Towards A Competitive Malaysia #12

Chapter 3: Diamond of Development (Cont’d)

Knowledge in the Village

Knowledge has supplanted the traditional factors of production in creating wealth. Those traditional factors of land, labor, and capital are still important, but their value can be leveraged considerably through the application of knowledge.

Consider two rice farmers, Ahmad and Bakar; both equally hardworking and have the same acreage of rice fields of comparable fertility. Every year they planted the same amount of rice seeds, put in the same amount of work, and not surprisingly, reaped the same amount of harvest. Their traditional factors of production—land, labor, and capital (in this case, seeds)—are the same; hence their output (harvest) is also the same.

In the classical understanding of economics, output could only be increased by increasing the input of the factors of production. Double the land under cultivation, and you double the yield; likewise, with increasing the labor input by planting two crops in a year.

There is a limit to what could be increased with the factors of production. Increasing the area under cultivation by taking land from another farmer would not necessarily increase the community’s total yield, and the supply of new arable land is also finite. There is also a limit as to how much harder a farmer could work. There comes a point when the harder he works, the less of a proportionate increase in harvest he would get, a diminishing marginal return. If he works much harder, he would risk injuring himself and becoming no longer productive.

Revisit the two farmers, this time from the perspective of the K-economy. One day Ahmad had an insight (or learned about it somewhere) and decided to plant his rice in the evening rather than the morning, as was the tradition. He noted that when he sowed in the morning, the birds would immediately swoop down and eat some of his freshly sowed seeds. He reasoned that by planting in the evening, his seeds would have a 12-hour head start before the birds would discover them the next morning. With the overnight dew, the seeds would become swollen and be less attractive to the birds, or be covered by the moist soil. Armed with this knowledge, he changed his ways. Meanwhile farmer Bakar stuck to tradition; his ancestors had always planted rice thus and who was he to mess around with a proven formula and defy tradition.

At harvest time Ahmad indeed enjoyed a greater yield, perhaps 30 percent more than Bakar, the increase from seeds that previously would have been eaten by the birds. The two farmers still have the same input of the traditional factors of production, but Ahmad’s output is now considerably more. This increase isattributable solely to the new knowledge Ahmad had acquired. Because of that, he is now more productive (getting more for the same input).

This simple story is the essence of the K-economy, encapsulating what the new theory of economic growth says of knowledge supplanting the traditional factors of production in creating wealth.

Before we get too smug and claim that we have understood the “new growth theory” by this simple example, let me add this caution. What made Ahmad think of changing his ways by sowing in the evening instead of simply following tradition? That implies a willingness to try something new and the courage to buck tradition, or at least not put too much deference to it. It also implies something else: the willingness to learn from your environment, to be observant and receptive. More importantly, it signifies the willingness to take risks, to take new paths—to be enterprising. When Ahmad planted his rice seeds, he did not simply do it mechanically without thinking. He had observed what those birds did to his seeds, and thought of ways to solve the problem. Most of all, Ahmad had the conviction of his belief and was willing to bet his future by applying his new insight, that is, to experiment.

The remarkable aspect to this new knowledge that Ahmad had acquired is that it is not exclusive to him. Bakar and every other farmer in the village are free to benefit from Ahmad’s insight. The only gain Ahmad gets from his knowledge is the 30 percent increase in his harvest. If the other farmers were to adopt his technique, they too would get comparable results. The more people using Ahmad’s knowledge, the more the benefits would be. Unlike the traditional factors of production, the law of diminishing returns does not apply. On the contrary, we have the new law of increasing returns. There is literally no limit to the increase in benefits if every farmer in the country were to adopt Ahmad’s insight.

This explains why developed countries continue to outstrip poor countries in wealth creation notwithstanding the conditional convergence discussed earlier. They do it with knowledge (and technology, insight, wisdom). Their preexisting wealth gives them a head start in further expanding their knowledge base.

Granted, Ahmad did not gain anything more than his 30 percent increased yield from his insight, and perhaps the gratitude of his fellow farmers who were enjoying a free ride on his innovation. Nonetheless there were ways for Ahmad to capitalize on his discovery. He could follow up his observation and discover that the same effect could be achieved by soaking the seeds overnight. Or, that by adding a mild detergent to the water to reduce its surface tension, he could have the same effect by soaking for only a few hours instead of overnight, thus saving precious time. He might further discover that by mixing the seeds with solutions of bitter roots he discovered in the jungle, he made the seeds even more unappetizing to the birds, and thus further increasing his harvest.

Having discovered this secret concoction, he could patent it. Now anyone who wanted his special formula would have to pay him. Soon he would not need to be a farmer anymore but simply market his new product. He could use his land only as an experimental farm to test his many novel ideas. A few years down the line, Ahmad would have a thriving company, employing many workers, and bringing immense benefit to his community. Meanwhile Bakar was still tending to the same plot of field and harvesting the same yield as before. Yet both started out with the same resources, the same “factors of production” of land, labor, and capital. The contrasting difference in economic returns between the two is due to knowledge.

This tale may not have the happy ending I described. Ahmad may have lost everything when he changed his time of sowing. His seeds could have been destroyed by the overnight mildew. If the community had no tolerance for new ideas, Ahmad would have been ridiculed if not condemned, and forever made an example to the rest of the village on the dangerous consequences of challenging tradition.

To encourage the Ahmads, the culture must be forgiving of new ideas and methods, and those who challenge the accepted ways. The culture must go beyond mere toleration of the adventurous few who dare seek new paths, it must encourage and nurture them if society were to progress.

For those who are skeptical of my simplified fictional account, consider this. In the 1950s and 60s, there were widespread gloomy predictions of global famine as exemplified by the Club of Rome pronouncements. Thankfully, through the insight of the University of Minnesota biologist Norman Borlaug, the world was spared this gruesome fate.9 Although his work was initially on high-yield, pest-resistant wheat, it was later adapted to rice, and helped usher in the Green Revolution. The fact that he is not more well known or as wealthy as a Bill Gates is another issue. Borlaug did win the Nobel Peace Prize in 1970.

Pramoedya Ananta Toer writes in his This Earth of Mankind, “Knowledge has given me a blessing whose beauty is beyond description.”10 In this new economy, one of the blessings of knowledge is that it gives bounty beyond imagination. There is truly no limit to the creation of wealth through knowledge, ingenuity, ideas, innovation, technology, or whatever we want to call it. This is the excitement behind the insight of this new “endogenous theory of growth” which underpins the K-economy.

