Side Views

Ideology and debt: A reply to Dr Mahathir — Pak Sako

AUG 23 — In his blog post “Change” (August 22, 2012), former Prime Minister Tun Dr Mahathir Mohamad criticised the socialist ideology.

He then claimed that “Malaysia has no ideology”.

This is not accurate.

It can be strongly argued that the Malaysian government after 1980 followed the “neoliberalism” ideology, a pro-business ideology.

This economic ideology was aggressively promoted around the world at the start of the 1980s by two pro-business world leaders: British Prime Minister Margaret Thatcher (elected 1979) and American President Ronald Reagan (elected 1981).

Both leaders had strong business connections and economic advisers who were pro-business, Alan Walters and Milton Friedman respectively.

Mahathir became prime minister around the same time, in 1981. Not long after, he officially announced a privatisation policy in 1983 (Jomo K.S. and Wong Sau Ngan (eds.), “Law, Institutions and Malaysian Economic Development”, page 42).

Mahathir too had close business associates, and his economic adviser was a businessman called Daim Zainuddin.

The neoliberal ideology says privatise publicly-held assets, sell them off to private business interests, entrepreneurs, corporate “captains”. 

This is what the Malaysian government did.

The “massive privatisation strategy” carried out during Mahathir’s tenure is said to be linked to “increased competition for resources within the ruling Malay party”; it redistributed resources “in favour of emerging factions centred on key political leaders” (Jeff Tan, “Privatization in Malaysia: Regulation, Rent-Seeking and Policy Failure”, 2008, page 5).

Privatisation seems to be a favoured economic policy of the Malaysian government till today.

The neoliberalism ideology calls for weaker worker unions so big businesses can have more “economic freedom”.

The Malaysian government’s development agenda subordinated labour in favour of private business interests, especially in the 1980s (Jomo Sundram and Patricia Todd, “Trade Unions and the state in Peninsular Malaysia”, 1994). Labour organisations are weak relative to business power in Malaysia.

The neoliberalism ideology wants free labour markets, let wages be competed down if necessary, minimum wage rules are bad.

Mahathir also lately argued against minimum wages in Malaysia, claiming it might bankrupt Malaysia (“Dr M: Minimum wage may bankrupt Malaysia”, The Malaysian Insider, March 2, 2012). He did not consider the positive aspects of minimum wage rules.

The neoliberalism ideology supports a strong state, but not a strong state that directly provides for the public welfare, but a strong state that enables businesses and capitalists to flourish freely — corporate freedom and welfare.

Mahathir too does not like the welfare state.

The welfare state approach claims that basic social needs and securities must be fulfilled as a precondition to economic prosperity. 

The opposite way is the neoliberal one: to support the corporate class in the hope that wealth will “trickle down” sufficiently to fulfil the fundamental needs of society.

In short: Mahathir complains about the injustices of the neoliberal international order, but he himself followed the neoliberal style (Johan Saravanamuttu, “Malaysia’s Foreign Policy, The First Fifty Years: Alignment, Neutralism, Islamism”, 2010, pages 202-203). Malaysia sharply switched to economic policies advocated by the neoliberal ideology under his rule. Mahathir’s personal positions on a number of issues are characteristic positions of the neoliberal ideology.

On debt, Mahathir says Greece borrowed a lot of money and is bankrupt.

But Europe fears Italy has also borrowed too much and is going bankrupt.

Malaysia has now been given a financial warning: a top debt ratings agency says our public finances are weak — they are at the same level as debt-struck Italy (“Fitch warns Malaysia of possible downgrade due to ‘deteriorating’ public debt ratios’, The Edge, August 1, 2012).

Malaysia’s debt is now more than half of the income Malaysia as a whole earns in a year. This debt is RM456 billion. This debt nearly doubled since 2007 — a matter of four years.

This is equal to saying that every Malaysian now owes about RM16,000. If you earn RM4,000 a month, that is four months’ pay.

Mahathir says: “Look at [Barisan’s] record... compare it even with the developed West. They are in deep financial trouble...”

Mahathir says: “Five years to give a trial as government is dangerous. Many things can be destroyed in five years.”

Question: Which government doubled Malaysia’s debt in less than five years?

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

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