Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Money is Not Enough

Written by johnleemk on 12:01:12 pm Jun 24, 2007.

A common solution in third world countries to a policy problem is to pour more money into the project. It's a seductively tempting idea, since it is true that the odds of the problem being solved probably increase as more funding is allocated to it.

However, the problem with this thinking is illustrated clearly by the economic theory of diminishing marginal returns. Basically, when you increase one input without varying the amount of other inputs, at some point, you start seeing smaller increases in benefits, and eventually may even get less while paying more.

After all, if the fundamental premise of a policy is flawed, what good will more money do? And even if the policy is fundamentally a good idea, pouring more money in may just be a licence for those involved to spend profligately without tackling the actual issue.

Today, I heard an interesting proposal for tackling the decline in the quality of Malaysian universities. Why not simply stop funding all those students who go overseas to lacklustre universities, and pump this money into our local universities?

It's a seductively simple idea. After all, nobody ever saw a university die because of too much money. And we would definitely see some improvements in the unfortunate state of higher education here just by spending more money.

But the pertinent question is, does this go to the root of the problem? The Malaysian government's usual solution to any problem is to throw more money at it (it's good for the cronies, after all).

But has this ever really addressed the original cause of the issue? The reason our universities are struggling, the reason our roads are potholed, the reason we can't sleep safely at night, the reason for almost every problem Malaysia has, often has nothing to do with money.

Take our universities again. The reason they cannot produce quality research and quality graduates is because their faculty and students simply have no freedom to think. It's really that simple.

No matter how much funding you pour into them, no matter how grand and lavish the facilities are, if the people using them are not free to do as they wish with them, then how can you expect results?

Malaysians and the Malaysian government have to resist the temptation to throw money at every problem that crops up. Sometimes, it may even be worse than doing nothing.

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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.

Infernal Ramblings is run by John Lee. For more, see the About section. If you have any questions or comments, do drop him a line.

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