Keynote Speech to the australian network leaders’ summit 2020
This is the text of my speech this morning 9.30 am, at the ANL Summit 2020 held in UOW Malaysia KDU University College. This is a 30 minutes speech, so it is kind of long, touching on the broad subject matter of sustainability.
1. Thank you for inviting me to deliver this keynote speech for the Australian Network Leaders’ Summit 2020. The title of this forum is “Towards A Sustainable Malaysia”.
2. Sustainability is a very wide topic. Most people will relate the concept of sustainability to the Sustainable Development Goals of the United Nations, which has 17 components. I am not going to discuss 17 topics now. Broadly speaking, sustainability is about meeting the needs of the current generation without damaging the ability of the following generations to meet their needs as well.
3. In other words, sustainable means having a socio-political-economic system that is fair to all generations and this system has to be resilient and can carry on perpetually. For instance, if the current generation consumes way too much of the earth’s resources, then the next generation will be deprived of the same level or better economic resources.
4. Sustainability has three basic pillars, first, economics, second, the environment and third society. Sustainability activists use the following keywords. In describing, economics they use the word “profits”, for the environment they use the word “planet”, and for society they use the word “people”, the so call the 3Ps of sustainability. Profits, Planet, People.
5. My speech today will focus on these three broad topics, the 3 Ps. I will speak for about roughly 30 minutes and thereafter I will do a questions and answers session for the following 30 minutes. So, do feel free to think about the broad topics that I will raise, and do listen and scribble away, prepare your questions, and I will be happy to answer them after this speech ends.
6. Let’s start with economics. The foundational thinking of modern economics can be traced back to Adam Smith’s The Wealth of Nations, where he discussed concepts of market, supply and demand and interestingly some left-wing policies, on sharing and equality.
7. Adam Smith’s concepts were hailed, accepted and adopted to guide and explain the modern capitalist world that we know today. Prior to capitalism, the world was run mostly on feudalism with monarchies, where the supply of goods and services were dictated often by rulers and powerful landlords, and property rights were very limited. The industrial revolution then saw a period of big changes, wealth creation and unsustainable growth in the late 1800s up to the early 1900s. These changes brought sufferings too and gave rise to alternative thinkers such as Karl Marx, who challenged the concept and the goodness of the free market.
8. The economic and the political shifts that came with the industrial revolution created a lot of disruptions, in the same way that artificial intelligence is disrupting our modern world. Two World Wars, followed by great political and social changes, led to the dominance of two broad economic philosophies, one from John Maynard Keynes and the other from Hayek and Friedman.
9. What we are seeing today is the dominance of the neo-liberal economic ideology of Hayek and Friedman over the past 40 years. In the last decade or so, we are seeing a limited revival of Keynesian economics. So what we had from the 1950s to the late 1970s, post World War Two was broadly Keynesian economics, then from the 1980s onwards, the dominance of the neo-liberals.
10. Today, we are seeing the retreat of neo-liberalism and the limited revival of Keynesian economics. In the midst of all these activities, the question of a sustainable economic model has become supremely important. Since the Asian Financial Crisis of 1997, and subsequently the Global Financial Crisis of 2008, there has been a lot of questions about the sustainability of neo-liberal economic order.
11. Some believe that we have to go back to the 1950s up to the 1970s, where we saw higher level of equality in America and Europe. The Keynesian model of government intervention looks set for a revival when central banks intervened in the market via quantitative easings, post 2008.
12. However, I’m not certain whether this is the correct path. Can we go back to the past to resolve the future? I think a more nuance economic philosophy, a hybrid of neo-liberal and also Keynesian economics can give birth to a new, much more sustainable and resilient model.
13. In life, we live by the moment, as such we tend to be more negative because we see a lot of problems with no solutions. But economics today in the year 2020, is on uncharted territories where everything is still possible. Data analysis today is much more superior, data driven policy decisions on economics is more assured and at the same time smart machine learning can better predict economic models and outcomes. So basically we have far greater tools today to predict and prescribe economic problems than what we ever had in the past. This fact gives us hope of new solutions coming through; solutions to resolve fundamental issues of economic prosperity and growth.
14. Now let’s turn briefly to Malaysia. In Malaysia, we generally just follow the prevailing economic thinking. If the world liberalise, we are tempted to do the same. However, the prevailing model we have largely adopted since the 1980s has been the developmental state structure. Yet we do have many problems. We are grappling with whether we should liberalise or should we continue to protect our markets, and in particular the bumiputera policies. At the ground level, cost of living issues and low wages are real life challenging matters. When I was a young lawyer in the 1990s, I could afford a small car, and I could afford a down payment for a reasonable middle class apartment, and I could afford to eat out in Bangsar. My first pay was RM2,000, and that was in 1991. Today, young graduates also have very similar pay, starting at RM2,300 to RM 2,500. If you put in inflation in terms of wage value, and if you put in the cost of cars, food, housing you know that I was way better off back then, than you are today. Therefore, the current economic model is clearly not sustainable from my generation to your generation, and from your generation to the next generation.
