There are hopes or windows of opportunity amid the crisis

AFTER the annus horribilis that was 2008, financial markets seem determined to start the year on a brighter footing.

In Asia, bourses have strung together a week of mostly rises, while in Europe, the expectation is for a significant easing of short-term money market liquidity and interest rates.

No one would seriously be thinking that the end to our economic troubles is anywhere in sight. The news streaming out of financial capitals is still unmitigatingly bleak.

The latest titbit to catch my attention was that the crash of New York’s unemployment claims computer system due to the overwhelming demands placed on it. My heart really went out to the poor snow-bound claimants.

Another was the suicide of the world’s 94th richest man, German billionaire, Adolf Merckle, who, among other things, took the wrong side of a very big stock trade. The rich obviously have different ideas about economic hardship from the rest of us.

Still, the idea that one should start the year with optimism and look for bright spots on an otherwise black canvas is a good one. One might equally ask what the bright spots on the Malaysian canvas are. Are there positives in the midst of the looming economic crisis?

There are most certainly positives although they could equally be considered hopes or windows of opportunity. I can think of three.

First, economic crises are a great opportunity for us to put aside our differences and work towards the common good.

Coming at a time when Malaysia is as ethnically and religiously polarised as ever, this can be a significant positive. After all, when a group of people has fallen into a deep hole, it is idiotic to quibble over race and religion or anything else when trying to find a way to climb out.

There is, of course, always the danger of gutter politics. This is politics that plays on our most elemental fears and exploits the most self-serving of interests.

It is a great pity that the political system, instead of penalising racists and religionists of every stripe and colour, actually seems to reward them. But that is another story.

It is my hope that the economic crisis does not slam us to the pavement. If it does, however, the logical choices are either to fight it together or, if possible, to flee separately. I, for one, am opting for the former.

Another bright spot of economic crises is that they force us to become more realistic and pragmatic.

Over time, human societies tend to become muddle-headed and complacent. We start to take economic growth and prosperity as a given. Worse, we start to develop fanciful ideas about we can achieve and what we are capable of.

This is when all kinds of grandiose and unproductive schemes leap from the drawing board. In the name of national pride, some countries today (which shall remain unnamed) have constructed some of the world’s tallest and most technologically sophisticated ghost towns.

The countries today that have broken through the so-called “middle-income trap” have kept their noses to the collective grindstone. They have largely declined ostentatious displays of wealth, at least relative to their growing piles of cash.

More than anything, they work feverishly to gather economic intelligence and position themselves to exploit and benefit from it. They do not, as seems to be a habit here, work until dinner devising another expensive plan or policy that will largely remain unimplemented and, in many cases, even unknown.

Economic crises should compel us to vigorously dispense with bureaucratic red-tape, appreciate those who are knowledgeable and capable and hold those who do not perform accountable.

The third and final positive is that the financial crisis on the doorstep promises to correct the yawning gap in relative incomes.

One of the reasons why this economic crisis is being acutely felt is that the economic growth of the past decade has been accompanied by increasing income disparities. The difference between blue collar and white collar pay is at a historic high.

In Malaysia, the bottom 40% of households earns much less than 20% of total income in a year. By contrast, the top 20% of households earns a little more than half.

It is perverse to welcome an economic crisis because it makes the rich poorer because it also hurts the poor.

Democratically-responsive countries, however, would use the opportunity to address equity issues and ensure that economic growth and prosperity are not only for the elite.

The richest and most dynamic countries in the world are not necessarily those with the lowest tax rates or the smallest governments. They are the most socially cohesive and best governed. If the economic crisis can shepherd Malaysia in this direction, it may not be as bad as it turns out.

Steven Wong is assistant director general of the Institute of Strategic and International Studies (ISIS) Malaysia responsible for the bureau of economic policy studies.