Where Does Wealth Come From?

I would like to put a different spin on Dari Jelebu’s article “Dari Mana Harta Kekayaan Datang” . Sdr Hishamuddin makes it clear that wealth comes from human efforts and labour, but why is it that those who labour the hardest are always the poorest? This seems like a contradiction and I wish to address this issue.

I submit that wealth is accumulated through competitive advantage. This sounds almost innocent, but when competitive advantage is extended to every conceivable human activity and human ingenuity and not just to business, it starts to look more sinister. The corollary to this is that the rich get richer and the poor get poorer whatever system or ideology you subscribe to or try to implement.

Take a few real life examples; gambling for instance – winner takes all or at least the bulk of the pot. So it makes sense for some competitive advantage to come into play – skill at gambling, insider information, manipulating the system, manipulating the odds in your favour, etc. Too often many of these “competitive advantages” are actually legal e.g. as in legal casinos where the odds are always in the favour of the banker. The suckers are those who are too stupid to quit or too greedy for their own good. They lose the ability to protect themselves.

There are many examples of winner takes all in real life. Take war as another example. Many warlords in the past became immensely wealthy through victories in battle. The losers lost their property, their women or even their lives. So it makes sense not to be defeated in battle even if you do not wish to attack or invade anyone. It makes sense to have the ability to protect yourself especially in this day and age where pre-emptive strikes leading to pre-emptive invasions are accepted as a valid security measure by western countries.

Competitive advantage applies in all other human activity including finance, mass media, law, economics, engineering, science, technology, business, education, transport, production, etc, etc.

Whenever there is even a small competitive advantage, the guy who has it reaps benefits which are way beyond simple direct investment or even simple comparison of efficiency. This is because humans still behave like the herd. Take for example 2 restaurants. Both restaurants invested the same amounts of money and have equally skilled chefs, but one spent more time researching a good location. This competitive advantage alone is enough for one restaurant owner to become a millionaire while the other just makes do and it is not only better access that accounts for the enormous difference. Often a restaurant’s marginal popularity will give it a better reputation and people will travel a long way to get to a restaurant with a better reputation. In addition lots of people like to be seen with the “in crowd”, so they make more effort to get to places where the “in crowd” congregates.

There is even a competitive advantage in propaganda. In the west, child labour, human trafficking, etc are described as crimes. They are the activities of dastardly criminals and outlaws who are outside the system, so the system remains pure and innocent. Their description of 3rd world countries are however different. In the 3rd world these activities are described as part of the system, where the law does nothing about it and people actually do these activities as part and parcel of their everyday lives. This means that skilled and trained individuals with economic assets will seek to live in western countries rather than in the countries of their birth, thus depriving poor countries of valuable human and economic assets. At the very same time, child labour and human trafficking contributes generous portions to the GDP of western countries though indirect measurements.

It is the same with human rights abuses. They export it to other countries through extraordinary renditions and back door deals or locate their torture centers outside their borders so their own laws cannot apply. Another way they cover it up is to blame racism or even just pure preferences of the people. This way, western countries isolate themselves from dirty things and look attractive, liberal and democratic to skilled and trained individuals with economic assets. I am sure they will have a way of making these activities contribute to their GDPs just as their charity and “aid” programmes contribute significantly to their GDPs. I just have not figured how they do it yet.

It stands to reason that countries with competitive advantages in finance, technologies etc, will reap benefits way beyond anything like what their populations are capable of producing when compared on a skill to skill or an efficiency to efficiency basis. So it is that rich countries become richer and poor countries become poorer. Wealth flows from the poor countries to the rich countries without any ability on the part of the poor countries to stop this flow.

But why is it that people of poor countries do not know this or do not realize this and take steps to protect themselves? Japan for example took very effective steps to neutralize the competitive advantage of the western countries and became very rich herself. Similarly, S Korea and China takes steps to protect themselves while trading actively with the west and they are on the way to become very rich themselves.

What differentiates these countries from countries which are perpetually poor are what Dari Jelebu calls “mandor-mandor ganas” – local leaders who use their power more to serve themselves than to serve their people. They find it easier and more convenient to accumulate wealth by being the “mandor-mandor” of other countries. They lack faith in their own people and suck up to rich patrons of other nationalities. They split and disunite their own people and label some as “immigrants” while they pander to others as “tuans”.

This way, tribe is pitted against tribe, superstition against superstition, backward thoughts against backward thoughts. The country wallows in perpetual ignorance, disunity and weakness.

I believe we have too many “mandor-mandor ganas” of all races in our country. These people are not leaders but oppressors and they do more harm than good for our country. The trick is to have both good leaders and good followers and all will be well.

By batsman