Agenda Ekonomi Saksama

Amidst an increasing global realisation that inequality hurts growth, general well-being of the population and, ultimately, stability, DAP Secretary-General Lim Guan Eng articulates an Agenda Ekonomi Saksama to orient DAP and Pakatan Rakyat on the question of inequality.

At a Roketkini forum, Guan Eng plays on the initials of the Automated Enforcement System in jest and calls for a different AES.

But his message is unequivocal: that reducing inequality is a top priority for the Penang State Government, DAP and Pakatan Rakyat.

Globally, The Economist, a widely read right-of-centre magazine, had just uncharacteristically published a special report entitled “True Progressivism: the new politics of capitalism and inequality.” The weekly says “inequality has reached a stage where it can be inefficient and bad for growth.”

The magazine went further to suggest that “even the sort of inequality produced by meritocracy can hurt growth. If income gaps get wide enough, they can lead to less equality of opportunity, especially in education.”

Internationally renowned economist Professor Jeffrey Sachs, who was hosted by Guan Eng through Penang Institute and received by others MPs in Parliament, made a compelling call for nations to embrace social democracy to ensure equity and sustainability in economics, education, environment and governance.

He cites Norway and Sweden as examples of  effective democracies that produce general well-being for most of its citizens whereas the United States of America is a clear case of big money hijacking the political processes to the detriment of ordinary folks.
Malaysia has seen its Gini coefficient, measurement of inequality (zero being equal and 1 being most unequal), worsened since the 1980s. It is at 0.46 now, just slightly lower than Singapore.

The bottom 60 percent earns a household income of less than RM3,000 per month, which qualify them for the RM500 BR1M handout. In other words, the Barisan Nasional Government recognised that the bottom 60 percent deserves help, except that the government could not think of any structural reform to help them apart from cash payment.

And, Malaysia is a textbook example of crony capitalism where blatant rent-seeking, corruption and nepotism are the orders of the day.

Guan Eng’s call for an Agenda Ekonomi Saksama is indeed timely. When Pakatan Rakyat takes charge in Putrajaya, beyond political democratisation, it must deliver social goods through policies that help narrow income and wealth gaps, and expand opportunities for all.

Our renewed discourse of social democracy is not purely about distribution and redistribution. It is a recognition that Malaysia can no longer be just relying on export-led industrialisation which is usually associated with policies that suppressed wages and even currencies.

We need to see distribution as the new strategy of growth. By enriching our citizens, our economy can maintain its resilience through sustainable domestic demand (that is not funded by ballooning household debts) in the short term while growing our skilled workforce to unleash its potentials in the long run.

With the realisation of Malaysia as a highly unequal society, it is also time for us to move away from the meritocracy platform to one that is founded upon the idea of solidarity. When a society is highly unequal, hard nose insistence on merits often benefit those who have the means disproportionally.

It is more important for the society to uplift those in the middle and at the bottom to create a rising tide that lifts all boats.

A more equitable society will have sustainable grow that general widely shared prosperity and well being, and hence stability.

Note: This article is published on The Rocket, 2012 November Issue.