Revolutionary inventions like the steam engine and computers improved productivity in readily apparent ways. Inventions and innovations need not necessarily be dramatic to have an impact on productivity. Often simple and obvious (at least after they have been discovered) inventions can cumulatively be significant. The explosive growth in international trade owes as much to the insights of economists and political leaders as to that simple invention: containers. That one device did away with the battalions of dockworkers and ship handlers while reducing port pilferage and other losses. This greatly increased efficiency and reduced shipping costs, enabling consumers to enjoy cheap goods. In the past it took days to load and unload a ship, today mere hours. It is estimated that shipping costs fell from about $5.83 a ton in 1956 to a mere 15.8 cents today, a steep drop of over 97 percent.11 Phenomenal improvement!

To prepare Malaysia for this new endogenous growth, the environment must be supportive. It must encourage and nurture knowledge, and reward creativity and innovation. Malaysia must tolerate if not actively encourage those who do not pay too much deference to precedents and traditions, and those who dare venture along untracked paths, that is, our Ahmads.

Merely adding more years of schooling or more universities would not do it. For if all our students learn is to obey authorities blindly, adhere to traditions slavishly, and accept their fate passively, then I would argue that the fewer years spent in formal education the better.

The type of education that would best prepare citizens for the K-economy is one that would develop their powers of observation, harness their innate curiosity, and encourage them to experiment. They should be able to evaluate new information and think critically. In short, an education system steeped in the modern liberal tradition and well grounded in the sciences.

We must instill in citizens the attitude that it is within their power to change their condition; it is not divinely destined. Nor do they need to wait for a benevolent and paternalistic government to provide them with the answers; rather it is within them to seek the solutions. We must encourage them to undertake changes, even and especially those that may appear counterintuitive and against the accepted notion. We must tolerate if not actively encourage those who challenge traditions. This implies a willingness to tolerate some disorder, and challenges to the status quo.

We must encourage citizens to pursue paths less traveled by not denigrating or putting “guilt trips” on them. We should not view that as an expression of ingratitude or disrespect, rather an expression of their curiosity to discover the larger world beyond the familiar.

To encourage the likes of Ahmad, we must have an environment where property rights, including the all-important intellectual rights, are respected so that citizens would have the incentives to pursue their ideas and inventions.

Above all, there must be an atmosphere of freedom, the freedom to pursue dreams and ideas. If we control everything the citizens read, view, or do, then we will necessarily limit the chances of these discoveries. We do not know where, when or from whom the next brilliant spark would emerge. Nor could we predict what that brilliant idea would be. Hence we must be receptive and open, and encourage as many participants as possible.

Malaysian leaders keep harping on the urgent need to prepare the nation for the K-economy. They should also be mindful of these other equally important and supportive factors, and not simply and blindly equate the K-economy to more years of formal education.

Next: Diamond of Development

Integrative Thinking Mark of Great Leadership

Integrative Thinking Mark Of Great Leadership

M. Bakri Musa

MT June 18, 2007

In a recent article in the Harvard Business Review,* Roger Martin, Dean of the University of Toronto School of Management, observed that successful leaders have the ability to hold two opposing ideas simultaneously, and then craft a solution based on the synthesis of both, instead of either/or. Malaysian leaders, political and religious, would do well to learn this.

Martin compared the human mind to the human thumb. An opposable thumb (able to apply force in opposing directions as well as opposable to the fingers) enables humans to do such intricate handiworks as drawing, writing, and sculpturing. It is also handy if not a necessity for a surgeon. Likewise, an opposable mind would enable leaders to think creatively instead of being trapped in a dichotomous or binary thinking of yes or no, and either/or. More importantly, this capacity for “integrative thinking” can be taught. It is the intellectual underpinning of Toronto’s fast-rising Management school.

Limitations of Binary Thinking

Many monumental problems can be traced to a leader’s inability to escape the trap of binary thinking. The earliest and most consequential split among Muslims was between those who believed that the leadership of the ummah (to succeed Prophet Muhammad s.a.w.) should be restricted to his bloodline, versus those who subscribed to the prophet’s command, “The best among you shall lead.” Thus we have the Shiites, the followers of Ali (the prophet’s nephew), and the Sunnis. Muslims and the world generally are still paying a terrible price as a consequence of that conventional thinking.

Had those earlier leaders been exercising their integrative thinking faculties, they could have come up with a solution along this line. Have the spiritual leadership of Islam be restricted to the Prophet’s descendents while the political leadership be to “the best among you.” We have the model of hereditary sultans and elected prime ministers. Perversely today, the only Shiites to adhere to the descendants-of-the-prophet-only-as-leader are the Ismailis. Mainstream Shiites have long ago abandoned that precept.

President Bush is today trapped in conventional thinking when he views the world as “either with us or against us.” As exemplified by Abu Gharaib and Guantanamo, atrocious behaviors are not limited only to “them.”

Prime Minister Tunku Abdul Rahman exhibited best this integrative thinking. Instead of choosing between the two racial extremes of championing Tanah Melayu (Land of the Malays) versus the thinly-veiled but equally racist thinking of what would later be subsumed under the “Malaysia for Malaysians” banner, he chose a course synthesizing both elements. Thus he opted for Malaysia instead of Tanah Melayu or Melayu Raya (Greater Malay) and relaxed the citizenship rules for non-Malays while retaining enough Malay attributes (the sultans, Malay language) to satisfy Malay sensitivities. That stroke of political genius spared the country the tragic fate that befell the Balkans, Rwanda, and Northern Ireland.

The Tunku’s political genius did not percolate to today’s leaders; they are still trapped in their binary thinking. To them, learning English means neglecting Malay, while encouraging the study of English would ipso facto be detrimental to Malay language. Similarly, special privileges for Bumiputras must automatically mean suppression and discrimination of non-Bumiputras. This zero-sum mentality, the consequent of binary thinking, is not only non-productive but also destructive.

With integrative thinking, these problems would look very different, and their solutions more fruitful. Learning English literature in college stimulated and enhanced my appreciation of Malay literature. The celebrated Indonesian novelist Pramoedya Ananta Toer would not have been the great writer that he was had he limited himself only to Malay literature. Pram studied such great writers as Steinbeck and Hemingway, and translated their works. He became a better writer, and the Malay literary world is enriched with his translated as well as original works.

Munshi Abdullah would not have been the astute observer of Malay society and culture had he not been exposed to the British colonialists. He did not view the colonialists as all evil; likewise Pendita Zaaba would not have produced his defining works on Malay language had he not studied English grammar.

Yet today we have too many myopic Malay leaders and scholars unable to escape the confines of their traditional thinking. They are disdainful of Malays who wish to learn English.

