IN his 2015 National Budget Speech, the finance minister had differentiated between capital and people economies. Capital economy is the stock of physical assets that society has built over the years. People economy relates to, largely, the stock of human resources or the human capital, together with their health, welfare, and wellness conditions.
The two matters are not new constructs as they have appeared under different names in development literature. This recent reference to it is heartening. In other words, hopefully, the planning for economic growth and development will be people-friendly or perhaps people-centric in the future as we proceed to a high-income nation.
Our past planning methodology to assist changes in the economy and society has relied much on building physical infrastructure, such as schools and hospitals.
If we talk of education, the first thing that comes to mind is establishing schools or colleges, and not the quality or the contents of the syllabi.
If we talk about improving health our quick response is the need to build hospitals. These are construction projects which initially benefit the contractors and suppliers. Not that these are not important, they are.
However, equally pertinent are concerns on the software side, such as the contents and quality of education and how they can change the way we see and do things.
In part, this is because we have emphasised much on economic growth hoping that the benefits of such growth will trickle down to the man on the street and change their mindset. To a certain extent, such benefits do reach them, as reflected by our low unemployment level and low incidence of absolute poverty, decline in infant morbidity, and low incidences of homelessness. However, development is certainly more than that.
Economic growth is quantitative increase in output. It is a necessary but not a sufficient condition of economic development. The latter is more qualitative as it denotes improvements in quality of life and more equitable wealth distribution in the country.
Recent statistics do indicate that disparity is still significant despite our strong economic growth numbers. The total wage share in national income is about 33 per cent compared with over 60 per cent for developed countries, meaning the remainder accrues to owners of capital and entrepreneurs.
The average Malaysian is still faced with the issue of owning a reasonable, affordable home. The incidences of crime are quite high compared with the situation in the 1970s. Gated communities and residential areas with guards are already a fashion now.
Thus, a focus on people economy includes not only the traditional aspects of health and education, but more importantly, of wellness and mental health. The state of mental health is pertinent because it can influence other dimensions of life, such as on family stability and our work culture.
Additionally, the standards in the public services should not be too basic; they should be in line with overall economic status of the society. If others have cars, then car ownership is essential for low-income families, too. If others have five-room homes, then the low income families should have at least three-room apartments with two bathrooms. In this regard, the Singapore public housing model is worth adopting.
Furthermore, poverty cannot be measured in absolute terms anymore but should be seen more in relative terms. In other words, as overall economic status improves, the elements making up the poverty line will have to be equally comprehensive, too. Thus, while we reduced poverty level as measured in absolute terms, (based on poverty line income which is price-adjusted), we will need to incorporate overall wellbeing now.
Moving forward, the element of wellness of societies will be a critical ingredient in emphasising people economy. In this regard, a higher quality of public services is important and their equitable distribution more relevant. Local governance is now put on call and has to be responsive to changing social needs.
Finally, strengthening social institutions to sustain economic and social changes is long overdue. Many of our traditional institutions have become irrelevant with the advent of modernisation and technology. For example, volunteerism is almost gone and has to be promoted again.
The importance of social institutions, such as cooperatives and farmers or fishermen’s organisations, cannot be overemphasised.
Their place in society needs re-branding and redefinition, so as to give them greater relevance as instrumentalities of change. Such institutions are visible in the economic landscape of Europe and they are collective mobilisers of resources and effective channel for business networking. Hence, in exploring for new strategies for economic and social changes, let us not underestimate them.
May we reflect on these ideas, not new though, but just being recycled.