Taking the Bull by the Horn

Inequality: Taking the Bull by the Horn

http://kadirjasin.blogspot.com/2014/10/inequality-taking-bull-by-horn.html

AS I stated in my Other Thots column in the Sept 16 issue of the Malaysian Business magazine, I am lucky to be in the company of many illustrious economic gurus and commentators.

Among them Ungku Abdul Aziz Ungku Abdul Hamid, the iconoclastic former Vice Chancellor of University of Malaya, Kamal Salleh, the late Dr. Mokhzani Abdul Rahim, the late Dr Ismail Md Salleh, Rama Iyer, Thong Yaw Hong, Dr Rais Saniman, the late Dr Mahani Zainal Abidib, Dr Jomo Kwame Sundaram and the Datuk Dr Zainal Aznam Yusof.

They were committed to their craft and were willing to be unpopular with the establishment by telling the truth. Despite that, many were co-opted into government committees and commissions, especially during the periods of the late Tun Abdul Razak Hussein and Dr Mahathir.

But these days I hear that economists and private sector managers who are engaged by the government are behaving as badly as their political masters. They are more concerned with protecting the government’s image than telling the truth about the state of the economy.

Sinar Harian : Prejudis kaum di sektor swasta

DR MASHITAH IBRAHIM

26 September 2014

SATU kajian empiris menunjukkan wanita di Malaysia umumnya adalah 18 peratus lebih kaya daripada lelaki. Satu sebab ialah wanita lebih pandai menyimpan duit atau pendapatan berbanding lelaki.

Mungkin ada yang mempertikai, tapi inilah hasil kajian Dr Muhammed Abdul Khalid yang dicetak dalam buku The Colour of Inequality: Ethnicity, Class, Income and Wealth in Malaysia.

Beliau memperoleh doktor falsafah (magna cum laude) dari Institute d’etudes Politiques de Paris dan ijazah sarjana ekonomi dari Universiti Malaya. Beliau juga mendapati pasangan berkahwin secara purata memiliki 37 peratus lebih banyak harta berbanding perseorangan.

Logiknya, gabungan pendapatan suami dan isteri meningkatkan kemampuan mereka untuk memiliki harta atau aset berbanding individu. Tapi tidak semua orang yang berkahwin adalah kaya. Dalam kalangan pasangan berkahwin kategori miskin, mereka secara purata adalah 41 peratus lebih miskin daripada yang tidak berkahwin.

Tanggungan keluarga, kekangan kewangan dan tanggungjawab yang lebih mengehadkan keupayaan mereka untuk mengumpul harta. Menariknya, kajian beliau menunjukkan mereka yang telah bercerai (janda atau duda) masih memiliki 25 peratus lebih banyak harta berbanding orang bujang.

Kajian Dr Muhammed, mantan felo penyelidik di UKM dan penganalisis kanan di ISIS, mendapati 90 peratus penduduk negara ini tidak mempunyai sebarang simpanan, manakala 60 peratus tidak memiliki apa-apa aset pelaburan. Kemiskinan dan kekangan kewangan adalah puncanya.

Tidak seperti golongan kelas pertengahan dan tinggi: kajian menunjukkan kenaikan satu peratus pendapatan boleh meningkatkan kekayaan isi rumah pada kadar lapan peratus. Perbandingan kekayaan berdasarkan etnik menunjukkan kaum Cina dan India umumnya adalah masing-masing 45 peratus dan 39 peratus lebih kaya daripada kaum Melayu.

Kajian Dr Muhammed, kini pengarah penyelidik di sebuah organisasi pemikir, mendapati orang Cina pada 2009, secara purata, sudah memiliki 2.5 kali ganda lebih banyak harta menjelang umur 25 tahun berbanding Melayu, kemungkinan besar melalui pewarisan harta pusaka.

Walaupun ini tidak meliputi semua orang Cina, kajian menunjukkan antara 52 dan 81 peratus kekayaan terkumpul orang Cina yang dikaji adalah berpunca daripada pemindahan harta daripada ibu bapa mereka.

Satu lagi faktor ialah diskriminasi terhadap kaum Melayu dalam sektor swasta. Perkara ini mempunyai kesan besar ke atas pendapatan (sekali gus, kekayaan dan kemampuan memiliki harta) Melayu kerana 90 peratus pekerjaan adalah di sektor swasta yang dikuasai kaum Cina.

Tindakan majikan Cina menetapkan kefasihan berbahasa Mandarin sebagai syarat kerja dalam negara yang mana bahasa Melayu adalah bahasa kebangsaan dianggap prejudis. Bagi majikan Cina, faktor kaum lebih penting daripada faktor kelayakan.

Kajian Lee Hwok Aun dan Muhammed Abdul Khalid mendapati: “Overall, Chinese are 5.3 times more likely than Malays to be called for an interview despite both having the same characteristics such as CGPA, education level etc meaning that, while grade or academic qualifications matter, race matters more.