Similarly, programs to assist Bumiputras should also indirectly help non-Bumiputras. Non-Bumiputra businesses would benefit more when Bumiputras are economically well off than when they are poor and marginalized. Executing programs under the NEP more efficiently and minimizing their leakages through corruption would go a long way towards minimizing non-Bumiputra resentments.

Encouraging Integrative Thinking

The good news is that we can learn integrative thinking. On visiting Singapore, Deng Xiaoping was astounded by the republic’s economic achievements. He was even more impressed when he considered that those Singapore Chinese were not descendents of the elite mandarin class (they chose to stay comfortably back home), rather of coolies and other dregs of China who could not make it back home and thus were forced to emigrate.

Deng rightly concluded that Singapore’s success had less to do with some mysterious and supposedly superior Asian (read: Chinese) values, as its leaders are wont to brag ad nauseam, rather to their embrace of free enterprise.

Instead of being hobbled in having to choose between capitalism and communism, which many thought were the only alternatives, Deng opted for a synthesis of the two. Hence his “communism with Chinese characteristics.” Russian leaders on the other hand, trapped in their conventional mindset, went headlong to latch onto capitalism without fully understanding it or having the necessary supportive institutions in place first. Consequently, Russia gives capitalism a bad name (at least initially) while China is a thriving capitalist society in all but name.

Deng learned integrative thinking informally; Martin teaches it to his MBA students formally in his lecture halls. He identifies four necessary steps to integrative thinking. First is identifying the key issues in a problem, what he calls salience, and then analyzing their links, specifically their causality, fully aware that these relationships may not necessarily be one-to-one or even linear. Third would be to outline the architecture of the various elements and their relationships. Last would be the resolution phase when we refrain from the either/or mentality and instead seek a synthesis by incorporating the best elements from each.

We all implicitly recognize that there are good and bad elements with any position. The challenge is to incorporate the good and eliminate the bad.

I have unconsciously applied integrative thinking to the many dilemmas in my life. Today I have difficulty identifying myself belonging to any particular mahdab (school of jurisprudence) of Islam. Through the freedom afforded me in the West, I am able to explore the vast and varied richness of our Islamic traditions, from the Ahmadiyyahs to the Ismailis and Wahhabis. In each I have found elements that appeal to and are useful for me.

The Ahmaddiyyahs’ emphasis on social services in particular education is relevant and appealing. From the Wahhabis I learn to value the anchoring stability of traditions and rituals. The Ismailis teach me a richer and deeper meaning of emulating our Prophet Muhammad s.a.w. Of all Muslims, they best exemplify the prophet’s commitment to seeking knowledge and serving your fellow humans.

The current obsession with Malay-Muslims on whether they are Muslims first or Malaysians is both puerile and divisive. Malays are Muslims and Malaysians simultaneously; the two are not mutually exclusive. It is not an either/or proposition, rather a synthesis of the two. If you were a good Muslim, you would be a good Malaysian, and vice versa. We all assume multiple identities simultaneously: a teacher as well as being a student; a father and a son; a leader and a follower. In my masjid, I am the follower and the Imam the leader. When he is in the hospital, I am the leader and he, the follower.

Martin’s integrative thinking has long been the staple of experienced physicians. It is instructive that while he is teaching future business leaders this useful skill, medical educators are perversely moving away from it. Today, doctors grapple with mandated algorithms, diagnostic trees, and treatment protocols, all under the guise of “evidence-based medicine.” These do nothing but force physicians into binary thinking, and of assuming an either/or mindset, to the detriment of their patients.

Many of the problems in Malaysia and the world would be better managed if we could escape our conventional thinking and opt for the integrative one. Conventional thinking handicaps us by making us view the world as “us” versus “them,” while integrative thinking helps make us see it more as “we.” In this increasingly globalized world, that is an imperative.

That notwithstanding conventional thinking is still appropriate and adequate when the problems are discrete and well defined. Even complex problems are made more readily solvable by breaking them up into discrete components and thinking conventionally. In short, as per Martin’s thesis, the choice between conventional and integrative thinking it is not an either/or proposition rather a synthesis of the two.

• Roger Martin: How Successful Leaders Think. Harvard Business Review, June 2007.

Towards A Competitive Malaysia #11

Chapter 3: Diamond of Development (Cont’d)

Romer’s “Ideas Matter”

We are in the Knowledge (K)-economy. Hardly a day goes by without some ministers or even the Prime Minister reminding us of this fact. What I am uncertain of is whether these leaders really know the significance of their statement or whether they are merely mouthing the current cliché.

While these leaders are busy exhorting us to acquire knowledge so we may thrive in this new economy, they fail to appreciate the vital ingredients and necessary environment needed for the effective acquisition, creation, and application of knowledge. While they incessantly urge us to acquire knowledge, they will not hesitate to censor and ban books and publications deemed “undesirable” or not supportive of the establishment. The strong censoring arm of the government is felt in the academy, publishing houses, and editorial desks. The government insists on controlling every aspect of the citizens’ life, especially what they read, hear, and view. The message is clear, by all means seek the truth and knowledge, but only those officially sanctioned.

The Muslim philosopher Maulana Saidina Ali had this observation on knowledge. Unlike wealth, knowledge protects its owners under all circumstances.4 With wealth we may be able to afford the best doctors, but if we have the knowledge of healthy living, we would not need (or not as often) the expensive services of a physician.

The world may crumble, but with my knowledge as a surgeon I can still contribute my skills. Likewise for the farmer, he can still use his knowledge to grow food and feed others. War, inflation, and economic crises may threaten and erode our wealth, but our knowledge stays. We may even become wiser and more knowledgeable after experiencing these adversities.

Knowledge is amplified and enhanced when shared, while wealth gets diluted. The remarkable advances in science are attributable to the fact that knowledge, discoveries, and insights are freely and widely disseminated within the scientific community. To me the knowledge that breastfeeding is healthy and should be encouraged is not new. Besides, that knowledge has no value to me now that my children have grown up. If I were to share it with young kampong mothers, I may well save them from grief by sparing their babies from being fed formula mixed with polluted water. To them, that same knowledge could be potentially life saving.

In Shahnon Ahmad’s celebrated novel, Ranjau Se Panjang Jalan (Obstacles All The Way), a gripping portrayal of the dehumanizing effects of rural poverty, the main character Lahuma ultimately succumbed to an infection from a sliver in his foot. (5) Had he the knowledge that such an infection could be easily treated, he would have sought medical help sooner. Lahuma had some knowledge all right, acquired from his misguided religious teachers, that is, everything is preordained. To him, that infection was the manifestation of the will of the Almighty, perhaps divine retribution for some long-forgotten sin he had unknowingly committed. Nothing could alter that fact; he simply had to endure, and in the end, tragically succumbed to it.

