PEMANDU's Annual Report was unveiled last week to much praise and, of course, criticism. Given the tumultuous political times that we live in, this is only to have been expected.
Before we get caught up in the heat of the moment, however, we may want to stop and remember that economics, for our purposes, is not about winning arguments but people - real, living, breathing people; our people.
Bad economic policies have the power to cause untold human misery. We see this in many parts of the world. Good economic policies, on the other hand, have capacity to uplift, enlighten and empower, in other words, to transform.
Of course we need hard numbers to help us chart and navigate our course. But these must be treated with absolute respect, scrupulousness and objectivity so that we are not turned into cynics.
Economic statistics tell us about the past. What they mean for the future is entirely more debatable.
All the flashy presentations or populist rhetoric in the world cannot raise the living standards of ordinary Malaysians one iota. Only well conceptualised, designed and executed policies can raise the lot of the living.
So what are good and bad economic policies? How do we tell the difference between what is currently on offer? Listed below are seven suggested indicators.
The reader is free to add or amend them and then critically evaluate the various proposals and manifestos being floated or implemented to see how well they fit.
Having done so, there should be good solid debate.
Rather than childish name calling, we ought to welcome diverse views, knowing that difficult as they are to stomach, they contribute to better final outcomes.
FIRST, good economic policies are practical.
It is all nice and good to have high-sounding goals but if they do not work and cannot be put into practice then they are for all intents and purposes useless.
There was, for example, a time when socialism looked like the solution to the world's woes.
After almost a hundred and fifty years, however, we now know that common ownership of the means of production does not work.
SECOND, good economic policies fully recognise interdependencies.
So long as there is scarcity of resources, actions taken will face trade-offs and will have effects that are transmitted to other sectors of the economy.
As incomes rise, for example, the quality of life increases but so, too, do costs.
If real costs do not rise, then any so-called increase in incomes and the ensuing quality of life would be extremely doubtful indeed.
THIRD, good economic policies do not reward unproductive behaviour and penalise productive behaviour. They do not present opportunities for rent-seeking, moral hazard and entitlement mind sets, much less corruption.
It is debatable whether rent seeking is a necessary evil in the early stages of development. What is certain is that if economic growth is to be an activity of the many rather than the few, this cannot and must not continue.
FOURTH, and at the risk of sounding dreary, good economic policies are financially sustainable. They do not force bad choices to be made in the present, and they do not pose a financial burden to the next generation.
The discussion about public debt in this country is wrongly based. It is not about bankruptcy, which is a very remote possibility, but much better decisions for our present and future Malaysians.
FIFTH, good economic policies are all about innovation. If the policies are not about doing things differently but are grounded in the status quo, they are likely to be reactionary rather than forward-looking.
Innovation must be large-scale and micro in nature. It must lead to radical change not just of industries and infrastructure but also organisations, systems, practices, values and attitudes.
SIXTH, good economic policies are externally oriented. Malaysia's future lies as much, if not more, beyond its borders as within. If economic policies are productive, they will have an external frame of reference.
Policies that seek to resist or delay external pressures are extremely suspect. They come at a cost and that cost is borne by Malaysians, not just households but businesses and the government itself.
SEVENTH, good economic policies build social capital and inclusiveness. Inclusiveness is much overused these days but for countries like Malaysia it is particularly important given the size of existing disparities.
Malaysia urgently needs a new robust and systemic framework to rebuild social capital and roll-back disparities -- not just of income and wealth but abilities and opportunities -- without returning to outdated models and practices.
These indicators are by no means complete and can be added to. It might also be argued that two or more are, to some degree, conflicting. This, however, is the real nature of economic policy - making the best choices among the options open and then acting accordingly.
Read more: Good, practical economic policies - Columnist - New Straits Times http://www.nst.com.my/opinion/columnist/good-practical-economic-policies-1.241796#ixzz2OcANS7Vf
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