Interestingly, (we) also find that even crucial skills such as proficiency in Chinese dialects only marginally increase the chances of Malay applicants in securing a job interview. (It cannot be discounted that) racial prejudice is a motivating factor.” (Kertas kerja dibentang di Universiti Malaya pada 2 November 2012).

Pemerhatian dan konklusi Lee dan Muhammed memperkukuhkan kenyataan Branco Milanovic yang mendapati “being Chinese, with all other attributes the same, resulted in almost 23% wage premium compared to being a Malay.” (Dalam Inequality and Determinants of Earnings in Malaysia 1984-1997, Asian Economic Journal, Jun 2006 hal 19). Ini adalah satu keadaan yang tidak adil dan perlu diberi perhatian berat oleh semua pihak berkaitan.

Teori baharu mengenai pertumbuhan berhujah bahawa pendapatan (dan pemilikan aset) juga bergantung pada tahap pendidikan, pengalaman, kemahiran dan teknologi. Jika ini diambil kira, jelas kaum Cina tetap memiliki kelebihan berbanding kaum lain di negara ini kerana kekayaan dan penguasaan sumber ekonomi meningkatkan peluang dan keupayaan mereka untuk mendapat pendidikan, kemudahan dan peluang perniagaan yang lebih baik.

Disebabkan majoriti masyarakat Cina tinggal di bandar, mereka mempunyai akses yang lebih luas kepada teknologi, infrastruktur, jaringan perdagangan dan pelbagai kemudahan.

http://www.sinarharian.com.my/kolumnis/prejudis-kaum-di-sektor-swasta-1.320100

24/9/14 Ex-NST editor urges Putrajaya to give true picture on income gap

source here 

Veteran journalist Datuk A.Kadir Jasin has cautioned Putrajaya against relying on the law of averages when determining income and wealth distribution in Malaysia.

Writing in the September 16 issue of the Malaysian Business magazine, he said using the law of averages was flawed, in referring to a recent survey on the rise in the household income of the average Malaysian.

Kadir’s remarks came following a statement by Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar who said that people were now enjoying a better standard of living as average household income had risen from RM5,000 per month in 2012 to over RM5,900 this year.

Wahid had cited a preliminary report of the 2014 Household Income Survey as the basis. Wahid then said he was referring to the mean average household income.

"I am more than certain that Wahid is aware that the law of averages is a flawed one," wrote Kadir Jasin.

"Former Prime Minister, Tun Dr Mahathir Mohamad often warned about the perils of relying too heavily on the law of averages.

"He had said that a person could drown in a puddle with an average depth of two inches, which was totally possible if the victim falls face down, loses consciousness and is not helped," Kadir wrote in the “Other Thots” column of the bi-monthly business magazine.

Kadir (pic, left) also said that although average income might have surpassed RM5,900, it was a fact that the bottom 40% of Malaysian households had very low income, in the region of  RM1,600 to RM1,800.

He also used the example of the recently released statistics on Amanah Saham Didik, an inheritance fund of Permodalan Nasional Berhad, to illustrate the flaw of the law of averages.

Kadir wrote that based on its 2014 annual report, the average investment was about RM14,500 an account holder, adding that this figure looked good and would be able to finance an undergraduate at a local public university.

The figure also reinforced the belief that Malaysia has one of the highest savings rates in the world, and in the case of Didik, it also showed how well-off and conscientious Malaysian parents were.

"But the true picture is vastly different and totally uncomplimentary, where the bottom 86%  of account holders have savings of only RM980 while the top half percentage average around RM1.5 million.

"The same trend applies generally to other savings instruments, voluntary and mandatory," he wrote in his column titled “Stick to Growth with Distribution”.

Kadir also quoted from a new book by economist Mohammed Abdul Khalid titled "The Colour of Inequality – Ethnicity, Class, Income and Wealth in Malaysia", which the newsman credited as having explored well the issue of uneven income and wealth distribution in the country.

Kadir said the author had noted after analysing 2009 wealth figures that "as expected, the distribution of wealth is extremely skewed".

The book also said that overall distribution of wealth holdings showed that the gross wealth per capita of the bottom 40% was RM123,428 and they owned less than 7% of  total household wealth.

The poorest 20% fared worse. Their wealth average was about RM11,666, and they cumulatively owned less than 0.2% of the total wealth in Malaysia.

Kadir said that young economists and economic thinkers should participate actively in research and discourse on socio-economic matters, especially now when traditional welfare-based economic planning was under eminent threat from the reactionist, market-driven model.

"Yes, the market is important, but the market is not always the best indicator of the success of an economy.

"The market does not care about the well-being of the people. That is the role of the government." – September 24, 2014

https://sg.news.yahoo.com/ex-nst-editor-urges-putrajaya-true-picture-income-072537650.html

Is Inequality Color Blind?

