The issue is Quality of Life, not Cost of Living. Focusing on Cost alone is a dangerous exercise in minimization. We must shift the narrative and conversation.

We’ve heard often over the past few years that cost of living has been increasing and that the Government needs to do something quick to address this problem. 

However, the real issue is not the cost of living: it is an issue of the Quality of Life. In short, our Quality of Life has not kept pace or improved as compared to the cost of living. Why do I say this? Well, in simple terms what matters is whether our income exceeds our costs. In reality, costs will always increase, it is a fact driven by increasing demand for scarce resources. So the key is whether (a) we are earning more to cover these costs; and (b) whether the costs we’re paying for is something we value and improves our lives.

Being too focused on the cost of living (and anchoring the political rhetoric on this) is a dangerous path as it would indicate that the obvious solution is to reduce costs, and this tends to be very short term in focus because of the political pressure. Typically, the initiatives to reduce costs will be through a combination of the following approaches:

  • Price Controls: This requires strong enforcement, but when the market (and Global dictates) conspires to drive costs upwards – enforcement will always lag behind. Boosting enforcement will become a costly burden to the economy with more enforcers, processes, Government price interventions, which creates the right conditions for unscrupulous parties to circumvent these controls.
  • Subsidies: Subsidies are costly and unsustainable for the Government and the economy simply because it will have to come from somewhere – either in the form of higher taxes, borrowings, or some other reluctant players in the economy. Subsidies also create severe distortions in the economy and result in incorrect price signals and allocation of resources. In the end, society will suffer as a result.
  • Cost reduction initiatives: In order to further drive down costs, the economy will cut corners; find ways to reduce wages; sacrifice on social, environment and safety standards; sacrifice on quality; defer investment in technology & upskilling, and other long term damages to the economy, society, and environment. Some of this will negatively impact benefits to people.

This is not to be dismissive of the rising costs of living. I acknowledge that the increasing cost of living is real. After all globally, costs have generally gone up. That is the way of things works as population increases, demand increases, yet resources become more scarce. Cost of living obeys simple laws of supply and demand.

So what should be done if not try to reduce the cost of living? Like anybody who understands a profit and loss account – what matters is the bottom line, the profit line, or the amount where your income exceeds your costs. In this case, I call this bottom line the Quality of Life. 

The goal and (political / policy) narrative should be on increasing the Quality of Life. Depending on economy and maturity of the society given the increasing costs, Quality of Life can come in the form of higher income, better infrastructure, better living standards, safety & security, better health care & education, better social mobility and social inclusion & participation in the economy and many more, and perhaps in some cases reducing costs (e.g. corruption, red tape, procurement). 

So shall we start the conversation and narrative of boosting our Quality of Life? I aim to write about my thoughts on boosting the Quality of Life in coming blog posts.

In order to be globally competitive, we need to start opening ourselves more to the world.

2018 is a World Cup year. This year, 32 teams from all over the world will be competing to be the World Champions, a feat achievable once in every four years.

In our real world – we are facing similar competition on a daily basis. We just don’t treat it like the World Cup, but we should. Every day, the global economy sees competition. The strongest, or the fastest, or the most innovative, or the most adaptable are the ones that win. This competition is not just about economies, but also ideologies, businesses, jobs, talent etc. With a fast-changing world, the competition gets even more frenetic. Adaptability and ability to move fast become increasingly the desired trait. What is relevant for us ordinary people is how we can sustain our living in this fast-changing environment? 

There are no easy answers to this question. But perhaps we can distil the ingredients that are essential to becoming competitive as a talent (in business, entertainment, sport, academia etc) in this new world environment.

Naturally, training, practice and developing skills are very important to be competitive. However, taking this a step further – these skills need to be developed and benchmarked to global standards. These should be global skills. Global languages, global outlook and attitudes. These skills will also further need to be honed against that global standard. To do this, we either send our talent to sharpen their skills amongst the best in the world, or we bring some of the best in the world to us. 

