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	Tuesday, October 05, 2004

"Speech of Dr. Mahathir Mohamad before the 30th PBC   (news) Dr. Mahathir Mohamad is the former prime minister of Malaysia ( PM from 1981 to 2003) .  He is credited with turning the Malaysian economy from a backwater in the 0s to one of the top emerging tiger economies by 2000, and making Malaysia to be the 17th top trading nation in the world.  He is acknowledged to be a spokesman for the New Asia and many times for Developing Countries.  He is also known to be controversial at times, and while at times speak for globalization, does not hesitate to hit out on rich countries, or rich capitalists like George Soros if he believes that they are not doing the proper thing for Malaysia.  He is known to be supportive of big business, but also is known to frown on corporate greed.  He says he supports capitalism, but did not hesitate to institute foreign currency controls in 1998, for which he was criticized as anti-laissez faire worldwide.  Following is a transcript of his vision  ( my own interpretation) for growth for a country's economy based on the Malaysian experience.  While he talks about management of a country's economy, most of his principles also goes towards the management of business.  It should be noted that his ideas are nothing new, and are known to many economists, but coming from somebody with his stature, it should be read and taken seriously. "  When you want to grow a country's economy, the important factor to look for is the equitable distribution of wealth.  Socialism and communism tried to address this, but they failed because while they tried to be fair to the poor, they were also unfair to the rich.  You have to make sure you are fair to both sides.   Thus, it was a caring capitalism, which was afraid of growing communism in Malaysia during that time, that provided the ammunition to grow the economy. Malaysia could only be peaceful if racial and economic differences could be removed and the class differences would be minimized.   The economy had to make Paul feel better, but it also could not grow by robbing Peter to feed Paul. It has to grow by allowing the rich to continue with their business, but allowing the poor a larger economic kick of the fruits of their labor.  This led me to institute affirmative action, which while positively biased to the Malaysians ended up benefitting all, as the disaprity of income between the rich and the poor was slowly addressed. The poor cannot become rich selling to the poor.  The poor can become rich only by working with the rich. Thus, while you make sure you are bettering the lot of the poor, you have to make sure the rich are sufficiently incentivize to continue making investments, creating jobs, and paying taxes.   Fig. 1. Dr. Mahathir Mohamad talks to officers of the Philippine Chamber of Commerce before his speech. No investments means that there will be no jobs created.  The workers would lose. If there is confrontation always between the employer and the employee, between the rich and the poor, then there will be no industrial peace,  there will be no investments.  Without investments, there will be economic stagnation. You have to help the rich generate profits through proper and legal means.  Working hard to insure that nobody  gets rich benefits nobody, and it prevents the creation of jobs which is the most important thing you want to happen.  It is not difficult to grow an economy, but to sustain it, you have to make sure it grows equitably. IN 1969, Malaysians made up 60% of the population but only 1% of the wealth.  Now, they own 20% of the wealth, and while it still fall short, I have the support of the foreigners, the Chinese, the Indians, and the native Malaysians who now agree that in order to establish a nation, you have to share and take care of all interest. It cannot be that the winner takes all, and the loser lose.  YOu should make sure it is open to everyone and that there is something for everybody to share.  Only then will you get everybody's cooperation that will allow your economy to move forward. " -end-       11:25:56 PM     comment []   trackback []