Income Inequality and UMNOnomics

The issue of inequality.

This issue was never tackled in the 2014 Budget. The focus was on getting a developed world status with a per capita income of USD15, 000. Najib was quick to point out that Malaysia can achieve this target earlier than 2020.

That status is meaningless if people can’t cope with rising cost of living; have poor housing; limited access to wealth-creating resources. The oft repeated generalization of the richer getting richer while the poor gets poorer isn’t dismissible as just an envy-driven ranting from the Sad Class.

Sabah and Sarawak remain as vassal states dependent on KL to chart their future. Tiny country Brunei with limited land mass can be super rich while Sabah and Sarawak remain as the sick people of Malaysia.

PM Najib took delight in declaring that the average household income of Malays is RM 4457. This was a figure quoted from the 2012 Household Income Survey. He made the first very public announcement about it at the launch of the Bumiputera Economic Empowerment Plan.

Unfortunately the delight and smirk are shared among the Malay elite and the Malay supremacist only. If that is the income of the average Malay, then no Malay qualifies to get BR1M. Isn’t the qualifying income level is set at RM3000 and below? If one looks at the income bracket, the proportion of people earning a mean monthly income of RM5000 and above is only around 10% in the rural areas and about 33% in urban areas.

UMNO politicians pride themselves for having that tender loving care for the downtrodden and marginalised. They are moved when recipients of BR1M shed tears of joy at becoming the beneficiaries of UMNO’s benevolence. The other way of looking at the number of BR1M recipients is to accept that there are 8 million poor people in Malaysia.

By their own admission, there are still many people who qualify for BR1M but are not given. There is much credibility in the claim that 40% of our population live on a monthly income of less than Rm1200. This means that close to 11 million people live with that income level. 90% of that is made of Malays and Bumiputeras suggesting that 10 million Bumiputeras lived in poverty and destitution.

So what has the affirmative strategies done for Malays and Bumiputeras? It has resulted in a consistently divided community where income inequality has remained persistently the same. The top 20% continue their stranglehold on 50% of the nation’s wealth.

The issue of income inequality is never mentioned in Najib’s 2014 Budget. Among all races- income distribution is unequal. Measured by GINI coefficient, all 0.43 and above.

Since 2002 to 2012- The top 20% income share is 50%; the middle 40 shares 36% of income. The bottom 40% shares 14% of income for the last 10 years. Compare to the decade before 2002, the income share of the top 20, the middle 40 and the bottom 40 is the same.

The Business plan of this country has ensured income distribution remains the same- the top 20 sapu 50% of the income.

What is the nature of the business model that has retained these features? It’s the trickle down mechanism which says to let the top rich subsidize the bottom feeders, resources, opportunities should be directed to the top and the select 20% so that they create wealth to be redistributed.

Are these features created by the failure of the market system? The answer it seems no- it’s the result of government lack of understanding of the market system. They interfere in the market in the wrong way, i.e. wrong fir the people at large, right for the top 20%.

Mean monthly gross household Y

race	2002	2012	x
bumi	2376	4457	1.87
chinese	4279	6366	1.48
indian	3044	5233	1.72
others	2165	3843	1.77

Look at table. The biggest improvement in monthly income is achieved by Bumiputeras.  The Bumiputera income has improved by 1.87 times compared to 1.48 times for the Chinese, 1.72 times for the Indians and 1.77 times for others.

So why is the BN especially UMNO attacking the wrong targets and blaming others for the own shortcomings? In terms of improvement its better than Chinese, Indians and others. Best improvement thus far.

Unless, they lied and the figures by the EPU cannot be trusted.

Because the government has been perpetually lying to the Malay audience. It has failed to address income inequality among all the races and most importantly among the Malays.

PM says average income of Malays is 4457. Malays can’t take comfort in that because there is huge disparity between the top 20% Melayu dan the bottom 40% Melayu. The average income of the top20% melayu is rm8000. The average income of the bottom 40% is 1200. 6.7 million Malays out of 16.8m earns 1200 per month.