Drop in FDI and the race to the bottom

In recent days, we have heard much public concern about the drop in Foreign Direct Investment (FDI) in Malaysia. Sure, we have our own set of problems such as serious corruption, lack of transparency and not-that-great governance. But investors especially labour-intensive manufacturers invariably invest in countries where wages are lower, all other things being more or less equal. The moment infrastructure in low-wage countries and political stability improves a bit, then you will find investors heading there. Maybe that explains why Malaysia drew less investments than the Philippines in 2009 for the first time.

Should we be surprised? Some clues may be found in the United States, that supposed bastion of free trade. There is a growing body of statistics there to suggest that the rich are getting richer while the poor are getting poorer. “Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace,” says Michael Snyder, who wrote an article for Business Insider published on the Yahoo! Finance web portal. Synder says the prevailing economic system there is gradually wiping out the American middle- class.

He cites a string of statistics to back up his assertion: 83 per cent of all US stocks are in the hands of 1 per cent of the people and 66 per cent of the income growth between 2001 and 2007 went to the top 1 per cent of all Americans. On the other hand, “a staggering 43 per cent of Americans have less than $10,000 saved up for retirement”. What’s more, the bottom 50 per cent of income earners own less than 1 per cent of the nation’s wealth. Perhaps most telling is his observation that the gap between executive salaries and workers’ wages has widened. “In 1950, the ratio of the average executive’s income to the average worker’s wages was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.” We can see evidence of that happening here as well.

The gap between top management’s salaries and ordinary production workers has widened over the last two decades in Malaysia. In the late 1980s, a production operator may have earned RM300 and a senior manager could have earned RM6,000 per month in basic income, making that a gap of RM5,700. Now, tell me, what is the gap today in their wages? Easily double that? Or triple? Is this the result of the neo-liberal capitalist system that rewards greed and squeezes workers over time? This is the same system that encourages private health care and undermines public health care (the latest example being the plans to undermine or ‘privatise’ the National Health Service under the new Tory-Lib Dem coalition government, as reported in the Guardian). We can see its manifestation here in Malaysia in the proliferation of private hospitals that cater to the wealthy. But what if there are not enough wealthy patients around to boost the profits of these private hospitals? Why, we will import medical tourists!

The same thing is happening in housing. Developers are more interested in building expensive “country houses” and luxury condominiums for the wealthy. But what if there are not enough wealthy Malaysians to buy these properties? Why, they are sold to foreign investors and speculators. So, what happens to the low-income workers struggling to buy homes of their own? They are struck in pigeon-hole apartments in flats that are invariably not well maintained. This system based on greed and profits has led us to multiple crises that are now erupting all over: we have an economic and financial crises, now culminating in an environmental crisis (global warming, the BP oil spill), an energy crisis and even a looming water and food crisis.

How different all this is from the New Testament vision of a sharing of resources and looking out for the needs of those in the community. Sometimes I wonder what Jesus would have made of a health care system where the rich have access to prompt and top quality health care while the rest have to contend with waiting in long queues in under-funded public hospitals? Remember, this is the Jesus who healed the poor and the outcasts in the countryside by the hundreds, even thousands. It reached a stage that they had to lower patients through the roof-tops to get past the crowds. This is the same Jesus who emphasised distributive justice and whose first followers practised community solidarity — so that no one may go away hungry or sick.

This is the same Jesus whose early followers practised and encouraged communal shared meals, in which social disparities were bridged and where all were one in Christ without distinction. Even patronage at these meals by the wealthy was discouraged. What would this Jesus make of the growing disparities in our world today?

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