Tuesday, July 28, 2009

Six National Key Result Areas

The government announces 6 National Key Result Areas:

KRA1: Reduction of Crime Rate
>KPI1.1: Reduce Street Crime by 20% by 2010

KRA2: Combat Corruption

KRA3: Widening Access to Affordable and Quality Education

KRA4: Raising the Living Standard of the Poor

KRA5: Improving the Infrastructure in Rural Areas
>KPI5.1: Add 1,500 km roads in Sabah and Sarawak by 2012
>KPI5.2: Not more than 5km of walking to tar roads in Peninsular by 2012
>KPI5.3: Clean water supply to 90% of Sabah and Sarawak by 2012
>KPI5.4: Electricity cover of 95% in Sabah and Sarawak by 2012
>KPI5.5: 24-hour electricity supply to 7,000 orang asli families in Peninsular by 2012

KRA6: Improving Public Transport in the Medium Term
>KPI6.1: Increase the number of public transport users from 16% to 25% by 2012
>KPI6.2: Add 35 sets of four-car trains on Kelana Jaya LRT by 2012

These KRAs are important for providing the basic rudiments of a modern life to all Malaysians.

I suppose we shall now have to wait for the New Economic Model to bring the whole economy to greater heights.

Promoting A Language

It stands to reason that, if the objective is to promote a certain language and ensure that it is alive by being properly spoken and properly written, then the logical action is to promote it properly.

In this country, it is strange to have a policy to hire native-speaking experts to promote English as a language - when the strategy should be to hire native-speaking experts to promote Malay as a language - not only to the Malays and Malaysians but also to other people.

We should have language experts in the Malay language to teach properly so that the language can be used properly.

Those of us who had spent some years in a foreign country know that the natives or the local people cannot read and write their own language as well as non-native users like us students who had learned to write and spell properly. Although the spoken part wasn't initially good enough but improved within months through practice with natives.

A language, therefore, can be kept alive by illiteracy by the poor and those who cannot get onto the mainstream - for they are the ones who have to live with what they have inherited from their parents and ancestors. This language is spoken everyday in the street markets. It will be a stretch of logic to argue that promoting tourism in remote parts of the country will help to spread the spoken language to foreigners.

In the area of education, it does not necessarily follow that native-speaking teachers in technical subjects will (a) speak and write the local language well for thinking and communicating abstract ideas and (b) will be competent in teaching those technical subjects.

If a learned language is better written (and fairly well spoken), then there is a case for teaching a foreign language in schools in the early years to inculcate in the young minds the importance of the need to put in effort to acquire knowledge in order to join the mainstream. The emphasis is on the need for conscious effort.

There is also a case for learning a language even if that language is the so-called mother tongue - for really there is no such thing as the mother tongue. Different communities even within the same political confines speak their own dialects no matter how similar the sound may be. There are so many dialects of the Malays, as there are for the Chinese and the Indians and all the other colourful tribes of our nation.

There is clearly a case for having a special strategy to promote the Malay Language and keeping it alive and kicking. The promotion can be through setting up a language institute - which I presume was what Dewan Bahasa was originally established for. There should be Malay Language Centres where one can seriously study the language and be exposed to its usage and beauty.

Personally, I would love to have a TV programme that gives a good Malay lesson for English-speaking Malaysians - not just in grammar but also in the literature, poetry including pantuns, and the wisdom that has been handed down in the form of sayings.


The our national education system must be founded on two cores: (a) language and communication ability, and (b) thinking and problem-solving ability. We should hire the experts and specialists in their fields, regardless of nationality, to teach our young.

In national schools, the young can be taught (a) English as a language and through literature and Maths and Science and thinking and problem-solving skills, (b) Malay as a language and through literature, history, culture, moral lessons, and (c) Mandarin as a language.

There should be the Malay Language Centres to promote the Malay Language to Malaysians and foreigners.

Monday, July 27, 2009

Language As A Policy

When language becomes a policy matter, the crux is the policy intent.

For the purpose of enhancing the livelihood of the people, the intent must be commercial and economic.

In the matter of culture, if culture is seen as a way to increase the likelihood of the survival of a people (which also means an improvement to their welfare) under all circumstance, then culture should have a stronger economic element than mere sentimentality over an established sense of identity.

Preserving a culture strictly in its old mode may be a futile attempt at stopping the flow of time and the changes in the environment. It resists adaptability and resourcefulness. It builds up narrowness for ease of control which in turn may quicken its own demise.

