Time unis offered degrees in politics, politics & economics

 It is impossible to separate politics and economics.

From Mazli Noor

Economics is so closely bound to politics that universities have built entire fields and faculties around it, offering degrees such as in philosophy, politics and economics. The scroll’s pedigree speaks for itself: David Cameron and Rishi Sunak both read it before becoming British prime ministers, as did Bill Clinton before his presidency and Aung San Suu Kyi before her years leading Myanmar’s democratic movement.

Former health minister Khairy Jamaluddin belongs to that list, so much so that it has, understandably, been referred to as the degree for future prime ministers.

The link between the two is in fact organic: governments create the regulatory ecosystems that markets operate in, and market conditions and performance in turn often decide who governs.

Every economic decision carries a political cost or dividend, and every political decision carries an economic one. The two thus exist in a symbiotic relationship, navigating the same terrain but from different perspectives, and nowhere is that clearer than in five recurring patterns.

Resource allocation

Economics examines how societies manage scarcity; politics decides who gets what from it. The moment resources are limited – and they almost always are – distribution becomes a political question, which is what ties economic theory directly to political governance.

Policy enforcement

Markets do not regulate themselves. Governments establish policies and legal frameworks within which the economy operates. In many cases, including in Malaysia, the central bank is an objective, neutral entity that sets monetary policy, which complements the government’s fiscal policies that set the tone for the country’s economic state.

Electoral consequences

Inflation, employment and the cost of living are the lived experiences that shape issues and often decide elections. Whether positive or otherwise, economic performance is the constant every government has to face.

Stakeholder interests

Corporations and unions across the globe actively court policymakers to shape legislation in their favour, placing economic interests directly into the political machinery and vice versa.

Ideological leanings

Parties differ fundamentally on how an economy should be run. The right tends towards free markets and deregulation, and the left towards redistribution and social guarantees. Which philosophy holds power generally decides a country’s economic priorities.

All of which means the vision and judgment of whoever is chosen to lead a country’s politics matters enormously to its economic trajectory, because sound economic planning only translates into sustained growth when the leadership behind it is equal to the task. Malaysia’s own history offers no lack of evidence.

The country’s second prime minister, Abdul Razak Hussein, established Felda in 1956 to drive rural growth and development. The scheme was an unqualified success, lifting more than a million people out of poverty while transforming Malaysia into the world’s leading producer of palm oil and rubber.

Settler families were each given four hectares to cultivate oil palm and rubber trees, turning subsistence farmers into landowning smallholders and creating an entirely new rural middle class, whose household incomes climbed steadily for decades.

Alongside this came roads, clean water, schools and clinics to areas that previously had none, narrowing the gap between rural and urban Malaysia.

During Felda’s peak years, roughly 1960 to 1980, GDP grew at 6.5 to 8% annually, driven in large part by the plantation sector it had built. The sustained success in what had previously been a neglected strata was crucial in establishing the ruling coalition’s economic credentials.

The same can be said for Malaysia’s fourth prime minister, Dr Mahathir Mohamad, when he launched the “Malaysia Incorporated” policy in 1983 which expanded the industrial sector exponentially, duly attracting foreign investment and pushing Malaysia’s manufacturing and export growth into double figures. The boom came with increasingly closer ties between the public and private sectors and transformed Malaysia within a generation – from an agriculture-based economy into a global industrial and trading player.

This shift was marked by numerous privately-funded mega infrastructure projects and drove Malaysia’s growth as one of the so-called Asian Tigers, achieving an unprecedented real GDP growth of 8% between 1983 to 1997, before the Asian financial crisis took the world by storm.

Mahathir continued driving his vision for a developed Malaysia through the Multimedia Super Corridor (MSC), pushing the country towards a knowledge-based economy and again pulling in large-scale foreign investment which generated thousands of high-value digital jobs and established the ICT as a serious contributor to Malaysia’s GDP.

At its peak, MSC added approximately RM34.57 billion to the nation’s coffers. A robust legal framework and incentives such as full tax exemption for pioneer companies drew multinational tech projects to Malaysia, creating a wave of high-income employment that, in turn, deepened domestic consumption and human capital development.

But not every major political decision has worked out so well. Malaysia is still paying for the government led by sixth prime minister Najib Razak’s heavy hand in the 1MDB investments.

Ill-advised investments, compounded by opaque and poorly governed corporate practices, left the government some RM42 billion deeper in debt, weakening the ringgit such that it inhibited foreign investment, and committed the country to repaying that debt with public funds through 2039.

At the height of the scandal in 2015, the ringgit was the worst-performing currency among developing economies – a direct casualty of collapsing investor confidence. The governance failures and the corruption exposed at the highest levels did lasting damage to Malaysia’s international standing, keeping foreign investors at bay.

It eventually led to a response in the form of stronger governance, greater transparency and stricter anti-money laundering rules. The political cost, however, was shattering: in 2018, the erstwhile unbeatable Barisan Nasional coalition lost the 14th general election, ending the 61-year unbroken run in power it had enjoyed since the nation gained independence in 1957.

It is absolutely impossible to separate politics and economics; besides the political climate, a nation’s quality of leadership ultimately determines whether any economic vision survives contact with reality. Malaysia’s first generation of leaders put the country on the path to the prosperity it enjoys today. The task now is to make sure the leadership that carries that work forward is equal to it.

Malaysia is not short of candidates: Terengganu menteri besar Ahmad Samsuri Mokhtar, former health minister Khairy and former economy minister Rafizi Ramli are among a cohort at the height of their abilities, with executive experience and, by most accounts, room still to rise.

All of which suggests that future degrees might be better named politics, politics and economics. - FMT

Mazli Noor serves on the boards of several public and private companies and is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.