The question remains, how did Lahuma acquire that misleading knowledge, and how could he have updated it and thereby saved his life? Put another way, how could he be so ignorant of elementary health knowledge? Sending him to spend more years in a religious school would not help; it would only reaffirm his belief that what he endured was divine punishment. Had he gone to a modern school where they taught elementary hygiene, or had a nurse as a neighbor, or if the local television stations were to carry programs like Emergency Room or Discovery Health instead of the mindless propaganda that is their regular staple, then Lahuma might learn a thing or two about modern medicine.

That knowledge in the “Knowledge-economy” has a much wider meaning. It means ideas, smarts, creativity, innovation, and technology, among others. It also means the willingness to learn and respect knowledge, and all the associated activities.

In the view of classical economics, new technologies and innovations have always been considered as exogenous, outside the usual calculus of the traditional “factors of production.” (6) The new thinking is that ideas, knowledge, innovations, and technologies are integral part of growth itself. Growth generates its own knowledge, and thus its own resources for further growth. It is self-amplifying; hence the endogenous (arising from within) theory of economic growth.

The intellectual giant behind this innovative idea is the Stanford economist Paul Romer. He puts it best, and succinctly, in ascribing the importance of knowledge in wealth creation: “Ideas matter!”(7)

American investments in basic research, R & D (research and development), and technology led to “high-tech” boom and improvements in productivity of the late 1990s. The subsequent bust did not in any way detract from the importance of such investments. Today America leads in such research and investments with all the other countries including China rushing in to follow in the same footpath. Top Chinese universities are now requiring their top students to take English in order for them to be at the forefront of science and technology. Malaysia ignores such trends at its peril. Young Chinese are now emulating the Japanese and South Koreans; no more chanting the Red Book on the “Thoughts of Chairman Mao.”

The thrust of this new thinking is that wealth creation depends more on our ability to do things better or in new innovative ways through the application of knowledge; hence the emphasis on education and research. The new “Endogenous Growth Theory” is thus better known as “The Innovation Policy.”

In the Islamic tradition, the importance of knowledge, of acquiring it, and of individuals who possess it is best encapsulated in these two well-known hadiths. The first is, go to China if you have to in order to seek knowledge, China being the epitome of the end of the earth at the prophet’s time. The second, “Verily, men of knowledge are heir to the Prophet.”

Warsh is his book, Knowledge and the Wealth of Nations, recounts the discovery of Romer’s and other economists’ insights on the role of knowledge. (8) Consider the familiar wisdom: Give a man a fish, and he eats for a day; teach him how to fish and he feeds himself for life. Give him the knowledge of fish breeding, sonar fish detectors, or deep-sea fishing, and he feeds the world, Warsh adds. There is literally no end to the economic multiplier effect with the application of knowledge.

If we were to simplistically equate knowledge with more years of schooling, then we would be missing the essence of the K-economy. There is no point sending our children to extended years of schooling if at the end we get human robots, able only to follow and regurgitate orders. “Menjunjong Titah” (Your order is my command!), as Malay peasants would say to their sultans. It would be akin to sending Lahuma to many more years in religious school; nothing would have changed with his life.

The difference in thinking associated with the “old economy” and the new K-economy can be illustrated with this example. In the early 1980s, Malaysia spent billions trying to control the tin market. The details of this fiasco have yet to be accounted for even to this date. That attempt failed, but not before Malaysia lost billions and the tin market nearly destroyed. The rationale behind that foolish maneuver, again reflecting the old thinking, was that by cornering the market, Malaysia could manipulate it and reap untold profits.

If Malaysian leaders had been thinking in the new K-economy mode, they would have invested the funds in knowledge creation, like finding new ways of using the metal. Tin could be combined with numerous other elements and compounds to make innovative new alloys. Tin-containing paints today are widely used in the maritime industry to prevent fouling of ships’ hulls. Then there are bronze and pewter, both tin alloys. Tin is now widely used in electronics to replace lead. With further research, there is no limit to the potential new uses and applications. Yet today not a single Malaysian university has a dedicated program engaged in tin research. Meanwhile Malaysian leaders keep harping on the importance of the K-economy.

Next: Knowledge in the Village

New Pathways to University

SEEING IT MY WAY

Malaysiakini.com June 5, 2007

M. Bakri Musa

New Pathways To University

Editorial lead: Input equals output - Malaysian universities need better-prepared students if they are to turn out quality graduates.

We cannot solve the current sorry quality of our local graduates by focusing only on the universities. Among others, we must address the basic issue of how we prepare our students for college.

At present Malaysia uses internal matriculating examinations, matrikulasi (for Bumiputras) and the Sijil Tinggi Persekutuan. As our graduates would eventually have to compete globally, we should use internationally accepted examinations to prepare and select future undergraduates.

There are three highly regarded and widely accepted such examinations: British GCE “A” level, American AP (Advanced Placement), and the International Baccalaureate (IB). The GCE “A” level is rigorous but suffers from being too narrow. The IB combines breadth with depth. The US National Academy of Science rates the IB and AP as the two best programs in preparing students to pursue college-level science. AP is of such quality that if you score well, even Harvard and Stanford would grant you college credits.

Despite its recent vintage, IB has received worldwide acceptance very quickly. More and more American high schools, not just the exclusive private “prep academies,” are offering the program.

Of interest, students from inner city schools that offer IB respond to the rigorous academic demands, demolishing many negative stereotypes. There is a lesson here for Malaysia. There is widespread perception that anything associated with Malays generally and MARA specifically is tainted with mediocrity. Yet the MARA Junior College in Banting, which until recently was the only school in the country to offer IB, achieved remarkable success. A while back it held the best performance worldwide for two consecutive years.

Despite that evident success, MARA and the government were slow to expand that program. MARA’s Seremban junior college began offering IB only in 2005. So far it is the only other government school offering IB. Malay College, the nation’s oldest residential school, is also toying with the idea. Despite its Chairman of the Board Raja Nazrin vigorously championing it, thus far it is still only an idea, reflecting the power of inertia in Malaysia.

Vices and Virtues of Democratizing Higher Education

A remarkable development since the 1960s is the democratization of higher education. The assumption is that every student, not just the select few, should be given the opportunity to pursue higher education. Universities would no longer the elitist institutions they once were.

