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    Aristotle believes that government, Society and Economy are one entity of the nation. Politic and economy cannot be separated.

  • Social Democracy

    The reform does not have to be coercive revolution and allow the democracy assimilate with Marxism and lead the form of Social Democratic parties...

  • What Is Marxism?

    Capitalist is a class that is according to Marx exploiting the proletariat which is the workers and continues until today.

  • Should We Support GST?

    Some said GST should be implemented to cater the welfare needs and to support the aspiration to become a first world country.

  • What Is Keynesian Economics?

    t emphasizes on the role of government in helping people make a rational choice. The Keynes believes that people is not always rational in certain condition.

Showing posts with label Instituinals Economics. Show all posts
Showing posts with label Instituinals Economics. Show all posts

How affirmative policy can be lifted

14 June 2014 0 comments



Government Institution’s important role in society is,  to reduce uncertainty by embedding a stable human interaction in the country. The Institutions might not necessarily efficient,  but it must be stable. However, by saying it must be stable; it doesn’t mean that the government institutions cannot be changed. In fact, to ensure its stability, it must evolve. How governments evolve? The tools are might be in the form of conventions, codes of conduct, norms or behavior to make law, and common law, and contract between individuals.  The change and evolution of the government will alter what is more for us, in this case Malaysian citizens. Take note that any change of policy will have to go back to rule No.1 , does the change provide stability to society.

                In this topic, we are going to discuss the formal constraint for the change of the government institutions which is a policy of special right for Malay and Bumiputera in economic policy. The government aims for Malay to have at least 30% economic equity. This is one of the aspiration to uplift the Malay social status because of hundreds years of colonization. The intention is to provide the stability to the country. To ensure society lives in the harmony, the policy embedded in the constitution and gradually in custom, tradition and norm of Malaysia. The question is, does the Malay privilege policy will be changed? What is the factor that might change this?

To answer this question, we have to look back in history rather the policy of protecting Malay are getting enlarge or become smaller.  History will let us know about  how much right of Malay has been reduced, or in other words evolves. From the beginning, even thought the Malay privilege was in the constitutions, Tunku Abdul Rahman administration does not really stress on how Malay should be aided. The economic approach is much more liberal and open. However, after the 13th May 1969 tragedy, the affirmative policy for a  Malay to strengthen the economy emphasized, with the intention to reduce the social class and the gap between rich and poor. The colonization promotes the economic identity based on races and that’s why the policy has to be specific to the Malay. New Economic Policy (NEP),National Development Policy, New Economic Model and other policy introduced. This is all done under the name of stability.
Dato Seri Hishamuddin,Future Prime Minister,Graduated From LSE. He is one of the stronghold in protecting Malay Privilege.-Illustration Purpose Only-


Let’s fast forward. Roughly, under Prime Minister Najib administration, the service and economic benefit were given to all Malaysian without prejudice. The economic policy under his currently rarely mentions on “Malay” compared to his predecessor. The term Malay in political rhetoric was replaced with 1Malaysia aspired to give benefit to all Malaysian.  Does this the attempt for the institution to evolve?

Of course to change Malay Privilege is a very complicated process. This is because by doing it, will cause the change of informal rules and the question of effectiveness of enforcement will come into play. Politician and legislator might change the rule on the paper, but informally, the people that running the policy are the “old Institutions” that take more than that to be changed. It is even harder to change informal constraints of changing policy ,such as customs, traditions because it has embodied in institutions.

Another question to focus is in term of the necessity of change. Is there a strong need to change and does the components that support the change sufficient for the change.  The necessity of change will depend on the divergence of society that wanted to change the policy. If the divergence is strong enough the policy will evolve.

For me, it is impossible to lift the Malay privilege formally. I can assure that the Malay right will not be lifted. However, I know that It WILL EVOLVE .It might change incrementally with the support by all organizations (politic ,education, NGO, business and other) when the Malaysian people itself feel that the policy affect the stability of this country. It will change itself when the days people saying that the races and religion are No. 2. Individual freedom, equality and solidarity are at priority. Today, what embedded in society is that, the policy was made to fix the social status and class of Malay and Bumiputera. Even thought the Barisan Nasional government might change one day, in my opinion, the institutions will not change and hard to change.

To change this policy, all institutions (government, society, religion, academics, etc..)  must converge and believe that this change are for the stability.  The winner will be the idea, that, which is going to provide betterment for the people.

History proves that custom, codes of ethical and norm will evolve. We seems example, today on how trade grows without highlights what religion, race, belief of the producers. In the medieval ages, the trades accounted this entire factor. The origin, custom, skin color and mission are converging into the similarity of background and ethnicity. However, in a few hundred years later, this nature has evolved. The trade institutions converge on finding one thing, which is to maximize profit and efficiency of production. The backgrounds become less important in this global world. The trade Institutions changes and evolve its policy. For all you know, Government is an Institution. It will evolve just like the trade.



What Is Institutional Economics?

10 June 2014 0 comments


Definition
Institutions are the LAW, CUSTOMS, and TRADITIONS of a society. Institutional Economics is  a discipline that focuses on the role of institutions and evolutionary process that will influence economic behavior. If the standard economics assume the existence of market and government policy influence economic and trade , Institutional Economic go deeper.


Human play under the “Rules Of Game”

Douglas C.North  is a Noble Prize for economics 1993 that study the role of Institutions.Institutionist look into the origin of the markets, how its tapping the state and other factor encouraging economic activity such as a social condition. Douglass North sees institutions as “humanly devised constraints that shape human interaction”. The interaction has rules.The rules are what makes his people act like in common.(eg. Society social code, customs, and traditions). This was called the North’s Institutions and run within the set “Rules Of Games”.




Evolution of Instituition

Institution's economic study institutions and believe that the complex relation of the market come from various Intuitions such as Individual, firms,states,social norms and others are built from the past.Choice in the future shape of the past.The niche area of Institutional economics is bounded rationality (Human are incapable to become rational all the time) , learning and evolution.



Traditional Institutions, Economics
They reject the idea of the institutional change just because of taste, environment and technology. The institutional nature shaped and limited by the expectation of the future, habits, and motivation. Things will not change if people choose to do the same thing routinely. Those values create the world -view.






The Importants Of Markets and Property for Norths Institutions

He mentions that Property right for the institution is an essential for economic growth. States must guarantee the order of the institution which going to give power to activate property right. This power also allows states to use resources for its own benefit. The market cannot survive without state to monitored institution.
According to North, the state also cannot survive under anarchy. Therefore, the institution within the state must be strengthened to strengthen the economy . The Bad institutions disrupt economic growth.While good institutions prosper the nation.