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I refer to your report M'sia has worst income disparity in SEA, gov't flayed .

When it comes to income gaps, the assumption seems to be that the government somehow caused it. The truth is, widening income gaps in any growing economy are almost unavoidable. Every economist will tell you that in history, no free market economy has ever grown with income disparities being reduced.

The reasons why persistent income disparities exist are actually complex. In simple terms, as the economic pie becomes bigger, successful economic effort gets rewarded more. So those who are successful, get a much higher income.

However, it does not mean that the rich get richer and the poor get poorer. The one saving grace of aa free market economy is that it consistently changes which in turn means that it is actually very difficult to stay rich consistently.

For those that comes from a poor background, the situation seems almost impossible as their rich neighbours only seem to keep on being rich. This is because the rich are always fewer in number while the poor are many. It does take time for the pool of rich to change but it consistently does, if the economy is free.

While income disparities are glaring, it's not a real problem unless those that are in the rich segment do not circulate. The Malaysian problem is that rich do become richer. And because of the political system, the players are the same.

What the government needs to do is to enforce a policy that guarantees there will be dynamic changes at the top levels. In some respects, this is has been proven by the rise of our prime minister and his people but in some ways this also signals a perpetuation of the same.

In other words, Umno is the reason why both the rich get richer and the rich pool gets circulated. The danger is if the latter gives way to the former leading ultimately to the failure of the NEP.


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