Is Inequality Color Blind?

Read the review  here

Capturing the essence of the NEP

BY KAMAL SALIH - 21 SEPTEMBER 2014 @ 8:08 AM

IN development thinking and practice, no policy has captured the imagination nor created more controversy in its implementation among scholars, politicians and the public alike than the New Economic Policy, introduced some 45 years ago. A generation had debated, lived and benefited from the NEP, until its formal ending in 1990.

Or so it seems in hindsight. The policy debate and the concerns surrounding the policy never really ended, for the issues of inequality along class and ethnic lines in our multiracial country remained stubbornly intransigent, even after its success (a controversial notion in itself) and new incarnations of the NEP in subsequent years.

Emotions, politics and myth-making continue to track the development debate even when statistics were adduced to support its successes (read economic growth, poverty eradication, rising middle class, interethnic distribution).

Now a new post-NEP generation has taken over. Dr Muhammed Abdul Khalid is a member of this second generation of scholars and policymakers. His book is an important scholarly contribution to development economics in Malaysia, in particular, to clarifying the controversies surrounding the NEP.

Employing a historico-statistical narrative, his book, The Colour of Inequality, rightly addresses the core of the NEP debate. This latest entry into the development policy debate, now clothed in the notion of inclusive growth, deals dead-on with the central issue of development in this millennium: inequality in all its dimensions.

Most importantly, as the Latin American economist de Soto had shown two decades ago, that asset ownership and wealth are crucial to success and livelihood in the capitalististic economy. In my view, Muhammed, at some risk of being politically incorrect, has bravely succeeded, by using the latest data at his disposal, to cut through to the core issues of economic and inclusion inequality through the prism of ethnicity and class.

The NEP reincarnations, in particular, the Bumiputera agenda, slowly lost steam towards the end of the Mahathir era, was regenerated under the Abdullah Badawi administration through the Ninth Malaysia Plan and generalised further the distributive mission in the Malaysia Plans through the introduction of the New Economic Model.

In many ways, Tun Abdul Razak Hussein, our second Prime Minister and the main author of the NEP, had launched the first transformation in Malaysia’s development experience. The New Economic Model and the ETP/GTP, introduced by Datuk Seri Najib Razak, a generation after his father, is the second transformation.

For those wanting to understand the history of development policy over the last 45 years, to know what had been achieved, what has failed and what’s next in our drive towards developed status and social justice, Muhammed’s book is indispensible reading.

This is his contribution to the next generation of politicians, policy advisors and implementors, as well as the new millenials.

http://www.nst.com.my/node/35595

Stick to Growth with Distribution

1st Review

Review by econsmalaysia

The Colour Of Inequality

[Full disclosure: Dr Muhammed is a good friend of mine, so the following commentary should be taken as unbalanced and totally biased. You have been warned]
There’s a new book coming out this weekend on income and wealth inequality in Malaysia, at MPH:

If you’re interested in the dimensions of inequality specific to the Malaysian experience, there are two books you must have on your bookshelf. The first is Shireen Mardziah Hashim’s “Income Inequality and Poverty in Malaysia”, which examines the distribution of income in Malaysia and focusing on the period of the New Economic Policy (1970-1990). It’s a bit on the technical side (i.e. it’s not written for non-economists), but the book has a wealth of data you might not find anywhere else. It also shows how the NEP had at best a peripheral role in East Malaysia.
Dr Muhammed’s book is more general, and covers both income and wealth inequality from ancient times to the present. If I were to contrast the two, I would call Dr Shireen’s book a scholarly work for scholars. Dr Muhammed’s on the other hand, while not lacking in scholarship, is very obviously intended for a very different audience.
In some ways the book echoes Piketty’s “Capital” in approach and structure – not too surprising given his PhD was gained in France. This is a book very specific to our times and tries to address contemporary concerns and criticisms, backed by data and evidence, in a fairly accessible package. More importantly, again like Piketty, it’s really a call to action with an explicit policy agenda for Malaysia.
Some of the data and conclusions will be new to many – I’m not going to quote anything, buy the book if you want the details. While awareness of income inequality among and between Malaysians is fairly widespread, the data on wealth are not. Neither is the level of discrimination in the labour force. There’s also more evidence here that Piketty’s conclusion that inherited wealth plays a major role in perpetuating inequality is a correct one.
There’s always a risk of something like this stoking the fires of social controversy – much of the data in the book would make good political and media fodder. Some of the statements in the book would also make uncomfortable reading both for those in power and in the political opposition.
But to define this work solely on some of its more explosive findings would be to miss the larger point – that inequality transcends race, transcends gender, transcends East and West. We’re all in it, like it or not, and its up to us (all of us) to fix it.

The Colour of Inequality : Ethnicity, Class, Income and Wealth in Malaysia

The book  is now available at MPH bookstores.  Available on line