The age of intolerance Privileged class must realise its duty to the nation,the world's economy in crisis, two competing narratives of its sources - and appropriate remedies - are emerging. The first, better-known diagnosis is that demand has collapsed because of high debt accumulated prior to the crisis. Households (and countries) that were most prone to spend cannot borrow any more. To revive growth, others must be encouraged to spend - governments that can still borrow should run larger deficits, and rock-bottom interest rates should discourage thrifty households from saving.Under these circumstances, budgetary recklessness is a virtue, at least in the short term. In the medium term, once growth revives, debt can be paid down and the financial sector curbed so that it does not inflict another crisis on the world.
Daim zainuddin, easily the most respected Malay businessman, particularly when it comes to ethics, has said that the Malay of this nation are idolising the corrupt. This statement may come as a surprise only to those who have their eyes shut and believe only in pious platitudes about Ketuan Melayu and its Bumiputra status, being mouthed by the corrupt. We are going from bad to worse.As if the series of scandals and tales of mis-governance (or misrule) weren’t full up to the brim already, our ruling class have Shahrizat Jalil., Muhyiddin Yassin and NajibRazak .On the face of it, the goveernment's initial move may seem exemplary, set to warn the wrong doers. But, as all observers know by now, that is just part of the story. It is simply the case of government does not have the ability to hit back even as it covers its own misdeeds.Do our politicians and babus even sit back and think about the repercussions of their short-sighted actions? Just as it has needlessly politicised the defence services through its sloppy handling
will ever be willing to be on board of any organisation, or deal with a private sector company while in service. Why should he, if the political bosses and the all-powerful (and never do wrong) administrators do not support them when in need and wash their hands completely of any responsibility? Would these four barred scientists have evaluated everything themselves ? Could they have gone ahead with the entire deal when so much money was at stake without the involvement of babus and the politicians for critical permissions? The answer to that and a lot of other questions you might have is a straight NO! But still, thanks to them never being held accountable, they will, as always, go scot-free.he drift in the nation and its governance is all too palpable. It shows a complete leadership vacuum.
That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.How does this dynamic interaction show up in the macroeconomy? Economist Alan Krueger, currently serving as Chair of the President's Council of Economic Advisers summarized these findings in a recent speech, in a section on the consequences of economic inequality.
Less robust (or debt-financed) consumption. Seventy percent of the US economy is accounted for by consumer spending, so if that part of GDP lags, economic growth slows. It is also the case that the propensity to consume out of current income is higher among lower-income households (i.e., compared to wealthier households, they're more likely to spend than save their income).
Based on an estimate of these relative propensities and the large shift in the share of national income that accrued to the top 1 percent over the past few decades, Krueger calculates that aggregate consumption could be 5 percent higher in the absence of such large income shifts. Applying rules of thumb on the relationship between aggregate growth and jobs, and assuming both economic slack and that this income was not simply replacing demand elsewhere in the economy, this extra consumption growth could reduce unemployment by 1.75 percentage points, implying about 2.6 million more people with jobs.
[As consumption is 70% of GDP, and each point of GDP above trend reduces unemployment by half a point, this calculation is .7*.5*5%, or 1.75%.]
Krueger cites an important caveat about this type of calculation. In the face of stagnant earnings in the 2000s, many in the middle class borrowed to make up -- or more than make up -- the difference, in which case middle-class consumption did not fall as much as it would have absent this leverage. To point out that this method of improving middle class living standards is both unsustainable and extremely risky is an obvious understatement.
Inequality and longer term growth. Krueger also points to recent research showing that "in a society where income inequality is greater, political decisions are likely to result in policies that lead to less growth." Nobelist Mancur Olsen also hypothesized about this relationship decades ago.
As more income, wealth, and power is concentrated at the top of the income scale, narrow coalitions will form to influence policy decisions in ways less likely to promote overall, or middle-class, well-being, and more likely to favor those with disproportionate power and resources. In the current economics debate, we clearly see these dynamics in a tax code that bestows preferential treatment on those with large amounts of assets, like capital gains and stock dividends, relative to wage earners.
Trickle-down economics, inequality, and incomes. Another piece of evidence with implications for rebuilding a strong middle class comes from new work by economists Emmanuel Saez et al. As shown in the figures from their paper (see here), they use international evidence from a wide variety of advanced economies to examine two key links in the logic of the supply-side chain.
First, they look at the relationship between the top marginal income tax rate in these countries and the change in income inequality. They find a strong negative correlation: in countries like ours that cut the top marginal tax rate, income is a lot more skewed (and note that this refers to pretax income, so the result is not a direct function of the tax policy changes).
But the critical question for supply-side is whether these high-end marginal tax rate reductions lead to faster income growth (we've already seen that they lead to more income inequality). The bottom figure shows that they do not. Real per capita income growth across these countries is unrelated to the changes in tax rates.