A good language policy is one that liberates the young from the grips of the old so that the young can chart a new future for themselves in the new world that will confront them, where they like it or not, as a direct consequence of the mindless actions of the old generations. The young will suffer the consequences of our errors and we must give them the means to save themselves from us. We must educate them by exposing to the frontier knowledge of the world, rather than hidding them under the coconut shell.

A good language policy should enourage the flourishing of knowledge in order for wisdom to grow.

Thursday, July 23, 2009

Speaking A Language

While the mastery of a language - namely, the ability to use words properly - is crucial thinking and communicating clearly especially on highly specialised subjects, we merely need "pasar" knowledge of languages in order to be able to undertake commercial transactions.

I am constantly amazed to notice how easy people in the streets can speak a smattering of different languages and dialects and can be successful in making money. This you will notice in most urban centres where shopkeepers have to pay monthly rent and they are like rats constantly on the commerical treadmill. Necessity is the mother of invention, and the cost pressures simply force them to be innovative in their choice of location and store display and their ability to communicate to with all and sundry who pass by their store front. In Shanghai, the old ladies may even pull you into the shop by the arm.

The ability to speak in more than one language, I believe, comes from the desire to communicate with other people, to know who they are and what they are like. Without the desire for direct contact and communication, we tend to form judgement from hearsay and prejudices without proper verification. Communicating with other communities, even if only through books or the computer, is an effective way of doing away with ignorance and hence undue fear of what we do not know. The ability to hear what others say in their own languages give one a very clear picture of their what whole mental make-up. It fosters goodwill.

I, therefore, think that promoting a myriad of languages to be spoken and understood in Malaysia even if only among people mingling in the bazaars is an effort which the government, and not necessarily the education department, should undertake if it wants the country to globalise among ourselves and with others.

Tuesday, July 21, 2009

Mastery of A Language...Or Anything For That Matter

I have been thinking lately about mastery of a language - or anything for that matter. What does it take and what does it mean to be a master.

To master anything, one must have the passion for it. Without passion, we are but pure mediocrity however smart we may imagine ourselves to be.

To master a language, we must appreciate the beauty of a language to express our emotions as precisely as we can. To do this, we must read the literature and the poetry, as well as the folklore and the fairy tales - for this is where the wisdom of our ancestors are passed down, by word of mouth, in stories that captivate our minds and captures our hearts - of love for the things that define us.

To master the Malay language, there are literature books written by lovers of the Malay language to display its natural beauty by bringing out the sounds that make our poetry and our songs a delight to our souls.

To master the English language, there are plenty of literature books to read. We older students were suckled on Shakespeare, Coleridge, Dickens, Walter de la Mare, Laurie Lee and V.S. Naipaul. We have translated versions of the Greek authors such as Euripides, Sophocles, Plato and Aristotle. We might even have enjoyed Lin Yutang, the Chinese classics or Vyasa, even if in English.

But Maths and Science are such technical subjects which do not lend themselves to easy translation. It can be done but it will have to take many years for the translations to be good and the language that is being translated into to be stable. Otherwise, we are likely to end up with codelike words which look like bad spelling. This will not be helpful to our children when we want them to be at par with children all over the world and compete in order to make our nation proud. We may be at risk as a scientific nation to immerse our children in bad translations of things which the translators may not be masters of in the first place. A bad translation of a masterpiece is a badly translated book.

Our history has shown that poor students in rural areas are capable of competiting with the best of the urban students if they are given inspired teachers and well-equipped schools. In this day and age, in this day of modern technology when information reaches all the little nooks and corners, it must be intense efforts of teachers of doing a consistently bad job to produce bad students. If teaching nowadays is not easy, this is the nature of the job and this is modern living - I don't believe there is any job now that can be said to be easy - where the person doing the job can be half asleep and hope that their incompetency will have no impact.

There is nowhere to hide in modern life except in badly concocted statistics. This goes for bad financing schemes, bad banking practices, bad accounting practices, bad politics, bad economics and bad teaching. There is a reason for governments for developing countries to constantly underfund the national statistical organisations - so that the truth will not emerge - so that they can survive on rhetoric.

Wednesday, July 15, 2009

Multi-Lingual Government Services

If the majority of the schools and population can become multi-lingual, re the last post, then the challenge is for government services to also become multi-lingual. Why not?

