Monday, January 26, 2015

Wealth distribution means 'giving a man a fish'. Soon he becomes a vegetable.

From the blog Outsyed The Box , link here

"But there is a larger problem. This is exactly the same reason the Arab countries are breaking down. The people are poor. Or relatively poorer (much poorer) than others. In this case it is Malays (poor) versus non Malays (richer)."

Tuesday, January 27, 2015

Dr Muhammad Abdul Khalid's "The Colour Of Inequality"

I am really way behind discussing the fantastic book 'The Colour Of Inequality' written by my young friend Dr Muhammad Abdul Khalid. 

First here is a picture of Dr Muhammad and his book. 

Dr Muhammad hails from Penang. He holds a PhD in Economics from the renowned French university the Ecole Politique. He speaks fluent French and of course did his PhD in French. 

He calls me 'mamu' (uncle) and I call him Mat. He is also the brother-in-law of a very prominent person in Malaysia. The person's picture has appeared in my Blog. Yup. Its that picture :)) Its a small, small world isnt it? 

I think everyone should read Dr Muhammad's book.  Why? Because of this news item in Monday's Star :  

Hundreds gather in rowdy protest against condo project
  • January 26, 2015  
  • Hundreds staged rowdy protest Datum Jelatek luxury condo
  • turned aggressive by breaking into project’s construction site
  • protesters, residents and Perkasa, claimed project infringed upon rights of Malays
  • tore down hoardings and marched into the site
  • situation under control when policemen told protesters to disperse
  • action committee chairman Salleh Samad warned of “bloodshed” 
  • area which he said was “100% Malay”
  • He said area always a predominantly Malay one 
  • implementation of the project forced local bumiputra to be “kicked out”
  • Why.. encroach into our land by bringing in bangsa asing ? 
  • not ready to accept other races in our community. They shouldn’t play with fire
  • project sits on four blocks of PKNS flats owned mostly by Malays
  • former Mentri Besar Khalid Ibrahim approved it.
Here is a picture of the protesters from The Malaysian Insider :

In today's papers Selangor MB Azmin Ali (its a PKNS project) says there are 1097 bumiputra buyers who have 'registered' to buy the condo units. But how many have paid deposits? My view is at RM700,000 a unit there will not be too many Malays who can afford to buy those units.

(This is what is really happening on the ground while the PM and his wife are f*rting around the planet on that jet plane.) 

Of cour$e there i$ a $imple $olution to thi$ particular prote$t. $ome folk$ mu$t be $uitably per$uaded.

But there is a larger problem. This is exactly the same reason the Arab countries are breaking down. The people are poor. Or relatively poorer (much poorer) than others. In this case it is Malays (poor) versus non Malays (richer).

This is what I have been warning about again and again and again in my Blog, in my books  and in my talks (if you have attended my talks). 

Some of you say I am pessimistic, a prophet of doom etc. No I am not. I can see as clear as day where we are headed. So can many hundreds of thousands of you as well.   Dr Muhammad Khalid can see this clearly too - to write a book about it.

However there are other hundreds of thousands of folks, mostly Malay and mostly inside gomen or who belong to the "butt kissing brigade", who insist on being blind. These are the syiok sendiri, bodoh sombong, dunggu tak ada akal types.

I say kawan, OutSyed The Box did not tell these protesters to go and tear down the hoardings and create a ruckus. This is what is already happening. 

Now lets get back to Dr Muhammad's book. It is full of facts and figures. Muhammad does a clinical and surgical analysis of what is the wealth level of the Malays, Chinese etc.

It is just facts, facts and more facts. A wonderful piece of work. Mat, you will never be a spin Blogger. Hang tak reti klentong.

I just want to refer a few of the facts from Dr Muhammad's book.

He says the average Chinese has 2,135 times more financial assets than the Bumiputeras. The median financial asset of a Bumiputera is only RM1. The average Chinese has RM2,135.

In 2009 the average Chinese household had 1.38 times as much income as a Bumiputera family.

The average real estate assets held by a Chinese household was RM314,520. The corresponding figure for Bumiputeras was RM164,464. Chinese hold about twice as much real estate assets as Bumis. 

Because of this huge difference, somewhere in Dr Muhammad's book, it also says that the average 25 year old Chinese has twice as much assets at his disposal than the average bumiputra  (because Chinese inherit more from their wealthier parents, receive more bequests from their wealthier parents).

