Adam Smith’s Chinamen

Adam's Smith's Chinamen?

If competitive capitalism thrives under a specific political climate where the role of government is limited, then it follows, that more of government hinders capitalism. Let us be clear at the outset, that less government does not mean government withdraws from providing services normally associated with being a government- security at home and protection against threats from abroad, upholding the rule of law through the relevant institutions etc, presiding over monopolies that only government should do.

What less government means is that government refrains from getting involved in business affairs which are better run by private individuals and enterprise. Like spending our own money. Like Milton Friedman says, nobody spends our money better than we ourselves do. If our money is spent by the government, the circumspect behaviour isn't just there. Our money means tax payers money.

If capitalism has been proven as the better way to create wealth, it follows therefore any fetters on the growth of capitalism also fetters wealth. Government's bossy involvement for instance can hinder the growth of capitalism which is necessary for wealth creation.

If one then looks at the different economic positions between Malays and Chinese, perhaps the chief reason why Malays lag behind is because of excessive government interference into the affairs at which the Malays would be better off in doing as private citizens.

In an earlier article, I got this comment (thank you anonymous) which I think is quite pertinent to my point:-

What is necessary is to develop genuine Bumis with the prerequisite skills/attitude within a competitive environment and incubated through a 5 year program i.e. no instant wealth thru APs, monopolies, brokerage etc..No issue about depriving the non Bumis but complementing existing capacities and competencies...

What strikes me in the above statement apart from the technical feasibility of such proposition is an acceptance that good business skills are teachable and are not genetically encoded.

My point is this. Let us dispel this myth about the Chinese having thousand of years cultural experience in dong business and hence their innate eminence in commercial abilities. That would suggest that business skills (now, business is a skill and not a cultural trait) are easily encoded in the genetic makeup of a particular race. Further, once encoded these are passed on from one generation to the next and so forth. In our present case, it is the Chinese whom we assigned this capability.

That statement crumbles when facts are brought up to refute it. The truth of such a statement would depend on whether it was a fact that those immigrants who immigrated into Malaya in those days, came from the merchant class. Now, as pointed out by many bloggers writing or commenting on this subject, the majority or indeed all those immigrants descended from the lower strata of Chinese society. Those better off on the social hierarchy stayed behind where life for them was better. Those who had nothing to lose except their miserable existence in China came over to the Nanyang and Malaya in those days. They met up with the challenges by an appropriate response- cultivating teachable habits and skills. those Chinese planters featured in the book Land to Till or Stepping Out- The Making of Chinese entrepreneurs, pardon my word, were the dregs of society or whom the Malays once referred to as sengkek.

Those early Chinese were able to thrive because our own rulers at that time regarded them more as a curiosity usable because they were industrious workers. I am not sure and certainly refuse to accept that industriousness is a cultural habit/trait unique only to the Chinese. Because of this trait, and not because of any other innate abilities, they were given initial start to engage in commercial activities. The opportunity was only at the beginning- once the Chinese applied themselves on economic endeavours, they were basically left alone to do their stuff. Again, it was the limited 'governmental' involvement in the handling of Chinese business affairs best run by themselves, pursuing their own interests, which allowed the Chinese to prosper.

This is classic Adam Smithian behaviour. Malays must take note of this.