After all, it is silly, for example, for a tax collecting agency to make itself obscure by restricting its communication in one mode when it has to try as much money as possible from all kinds of people for all kinds of reasons, whether they are citizens or not. The tax collector should produce their rules and instructions in languages that people can understand so that their awareness will make them pay more fully.

The world has changed. The people now do not need the government: Those who can't take it have left; those who are here do not care for it. Moreover, the government now needs the people. To pay their taxes. To vote for them.

With globalisation, it is not valid for the government to have a tight grip on the people by saying: "We are the government and you are the citizens. We tell you what to do and you obey, or else you quit." People have quit. But foreigners come into the country, ignorant of the rules and laws which are written only in BM. They go about their businesses oblivious of the government. They break rules and laws, and didn't know they did.

The government now has to struggle within itself to make itself relevant not only to the citizens but also foreigners and the rest of the world.

There are also real concerns such as over public health where there is an urgent need to communicate well. Communication can be improved through better images and better use of languages.

The country needs to mobilise its resources - all its potential resources and talents - in order to lift itself out of the quagmire. The government must speak not in one tongue but consistent messages in multiple languages and modes for its diverse culture and ethnicity.

It's time for government services to go multi-lingual!

Tuesday, July 14, 2009

Teaching Maths & Science Revisited...and More

I have been increasingly troubled by the proposed change in policy on the teaching of maths and science. Maths and science are now being taught in English in all schools on the argument that it will help the country to advance technologically (hence, the maths and science) and internationally (hence, the English). The proposed policy change is that the teaching of maths and science will revert to the vernacular by 2012 but without the neglect of learning English as a language in all schools. In my last post, I have suggested some refinements to the proposed policy change, as per the views put forward by, among others, de minimis and sakmongkol AK47. I suggested there that the quality of the teaching staff may be a problem and there is a way to tackle it.

In this post, I wish to point out that problem areas still exist in my earlier policy proposal and hereby suggested a more elaborate but probably more comprehensive and satisfying way to go about thinking and dealing with it.

1. I shall conveniently classified any of the ethnic languages as vernacular: Bahasa Melayu, Mandarin and Tamil. I think the urban community would like to consider English as their vernacular. Let is then grant everybody their wishes.

Consider the medium of instruction for all subjects in these 4 types of schools:
Rural schools: BM
Chinese schools: Mandarin
Tamil schools: Tamil
Urban schools: English

We discover that keeping very silent in the whole debate are the international schools which are, in fact, English schools. By right, in the land of liberalisation, there should be no barrier to entry into international schools for students as well as private educators.

2. If, for the sake of national integration, we add in a layer of BM (one language or literature class) so that all students in the country can communicate with each other. We get this:
Rural schools: BM/BM
Chinese schools: Mandarin/BM
Tamil schools: Tamil/BM
Urban schools: English/BM

We find that the students of rural schools will be disadvantaged by being monolingual, and the students of the other schools will be bilingual (which is better).

3. Let us then introduce, for the sake of international integration, another layer of English (one language or literature class) so that all students in the country can communicate with students outside the country. We get this:
Rural schools: BM/BM/English
Chinese schools: Mandarin/BM/English
Tamil schools: Tamil/BM/English
Urban schools: English/BM/English

We find that the Chinese and Tamil schools become trilingual, while the rural and urban schools (aka national schools) are only bilingual (BM and English).

It appears, from the above analysis, that the restrictive structure of the rural schools may be holding back the advancement of the urban schools in terms of curriculum development.

4. The logical way to resolve the above imbalance across the entire school system is also to introduce Mandarin or Tamil to rural schools, and Mandarin or Tamil to urban schools.

In rural schools in Sabah and Sarawak, their own languages can be introduced instead of Mandarin or Tamil, i.e., Iban, Bidayuh, Kayan, Kenyah, Kelabit, Lunbawan, Penan, Kadazan, Dusun, etc.

I would add Arabic for those who may be interested to build ties with the Middle East.

So, the picture will come out like this:
Rural schools: BM/English/Mandarin or Tamil or Arabic or an indigenous language
Chinese schools: Mandarin/BM/English
Tamil schools: Tamil/BM/English
Urban schools: English/BM/Mandarin or Tamil or Arabic

The above analysis shows that insufficient resources may have been put into the study and promotion of the many languages that exist naturally in a multicultural society such as Malaysia's.

