Friday, September 6, 2013

Greed and moral need to be balanced


夏伟文 & 陈薛卉

Economic plans and policies can be written in splendid wordings with great ambition to be achieved. However, how many of them explicitly highlighted certain moral standards and responsibilities needed to be achieved in their plan? At minimum level, moral element is only embedded in corporate social responsibility (CSR) and assumed to be taught in certain subjects in education. These are not enough. Therefore, moral responsibility is an important missing piece in economic planning which can enhance the economy as well as welfare of its people.

Missing moral element in economic plan may not affect contemporary growth but does negatively impact on holistic and sustainable development. On one hand, economic plan that too bias to capitalist may results in income inequality where capitalists may immorally parasite on workers’ and society’s welfare for corporate or shareholders’ profit. This creates a greedy economy. On the other hand, socialist style policy that bias to worker group commonly causes inefficiency where none has incentive or moral responsibility to work hard. This creates a sluggish economy. The ideal should be a balance between reward for constructive greed and restriction by moral responsibility.

What will be the effect if we never explicitly set moral responsibility in economic planning? Does our economic plans like Economic Transformation Plan (ETP) has moral responsibility as target? How can moral element enhance ETP and our economy?

Greed is good?
“Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind.” Those words are from a famous fictional character named Gordon Gekko, the main character and antagonist of the 1987 film Wall Street and then, the 2010 film Wall Street: Money Never Sleeps, both directed by Oliver Stone.

Here, the question will be is being greedy the right way towards healthy economy? From the economics perspectives, at least one person claim “yes, greed is good” – Adam Smith of the classic school. Through his theory of invisible hand, market can achieve efficiency when consumers and producers try to be greedy by maximizing their utility and profit respectively. Despite ‘promoting’ greed is good, Adam Smith’s idea of free market is actually originated from his Theory of Moral Sentiments that uphold moral value in society and economics. This actually supported our call for “balance between reward for constructive greed and restriction by moral responsibility”. Only matter is that it needs to be highlighted out rather than assume moral responsibility will be automatic.

Without determining certain moral responsibility, “efficiency” could be misinterpreted as monetary efficiency in which maximize profit neither equal to maximize economic sustainability nor collective welfare. This could be resulted in negative externalities to the environment, exploitation of labor and social imbalance, which threaten sustainability, social justice and welfare.

In a simple micro perspective example, let take a look at our surrounding. You may find public car park lots being occupied by car repair shops, eateries, illegal DVD selling stalls, pubs/disco and variety types of shops. One car wash bay can easily swallowed five to eight parking lots at no cost to them but to the public welfare. Together with businesses like selling pirates DVD, book photocopying, illegal betting, illegal car jokey, prostitution, drugs, money laundering and others make up so called “underground economy”. This type of economy does not pay taxes nor usually benefit the society. Due to constant missing moral element in policy and economic plan as well as lack of enforcement, underground economy is flourishing in Malaysia.

In macro perspective example, commercialization of education and healthcare under two of its National Key Economic Areas (NKEAs) may result in greedy economy rather than welfare economy if no moral restriction is being attached to its Entry Point Projects (EPP).

Few education NKEAs could be better by emphasizing moral element through CSR. ETP wishes to transform education sector from small scale, highly regulated and public funding to national or regional players, self-regulated and demand-side funding. All these planned changes are dangerously directing education into a highly commercialized “commodity industry” as termed by German philosopher Theodor Adorno (originally in German language as “kulturindustrie”). Thus, the government should force private education institutions (from pre-school to university level) to provide free education to (for example) one needy student out of 20 paid students.

Acknowledging that child’s brain develops the most during the first five years of life, EPP 1 and EPP 2 have been planned to develop early child care and education. This is good. Yet, this goodness should be able to benefit all Malaysian including the poor family. Indeed, President Barack Obama has recently planned for a free national pre-school in United States to ensure every American child has fair access to education at every level.

Thus, highlighting or legally imposing the needs to do CSR (preferable in free education) in ETP could have bigger positive impact to our social and sustainable economic development than relies on voluntarily charity. 

Developing health care as industry is like kill two bird with one stone – enable healthy and therefore, more productive Malaysians and as new powerful engine of economic growth. Some of the EPP are focused on globalizing and exporting of medical devices and pharmaceutical products. Examples are EPP 3, EPP 9, EPP 10 and EPP 11. Some aim to make Malaysia an international medical hub for in vitro diagnosis (IVD) (EPP 7), medical tourism (EPP 4) and medical refurbishment (EPP 12).

All those EPPs can upgrade the medical industry in Malaysia but will the fruits of success also being enjoyed fairly by the poor? ETP wishes private sector to play more active and bigger role in Malaysian economy. Hence, make them play equally more active and bigger role in protecting society welfare, especially improving the poor is important aspect in economic planning. Highlighting private sector’s moral responsibility in ETP for healthcare could enhance the economic plan itself.

It would be nice if ETP has certain target for free medical for the needy. In addition, instead of focusing on foreign workers, EPP 1 could be enhanced by targeting certain level of insurance coverage for every Malaysian including non-working persons like housewife.  EPP 5 could be enhanced by giving tax relief incentive to private hospital to give free diagnosis service. There are various private companies listed as EPP champions for respective areas. It would be better if they are given targets to give education scholarship for medical study for the qualified needy talents in Malaysia as their moral responsibility.

Ronald Reagan, former President of United States once said the ultimate aim of welfare is to eliminate the need of its existence. However, this can only be achieved with moral economy rather than greedy economy system. In developing countries like Malaysia, moral responsibility needs to be administrated and then gradually cultivated before assuming it to be an automatic process. 

[Chinese version published at Nanyang Press, 28th January 2013. Available online at h This English version may be slightly different from the Chinese/ newspaper version]

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