Towards A Competitive Malaysia #88
Chapter 13: Deteriorating Institutions
Enhancing Public Institutions
Those ministers who keep exhorting, “Be efficient!” “Be trustworthy!” “Be honest!” simply do not comprehend the magnitude of the difficulties in changing institutions. There is only one certainty: It is easy to destroy good institutions, much more difficult to strengthen them or restore the bad ones.
The corrupt and the incompetent are good at one thing: sidestepping “reforms.” They have seen many similar moves in the past and will treat any new attempt with contempt. The otherwise incompetent personnel are adept in ensuring their survival.
One effective step would be to shut down the worse institutions. They are not doing their job anyway, and no one would miss them except of course their corrupt employees and their equally corrupt clients. They—institutions and employees—are beyond redemption; might as well get rid of them and outsource their jobs.
Indonesia did this with its Customs Department in the 1980s. It was thoroughly corrupted and resisted all attempts at cleansing. In desperation the government contracted the service to a foreign company who brought in new workers who were not tainted.
The results were remarkable: revenues shot up and bottlenecks disappeared. Even more surprising, there were concomitant improvements in related agencies. Evidently the non-corrupt examples set by the new workers at the Customs Department rubbed off on personnel at other agencies, or that they were scared stiff that their jobs would be the next to be outsourced. Such a radical move would send seismic shock waves to other corrupt departments.
Unfortunately the Indonesian government did not pursue this; it succumbed to political pressure at the highest level and terminated the bold experiment. It did not take long for those workers who had performed well under foreign supervision to return to the corrupt ways of their predecessors.
American companies are fully aware of this great power of threat of closure in dealing with recalcitrant unions. The companies would simply close those inefficient plants with the most egregious featherbedding practices and transfer the work to Mexico. Workers at the other factories would soon get the brutal message, and suddenly their union leaders would become mellower and their members more productive.
At one time union leaders in the West were an intransigent lot. Their grip on power was unassailable; they held even the government at ransom, much as corrupt politicians and civil servants do in Malaysia.
It took the courage of Margaret Thatcher and Ronald Reagan to break the unions’ stranglehold. The pivotal moment for Reagan occurred when he fired the entire Air Traffic Controllers for striking illegally. These controllers are crucial for the airline industry, and they cannot be trained overnight. So there was a calculated risk that the union would cripple the entire industry. Reagan succeeded because he was willing to face that risk. He wanted to send a strong message not only to the Controllers’ union but also others.4 He had the military take over, and although air traffic was disrupted for a while, in the end many of the members broke ranks and returned to work on seeing that Reagan was resolute.
More important was the impact of Reagan’s decision on other unions; it made them more compliant and reasonable. Today, American unionists are not of the same breed as their bullying predecessors who would not hesitate in calling a strike over minor issues. Today’s union leaders are as adept at reading financial statements and gauging market realities as they are in addressing workers’ grievances. Some even sit on the boards of their companies. The relationships between companies and their unions today are less adversarial and more cooperative, although not quiet at the level of coziness as seen in Japan.
If the Malaysian government were to shut down just one or two of these ineffective and corrupt institutions, fire the employees, and outsource their work, the message would reverberate very quickly. Workers elsewhere would become honest overnight knowing that their job security would be at stake. The public would not suffer much from such closures, as those institutions were ineffective anyway. More than likely the public would cheer such a radical move.
Next: Eradicating Corruption
Enhancing Public Institutions
Those ministers who keep exhorting, “Be efficient!” “Be trustworthy!” “Be honest!” simply do not comprehend the magnitude of the difficulties in changing institutions. There is only one certainty: It is easy to destroy good institutions, much more difficult to strengthen them or restore the bad ones.
The corrupt and the incompetent are good at one thing: sidestepping “reforms.” They have seen many similar moves in the past and will treat any new attempt with contempt. The otherwise incompetent personnel are adept in ensuring their survival.
One effective step would be to shut down the worse institutions. They are not doing their job anyway, and no one would miss them except of course their corrupt employees and their equally corrupt clients. They—institutions and employees—are beyond redemption; might as well get rid of them and outsource their jobs.
Indonesia did this with its Customs Department in the 1980s. It was thoroughly corrupted and resisted all attempts at cleansing. In desperation the government contracted the service to a foreign company who brought in new workers who were not tainted.
The results were remarkable: revenues shot up and bottlenecks disappeared. Even more surprising, there were concomitant improvements in related agencies. Evidently the non-corrupt examples set by the new workers at the Customs Department rubbed off on personnel at other agencies, or that they were scared stiff that their jobs would be the next to be outsourced. Such a radical move would send seismic shock waves to other corrupt departments.
Unfortunately the Indonesian government did not pursue this; it succumbed to political pressure at the highest level and terminated the bold experiment. It did not take long for those workers who had performed well under foreign supervision to return to the corrupt ways of their predecessors.
American companies are fully aware of this great power of threat of closure in dealing with recalcitrant unions. The companies would simply close those inefficient plants with the most egregious featherbedding practices and transfer the work to Mexico. Workers at the other factories would soon get the brutal message, and suddenly their union leaders would become mellower and their members more productive.
At one time union leaders in the West were an intransigent lot. Their grip on power was unassailable; they held even the government at ransom, much as corrupt politicians and civil servants do in Malaysia.
It took the courage of Margaret Thatcher and Ronald Reagan to break the unions’ stranglehold. The pivotal moment for Reagan occurred when he fired the entire Air Traffic Controllers for striking illegally. These controllers are crucial for the airline industry, and they cannot be trained overnight. So there was a calculated risk that the union would cripple the entire industry. Reagan succeeded because he was willing to face that risk. He wanted to send a strong message not only to the Controllers’ union but also others.4 He had the military take over, and although air traffic was disrupted for a while, in the end many of the members broke ranks and returned to work on seeing that Reagan was resolute.
More important was the impact of Reagan’s decision on other unions; it made them more compliant and reasonable. Today, American unionists are not of the same breed as their bullying predecessors who would not hesitate in calling a strike over minor issues. Today’s union leaders are as adept at reading financial statements and gauging market realities as they are in addressing workers’ grievances. Some even sit on the boards of their companies. The relationships between companies and their unions today are less adversarial and more cooperative, although not quiet at the level of coziness as seen in Japan.
If the Malaysian government were to shut down just one or two of these ineffective and corrupt institutions, fire the employees, and outsource their work, the message would reverberate very quickly. Workers elsewhere would become honest overnight knowing that their job security would be at stake. The public would not suffer much from such closures, as those institutions were ineffective anyway. More than likely the public would cheer such a radical move.
Next: Eradicating Corruption
posted by M. Bakri Musa | 4:48 PM
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