After my recent trips into nostalgia, it is time for me to head back to the world of harsh realities. Given recent events, I thought a theoretical perspective may be interesting, in order just to get to a different plane.
The reality is always harsh, as the jungle is always neutral. It is how each of us or a group of us traverse the difficult terrain that we get to the other side, not levelling the ground (by someone else) so that everybody can sit and fall asleep (by doing nothing), although it might be useful if someone who has gone through the journey before could signpost some of the danger points.
I have always thought, and still think, that Malaysia is very forward in its socio-economic thinking by bringing out the New Economic Policy explicitly for implementation. In any modern society, the issues of growth and distribution are the twins that always appear in any national agenda. My only unhappiness is that there has not been much discussion about how a more egalitarian society can be created in Malaysia, although there has been much discussion on this issue of social justice in modern economic and political literature. It is as if Malaysia is stuck with its foot in the mud of 1969, unable to extricate itself from the political rhetoric of the time and getting itself out and become relevant in the modern borderless world where sovereignty of all sorts is being threatened. As the global economy construct changes, the issues of growth and distribution change as well, and hence the required solutions to the problems.
Growth is often pursued in modern societies at the expense of distribution because of the very nature of this capitalistic and market-oriented economic system where incomes are not earned evenly across the social strata, where different communities consume at different rate in relation to their incomes, and as a result, savings are done also at different rates. Wealth, being created out of investments and hence out of savings, is therefore unevenly distributed, and some would say, unfairly, by going to those how know how to create it, and eluding those who desperately are in need of it.
It is now recognised that the modern economic world is built by those who are the best, the most capable, and the most brilliant - but not necessarily the most noble nor the righteous. The modern economic world is a world of output and production of goods and more importantly now of services which, could be compared to the olden days of alchemy and magic but today of the financial and derivative kinds, and not excluding the age old services of prostitution, drugs, robbery and murder. The modern economic world is therefore a mishmash of all sorts of people of able minds and bodies.
The diadvantaged are typically those who are not in the travelling band, because they cannot be - the very young, the very old, those nursing the very young and very old, the handicapped, those disturbed of minds, the unschooled and untrained and hence unable to be of service to others. Or simply those who are caught in a time warp oblivious to the shenanigans of modern economic activities. These are those whose welfare the modern society must try to look after in order that we all feel that we are doing our bit to alleviate the necessary suffering of this world.
That we feel like having to do charity is because we may, deep in our hearts, realise that the world we live in is an artificial world that we have created out of our own imaginings for our own fancy - based basically on little bits of paper certified by some authority to be legal tender, and that trading of those bits of paper are allowed. The modern world of investments is based on the confidence that bankers have on the borrowers to pay them back their money, and their collateral today is real estate but in the days of old when real estate was in its infancy trust and word and character of the borrowers. Now, the modern world grows quickly with the real estate as the right foot and the money lenders as the left foot.
The value of the real estate is defined by location, the value radiating out of the urban centre where the concentration is the greatest, as defined by the number of people or business per unit area. It is this interplay of the supply and demand forces that defines the value of the rent and the land. It is this different rate of output that determines that (sharp) differences between the value of the real estate in urban centres and the rural areas (the latter defined mostly by agricultural output, which can be intensified by plantation technology).
The battle therefore is on the rate of output and the rate of improvement in productivity. Economists know that the rate of improvement is the slowest in the primary sector, with rapid growth during the industrial revolution and the Japan-type revolution of the manufacturing engineering, and now the services sector propelled by ICT and globalisation.
It is a challenge to try to reduce the difference in productivity in the rural areas and the urban areas. But it is this reduction that will resolve the disparity in distribution in a traditionally agricultural society that is rapidly modernising. Over time, the trend could be in the form of the growing importance of urbanisation where old towns become bigger towns, and new villages become new towns. The importance of urbanisation is economic efficiency in the provision of basic amenities such as education, health, and security which are critical for uplifting livelihood of communities.
In the end, the linkage with the rest of the world will define whether Malaysia will become a successful global trading partner. In this sense, successful Malaysians will be those who are resourceful, agile and open to new ideas with an affinity to dealing with communities other than themselves.
With the focus on the livelihood of Malaysia, the correct approach to measuring the improvement in the economy is the GNI or GNP, and not GDP. When the focus is on GDP, the focus tends to concentrate on foreign investors. With GNP, the focus will the opportunities that are being offered or made available to Malaysians, whether those opportunities are at home or abroad. GNP should be an integral part of the 1Malaysia concept, for it counts Malaysians whether they may be.
There is a serious need for discussions on the Malaysian economy to focus on issues where positive policies can take place.