Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Income Inequality in Malaysia

Written by johnleemk on 2:37:59 pm Jun 15, 2007.
Categories: , ,

Malaysians seem particularly blind to the problem of income inequality in our society. It is not a commonly known fact, but according to the Gini coefficient, which is a measure of income inequality, Malaysians have a wider disparity of income than other basket cases in the region like the Philippines.

I think a main cause is probably how virtually all economic problems are cast in racial terms. We are just unable to let go of race, so the non-Malays which (let's face it) are relatively well off are not likely to care about the Malays which (again, let's face it) are relatively poorer. (And in case anyone forgot about East Malaysia, we have people starving to death there.)

Of course, an alternative hypothesis is that it is just class. As the 19th century economist Walter Bagehot, the rich are unable to understand the problem of poverty because it is impossible to fathom why, if you are hungry, you do not ring the bell to summon a servant bearing food.

Since the non-Malays (okay, more like the Chinese, since many Indians are dirt poor) are mainly in the upper and middle classes, they are less likely to care about inequality; inequality, however, is an issue trumpeted by the Malays since they are the ones affected strongly by it.

In any event, this is a problem that we cannot afford to look at with a tinted perspective. I am afraid that far too often, our discourse is punctuated with racial rhetoric and chauvinistic thinking.

The Chinese are by-and-large ignorant of the magnitude of the problems poverty causes. To them, a laissez-faire system would be just peachy; most would like nothing more than to see the government's anti-poverty policies repealed and for the free market to reign.

Meanwhile, the Malays can only think of how to enrich their impoverished community, but they are so occupied with equality of results that they end up creating artificial and unsustainable wealth, concentrated in the hands of a tiny elite.

It is not a well-known fact, but the Gini coefficient also indicates that the Malays have the largest income gap of any community in Malaysia. I have Malay friends whose first car was a luxury sedan; I also have Malay friends who work at the local McDonald's during Hari Raya Aidilfitri.

And, of course, just to confirm the adage that "A Malay problem is a national problem; a Chinese problem is a racial problem; an Indian problem is not a problem," Indian poverty is all but ignored.

Making matters worse, the few who are cognisant of income inequality seem far too focused on achieving equality of results instead of equality of opportunity. There is a presumption that income inequality is a bad thing, full stop.

However, in a market economy, income inequality is an implied outcome. It is how the market rewards those who are effective and punishes those who can't hack it.

The true problem with income inequality is that it generally indicates a lack of economic opportunity. If the next Einstein was born to an Indian family working on an estate, what are the odds he would grow up to be anything other than an estate worker? If the next Bill Gates were to be born into a Malay family in the kampung, what would his chances be of realising his full potential as an individual?

Poverty is a problem which cuts across all races, across all communities. There is a reliable economic case to be made for fighting poverty. Malaysians should be ashamed not just that we have worse income inequality than the Philippines, but that in our society, which family you are born into is such a strong determinant of what you will grow up to be. That doesn't have to be the case, and it should not be the case.

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Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

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