15. I am a Gen X yuppie, the generation before me are known as the boomers, or baby boomers, they were born in the 50s to 60s, my generation I must say did better than the boomer generation but Gen Y has not done as well as us, and Gen Z which is you guys, is likely to be even worse off. Therefore, on the first pillar of sustainability, economics, it doesn’t look sustainable anymore for the next generations to come. But, as I have said earlier, advances in machine learning and data and coupled by awareness of the younger generation on social issues, I am reasonably confident that your “woke” generation will be able to find a solution.
16. Now, I talked about the great economic ideas earlier, but, all their fundamental assumptions of economics were then predicated on very basic rule of supply and demand of needs. That situation does not exist anymore in today’s world, as most of the needs have been met. We are now in the territory of the economics of wants, entertainment and frivolity, which needs new economic models to explain.
17. I would add that we also need a higher engagement and understanding on behavioural economics. A fundamental key driver to this situation is the supremacy and over reliance on fiat money, and fiat money has essentially created the globalised debt economy.
18. It sounds very negative, but after 2008, the implementation of a policy to creating money to cover upon existing debts, seems to have no real negative effect on the global economy at all. We could be entering a new type of economics where we could perpetually create more and more paper debts, but what we clearly need to do, is to stabilise that by implementing strict policies to evenly distribute the money that is created. In other words, the ability to create money seems unlimited but we must match it with a responsible system to distribute fairly that money. Only the, can we try to solve the most pressing global financial problems.
19. Now, I’m not an economic expert, nor do I profess to have any economics degree or diploma, but I like to think that I am a decent observer of things. I’m sure there are many smarter people are considering these issues. As long as clever people are thinking, I am happy to express that I am worried but not terribly negative, on economic sustainability.
20. Number two, environmental sustainability. This matter on the other hand, is much more worrying. While economics is about the creation and distribution of wealth, and the current wealth is disproportionately distributed in favour of the 1%, as opposed to the 99%, we could through distributive political means to bring it to a 30-70 split between the rich and the poor. But when it comes to environmental sustainability, there is an even more urgent call to dramatically stop global warming and prevent catastrophic climate change.
21. We as a planet, is hurtling towards a two degree Celsius increase in 10 years as predicted by all scientists and that is also based on an assumption that we do all we can now, to contain it at two degree increase. That means we have to quickly implement all the policies to meet the Paris Agreement targets now, in order to contain global warming of two degrees. If we don’t do it, and it doesn’t look like we’re likely to do it, then in 10 years, that global increase could be north of two degrees. I am not sure whether we can sustain a world without major disruptions in terms of socio-political conflicts, and even basic human survival if the temperature increases more than say, four degrees. So two degrees is going to happen, our job is to ensure four degrees and beyond does not happen.
22. So we have to do something about it, and that something is both political and technological. Political in the sense like Greta Thunberg, you have to protest fiercely about it, promote and refine the science, in fact perfect the science, and then push your politicians to do the right thing. In the Malaysian context, I have to admit that very few Members of Parliament are interested in the subject matter of climate change. Malaysia needs more environmental scientists and we need to really collate environmental data, and then find and identify solutions to combat global warming.
23. About 60% to 80% of global warming is caused by energy consumption. It Malaysia, it is 80%. I’m not saying that we should stop consuming energy, but one thing is clear, we cannot consume coal energy anymore and we should phase out of gas and oil, and we must quickly embrace alternative sustainable energy. Even nuclear as a last option will be better than coal. We must also plant a lot more trees, the world needs 1 trillion new trees, and we have to find a technological solution to capture carbon dioxide emission.
24. There are advances in the technology of carbon capture, but whether that we can build machines on such a big scale is another issue. But if we practice responsible politics, if we change the structure of energy consumption, we plant more trees, and we do pursue technological solutions, we can contain global warming. If we are being more holistic and less people centric, we should also do something about protecting the diversity of animals and the plants.
25. But human beings, in particular the politicians, are sadly selfish procrastinators. At this rate, we will be lucky to save half of the current flora and fauna in the world. But we should be able to save mankind. The youth, no matter what race, religion, gender you are, should act more on these environmental issues. We in Malaysia of course, gets the brunt of global scorn over oil palm. My view on oil palm, is that we have to do the maths and science and try to adopt a balanced position.
26. Since palm oil is a crucial sector in the Malaysian economy, let me address this issue, to illustrate that when economic interests and environmental concerns clash, things are not always going to be black and white. The world has 4.9 billion hectares of agriculture land and we have 7.3 billion people globally. Palm oil uses 27 million hectares of total agriculture land, roughly 0.55 %, but palm oil is also 5 to 8 times more productive per hectare in terms of vegetable oil production.