1. In line with the wave of liberalisation at home, we may want Dewan Bahasa Dan Pustaka to open up to the other above language to make the organisation more expansive, with such ambituous projects as the BM/English/Iban dictionary, BM/Arab/Iban dictionary, etc.

2. The government should publish bilingual BM/English textbooks for all the subjects that are being offered in national-type schools: History, Geography, Maths, Science, etc. for primary and secondary schools.

3. By implication, therefore, there should be similar changes in the universities where students from any types of schools should be eligible to enter any of the local universities - if our local universities are so keen to welcome foreign students ostensibly to improve the diversity of the campus population.

For now, I am fairly happy with what I have said about the required change for the education system in terms of the language aspect. I am happy because my proposed perspective is outside looking and therefore more liberating, at least, to the mind. The current education system that we have, and the current thinking on the teaching policy, seem to me to be conservative.

If Malaysia is to grow at a rapid pace, we should liberalise our education system and invite innovation and creativity in the way we manage the education system and our kids. Education lies in the services sector which the new government sees to be the next engine of growth. Let us start the education engine by bootstrapping it so that it will drive the rest of the economy into high-income growth filled with brain-filled ideas.

In line with outsourcing and PFIs and what-not, I suggest the Ministry of Education should focus on policy and product design (and make sure the design is first-class) and then to make known to the public the precise nature of the product so that the private sector with all the excess liquidity can participate in this great stride forward in educating our future leaders, in addition to the development expenditure (for schools and facilities) and operating expenditures (for qualified teachers and lecturers) that the Ministry of Education will fight to allocate for education.

Monday, July 13, 2009

Key Result Areas (KRAs) for High-Income Economy

When I was given a time planner in the early 1980s as a young executive, I spent an intense several months figuring how to use it properly, applying such concepts as goals, strategies, and action plans. I discovered I like the Key Result Area (KRA) better than Key Performance Indicator (KPI). It is therefore a pleasant surprise when I hear the government talking about the KRA instead of the KPI.

The problem with the KPI is its pretense to precision and measurement which may be logical but misleading. The KRA may be fuzzy but it can be more realistic because it touches on areas that are intuitively logical but not measurable with any precision (and not entirely unmeasurable).

My objective in this post is to try to put together into a coherent whole the concepts that have been reported in the press so far and see how everything fits:
High-Income Economy
New Economic Model

Vision is an image that we see in our minds of what, in this case, we imagine our nation to be. The first vision was "Independent Malaya" in 1957, expanded into "Independent Malaysia" in 1963. The vision was changed to the "New Economic Policy" in 1970 to last for twenty years. In 1991, "Vision 2020" was mooted but the clarity was clouded by the financial crisis and subsequent policy actions were to salvage what was left of the economy.

Today, the two contending visions seem to be "1Malaysia" and "High-Income Economy." (I think the "New Economic Model" is a stray to try to emulate the "New Economic Policy" but will encompass "1Malaysia" and "High-Income Economy.")

"1Malaysia" seems to be an anti-thesis to the "New Economic Policy." "1Malaysia" is now being touted as the higher vision of the NEP while the old NEP has been degraded as a poor instrument of the higher objective.

The "High-Income Economy" is not new (being nested in "Vision 2020") but works as an anti-thesis to the delapidating policies particularly fiscal, immigration, institutional and financial policies that seem to have worked to corner the whole economy into, theoretically, an equilibrium but not a happy one.

"High-Income Economy" is therefore a higher vision than "1Malaysia", with the latter acting as a crucial unifying force of higher growth.

But the level of one's eventual achievement depends on the height of one's sight. Malaysia can go higher. "Paradise on Earth" seems like a good higher vision that subsumes under it "1Malaysia" and "High-Income Economy."

Most people get the vision mixed up with the mission. Vision is this large image that we are trying to create - and not necessarily, or rather should not be, measurable. Mission deals with the question of the motivation for this vision, so as to mobilise support for the vision.

We concluded above that the vision should be "High-Income Economy" and not "1Malaysia." But "1Malaysia" is an important Key Result Area for the vision of "High-Income Economy."

But what is the mission for the goal of "High-Income Economy." The primary motivation must be "Equal Opportunity For All" rather than "Economic Opportunities For A Select Few." In which case, the manner by which the "High-Income Economy" is achieved becomes important to ensure that growth and distribution are in the right direction.

