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