27. The elimination of palm oil from the global food chain will definitely result in 5 to 8 times more arable land, taken up to supply 7.3 billion people on cooking oil. The world will see quicker opening of arable land to plant soya bean, rape seed and sunflower in order to replace oil palm to feed the rising world population. Of course not all palm oil is used for food consumption but the above example gives you an illustration that the issue is not as simple as you think. By not consuming palm oil, you may think that you are saving the world. In actual fact, by not consuming palm oil, you will in fact help to destroy larger chunks of the world’s limited arable land even faster.
28. So, when dealing with solutions on environmental sustainability, there are clear moral things that we need to do, but we also need to understand the maths and the science and to look at the global big picture. The one thing that we need to do, is to overall consume less. Consume less of every single thing. Less food, less clothes, less things, less packaging. Unlimited and wasteful consumption is the big problem, the types of goods that we consume are part of that big problem. If you consume soya oil more than palm oil, you are still part of the problem. But if we all consume 20kg of oil per year, let’s try to consume 10kg, and make that 10k be the most sustainable oil.
29. Now, this argument may seem cynical and may seem counter intuitive, but when we talk about global warming and sustainable environment, we are looking at the sustainability and survival of mankind, first and foremost, not so much on the diversity and protection on the flora and fauna.
30. I still think that there can be solutions, there can be gives and takes, but time is also running out fast, we have roughly one decade left before we have to face dramatic changes. I hope that we can do something, more than a lot. On this front, I have been talking about the issue of carbon pricing for the last few years. Carbon pricing make consumers pay and when it hurts consumer pockets, consumers consume less and become more environmentally friendly. Money, a carbon tax ironically can help to tackle the basic human instincts of selfishness and greed. So while we hope, we must also take pragmatic policy actions such as carbon tax.
31. Lastly, I am going to talk about social sustainability. Social sustainability has many many aspects, but the most important is about equality and the sharing of wealth. In my office, we teach our interns concepts such as fractional banking, and that money can be printed and manufactured at will by both banks and governments. So, the ability to make money which was the very first point that I raised in the economic section of the 3 pillars, is very real. But the real value of that money after it is manufactured is a political decision, and that big decision is whether to distribute it to the rich or to distribute to the poor. What affects that decision making? Corruption and power in our political structure.
32. Sustainable social causes will need higher equality. No distribution to extreme, obscene lifestyles. We should not support a socio-economic system that helps tycoons to own a private jet, a yacht, 6 houses and in the Malaysian context, obscenely large pink diamonds, but instead we must move towards a greater share of the wealth like the Nordic countries, eliminating extreme poverty and eliminating incentives to create billionaires. Everybody should aim to have a good income of say RM10,000 a month, so that there is enough for us to share. It is not sustainable for Malaysia to have a minimum wage at the current rate of RM1,200 a month. It is also not sustainable for Malaysia to have super tycoons that do not pay a fair share of tax.
33. Therefore, social sustainability must come from a commitment to share more, we need to tax more progressively. Progressive taxation is the best tool that government can use to redistribute wealth.
34. The modern socio world is largely driven by technology. Technology needs to be realigned to make life simpler for everyone, to be democratised and given freely to all to enjoy the benefits and not to create techno-entrepreneur billionaires such as Mark Zuckerburg.
35. If you look at the coming US presidential election, very few of the candidates have talked about taxing the tech billionaires. And of course, one of my favourites, Elizabeth Warren is a strong campaigner on this issue. What she wants to do is to ensure social sustainability for the next generation, by tackling tax and tech.
36. I stress again that technology should be used to make our life simpler, it should never be used to entrench monopolies and create billionaires. At the heart of this issue of inequality is the issue of corruption and abuses of power. For Malaysia to be socially sustainable, we need to eliminate corruption and abuses of power, which still exists today, even in the New Malaysia, and create a society that is more transparent and accountable to make Malaysia socially more sustainable.
37. In conclusion, economically speaking, we need the government to understand the big picture, to comprehend and examine the global economic philosophical fight between the neo-liberals and Keynesian economists and be woke on what could be the future, advanced by machine learning, big data, and also new economic pragmatic theories out there. We must be in the know, do our bit and adjust our economies to the coming trends.
38. On the environmental front, we must concede some points on oil palm and re-engage the global community. We must stop deforesting for palm oil now. We can focus on making palm oil yield much better. We must do more research on increasing palm oil yield without increasing any more land to plant them.
39. On social sustainability, the youths have to put responsible non corrupt people into power that will fight for greater equality. Use social media. We have to treat our poorest Malaysians much better. We must implement a higher minimum wage, which was proposed at RM1,500 per month as per the Buku Harapan. And we must progressively tax the billionaires. And lastly, the government has to be more accountable and transparent.
40. With those few points, I hope that I have managed to get you a bit more interested in the big picture regarding sustainability. Profits, planet and people, the topic of your forum today. I look forward to answering your questions in the next 30 minutes.
41. Thank you very much