But training and developing skills alone to match global standards will not be enough. Talent, like flora and fauna, will need to have the right conditions to grow and bloom. Trying to match the world’s best without the right diet, encouragement, discipline etc will not work. So we need to replicate the best conditions for talent to flourish. In particular, to grow and develop intellectual talent, there need to be conditions that allow the mind to explore limits of knowledge and challenge norms to bring about new ideas, and new skills. A key principle in order to achieve this – create intellectually open and globally diverse minds in order to stimulate new ideas, bring about creative tension and preserve checks and balances.  Like the rich tropical forests in our country, preserving and balancing the diverse eco-system of talent is vital to ensure that the natural advantage of diverse talent brings about the opportunity to enrich each other.

The 21st century promises significant disruptions but with it new opportunities for the disruptors. This is the time to move forward openly into the world instead of retreating out of fear and seeking a false sense of protection. Yes, going forward is going to be uncomfortable – but the cost of not doing so will be far more immeasurable for decades to come. We cannot afford to be left behind. 

Basic education needed for uncertain future occupation

We fear that artificial intelligence – AI – will be taking away jobs from us in a big way. Although similar concerns were raised during the days when robots were introduced to the factory floor to automate manufacturing – in truth, the impact to the availability of human jobs was not significantly affected. But this time we now increasingly fear that jobs for humans will finally be threatened by technology – by AI, purely because technological development is far outpacing our ability to learn and adapt to new things. The jobs we know today may no longer be relevant in the future. Will there be new jobs or occupation in the future in such AI driven economy? And we know that it will not be easy for us to be retrained, reskilled – to unlearn and relearn new things. Thus, this begs the question of what kind of education should our children be given in order to survive in this uncertain future? Perhaps we should forget about teaching the next generation biology, physics, law, accounting etc. Perhaps we should teach them even more fundamental skills and habits such as reading, creativity, empathy, adaptability, curiousity, research, learning, problem-solving, interaction and the likes. What do you think?

AI and the destruction of human kind

We’ve seen a number of the intelligentsia, entrepreneurs and celebrities warn us of the threat of Artificial Intelligence. Pop culture too can be mined for such images and warnings of the dangers of AI. One then has to wonder how much of this is true and how much of it is some form of paranoia. However, if you were to watch some YouTube videos of interviews with AI Robots – some appear downright creepy and even seeming to indicate that humans are the problem. At this point, we cannot be sure if this was said tongue-in-cheek (I cannot read robot humour), or simply something scripted, or worryingly something based on those robots’ logical conclusion. Perhaps those robots were simply telling the truth based on their logical conclusion based on the evidence. If this is so, what should be our actions before it is too late? Should we ban AI? Should AI be regulated with some form of Asimovian Law of Robotics? Or should Human Kind simply try to prove itself (to the AI robots) that we are the solution, and NOT the problem – as it appears being concluded by the AI. Can we even achieve this within the short space of time before the singularity?

Creating 21st century ready jobs and new wealth creation

We live at a time when the cost of living continues to increase. More importantly, increases in household income are falling short of the increasing costs. Yet, governments state that the economy is growing and improving. So why isn’t this growth felt by the ordinary people?

The economic benefits are disproportionately experienced by society. This is mainly due to the limited reallocation of wealth. Which means, the rich continue to get richer, and the poor continue to get poorer. Wealth remains with the same class of society as it has always been. If we look at the Forbes’ list of top 20 richest Malaysians, it is quite obvious that the richest people in Malaysia have been the richest people in Malaysia for quite a long time. There are very few new wealth, “new-economy” wealth. I’m not saying that this is bad or good, but if we want the economy to create new wealth, we need to create conditions for resource, capital and wealth to be re-allocated. 

Naturally, there is a short-term option and a long-term solution to solving the cost of living issue. The short-term term option such as subsidies, handouts etc is only temporary given that not much will change to raise household income.

It is therefore important that the long-term solution is given a bigger spotlight – which should be about “Jobs and new wealth creation for the 21st century Malaysia in a global and disruptive world” – I think any government or party that owns this cause has a strong chance to win the hearts and minds of the people.

