Pakatan’s economic plan for a better M’sia

As often repeated in the mainstream media, Malaysia has huge, almost boundless economic potential. Blessed with abundant natural resources, a diversified workforce and strategic geographic location, Malaysia has been able to grow rapidly in the last couple of decades with relative ease.

The challenge now is to sustain growth in a more competitive world. Although not officially endorsed, this represents Pakatan Rakyat’s core thinking around economic management.

Let me begin by stating our core guiding principles, that will be our compass in developing a potential Pakatan administrative plan.

Our core belief and our basic economic philosophy is as following:

A market economy, economic equity and means-tested redistribution and comprehensive political reform. I will now deal with them individually.

A sustainable economy growth: Implementing a humane economy

We believe in a market economy. That means that as a rule the government will not interfere in the fundamental operations of the free market mechanism.

Businesses will be given full facility to operate and flourish, hard work will be rewarded and forces of supply and demand will, ceteris paribus, determine the equilibrium pricing of goods and services.

But it will not be a laissez-faire or “leave it alone” economy because while transactions between private parties may be sacrosanct, history has shown that unbridled free enterprise has led to abuse and exploitation of the weak.

We have all seen how the financial crisis of 2008 brought the global markets to their knees, with a toxic mixture of greed and banking deregulation.

Reality is that “ceteris paribus” is fiction because many things are not equal. So, in pricing there are situations where the government must act.

True, decisions on investments and resource allocation should, as a rule, be determined through markets. But where you have monopolies, cartels and mismanaged state corporations ganging up to skewer the pricing mechanism, that is no longer a free market. In such situations, government intervention is no longer a question of choice but a moral imperative.

Philosopher Michael J Sander argued that the world is in danger of becoming a “market society” where everything is for sale and where the markets have become detached from morals.

A market society based on price tags cannot differentiate worthy or unworthy causes. Therefore, he argued, rightfully, that a free market should only be used as a tool and not as an all encompassing way of life. What we want is a market economy, not a market society.

So, the Pakatan market economy will be a regulated market with an interventionist slant. It will still be very much a free market economy but with a human face. In other words, it will be a humane market economy.

Socio economic equity: Protecting the poor, benefiting the middle and rich

Our second core belief is our commitment to economic equity. We will do our level best to improve the livelihood of the bottom 40% households, who are earning less than RM1,500 a month. For the businessmen in the crowd, I am sure none of you fall under this category. So you may ask, what has economic equity got to do with me? Why should my income tax be used to help the bottom 40%?

If the poor can earn a better income, then they will become better consumers of the goods and services that you produce.

If they have better incomes, their children will be better educated and grow up to be your future productive workers, innovators and directors.

It’s a simple circle of life, improve the livelihood of the poor and they in turn power economic growth. Our target is to ensure the bottom 40% achieve a household income of RM4,000 a month.

Our economic equity is essentially based on social justice, which is to introduce an equitable redistribution policy based, not on race, but on economic means testing.

The NEP has been grossly abused. While it served its purpose at the formative stages, it is no longer in tune with the times.

Our new policy will be based on needs. This means the poor, the needy and the marginalised will never be neglected. The Malays and the bumiputeras still comprise the largest group in this category.

So, any suggestion that they will lose out is totally unfounded. It is a more equitable policy because we know that poverty cuts across all races and the best measure for affirmative action is means testing. No ethnic group will be left out.

This policy is not directed just towards poverty eradication but also economic upliftment. With means testing, we will work towards a more equitable distribution of the nation’s economic pie.

Comprehensive political reforms: Implementing structural changes, without fear or favour

An important dependency of real economic impact is the implementation of comprehensive political reforms in Malaysia. Without these reforms, impediments to higher growth will remain.

Crony capitalism prevents many budding and genuine entrepreneurs from climbing up the economic ladder, while crony subsidies and crony monopolies ensures that the rich continue to be rich or become even richer.

The government must have the resolve to remove structural economic advantages to certain parties. In most cases, implementing such changes involves self-interest.

Is the ruling government able to remove monopolies and/or oligopolies in telecommunications and trade imports that continue to support partisan causes?

Umno/Barisan Nasional has no uniting cause, unless you consider plundering the rakyat, to be a valid common goal.

BN operates with Umno as the big brother, all other component parties just follow in their footsteps. As propaganda goes, this is a recipe for a stable government, in reality though, there is a terminology for this kind of government – authoritarianism.

Authoritarianism restricts freedom and breeds corruption.

The government has been going into overdrive to paint a negative picture about Pakatan’s ability to rule, much less implement economic policies.

The government says that Pakatan is too fragmented – DAP is too Chinese, PAS is too Islamist, and PKR is too multi-racial.

It is true that we are different, but what Pakatan has in common makes it Herculean.

Pakatan is united in a common belief of social justice and has a real desire to see a better future for all Malaysians.