Malaysia: Kingdom of Rent-Seekers
When I read the following definition of ‘rent-seeking’ from the Economist A-Z terms of economics, I couldn’t help but see how well it applies to us in Malaysia.
Don’t get me wrong, we are most certainly NOT the only country in the world to practise rent-seeking but we certainly do it on a mega-scale.
Definition (italics mine)
RENT-SEEKING
Cutting yourself a bigger slice of the cake rather than making the cake bigger. Trying to make more money without producing more for customers. Classic examples of rent-seeking, a phrase coined by an economist, Gordon Tullock, include:
• a protection racket, in which the gang takes a cut from the shopkeeper’s PROFIT;
- I don’t know about this but from what I hear, I think there’s a lot of this sort of thuggery happening in our towns and cities.
• a CARTEL of FIRMS agreeing to raise PRICES;
- Hmm… the only thing that comes to mind are the oil companies but our oil prices are subsidized and controlled so there’s hardly room to move there. The only other area I can think of are approved government suppliers/vendors from whom agencies must procure their stuff from.
• a UNION demanding higher WAGES without offering any increase in PRODUCTIVITY;
- Our unions have been rendered quite toothless… so I guess no comment on this one.
• lobbying the GOVERNMENT for tax, spending or regulatory policies that benefit the lobbyists at the expense of taxpayers or consumers or some other rivals.
- In this category we have PLENNNNTTTYYY of examples:
o The auto industry (Proton, Perodua, Naza etc)
o The highway industry (PLUS, LITRAK etc)
o The media industry (TV3, NST, Astro etc)
This last statement takes the cake and summarizes our current economic environment:
Whether legal or illegal, as they do not create any value, rent-seeking activities can impose large costs on an economy.
The definition can be found here.
posted by hew @ 10:27 am
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