America was the leader in this movement. Later, even rigidly class-conscious Britain joined in. The phenomenal economic achievements of America in recent decades are largely attributed to its highly educated workforce. Over 60 percent of its high school graduates go on to pursue higher education. Of these, slightly over two thirds (or 44 percent of all high school graduates) enroll in degree-granting four-year institutions, and the rest in community (two-year diploma-granting) colleges.

Other countries including Malaysia began following America’s example in expanding their universities. For Malaysia however, the consequences are less positive. Far from enhancing the overall quality of our workforce, these universities dilute it. There is erosion of the quality of its previously highly regarded University of Malaya, with resources and talent diluted to other campuses. Worse, these mushrooming institutions contribute to the already unhealthy obsession with paper qualifications – “credentialism.”

Not all nations joined the bandwagon of higher education for the masses. Switzerland still maintains a highly selective university system, admitting only 15-20 percent of its high school graduates, with another 30 percent pursuing diploma and vocational programs. Switzerland’s economy is even more productive than America’s.

The Pertinent Lessons From America

When universities admit the top 30-40 percent of high school graduates instead of only the top 10, there is bound to be the inevitable dilution of quality. America solves this quality versus quantity dilemma by stratifying its universities. Yes, the admission requirements for all universities are the same (a high school diploma). On the other hand, the quality of students admitted to Harvard is vastly different from those going to Podunk State University; likewise the academic programs. The freshman calculus class at MIT is very different from that at the local state university.

The issue is not that there is a vast gap between the top and lower rank universities – that is acknowledged and accepted – rather that each institution serves the nation well in its own way. Podunk State produces the local teachers and engineers while Harvard graduates would go on to professional and graduate schools or join the large firms.

Granted, the economics taught at Podunk State may not be as rigorous as at Harvard, nonetheless those students at Podunk State are better for having attended that institution then not going to college at all.

Malaysia is attempting similar stratification of its universities, designating a few as research universities. This is a positive step. I would go further and clarify the criteria for such a designation. Apart from research capability, I would include breath of undergraduate offerings, presence of professional schools (law, medicine), and graduate students comprising at least 25 percent of the enrolment. Universities that do not meet these criteria would be termed university colleges, comparable to the American liberal arts colleges.

This classification implies no statement as to quality. Some of America’s best liberal arts colleges (Reed, Williams, Swarthmore) have academic and market reputations far superior to many research universities.

California has distinct and explicit stratification. The research-oriented University of California system with its nine campuses enroll the top 12 percent of students, while the 23-campus California State University (CSU) system enroll the top 33. CSU offers only limited Master’s programs and no professional degrees. The community colleges admit anyone with a high school diploma. Those clear demarcations notwithstanding, there are well-delineated pathways so students could transfer from one stream to the other.

The important difference is that unlike in Malaysia, the individual campuses select their own students and staff. The central office merely does the administrative coordination so students would not be burdened with filing multiple applications. In Malaysia, the bureaucrats at the ministry do the hiring of lecturers and selecting of students.

As with the universities, there is similar stratification of schools, as well as within schools. Not all schools offer AP or IB programs. When they do, only a fraction of their students (those academically capable and sufficiently motivated) would enroll in the program. There is no point in enrolling students in the rigorous IB program if their career aspirations do not go beyond being a nurse, clerk, or elementary school teacher. It would not serve the student, school, or nation. On the other hand, if the students were to aspire for admission to Harvard or Stanford, then they better enroll and excel in a few AP courses.

We could begin with our residential schools. As they admit the top 5 percent of our students, these schools should dispense with the ministry’s regular curriculum and examinations. Instead their students should be geared to international standards and follow the GCE, AP or IB curriculum. Even if they do not end up at the world’s top universities or opt for local ones, these institutions would be the better with the presence of these highly qualified and well prepared students.

Our best students should be pitted against the world’s best. Anything less and we would be doing them and our nation a great disservice.

Towards A Competitive Malaysia #10

Chapter 3: Diamond of Development (Cont’d)

Barro’s Determinants of Economic Growth

Meanwhile another Harvard scholar, economist Robert Barro, initiated a massive cross-national survey to discern the commonalities that might explain why some countries experience superior economic performance and their citizens enjoy high standards of living, while others remain economic laggards and their citizens trapped in poverty. The assumption is that these successful countries must be doing something right, worthy for others to emulate. The other premise is that the misery endured by the Rwandans and Romanians, and the affluence enjoyed by the Swiss and Singaporeans are not the result of some divine design rather the consequence of the policies of their leaders, institutions, and governments. Meaning, progress and economic development just do not happen; they can be planned and executed.

Barro collected voluminous data from over 100 countries spanning over three decades.3 Using sophisticated statistical techniques he isolated the many variables and examined their individual impact on economic growth. A formidable task! Imagine having first to standardize the data to ensure their comparability, and then to analyze them. He was able to do so and presented a number of interesting observations, some expected, others surprising.

As expected, countries with highly educated citizens, strong rule of law, favorable trading activities, low inflation, and where the government has low levels of expenditures (except for defense and education) tend to have high economic growth. Growth also goes hand in hand with high life expectancy, higher male secondary schooling, and low fertility. These are also indictors of the quality of their human capital.

Surprisingly, freedom (and democracy specifically) is not critical for economic development. This is best illustrated by contrasting South Korea (little freedom and democracy but high economic growth) to the Philippines (freewheeling democracy to the extent that it interferes with the formulation and execution of sound economic policies). The Filipinos may have more political freedom in the sense that they can take part in elections and remove leaders they do not like, but unlike the South Koreans, the Filipinos lack that most basic of freedom—to be free from privation. No sane South Korean would wish to trade places with the Filipinos.

Freedom and economic growth are linked on an inverted U curve. At low levels of freedom, an expansion of these rights stimulates growth. Once that is achieved, further expansion of these rights reduces growth. The democratic system of governance responds to popular political demands; this generally means focusing on redistribution policies (generous social welfare programs and entitlements) at the expense of growth.

In America, powerful interest groups lobby the legislatures at all levels for favorable treatment. The greatest obstacle to sound economic planning in America and other mature Western democracies is the unrestrained growth in entitlements like social welfare and pension plans. It is impossible to have rational discussions on these issues because they have huge and deeply entrenched constituencies.

The Philippines apes America in this sorry respect; the Filipinos’ freewheeling democracy produces nothing but gridlock, with the president and legislators engaged in endless squabbles while their citizens starve.

