to talk of market friendly policies and pro-growth initiatives to generate a bigger pie if the prerequisites of good governance, transparency and accountability were not already prevalent.
“Without those prerequisites this pie will be devoured by a select few at the expense of the more deserving majority,” he said. “And when a crisis breaks out, it is this majority who will bear the brunt. They are the real victims.”
He said the enduring lesson of the 1997 crisis was that the “rich and powerful …get away unscathed or if they do get into trouble, they will be the first to be bailed out.”
“The life boats will be reserved for them in times of trouble. In good times, they will get the icing on the economic cake and this applies across the board: water services, waste disposal, telecommunications, and ports speaking of which, you might already know that in Malaysia, a certain billion ringgit port scandal is about to explode and it goes back to the issues of good governance, transparency and accountability,” asserted Anwar.
He said another lesson gained from the crisis was a key cause was excessive leverage -- heavy borrowing from banks by the politically connected. He said this created the conditions for “moral hazard” which exists when governments create incentives for reckless behaviour.
He said when the collapse of the entire banking and financial system was the price to be paid if heavy borrowers were allowed to go bust, the conditions existed for moral hazard – the shielding of the improvident from the consequences of their own behaviour. Anwar said it was better to err on the side of caution rather than to invite moral hazard. In short, prudence was paramount.
As for managing the economy, Anwar said he preferred “Hayekian free enterprise with a dose of Keynesian fiscal remedy every now and then.”
“In Islam we call it awsatuha just as we are familiar with the chung yung of Confucius. Translated into practical terms, it means that when the economy is underperforming below its potential, increased public expenditures would be needed. Obviously, fiscal discipline must be maintained to ensure that the consequent fiscal imbalances remain within manageable levels at all times,” he said.
“We can subscribe to Hayek up to a point at which neoliberalism must make way for the paternalism of Keynes. Some call this Dr. Jekyll and Mr. Hyde economics. I call it humane economics,” summed up Anwar.