COMMENT Of late, certain quarters are propagating that economic freedom leads to political freedom. In order to answer this, we need to define ‘freedom’ and give it the proper context.

For many, freedom is equated with choice whereby the ability to choose without condition is every human’s basic right. This right to choose is also the crux of democracy.

Therefore, when we say economic freedom, we are saying it is as a means for people to choose their economic choices without conditions - what kind of job one wants to be employed in, the means of how to pay off our debts, how we wish to spend our money and what products to purchase, among others.

Ultimately, economic freedom is evident only by the economic health of a country, and the economic health of Malaysia is under threat. Why do we say it is under threat?

As of Jan 20, 2017, Malaysia’s international reserves dipped by US$300 million from US$94.6 Billion to US$94.3 Billion. Meanwhile, the US dollar to ringgit exchange rate has increased from 1US$ = RM4.2 in October 2016 to US$1 = RM4.55 as of Jan 20, 2017.

Although gross domestic product (GDP) growth remains relatively stable and per capita income has increased over the years, these numbers do not take into account the effect of inflation, growing wealth inequality and a rising cost of living to individual economic freedoms.

No doubt the causes for these are as much external as they are internal. But to deny the internal causes for the declining economic health is to disregard the fundamentals that propelled us to be among the Top 20 trading nations in the world in the 1980s and now ranked at 23.

For it is these same fundamentals that buffered the shocks to our economy from fluxes in the world economy while maintaining our position. The same fundamentals that are being eroded through recent economic policies that saw our rank drop to the 23rd largest trading nation, out of the Top 20, only recently.

Among others, these policies have also caused limitations on employment and incapacitated people’s ability to service increasing household debt. We can safely say that such limitations are evidence of the decline in the economic freedoms of our people.

By the same token that economic freedom allows freedom to make economic decisions, political freedom allows freedom to exercise a political will but is constrained by the political ideology and system subscribed to.

Ultimately the political freedom to choose a nation’s political ideology and system is what determines the extent to which the people are free to make economic and political choices.

Why is political freedom a determinant of economic freedom? Only because politics gives the power to organise, administer and influence a country’s resources typically used for economic purposes. In standard economic models, government is always a determinant of economic spending and growth.

It thus bears to revisit the political systems in operation today and remind ourselves of which system we are heading towards.

On one end of the spectrum, we have extractive political systems wherein a few of the elites control the political foundations and institutions with few constraints or opposing forces.

These elites structure political and economic institutions which almost always lead to the elites enriching the elites, at the expense of the rest of the population. This is where you will see a massive wealth inequality in society.

On the opposite end, inclusive political systems are forged on foundations laid by inclusive political institutions. When we say inclusive, it means it is inclusive of the society’s choices at large.

In Malaysia’s case, we fancy ourselves as a democracy wherein our Federal Constitution also explicitly ensures inclusivity and distributes power to society via our four branches of government - the Executive, the Monarchy, the Parliament and the Judiciary.

This system is enjoined to prevent concentration and exploitation of power or wealth among a few elites as in an extractive political system. It is also designed to protect the people’s political and economic freedoms.

However, what we are seeing today is a trend where the Executive branch seems to forget its place and is gradually absorbing the powers of the Monarchy, the Parliament and the Judiciary through political means and thus monopolising the economic policies and decisions of the country.