A benevolent and wise dictator-like leader could formulate sound and effective policies, and then execute them efficiently without having to face needless opposition. We see this in South Korea and Singapore. On the other hand, if he turns out to be a corrupt and malicious dictator like Saddam Hussein, the damage inflicted would be irreparable and long lasting. At least with a functioning democracy, the authoritarian tendencies of these leaders could at least be checked and restrained. Mahathir was a great leader, but had he had his way without the restraint of Parliament and the opposition parties, how many more scandals like Perwaja Steel, London Tin, and Bank Bumiputra would there be?

Barro’s remarkable research demonstrates that the poorer the country is to begin with, the more pronounced would be the effects on growth of these various factors, a phenomenon referred to as “conditional convergence.” This should be an impetus for poor countries to pursue these proven pro-growth policies.

One reason for this conditional convergence is the law of diminishing returns. Spending on education is conducive to economic growth, but there is a limit to this. After the basic primary and secondary schooling, the added costs for providing more education do not produce commensurate increases in returns. This applies not only to education but also other endeavors.

The experiences of multinational corporations that had moved their plants to the Third World bore this out. Their workers are not as well educated as in the West; most have only primary level education. Despite that, these companies discovered that with the proper on-the-job training, the lowly educated Mexicans and Chinese could perform their work just as well as their highly educated counterparts in the West, much to the chagrin of Western union leaders.

We cannot carry this assumption too far, for while it may be true for simple manufacturing and assembly work, it may not be so for other jobs. Experiences in Japan and South Korea, where the workers have much higher education and are well versed in science and mathematics, show that their productivity is much higher than those in the Third World. They are also more receptive to and better prepared for innovations, and more easily re-trained to meet changing market conditions.

A well-educated citizenry is important for other reasons. They would be more informed and less likely to be swayed by chauvinistic leaders. Besides, before a nation could leap onto the next trajectory of development—the innovative-driven stage—it must have a highly educated workforce.

This conditional convergence phenomenon, carried to its conclusion, would result in poorer countries ultimately achieving the status of and be on par with developed countries. Unfortunately, the reality is far different. Conditional convergence notwithstanding, the gulf separating poor countries from the rich continues to widen. For an explanation of why developed countries continue to grow faster and defy the laws of diminishing returns, I turn to the novel ideas on economic growth postulated by among others, Paul Romer.

Next: Romer’s “Ideas Matter”

High Hopes From A "Settled" Abdullah-Exchanges With Din Merican

High Hopes From A “Settled” Abdullah

Exchanges Between Din Merican and Bakri Musa

Dear Bakri:

Raja Petra of Malaysia Today was spot-on when he wrote many months ago that Prime Minister Abdullah had found someone special to fill the void in his heart after the death of his beloved wife Datin Seri Endon nearly two years ago. Raja Petra correctly identified the lady as Jeanne Danker; he erred only in stating that Abdullah had already married her.

It is now official, confirmed no less by the Prime Minister himself at a press conference earlier this week, and covered prominently by the media. The ceremony will be this Saturday, June 9 at Seri Perdana. It will be a simple private ceremony.

Abdullah was exuberantly upbeat in making the announcement, beaming cheek-to-cheek and hardly able to contain his almost boyish excitement. For a brief moment, he forgot that he had been married before! That is understandable, and we all can forgive him for that. He should not however, let the memory of his late wife to come between him and his new bride. He must live the present, and work toward a better and greater future.

For the first time I saw in him the promise of a reinvigorated leader, undoubtedly renewed and inspired by his new love. It is amazing, Bakri, what a woman can do to a man when love is in the air. I also noticed that Abdullah had a fresh look. Again, the renewed inspiration!

I am thrilled that he has found his new lifelong companion. Jeanne will be a great asset to him, his family, and our country. I have heard nothing but positive feedback on her character and personality. She has excellent people skills, and is comfortable with people from all walks of life. Her personality complements his. She is well organized and has modest taste, a marked contrast to Abdullah. She will be an elegant and competent hostess at Seri Perdana.

With her modern outlook and background as a career woman, Jeanne will be very comfortable accompanying the Prime Minister on his overseas visits. She will hold her own among the wives of other heads of states and royalty.

My hope is that some of Jeanne’s organizational and time management skills will rub off on her new husband. God knows, Abdullah needs them! An injection of self-discipline will also do him good. She has to, otherwise he will continue to be bogged down with useless official trivia, with no time left for her. Alternatively. he may devote so much attention to his new wife to the detriment of his official duties.

I hope she would be successful in imparting to him this central message: Deeds speak louder than words. This is the message you, Raja Petra and others have not been successful in imparting on Abdullah. She needs to bring a much-needed dose of realism to his life. We have had enough of that put-on “feel good” sentiment. We demand results now, nearly four years into his leadership.

Like many, I am torn between in wanting to believe that he can lead, now that he is a “new” man. The reality however, points toward nothing but hot air and NATO (No action, talk only).

Like others, I hope that with Jeanne by his side, Abdullah would now settle down and pay attention to the many problems facing our nation, like making it less corrupt and fixing the economy. In short, I hope she will inspire him not only to be a “new man” but also a “new” leader.

We Malaysians are a forgiving lot; we are willing to give him yet another chance to prove his leadership. I do not know why, as there is nothing in his track record to support our contention. Nonetheless I always have faith that we humans are capable of learning, adapting, changing our mindset, and renewing ourselves. I am going against my better judgment here, but it is my hope that with Jeanne beside him, he would have inner peace and be a leader worthy of our great nation.

Sallam,

Din Merican

====

Dear Din:

There is nothing more heartwarming than to see two people in love declaring their commitment to each other, and sharing that joyous news with us all. Love is always beautiful and precious, no matter how many times around.

The only sour note to an otherwise sweet occasion was when the Prime Minister’s office ordered the mainstream editors to tow the line on what and what not to report. They of course willingly obliged; the force of habit.

We cannot lay the blame solely on the control freaks of the Fourth Floor; they have too many enablers in the editorial floors of our newspapers, radio and television stations. If this is how the boys on the Fourth Floor handle the good news, imagine what they would do when the news is bad!

The last occasion when citizens were engrossed with details of their leader’s love life was the time when President Clinton was busy with that infamous intern in the closet of the Oval Office.

Deaths and marriages are life-transforming events. It is not unreasonable of you to expect change in Abdullah from his new marriage. This new groom may turn out to be a new man, and in turn an invigorated leader. There is always hope. At least the wedding will be a restrained affair, unlike the gaudy extravaganza of that forty-something Datuk who married the celebrity singer his daughter’s age. Perhaps Raja Nazrin’s example is beginning to have an impact on our people.

