Towards A Competitive Malaysia #117
Chapter 17: Granting Malaysians Their Merdeka
Individual and the State
The central challenge for Malaysia is in ensuring that its citizens, especially Bumiputras, are not dependent on the state. That is a necessary first step to their being competitive. There will always be those who will have to depend on the state: the young, aged, sick, and disabled.
If the total cost for rearing the young were to be borne fully by the family, it would be prohibitive and beyond the means of most. Were families forced to do so, as in a Darwinian social jungle, many children would have to forgo their education, health care, and even food and clothing. The state must step in to provide education and essential health services. Otherwise the citizens would not be healthy and educated, and their value as human capital (and as a human being) would be diminished. Ultimately, the state too would lose. Viewed thus, resources expended upon the young are investments, which the state would later recoup by having a productive workforce.
With the aged, the story is different. They have already contributed, and now society owes them something in return. Various emotionally laden words and phrases are used to justify this, among them gratitude, respect for elders, and repaying our debt to them. At its core and stripped of the associated emotions, this reflects the mentality of being dependent on the state. We should disabuse ourselves of such an expectation. We can begin by instilling in the young the need to plan for their retirement. Progressive countries have mandatory retirement plans. Most are under government control, as with Malaysia’s Employees Provident Fund and America’s Social Security. I see no reason why with proper strict state oversight this cannot be undertaken by the private sector, as in Chile.
The important point is that workers must be encouraged if not forced to save for their future. Apart from the economic benefits that would accrue from those savings, the more important lesson is to instill in citizens the expectation not to be dependent on the state (or their adult children) during their old age.
The handicapped and the disabled are the only ones truly deserving state and our help. That is our collective obligation, not subject to accounting analysis. All religions agree on this. The important point is that when society is not distracted from having to look after and subsidize the able bodied, it would have more resources for taking better care of the truly needy. Society must have adequate safety nets to take care of those unfortunate enough not to be able to take care of themselves. For others, they must weave their own. The state’s responsibility is to ensure that this happens, hence mandatory workers’ health, disability, and unemployment insurances in addition to retirement plans.
The danger comes when the safety net is too generous. Too comfortable a safety net and it becomes a hammock, tempting citizens to just simply lie down and let others (like immigrants) do the work, as seen in modern welfare states like France and Germany.
The economist Richard Layard observes that at the elemental level what makes people happy is to be free from the basic fear of starvation and privation, the first stage of society’s development as discussed earlier. Thus poverty reduction and elimination should be the highest priority. Once this fear is alleviated, it would not take much more to make citizens happier. This “not much more” does not necessarily mean a higher income or more and better gadgets. The quantum increase in happiness in graduating from having no bicycle to having one is huge; the increase in gratification is considerably less in trading a Mazda for a Mercedes. The emotional satisfaction diminishes rapidly with increases in material value.
Once we cross over that basic threshold of freedom from fear of starvation and privation, our value system changes. Then the issue is not so much with what we have, rather what we have as compared what others in our reference group (neighbors, coworkers, friends) posses, of “keeping up with the Joneses” and of our relative positions. This is the preoccupation of societies in the material phase. Even the best and brightest are not immune to this prosperity envy. Studies done on Harvard students showed that they prefer a situation where they would earn $50K while others get only $25K, to one where they would earn $100K while others collected $250K. You compare yourself with those in your reference group, not on absolute level. This explains why Olympic Bronze medalists are happier than Silver winners. The former compare themselves with those who did not win any medal, while the later with the gold medalists.
As your income increases, your reference group gets smaller very quickly, and other considerations become pivotal. By the time you get in the same wealth league as the Sultan of Brunei, your peers would consist of only Bill Gates and a few select individuals. I am certain that the Sultan’s fleet of Rolls Royces, collection of grandiose palaces, and multiple gorgeous wives do not impress Gates. You impress him not with your collection of expensive toys rather with your “Killer App” software.
Also, beyond a certain level one has the luxury of choosing one’s peer group. Some prefer to be the proverbial small fish in a big pond; others a big fish in a small pond. One Cuban pilot may eagerly be the first officer of United Airlines’ Fokker Friendship on a commuter run but with First World pay and work culture; another prefers being the Captain of Air Cuba’s 747 on the Cuba-Moscow sector, despite its Third World pay and work ethics.
Had I stayed in Malaysia, I would probably have been a Professor of Surgery or a Senior Federal Surgeon, and maybe a datukship to boot. To some, that would have been the pinnacle of achievement. In America, I am one of literally thousands of surgeons, but then I value my personal freedom and professional opportunities more than titles.
Knowing what is important to people especially those with talent and creativity is necessary if we are to attract them. Richard Florida, the American Management Professor, suggested the three Ts to attracting such individuals: talent, technology, and tolerance. Talented individuals do not want to work in isolation; they are stimulated by and thus welcome interactions with others equally talented even or especially if they are competitors. When we have a critical mass of such individuals, they will attract others. This explains the success of Silicon Valley, and nearby, the blossoming of Singapore’s academic community when Lee Kuan Yew liberalized the recruitment process in the 1970s. I am dismayed that in choosing leaders of Malaysian universities, the government still dares not look beyond race and nationality.
Then there is technology. Without modern telecommunication and transportation, a city or nation would have a tough time attracting talent. The Internet and ease of travel enable people to live high in the Rockies of Colorado or Idaho to do their work and yet be in constant contact with the outside world. Similarly if you want to attract molecular biologists, your laboratory must have DNA sequencer and other modern gadgets.
The third element is tolerance. Talented people value their personal freedom and they do not like the government or any other big brother agency telling them what books they can or cannot read or what clothes to wear (apart from considerations of modesty). In order for the talented and creative to flower and maximize their God-given talent, they must be given greater degree of personal freedom and autonomy. This is where countries like Malaysia and Singapore are having difficulties in attracting talent. Their leaders, despite their modern Western education, still have the Third World mentality of being control freaks. They want total control over their citizens. That reflects their lack of trust and confidence in their citizens, and in turn themselves.
For citizens to express fully their creativity and talent, they must first be liberated, be granted their own personal merdeka.