I cannot over-emphasise the importance of the nature of the implementation of the "High-Income Economy." The previous goal of high-growth economy had worked badly because of the errors in policies being implmented from which we are still reeling.

It has been reported that the foundation for the "1Malaysia" is the principle of justice for all. (The Star, 11 July). But justice can be a difficult word because of its many connotations, one of which implies the justification to resort to violence or unscrupulous means to achieve justice. I would prefer "Fairness For All," as the word "fairness" is more of a plea than a demand. Which all boils down to "Equal Opportunities For All."

The concept of the Key Result Areas is akin to the concept of the Critical Success Factors, being pre-conditions for the success of a goal or vision.

If "High-Income Society" is the Vision, and "Equal Opportunities For All" is the Mission, then the Key Result Areas should be as follows:
KRA1: 1Malaysia - National Unity as the First Underlying Force for Competitive Advantage
KRA2: High Savings and Investment Rates for Domestically-Generated Growth
KRA3: Downsizing the Government
KRA4: World-Class Education System that is relevant to the Global Economy As the Second Underlying Force for Competitive Advantage

KRA1: 1Malaysia
"1Malaysia" is a complex concept, depending on what we see when we look at diversity. If we see in diversity, enemies, then the tendency will be to dominate others to ensure supremacy. If we see strength in diversity, then the tendency will be to embrace the diversity to create new and greater synergistic strength. If Malaysia is to become an enlightened nation, then aiming for high ideals is a key result area that we must see achieved. To achieve KRA1:1Malaysia, the action plans may include:
Action Plan 1.1: No Discrimination for or against in all areas of life in Malaysia, including foreign investors. Actions have been taken to remove barriers to entry into certain areas of the economy. However, we must also be conscious that all rules apply and that foreign investors and foreign workers, however much needed, should also not be given concessions which are given to local investors or local workers.
Action Plan 1.2: Promoting "Malaysia, My Home" to every Malaysian citizens so that they feel at home in this country. This is important economically to retain savings and for those savings to be invested at home to create jobs for the young people at home. We have successfully been promoting "Malaysia, My Second Home" to foreigners and we should therefore put equal effort or more effort to promote Malaysia to Malaysians, even ex-Malaysians, in order to extend our global reach.
Action Plan 1.3: A Common Language to unite the people and this invariably falls onto the Malay Language (but whether it should be the medium of instruction in schools is another matter). This is more of a practical need for people of all walks of life to communicate with each other across different strata.
Action Plan 1.4: The celebration of cultures as a reflection of the way people in Malaysia cope with life in the nation, by preserving old cultures and the traditional way of life as well promoting the performance arts with Malaysian elements. This is not very hard to do, as Malaysians have already embraced key elements of each other's local cultural heritage, short of religious imperatives.

KRA2: High Savings and Investment Rates
No country has not grown as a result of a high savings rate. All countries that do not save have all gone bankrupt.
Action Plan2.1: There should be constant encouragement for the people to save by providing safe savings instruments with guaranteed positive returns.
Action Plan 2.2:There should be constant encouragement for the people to invest in themselves (human capital) and technology (equipment).
Action Plan 2.3:For investments to match savings, financial institutions should be made more efficient where credit officers and managers are knowledge of the evolving structure of the economy and are constantly searching for ways and means to nurture new and growing industries.
Action Plan 2.4:There should be strict controls of financial and business speculation by financial institutions.
Action Plan 2.5: Keep the Ringgit Strong whenever there is a current account surplus, and keep it weak when there is a current account deficit.

KRA3: Downsizing the Government
Action Plan 3.1: There is a need to structure the government machinery properly. There is a tendency to look far afield for expert advice when in fact the experts have been sitting so faithfully right under the noses of the leaders for so long that they have generally been ignored. Office politics have a tendency to kill immediate work rivals to the detriment of the nation; and foreign consultants hired at exorbitant sums to provide advice based on inputs of the poor local loyal workers. In other words, there is a huge mis-match between the job-holder and the job-description in the civil service as a result of past hiring policies. There is a need to discard the ill-qualified workers from their posts and hire properly-trained personnels to fill the posts.
Action Plan 3.2: The government should increase the number of technocrats who can design systems and manned systems and sure that the government system is cyber-safe. The government should be based on systems that are opened to all and there should be minimal tweeking at high levels.
Action Plan 3.3: The government should not crowd the economy. Government-linked companies (GLCs) should be asked to make profits but no more than the savings-deposit rate so that there is no encouragement of natural monopolies to make supernormal profits to enrich their executives by charging high tariffs.

