Imagine there is no NEP

For many members of ethnic minorities, if there is no New Economic Policy (NEP), then all the people will be living in peace.

The reality is more complicated than this. Doing the NEP may just do away state partiality, but not socio-economic inequality.  And we need an alternative to do away both.

What’s wrong with the NEP?

Many people like to argue that the design of the NEP was good, only its implementation was bad. I respectfully disagree.

For me, the intention of many – but definitely not all – to have and support the NEP was good, but its design and its implementation were flawed.

The road to hell is paved with good intentions, if you like.

So, what’s wrong with the NEP? The NEP was flawed in three ways.

Flaw 1: statist assumption

First, like all statist projects, the NEP was based on the assumption the state was benevolent and selfless, and had no mechanism to check the “agency problem” of its executors.

The very core idea of the NEP, which was firmly planted in 1946 and lives on after its technical conclusion in 1990, was that state partiality can check the excess of socio-economic inequality. Unfortunately, even in pragmatic sense, two wrongs don’t make a right.

Prime Minister Datuk Seri Najib Razak just claimed that Bumiputeras only effectively controlled 10% of corporate share.

And according to Dr Muhammed Abdul Khalid in a 2002 article titled “Anti-poverty plans are colour-blind”, the poverty rate for the Bumiputera was 5.3% as compared with that of only 0.6% for the Chinese.

Even when comparing the bottom 10% of each ethnic group, the Malays’ average household income was only about 70% of that of the Chinese. 

The simple question to ask: how can the powerful NEP state fail to help the Malays, both in building a competent and self-reliant capitalist class and lifting the Malays out of poverty after 45 years?

Has the state done all it can? Or does it fail because it has not extracted more from the minorities or hold them back enough? Or is the failure caused by some sabotages by the evil Jews and the evil Americans?

The more convincing answer to me is misplaced incentives.

First, economically, the uncompetitive nature of Umno’s electoral one-party state allows the ethnic champions and guardians to steal what they are supposed to protect. If you can only count on me to advance your interests, what don’t I take a cut?

Second, politically and most detrimentally, the economic independence of Malays will gradually eliminate the political dependence of Umno.

Think of it this way: if ghosts are forever gone, ghost-busters will be out of job.

Similarly, if a cat is kept fundamentally to catch mice, then the cat must be able to catch enough mice to impress the masters. However, if the cat eliminates the mice population, it will be the victim of its own success. As its usefulness end, all its mistakes and nuisances may become intolerable.

Flaw 2: mono-ethnic support

The second flaw of the NEP is that it has no real cross-ethnic support. In the aftermath of May 13, the non-Bumiputeras basically swallowed the NEP down the throat as the price to restore peace and avoid more ethnic violence.

Even when the economy is good, the minorities support for the NEP and its successor policies is at best lukewarm and half-hearted. Unable to overthrow the policy, the minorities skirt around it with schemes like Ali Baba partnership.

Those who feel strongly alienated respond with brain drain, capital flight or supporting the opposition. Some even privately discriminate against or belittle the ethnic majority as an everyday form of resistance.  

This frustrates both the state and the Malays, which respond with more discriminative policies against the minorities. Malaysians are like crabs in a basket – trying hard to pull each other down from climbing out of it.

It’s unfair to blame the NEP’s mono-ethnic support base solely or mainly on the state or the ethnic majority. It’s our collective karma, going all the way back to our failure to build a really inclusive notion of nationhood after decolonisation.

But the harsh reality remains: an economic problem cannot be resolved with authoritarian political means.

Flaw 3: violence as the guarantor

The third flaw of the NEP has got everything to do with its origin: the May 13, 1969 riot. It was installed with violence and any attempt to remove it even through democratic means is responded with threat of violence.

With Bumiputeras constituting a majority in some three quarters of parliamentary constituencies, there is no way the NEP can be removed without substantial support of the ethnic majority.

Yet, defenders of the NEP like Tun Dr Mahathir Mohamad object vehemently to the proposed repeal of the Sedition Act which, in practice, shelves the NEP from public debate and its replacement by other laws.

When violence is used as the ultimate backer of a policy in the “or else” way, not only its flaws and weaknesses – as the two flaws of NEP discussed above – cannot be addressed, society gets addicted to violence as a means to curb dissent and suppress difference.

Any surprise that now to “protect” the Muslims from dogs, a man’s life is threatened?

Alternative to NEP – non-statist, non-ethnic, non-violent

The NEP policy paradigm is flawed but it would be wrong to think that Malaysia without the NEP and all its flaws would be a bed of roses.

American President Theodore Roosevelt said it aptly: “this country will not be a good place for any of us to live in unless we make it a good place for all of us to live in.”

It’s true for any country in the world, more so for multicultural societies, where socio-economic inequality often correlates with some cultural divides, hence capable of turning class tension into communal conflicts.   

It’s time that Malaysians to think of an alternative to the NEP. To not repeat the latter’s flaws, the new policy paradigm must have at least these three characteristics.

First, it should be non-statist by large, building the incentives into market and society to eradicate poverty and restructure society.

A rigidly stratified society, whether between or within ethnic groups, means restricted social upwards mobility for individuals trapped at the bottom. It’s not just injustice but also losses to society and economy when talents cannot be tapped optimally.

However, for a society to stay harmonious and economy to stay stable, it requires also solidarity for the least endowed to have a decent life.

Dog-eats-dog competition is not only inhumane but may eventually tear apart the social fabric in a multicultural setting.

This leads to the second point, the agenda must be national, and not communal. Socio-economic empowerment should be seen as a right and part of what the Malaysian citizenship entails, rather than a privilege based on group membership.

This will deprive any political entrepreneurs from holding any community at ransom for the empowerment that is rightly theirs.

This means a fundamental paradigm shift from “entitlement” – who our ancestors were and when they came here – to “empowerment” – where we are and where we want to go to actualise our life.

For this to work, we will need a national consensus that covers also the aspect of cultural identity. We will need to confront honestly the 1946 question, seek a real consensus and make peace.

Third, the new policy paradigm must be based on reason, the opposite of violence. This would allow all its flaws and weaknesses to be scrutinised and corrected.

Is this new paradigm possible? Allow me to paraphrase John Lennon:

“You may say I'm a dreamer
But I'm not the only one
I hope someday you'll join us
And the country will live as one.” – October 23, 2014.

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