Yes, the man has been distracted by his late wife’s long battle with cancer. That her death was expected did not make it any less sorrowful. The last few years must have taken their toll on Abdullah. I cannot pretend to comprehend the burden that he and his family had to endure. It must have been considerable.

I have factored in those elements in my assessment of Abdullah. I look at his record during his earlier tenure as Education, Defense, and Foreign Minister, among other positions. These were when Endon was still very healthy; meaning, he had no personal distractions.

At his age, it is unlikely that Abdullah would have any hitherto hidden talent remaining untapped. The chance of a “late bloom” is remote.

Abdullah reminds me of the simpleton character Chauncy the gardener, played by the late Peter Sellers in the movie, Being There. His unobtrusive silence and simple witted utterances were mistaken as profundities. Chauncy went on to advise even the President!

God knows, many sharp minds in Malaysia were taken in by Abdullah! Just ask Mahathir! The difference between Chauncy the gardener and Abdullah the Prime Minister is that Chauncy had no advisors. What he uttered were his own words; he was his own true self. Fool on those who wanted to read or give something more to the simple gardening wisdom he uttered.

Abdullah’s advisors insulate him. Even if he were to be transformed by his new love, his advisors would remain the same, and so would their advice to him.

While the country has no choice but to tolerate his “No action, talk only” stance, Jeanne would definitely not be satisfied with Abdullah’s NATO, husband-wise!

My fear is that with Abdullah totally consumed with his newfound love, his advisors would now become even more emboldened. Abdullah would not be there, at least mentally, to restrain them.

Further, if before we could be forgiving of Abdullah for his being always sleepy at important meetings (blaming it on his personal problems), now with a new young wife, he would have an even better excuse to be sleepy during normal working hours!

I wish the happy couple many long blissful years, and I hope, Din, that your and other Malaysians’ expectations will also come true.

Sallam,

Bakri

Towards A Competitive Malaysia #9

Chapter 3: Diamond of Development (Cont’d)

Role of Government and Public Policies

In addition to the four factors, Porter postulates two others: the role of luck, and that of the government. Chance or luck is by definition unpredictable. Malaysia was fortunate to discover vast oil and gas deposits that gave it a windfall. Unlike the Arabs, Malaysians use that windfall to good purposes for the most part, although it could stand some improvement.

The Canadian province of Alberta is also blessed with vast oil sand deposits. Unlike Malaysia, it uses the windfall not to bail out failing banks and airlines or build grandiose skyscrapers but to create its Heritage Fund to finance universities and medical research. Today, the province is at the cutting edge of medicine, pioneering such breakthroughs as islet cell transplants to treat diabetes, with the University of Alberta now ranking among the finest globally. Quite a legacy! Imagine had Malaysia followed Alberta’s example! The Norwegians took a different tack. It “sterilized” its oil windfall by diverting it into a Trust Fund, thus sparing the nation a runaway inflation and otherwise disturbing the equilibrium of its existing economy. Today the fund is the largest investment unit in the world, quite an achievement for a nation of only a few million. The Norwegians are now assured that when their oil runs dry, as inevitably it will, their way of life would not be disrupted.

To be fair, Malaysia has done better than Indonesia and most Arab countries where the oil wealth merely fuels the greed and corruption of their leaders.

The role of government cuts both ways. The world is replete with examples of both where government is the major problem, trampling on the rights and aspirations of its citizens, as well as where it has truly enlightened and transformed the lives of its citizens. The governments of the Philippines and Indonesia could not be more different than those in Malaysia and Singapore. The fate of their citizens reflects this glaring difference. I will explore the role of government and institutions in greater depth in later chapters.

Porter does not discuss the role of religion. I am struck that all the top ten nations are essentially secular. The possible exception might be Italy, but there the role of the Church is limited to within the Vatican. Ireland is much more Catholic than Italy. The influence of religion on economics is complex, but suffice to note that religious people who are not exposed to modern science and technology have a fatalistic worldview. Muslims refer to it as takdir (It is so written); the Christians, predestination. The Philippines and a huge swath of Latin America have this same belief wrapped in their Catholicism. I do not imply that religious beliefs interfere or are in conflict with economic pursuits. Later I will discuss the transforming effect of the innovative thinking of John Calvin and other reformists on traditional Christian (specifically Catholic) beliefs that later gave rise to capitalism.

Going back to Porter’s diamond, you do not need all four elements to be favorable in order for a company or industry to thrive. Suffice that one or two are favorable, and then exploit that fully.

Stages in Economic Development

The relative importance of the four factors depends on the stage of economic development of the industry or country. National economies, like industries, go through stages in their development. The first stage is “factor-driven,” with the economy based essentially on the traditional factors of production: natural resources, commodities, and availability of cheap power and labor. This was Malaysia of the 1960s and 70s, its primary competitive advantage being its cheap resources (rubber and tin), land and labor, and favorable tax treatment. These advantages were not only limiting but also transient. When commodity prices dropped, Malaysia lost its competitive advantage. When China entered the game with her endless supply of even cheaper labor and land, Malaysia could hardly compete. During this phase, the basic source of competitive advantage is obviously the “factor conditions” of the diamond.

The next stage is investment driven where the competitive advantage is governed by the willingness of firms and nations to invest in modern factories, upgrade the skills of their workers, and adopt efficient technology. Factor conditions are still important, but in addition, the fourth—firms’ strategy, structure and rivalry—becomes the major determinant. This is where Malaysia is currently.

The third stage is innovation driven where all four points of the diamond are in full play. This is where Malaysia aspires to be. With all four points in equal play, the relative role of factor-driven variables like cheap labor and commodities becomes relatively less important. Singapore Airlines is able to pay its staff globally competitive salaries; it no longer depends on cheap labor as a competitive advantage as the airline caters to premium class passengers.

Porter adds a fourth stage—wealth driven—where the emphasis is on wealth preservation. Companies and nations risk losing their competitive advantage and start their downward spiral. This was the Britain that Margaret Thatcher inherited in 1979, deep in its winter of discontent. This was the America of the 1980s when its major industries were clobbered by the Japanese and South Koreans. This is the Japan of today, unable and unwilling to change, and content with enjoying the wealth their parents had created.

In this phase, senior leaders are concerned with and distracted by financial engineering. They are preoccupied with mergers and acquisitions, creation of special purpose vehicles, and other paper-shuffling activities while ignoring the real issues on the factory floors. General Motors and Ford profit more from their finance subsidiaries than from their cars. Their board and senior executives pay more attention to their MBAs and accountants than the engineers.

Britain just before Thatcher and America before Reagan were similarly preoccupied not with creating wealth but with its redistribution, all in the name of social justice and equity.