KRA4: World-Class Education System
The education system is an area where a clear analysis of the root cause of the problem should be identified. From the debate in the media, it is clear that the root cause is the poor quality of the teachers that we have - not only in (i) the lack of mastery of speaking and explaining in English but also (ii) the lack of mastery in the teaching of Mathematics and (ii) the lack of mastery in the teaching of Science - factors which could be attributed to be the product of the existing education system. The inability of teachers to teach in the subjects in which they are assigned to teach is the crux of the whole debate.
Action Plan 4.1: As we have recommended for the civil service, teachers should individually be reassessed by credible and objective assessors of their core competence as to (i) their ability to teach Mathematics regardless of language, (ii) their ability to teach Science regardless of language; and (ii) their ability to speak and write English and Bahasa Melayu. Depending on where the demand or vacancies are, the posts should be filled only by competent teachers. Additional teachers can be hired from retirement or Singapore.
Action Plan 4.2: There is also the problem of the competence of the students, especially those in rural schools and those in urban schools. The medium of instruction in rural schools should be Bahasa Melayu, but students must learn an extra language preferably English or Mandarin. The medium of instruction in urban schools should be English, but students must learn an extra language preferably Bahasa Melayu or Mandarin. The medium of instruction in Chinese/Tamil schools should be in Mandarin/Tamil, but students must learn an extra language preferably English or Bahasa Melayu.
Action Plan 4.3: For rural schools, there must be forward planning for teachers for each of the states. As far as possible, teachers should be recruited from the respective rural areas so that, when properly trained, they would be willing be willing to go back to their respective kampongs to serve their communities on a long-term basis.
Action Plan 4.4: There should be emphasis in teaching on principles and methods of thinking rather than raw facts. The syllabus should be simplified by experts who know their subjects well so that the core essence of each subject is taught while exercises are given to encourage the application of ideas.
Action Plan 4.5: There should be a limit placed on the inflation of grades, and the quality of the examination questions assessed as to their level. When the exams are too easy and the grades are all high, there is no basis for proper grading of acumen and competence and flair of students. There has been less emphasis on academic training and more on professional or vocational training which a nation that wants to build its own indigenous industries from the bottom up needs. There should be some correlation between the standards that are produced from public examinations and the availability of local undergraduates positions (e.g. All 10 As students will be guaranteed a place in the local universities in the subject of their choices.)

The above is not the New Economic Model but just some thoughts of an individual who hopes to throw some light in the search for one. When properly done, it can be an elaborate and consistent set of action plans derived from a vision but based on an understanding of the reality.

Lin See-Yan on Education

Lin See-Yan wrote a good piece on education in the Star last Saturday.

He wrote of the original role of universities of educating young men and women to become good citizens and how the universities have lost the force of their initial vision along the way to commercial viability.

He questioned whether the lack of moral education and care for others have turned perfectly young men and women into monsters that are now creating havoc in the modern world that we now live in as exemplified by the financial collapse world-wide.

He wrote: "In my view, restoration of the right balance between scholarly excellence and its education role requires developing in students a philosophy of life that brings dignity, honor and responsibility to oneself.

"For Malaysia, this means helping them to believe in themselves as individuals, and not to see themselves first as members of any identity group. This simply entails creating community out of diversity. The building of self-understanding and confidence in one’s own principles remains key to the educated person and leader we all want to emerge from our universities.

"In this context, universities have proceeded to redesign curriculum that includes seven basic requirements: (i) more flexible purposeful-course requirements; (ii) written and oral communication; (iii) foreign language; (iv) quantitative skills; (v) basic science; (vi) moral reasoning; and (vii) specialisation."

Thursday, July 9, 2009

The Nature Of Economic Theory & Policy II

In my last post, I depicted, as clearly as I could, the dichotomy that between theory and policy that economic theorists have tried to maintain in order to ensure that theirs is a theoretical research programme that is as objective as it can be scientific.

As a result, there is a tendency to emphasis on the theory of growth and neglect the theory of distribution, such that formulators of distributive policies that less guidance on from theory and therefore the chances of distributive policy errors are high.

Of course, for those of us who know our economic growth theories, we cannot pretend to write a production function without being confronted with the implications on distribution of the output. It is this glaring neglect that we find ourselves talking senseless about growth without ignoring the reality of distribution right in front of our noses.