Jobs and new wealth creation for the 21st century Malaysia in a global and disruptive world

To achieve this, the reality of the world must be accepted – it is more global, and it is becoming more disruptive. The old economy will be overtaken by the new economy, new technology will change the way our world operates, and capital and wealth reallocated globally. This can be an opportunity for Malaysians to be the ones to gain from the reallocation of capital and wealth if we do it well.

Specifically, I see three areas of focus:

  1. People
  2. Innovation
  3. Environment

People: We should aim to incentivize the private sector more to invest in people, in education, STEM (science technology engineering mathematics), TVET (technical vocational education and training) and entrepreneurship. Additionally, firms and public sector should aim to support the people to adapt to these disruptions. Some examples are incentivizing employers to help people cope with costs by encouraging teleworking, energy efficiency and other similar solutions. On entrepreneurship, I believe firms should be in a position to help their employees become entrepreneurs as an alternative career change.

Innovation: More investment will be needed in new technology and new business. The private sector will need to be incentivized to take a bit more risk on such investments. Incentivise the establishments of more private equity firms (not Government sponsored, please) to reallocate capital to enterprises with new technology, products, business models etc. Create catalysts and conditions for selected industries to restructure in order to create new opportunities and new value.

Innovation needs money. Although liquidity is not a problem in Malaysia, investment for slightly more risky ideas is. With interest rates low, returns for investors are becoming less attractive. It is good that we move towards encouraging and creating right conditions for private equity and venture capital investors. These are the people who can take a bit more risk for a higher return (without having to worry about losses of public funds) and move faster (unencumbered by bureaucracy), by taking many bets in new technology, new business, new business models etc. I personally think this needs to be significantly accelerated. There may be failures no doubt, but there will also be big opportunities to learn and gain.

Environment: I heard a few weeks back at a Utility conference that “moving the world off of carbon is the biggest business opportunity of the century”. We need to position Malaysia towards the front end of this in order to be able to capture the new business opportunities ourselves (as opposed to continue to be users). Incentivize energy efficiency and renewables in a big way. Dis-incentivize dirty fuels, wastage, driving etc. Costs of renewable energy will continue to reduce – not because of fuel, there isn’t any, but because of the technological advances, production improvements and economies of scale. It only needs some catalyst such as short-term incentives for renewables and disincentives for non-renewables for this to happen. Once the cost reaches parity, these incentives can be withdrawn.

A new narrative for Malaysia

I strongly believe with this confluence of factors such as technology changes, globalization, environmental concerns etc – there is a strong need for Governments to put a stake in the ground around creating 21st century-ready jobs, with opportunities for new wealth creation. We see the public, specifically some youths, tired of seeing the political narrative being very reactive and revolve around same old tired issues. 

Yes, cost of living is a problem. But it is a problem because the economy is not creating new opportunities, it is just rehashing old stuff. Wealth is stagnating and stagnating within the same circles, the same sectors and the same entities. Institutions with large funds in Malaysia tend to be Government-linked, and thus is often risk-averse (due to needing to avoid losing public money) and will allocate capital primarily to low-risk investments – which will only benefit the incumbents. Thus continuing the cycle of keeping wealth in the same places.

New opportunities need to be created, so new jobs can be created. Capital needs to flow to these new opportunities. Rightly or wrongly, Trump’s campaign was centred around bring jobs back to the USA. This issue about jobs (and wealth) is similarly relevant here in Malaysia.

Make no mistake, the job creation narrative is not about creating more administrative or bureaucratic jobs etc – it has to be about 21st century-ready (global and innovation led) jobs. The opportunity for Malaysia is to ride the wave of the Decarbonization, Digitalization and Decentralization (the 3D theme of the recent European Utility Week in Amsterdam) of the world. The emphasis must be global, not just Malaysia. We don’t want jaguh kampungs anymore. By strongly emphasizing the global and innovation perspective to jobs, I believe it will make our society realise that we must be much more tolerant and celebrate our cultural diversity and solve another ticking bomb social issue that we face today.