Something happened to Britain under Thatcher, and to America in the1990s that reversed this downward spiral. What transformed both nations was the power of ideas. I will explore this later in the chapter under Romer’s “Ideas Matters.”

Next: Barro’s Determinants of Economic Growth

Our Crumbling Civil Service

Our Crumbling Civil Service

M. Bakri Musa and Din Merican

MalaysiaToday May 30, 2007

Prime Minister Abdullah’s announcement of a pay raise for civil servants, in the midst of the furor over water leaks and collapsed ceilings at spanking new government buildings, brings to the fore once again the angst on the state of the Malaysian civil service.

The civil service specifically and our public institutions generally are fast losing their effectiveness through the twin blights of corruption and incompetence. This is the critical challenge facing the nation. Unfortunately, the Prime Minister refuses to acknowledge or is unable to comprehend this reality. He is content with mouthing endless exhortations: “Be more efficient!” “Do not be corrupt!” “Be global in outlook!”

This is vintage Abdullah, as his contemporaries in the civil service would attest, accustomed to his countless hours in such sembang (empty talks) back at the old Federal House building in the 1960s.

Abdullah’s leadership, like our institutions, is blighted by incompetence and corruption. Only a few months ago Abdullah was bemoaning the Little Napoleons in the civil service. Then the service was a convenient scapegoat for the inadequacies of his policies. Today he claims these civil servants deserve a pay hike. Talk about mixed signals!

Bloat Is Not The Only Problem

By whatever measure (relative to the economy, population, state of development, or compared to similar nations), our civil service is definitely bloated. That presents its own problems, quite apart from the substantial burden it imposes on the country. The only thing worse than a bloated civil service is one that is also corrupt and incompetent. And that unfortunately is what Malaysia has.

The optimal size of government varies with different countries, dependent upon among others, the culture and state of development. Thus simplistically comparing the civil servant-to-population ratios or size of government relative to the economy would be meaningless. Even more problematic is that the very definition of public service varies. Physicians do the same work everywhere; in America they are mostly in the private sector, in Malaysia, civil service.

When there is no government (or an ineffective one), there would be chaos and no meaningful development, economic and others. That is the curse of many African countries. Likewise when the government is huge and all-powerful, it smothers the citizens, reducing them to wards of the state. The result would be also economic stagnation, as exemplified by the old Soviet system. The American Presidential candidate of the 1960s, Barry Goldwater, rightly observed that a government that is big enough to give you all you want is big enough to take it all away.

This negative consequence of too little or too much government is encapsulated in the wisdom of the Armey curve, first articulated by the American economist turned politician, Richard Armey.

It is not the size of the government however, that is important, rather what it does with that size and power. Governments in Canada and Scandinavia consume a much larger share of the economy, yet their citizens are very happy. Those governments use their power and resources to provide preschool for every child, protect the environment, and guarantee universal healthcare for their citizens. The Malaysian government uses its considerable power and size to monitoring what citizens are reading, intimidating its critics, and competing against citizens in the marketplace.

Visit a Canadian National Park and compare it to our Taman Negara; that would be a concrete and readily comprehensible example of an effective government. If our civil servants were consumed less with moral cleansing by snooping around catching people in khalwat and instead pick up the rubbish in our parks and rivers, then there would be fewer complaints and more sympathy for the salary hikes.

If ministers responsible for education were to focus only on improving our schools and universities instead of busy trying to appear as champions of our race, language, and other extraneous issues, then we would need only one instead of three ministers. We could then double his or her salary, and it would still be cheaper on the nation. It would also be more efficient.

Insidious Problem

To be fair, the deterioration of the civil service predated Abdullah. The shift away from an independent, apolitical and impartial institution began under Mahathir. He appointed the less-than-capable Ahmad Sarji as Chief Secretary to do his (Mahathir’s) bidding. That however is now history. The consequence is that today the civil service is reduced to nothing more than an instrument of UMNO.

Abdullah perpetuated and aggravated the trend by bringing in his own cabal of wet-behind-the-ears outside advisers, most notably his son-in-law and Kallimullah Hassan. Abdullah squandered his massive electoral mandate in not improving the civil service.

With time and lack of remedial actions, the problems in the civil service compounded and gained momentum. Now the rot is obvious and has reached the very core; solving it would be much more complicated.

Consider corruption. We do not need Transparency International to tell us that the problem is entrenched. The leaking roof is only the most visible manifestation of corruption’s toll. An encounter with the traffic police or customs officer will bring that reality to a very personal level.

It reflects Abdullah’s naivety that he believes raising salaries would solve the problem of corruption. On the contrary, that would only make it worse. Whereas before a RM 50 note would satisfy the traffic cop, today he or she would sniff at it, demanding a bigger loot to match his or her now higher expectations.

There can only be two reasons for increasing salaries: to reward increased productivity and to attract talent. The civil service fails on both counts. There is no shortage of applicants for government jobs. As for productivity, visit any government department.

One would think that with the glut of applicants, the government would get the best talent. Far from it! The qualification for entry into the administrative service remains the same, any university degree. One would have thought that the government would tighten the standards and insist that candidates demonstrate competency in English and mathematics. Today our diplomats can hardly express themselves or understand the quantitative aspects of high finance, yet we trust them to negotiate complicated trade treaties and international agreements!

Impact on the Malay Labor Market

Either by design or through default, the civil service is primarily a Malay institution. As the largest employer of Malays, it has a disproportionate and unhealthy impact on the dynamics of the Malay labor market. Young Malays respond not to market forces but to the demands of the civil service. The world may demand skills in science, technology, and English, but as long as the civil service does not emphasize or need those skills, young Malays would have little incentive to acquire them.

As Malays have a fascination for the civil service, it could potentially play a pivotal role in influencing the development of Malay talent. If the government were to mandate that all civil servants be fluent in English (as well as Malay, of course), science literate, and have mathematical skills, it would automatically encourage young Malays to pursue those subjects.

We recommend going further and require that all applicants for government jobs have at least three years of private sector experience. That would ensure the government gets the best applicants. Those Malays who aspire for the civil service would have to first prepare themselves for the private sector, meaning they would have to learn English and be mathematically competent.

Imagine the improved quality of our civil servants if they have had some private sector experience and marketplace exposure. For one, they would be more responsive to the needs of their customers, the public. For another, they would not be insulated from everyday realities.

The public disgust against the recent salary hikes for civil servants reflects a general dissatisfaction on the quality of our government. The public is not getting the quality of services for all the money expended. Improve the quality, and the public would not begrudge the raises.