To be authentically economic, we cannot simply write a production function that is comprised of different races of people. We know the key factors of production to be land, labour and capital.

Theoretically, it requires a heroic assumption to say that race A has land, race B has labour and race C has capital. In all likelihood, every race of people has A, B and C in them. And this is why the theory of distribution inevitably falls back to class rather than race.

Land is without productivity which is embodied only in capital. Labour is without skill which is embodied in capital.

Capital, however, embodies skills, technology but I do not think it contains money. Money, as Keynes contended, is not there to earn interest. Money contends with uncertainty of capital value and hence liquidity.

Capital is that which links the past to the present and the present to the future. Without capital, we will be nothing but a subsistence living from day to day depending on our daily bread from providence and occasionally manna from heaven if we happen to have oil.

We should therefore take the bulls by the horns, if our research is to be realistic, by studying the impact of distributive policies on the accumulation of capital. (It does not bode well for a country which claims to be wealthy but having to resort constantly to foreign savings for capital.)

There should be research, especially empirical work, directed at the distributive inpact of growth policies to see whether a particular policy is sustainable or not over the long run. But there will be immense difficulty with this programme of research when even the measurement of wealth is a massive obstacle in itself.

This is an area of empirical research which I think Malaysia has sufficient data points to throw light on.

Friday, July 3, 2009

The Nature Of Economic Theory & Policy I

There is a sharp difference between theory and policy in economics. Theory aspires to be objective, insofar as a social science - the science of human beings studying themselves - can be; whereas policy is explicitly normative in the sense of being prescriptive - however much propounders of a specific slant may try to convince us all that their is the "fairest of them all."

In the natural sciences (such as physics, chemistry and biology), the methodology followed is "induction" where repeated experiments can be conducted to test the validity of a proposition in order to "get at the truth". But even induction has been famously known to have its own problem, as exemplified by the case of the black swans - a paradigm shift that can be as profound as Galileo's.

In trying to come to some kind of a decent conclusion for economic propositions, economic theorists have decided on "positivism" (a la A.J. Ayer) as the philosophical basis for its scientific foundation. The positivist argument is that while the premises may not be testable (as in "limitlessness of human wants"), the eventual conclusions or propositions derived should be subject to test and be testable. Herein lies the whole study of statistics and econometrics and modelling for the purpose of testing economic hypotheses.

We shall remind ourselves that reality is not neatly separated into economics and everything else. Reality is a mixture of economics, politics, religion, environment, etc. The economic data that we collect to test economic propositions are in themselves constructed out of theories themselves and therefore are bias towards the theoretical framework. There are many structural changes to the global economies as well as the local economies, such that the data points (for a young nation like Malaysia) are inadequate to take into account all the relevant factors. The other factors such as politics and environment are not as "quantitifiable" as economics which in turn is not as "quantifiable" as CO2, for example.

In the face of insufficient data (especially uptodate data) and poorly tested propositions (or "theories" as economists would like to call them), many economists have to resort to a particularly way of thinking on economic issues and to rely on economic insights drawn from years of keen observation to arrive at a judgement on what the economic reality actually is.

The economic way of thinking is the observation of how human beings behave to satisfy their wants and desires, and how they respond to stimuli. While economists focusing on the GDP will want us to believe everything boils down to goods and services, I wish to make the point that how the structure of the economy evolves to be what it is today and how it will evolve into tomorrow is a respond to the fears and uncertainties faced by human beings. At the meta level, i.e., the underlying fundamentals, we know that human beings are destroying the very ground on which they stand in order to have a firm grasp of their future (which we all know is elusive and never here).

In the end, the policy we pursue is a reflection of our own value judgement of how our society should be and become. Policy is normative, with no pretense on objectivity. We may argue that we should be market-oriented in order to be economically efficient, but our society may become more treacherous as a result. In policy, we wish to argue a position for our society to take, as we would wish to argue for our particular way of living. There are some basic economic relationships which we must recognise and take into consideration, if only to arrive at an ideal state - as ideal as anyone can tell us that ideal is necessarily good. But it does not mean that foolish do not exist, and that wrong policy actions are not taken. Errors occur everyday; it is the ability to undertake error-correction that keeps us from ultimate disaster.

In policy, we tend ultimately to argue for a particular way of life for our society or the degree of freedom to live the way we prefer.