The above points emphasize an economic rationale for a growth model more favorable to the middle class. More broadly shared growth would not only score higher on a fairness criterion; it would provide a more reliable and durable structure for overall growth itself. It is no accident, in this regard, that the era of heightened inequality coincides with the arrival and persistence of what I've called "the shampoo economy:" bubble, bust, repeat.
But our emphasis on growth should not crowd out that of fairness, and in this regard, some of the most important recent work in this area has stressed the relationship between inequality and mobility, the latter being the extent to which individuals' and families' economic positions change over the life cycles. Again, I will briefly summarize the relevant findings.
Economic mobility. Some policy makers, often in seeking to dismiss the inequality problem, argue that the US has enough income mobility to offset increased inequality. We may start out further apart, they argue, but we change places enough that it doesn't matter. This argument fails, however, both in terms of logic and evidence. The existence of mobility cannot offset increased inequality; for that to occur, mobility itself must be accelerating. There is no evidence to support such acceleration and some new, high-quality work suggests a slight decline in the rate of mobility.
The US has considerably less income mobility than almost every other advanced economy. In particular, as stressed in a recent New York Times article, parental income is a stronger predictor of the success of grown children in the U.S. relative to other advanced nations -- i.e., we have less intergenerational mobility than other nations.
Putting some of these themes together, I have hypothesized that there are causal linkages between inequality and immobility. To the extent that those who have lost income share in recent years suffer diminished access to the goods, services, and general living conditions that would enhance their mobility, we would expect to see economic results like those cited above.
Here, I'm thinking about everything from access to quality education, starting with pre-school (such early educational interventions have been shown to have lasting positive impacts), to public services, like decent libraries and parks, to health care, housing, and even the physical environment. The new research linking mobility and inequality may well find that as society grows ever more unequal, those falling behind are losing access to the ladders that used to help them climb over the mobility barriers they faced.
Hanauer's feedback loop is key to this model. It's not just that we need growth to reach the middle class. It's that when it does, the growth is more durable. There's room for a lot more research here, but this feels like the right economic model for the present and the future.
“These people (UMNO bribed sycophants) are hiding behind the tired and over-used phrase of Malay supremacy. The real supremacy of Malays must be fought in the realm of economics. The answer to Malay prosperity may well lie in the basic building blocks of economic advancement.”-Dato Ariff Sabri Aziz
Many have realised that the struggle to preserve the 30% quota of privileges has never expanded into the universal struggle for the economic emancipation of Malays.I want to repeat this observation. The penury of the majority Malays is not the result of greedy others (read non-Malays) taking a larger share of the economic pie.
We have been taken for a ride believing in this.The causes for the continued misdevelopment of Malays are likely to be found in the actions and behaviour of the Malay leadership.The Malay leadership at all levels have not acted in the interest of Malays actually.
Please look around you. The top leadership of Malays from kings to district officers, to head of departments, the army, the police down to the lowly paid peons and thambys, are all Malays. They have the means to develop Malays.
Yet the lot of the majority Malays hasn’t improved substantially. But the lot of our own (Malay) Super 30 (as in ruling elite) has improved tremendously. There can only be one conclusion – the elite leadership calling for the magic number of 30 has been helping themselves to the pie and excluding the majority of Malays.
UMNO’s bribed sycophants
The majority of Malays have improved on account of themselves.They have turned themselves into capital goods in the sense of having acquired the skills and education to pull themselves up.
It is strange – the UMNO “progressives” who fight vehemently against the dismantling of the 30% are in fact fighting on behalf of the real exploiters of the Malays Hence, it is they, not those who decry and call for economic liberalisations who are the bribed sycophants of the old bourgeoisie.
These people are hiding behind the tired and over-used phrase of Malay supremacy. The real supremacy of Malays must be fought in the realm of economics. The answer to Malay prosperity may well lie in the basic building blocks of economic advancement.
These can be summarised into four broad headings – mass production, the application of science to production, the passion for productivity and the spirit of competition. These were the views by a leading teacher of economics at Harvard University, William E Rappard.
Malays must ‘want’ prosperity
Rappard noted these four headings when explaining the secret behind America’s prosperity. Hence instead of the sabre rattling and kris wielding, maybe we Malays need to go back to the first principles of economics.
Once we accept these general observations as to what lay behind prosperity, we then begin to understand the political significance of the conclusions. It is that, our prosperity and conversely our penury lie within us. Our own salvation will be the result of our own efforts and will be a purely Malay phenomenon.It is no way caused or furthered by external factors, principal among them the greedy appropriation of other races from us.
I cannot dispute when Professor Rappard says the wealth of a country very largely depends on the will of the nation. “Other things being equal, then, a country and its economy will be more productive in proportion as its inhabitants want it to be.”
Malay community will be prosperous if the Malays want prosperity and lay down policies fitted for the purpose. The ‘want to’ must be there first.
related article http://suarakeadilanmalaysia.wordpress.com
/2012/01/31/tan-sri-nor-mohamed-yakcop-hero-or-goat/
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