masterwordsmith-unplugged

According to this article HERE, Forbes says that Malaysia’s rich is getting richer. It said:

Tan Sri Robert Kuok and Ananda Krishnan remained top of Malaysia’s rich list last year, according to Forbes magazine, which also reported that Malaysia’s top 40 richest individuals increased their fortunes by 18 per cent to US$62.1 billion (RM186.3 billion) largely due to the surge in global commodity prices.

"The rich get richer and the poor get poorer" is an old proverb frequently used when discussing economic inequality. Of course in Malaysia, we cannot deny that the living standards of the hard-core poor have improved considerably. However, the past three years have been particularly difficult for many not just in the working class, but also for middle class Malaysians.



Could it be that people are struggling because some who have the money and the means to make a difference are not really doing enough to make things better for the rest of us even though it is their duty and responsibility to do so?

Prices of many products and services have increased. Our bowl of noodles cost more but we are getting smaller portions with less condiments. It almost seems that the profit-maximization motive is in their minds so we witness increasing prices on many products/service to reap a profit off their consumers and pass on the rising costs to the helpless consumer.

Economically speaking, the rich are better off because they have the means to acquire capital to let their money make money for them without needing to work. In other words, they are earning passively when their capital investments provide them with capital gains or passive income.

Karl Marx talked about this in his discourse on class struggles where he explained that the bourgeoisie (the rich) had the means of production and of exchange but the proletariat (the poor) had to sell their manpower/labor to survive. Even hundreds of years later, we see this happening. (*I am not a Marxist but I do agree with this part of his writings.)

In reality, the rich would naturally be concerned about "capital gains" and "passive income". The whole concept of "earned income" is probably foreign to them unless their wealth was a rags to riches experience. With the money they have acquired, they would be constantly creating and building assets that would allow them to reap more passive income from their investments. They do not really experience in intrinsic value of work and earnings because theirs is a different process altogether.

On the other hand, the main source of income for the rest of us is "earned income" which may not be increased in tandem with inflation rate. In other words, our real income falls as our purchasing power is reduced over time with rising expenses. A trip to the wet market/supermarket may mean less grocery items with the same budget and this can be exacerbated if there is a birth or death, medical bills need to be paid, rising prices of food items, petrol prices that keep going up and up, never to come down. In the same scenario, our earned income remains either unchanged or minimally increased by some sympathetic bosses. In that way, the poor get poorer.

The truth is, some barely earn enough to cover their expenses. The rich on the other hand make well more than enough in passive income to cover their expenses.

Some may ask what has the government been doing about the disparity? To a certain extent, we can say that government intervention under the New Economic Policy has been successful in spurring economic growth and development of the country in some areas and also the development of the Malay ethnic group. However, is it all hunky dory as some prefer us to believe?

If you have time, please check out this set of slides on Income Distribution in Malaysia: Old Issues, New Approaches by Ragayah Haji Mat Zin of Institute of M’sian & International Studies
@ Universiti Kebangsaan Malaysia which you can access AT THIS LINK.

There is a very interesting section in her paper on Explaining Inequality after NEP. Consider the following excerpt taken from THIS LINK:

• State-government-party collusion (corruption, cronyism and nepotism)–ownership and control of the economy by political parties, & parties linked to noted business tycoons or ‘cronies’, many of whom are engaged in rent-seeking enterprises…the common thread is that the leaders of ruling parties have been able to use their political clout and influence to earn enormous rents for themselves or their political cronies and families.

• This phenomenon transcends ethnicity and enabled a selected section of the Malaysian society to accumulate income and wealth very rapidly, thus accentuating inequality

The writers proposed a Shift in Approach to Narrow Inequality including:

• Should focus more on reducing inequality within both urban & rural areas as well as within each state, although economic development in the laggard states have to be geared up in order to reduce the regional gaps.

• Shift the focus of reducing inter-ethnic inequality to intra-ethnic inequality, and to re-conceptualise the strategies of attaining ethnic income parity such that they do not worsen
within group inequality among the the various ethnic groups.

• Move from race-based policies to national policies, which are inclusive of all ethnic groups. The urban poor and low income groups should be seen as socio-economic groups rather than groups aggregated based on ethnic origins.

• Education is the sharpest tool for poverty eradication and moderating income inequality. Thus, need more access to quality education for the poor. Assistance should favour the disadvantaged. Better-off parents take the responsibility of educating their children, if not fully, at least part of the costs.

• A mechanism must be developed to ensure that beneficiaries, esp. those getting the privatization projects or benefiting from any other direct redistributive policies, to give back to society.

• Projects need to be allocated based not on political connections, the “influential and powerful”, but according to genuine ability criteria. E.g. through the community or bottom-up approach. Transparency and proper governance should always be part of the guidelines in the allocation.

•The issue of foreign labor must be resolved. Although the Government is encouraging greater automation and mechanization of labour-intensive industries in order to reduce the dependence on foreign workers, these measures must seriously be implemented.

• The demand for minimum wage or higher wages to be paid to the local workers needs serious consideration.

• Since most of the taxes have become less progressive, a study should be carried out to explore the viability of introducing 'leveling taxes', such as hereditary or wealth taxes.

Interestingly, the writer of that paper said "The neglect of ensuring equitable distribution of the economic pie was said to lead to the 13 May 1969 racial riot as well as probably one of the causes of the National Front loss on 8 March 2008."

When the government is ready and able to solve problems related to the disparity in income on a needs-base rather than on ethnic lines, perhaps then such news is worthy of headlines and reason for all to rejoice.

The government and the media should be more concerned with how to reduce poverty, enhance standards in education, create jobs, stimulate and spur growth and development in our economy in such a way that it generates wealth for the benefit of EVERYONE. Then only can we hope to reduce the gap between the rich and the poor.

Until that happens, such news about very rich people is nothing to scream about. It only reminds us of what should have been and what can be if people had voted wisely.

As such, please cast your vote wisely at the next GE.