The reason why we felt strongly about writing this article is because while we agree with the diagnosis of the World Bank report (the identification of the problems and challenges confronting the nation), we believe the World Bank, and perhaps the government of Malaysia, is wrong on the policy recommendations (the solutions). Perhaps there is some reluctance to narrate “honest, truthful pains”. And this is important because the policy options, as articulated, will lead to a worse outcome. Yes, we are not so arrogant as to believe we are absolutely right. After all, the World Bank, DoSM and Ministry of Economy are highly credible institutions, with very qualified people possessing vast experience. But we will articulate our reasons and provide the evidence, and you can be the judge. At the very least, we think our views should serve as a wake-up call for the standard economic prescriptions that were presented. We also happen to believe that in economics, there are no eternal or definitive truths. And the way we see the problems and the solutions are also formed by our beliefs and values, besides our interests.
Two weeks ago, both this column (“Special Report: Better to be equal and poor or unequal and richer?”, Feb 10, 2025) and the World Bank (“Reducing inequality and enhancing mobility in Malaysia”, launched on Feb 5, 2025) wrote about economic growth and economic inequalities. We can all agree that not all economic inequalities of outcomes are bad. Indeed, inequalities arising from meritocracy (where there is equality of opportunity — or as we call it, without economic injustice) are essential and beneficial for societies and nations. We argued that the world could better focus on economic growth and economic justice — where striving for both is not contradictory. This would be better than the constant swings in trying to achieve the two extreme goals of growth and equality, where the world is relentlessly forced to choose, or finding the illusive middle ground. This is evidenced historically in the continuous pendulum swings between Keynesian interventionism, “spend baby spend” fiscal policies with high taxes and left-wing progressive inclusivity and Milton Friedman’s free-market liberal, supply-side, small government, low taxes and monetarism.
This article is an attempt to expand on our previous article, by also incorporating the data, results and analysis from the World Bank report, which was prepared in close collaboration with the Ministry of Economy of Malaysia and the Department of Statistics Malaysia (DoSM). The report was launched by the Minister of Economy. In other words, the data is from DoSM and the views, opinions and results presented are supported by the government, likely after consultation.