In short as time passes, the difference is going to get greater and greater. So that is also why the people in the picture above are protesting.
Dr Muhammad also states that the mean income of bumiputera households (2012) is RM4,457. This is the lowest. The Chinese mean household income is RM6,366 which is 1.42 times the bumiputeras.

However these are all statistics, figures assembled by various institutions, following some standard methodology. My view is it is not reflective of the true situation.

The Bumiputera figures (on household income) would include the billionaires and the millionaires who control huge chunks of bumiputra assets, especially the 'given on a silver platter' Bumiputra corporates. 

There is a much smaller genuine Bumiputera middle class which is asset owning.  

The Chinese on the other hand have a broader diamond shaped middle class with more self sustaining Chinese who own assets.

This becomes evident in another set of numbers Dr Muhammad provides ie the Amanah Saham Bumiputra holdings. 

In 2012  about 74% of  Amanah Saham Bumiputra unit holders had just over 600 units each - totalling 3.2% of total holdings. At the top end, about 8% of wealthy bumis held 74% of ASB holdings !! Even the wealth distibution among Bumiputras was very skewed.

Dr Muhammad is an economist. He presents cold facts and figures. My view is the sociologists, and especially the psychologists have to study these figures. 

Have we spent an insufficient amount of money on the Bumiputeras for the past 40 years? Duit tak cukup ke? We have spent hundreds of billions.  How come they are still lacking?

Lets back track a little. Even looking at the rich bumiputeras (lets say the 8% Bumis who own 74% of Amanah Saham Bumiputera units)  how many of them really worked in an open, competitive environment to earn money that enabled them to hold that 74% of ASB units?

How many of them were dependent on government contracts, projects, the NEP etc to attain their wealth?

Without the continuous support of affirmative action can they still sustain their wealth and their position?

In other words I am referring to their sustainability of income and their quality of earnings.  

This leads to that Mother of all questions - was their wealth a result of 'wealth distribution' or 'new wealth creation' ?

Wealth distribution means 'giving a man a fish'. Soon he becomes a vegetable.

Wealth creation means 'teaching a man to fish'. He creates new wealth.

Sad to say, far too much of the NEP has focussed on giving the man a fish. Without bothering if he has learnt to fish. This happened because UMNO and BN needed the man's votes. 

Dont worry. Just vote for me. I will give you a fish everyday. (While I keep the whale under my boat).

The Chinese, Indians etc were not "cursed" (yes folks it is a curse) by this 'give you a fish everyday' economic system.

They had to catch their own fish. They had to compete, scratch and scrounge to claw their way up. They became tougher, they became smarter, they understood the market better. Their customer service has improved by leaps and bounds. 

They appreciate education much better. And most of all (from my personal observation) hey do not waste as much of the 24 hours that they have in a day, compared to the bumiputeras. I can write a book on how the bumis and non bumis spend their time.  (Or how the Muslims and non Muslims spend their time).

Please note these are not entirely economic issues. This involves cultural traits, traditions, religious influences etc that makes a huge impact on bumis versus non bumis.

Even if a Bumi is wealthy, after his death his wealth is diluted among his kids according to the faraid (religious inheritance laws). If he has multiple wives, the dilution is even more. Worse - families get disrupted because they can legally fight over division of inheritances (whic is determined by the State).

Chinese also fight over inheritances but they do not have faraid. Parents can bequeath wills which tend to preserve the wealth and also create less acrimony in the family. The family stays together.

To bring the bumis at par to the non bumis (and by extension to bring the muslims - all over the world - at par with the non Muslims)  may need much more than just an economic approach.

It may need a more scientific, sociological and psychological approach.  

How you spend your time determines your fate. 

What is it that a bumi does with his 24 hours in a day compared to say a Chinese? 

What does a four year old Bumi child learn from his mother compared to a four year old Chinese child? Someone has to scientifically study these things and make comparisons.

For decades we have spent hundreds of billions of Petronas' oil earnings. Yet Dr Muhammad says the economic divergences are increasing. The Gini coefficients are going separate ways between bumis and non bumis again. 

Now Petronas' earnings are decreasing. It may ot come back for a long time.

Buka mata folks. 

Why do we import so many Banglas, Filipinos and Indons - who now work in supermarts, at the gym as instructors, as waiters and supervisors at almost all high end restaurants? Why? Sebab bebudak kita malas bekerja, tak datang kerja, tunjuk perangai di tempat kerja. They just cannot work.

There are sociological and psychological issues. They cannot be solved just by econometric modelling, by prudent application of capital resources etc. Itu semua buzzwords.

There are other issues at stake here.
Feel free to express your views.

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