Former Malaysian PM Mahathir Mohamad Speech at Future of Asia Conference
Saturday, May 26, 2012
Tokyo- (PanOrient News) The following is the full text of the speech given by former Malaysian Prime Minister Mahathir bin Mohamad at the annual Future of Asia conference held in Tokyo Friday, May 25, 2012.
Dr. Mahathir talked about how their pursuit for easy money and luxurious lifestyles led America and Europe to actions that created the current global economic turmoil in the West. He also pointed out how it was time for Asians to work together and become a model for change.
Ladies and Gentleman,
Firstly, I would like to thank Nikkei for organizing this conference on the Future of Asia, for this invitation to speak on Asia’s Rule in the Tumultuous world in Search of a New Growth Model.
Yes, we are living in a tumultuous world. But it must be obvious that the Tumult is largely in America and in Europe.
Asia is considerably more stable and is doing relatively well. In fact, much of the world's economic growth is due to China, Korea, India and Southeast Asia.
Why so? Clearly, something is wrong with the management of finances and economies of America and Europe.
Asian countries seem to manage their economies and finances somewhat better.
Despite the belief in contagion in the economic disease of countries infecting others, the disease of the European countries has not spread that much to Asian countries.
And this, despite Asian countries having been quite dependent on the European and American markets for ideas, systems and ideologies.
Western countries, the proponents of capitalism and the free market, are in trouble, because of trying to live in the style they were used to, when their empires straddled the world. When the world needs manufactured products were met by them exclusively., when they had a monopoly of trade and shipping.
After WW2, the eastern countries industrialized and begin to push western manufactured goods off the world markets. Eastern manufacturers achieved high quality at low cost.
Unable to compete, the west retreated into the financial markets. They invented new financial products which could give easy money to them and so sustain their growth.
Their GDP and per capita income continued to grow and they appeared to be doing well.
Convinced that the financial business was the answer to their ouster from the manufactured goods' markets, they continued their profligate ways. They kept on increasing wages which were already high despite low productivity.
They gave themselves more holidays, awarded big bonuses, irrespective of profits at times doubling the pay, they ordered generous pensions and early retirement, shorter working hours, unemployment and medical benefits and various other perks.
All these increase their costs and rendered their products even less competitive. But they appear to be doing well and continued to indulge in high spending and a high standard of living.
The value of the companies reflects neither their assets nor their profitability.
Yet, they are acquired at many times their value or are merged, leveraging enables huge sums to be paid for these acquisitions. Business is no longer about producing and selling goods. But is about buying and selling companies and corporations.
In the financial markets, all kinds of products were created, designed for easy profits. Short selling, which started with shares was expanded to include commodities and currencies.
Banks gave out much more loans than warranted by their capital and deposits. Loans totaling billions were given indiscriminately including to clients with no capacity to pay back. These loans were bundled and placed with mortgage and insurance companies to secure them.
Leveraging also enabled hedge funds to borrow and invest huge sums of money. Sometimes as much as 30 times the amount invested with them. Liquidity seemed limitless and vast amounts of money seemed always to be available.
Currency trading, for example, are said to total 4 trillion dollars a day, equal to Germany’s total productivity in one year. All kinds of risks were sold for high returns.
The products were so mysterious that investors know very little about them, or how the hedge funds make money and give such high returns.
The belief in banks and funds being too big to fail, assured investors and players that they would not fail. The government just could not allow them to fail as their failure would bring the whole economy and finances of the country down.
The poorer western countries also tried to live in grand style like those who were well off. They borrowed huge sums of money to finance their deficits. Eventually they defaulted and rescue operations had to be mounted to save them from bankruptcy.
All these financial businesses create practically no jobs, hardly any spin offs into small businesses, no trading of goods and no requirement for transportation.
All that happens is that figures in bankbooks move from one account to another electronically. But eventually, what was believed to be too big to fail, suddenly failed.
It appeared to begin with the subprime loans, but the other financial businesses were also beginning to fail and except that criminal cover-ups delayed the collapse.
All these while the west demanded the best remained hooked on the idea of military power and world hegemony. They have not noticed that victors in war do not prosper.
The victories are hollow as occupying through its troops failed to police the vanquished.
With the development of long range missiles, expensive foreign bases give no particular advantage. The trillions spent on research development and deployment of new weapons adds to the financial deficits in the west.
Yet in most instances these weapons including arsenals of nuclear warheads cannot be used.
And so the west plunged into a financial crisis of unprecedented scale.
Although in Asia a few countries tried to indulge in financial gambling by and large they stick to the real business of producing and selling goods, and supplying needed services.
As a result, they are much less affected by the crisis facing the world today. All that affected them is the loss of much of the lucrative markets in America and in Europe.
What then should be the rule of Asia?
Basically, it is to prove that financial market gambling is counter-productive, that the money earned is not real. That sooner rather than later, the system will collapse with disastrous consequences.
To prove that the Asian model is more positive, Asian countries must work more closely together.
The cooperation should not take the form of a union, like the European Union. It should at least initially form a loose economic community wherein countries help each other to prosper.
While it should not have an Asian currency common for all countries like the Euro, it should have a stable trading currency with which whole trading should be transacted.
The goods should be valued and priced in this trading currency in order to increase intra-Asian trade.
The community should also mean to tackle disputes and to formulate a common approach in dealing with the structures and practices for international trade. It should also help to reduce tensions between members.
Malaysia had learned much from Japan, and also from South Korea under the Look East policy. It is the clean and work ethics of Asia, which contribute most towards growth and development.
Asia should, therefore, promote the Asian system and work ethics to Asian countries and to the rest of the world.
One lessen that Japan can contribute is forswearing war as a solution to conflicts.
War is about killing people and Killing people is a crime. War is a rather primitive way to settle disputes or to promote national policies.
Modern wars invariably failed to attain the objectives they are fought for.
The idea of a war to end wars ensure nonsense. Nor is a humanitarian war logical. This is in fact a contradiction in terms.
In the promotion of Asian system’s and ideas, the road should be through negotiation, arbitration, and resort to a code of law. Forcing acceptance of any system, however good, must never be allowed.
Certainly wars to promote ideologies or system should be outlawed. Asia should lead the world in the peaceful settlement of disputes.
Confrontations, and settlements and belligerent policies such as sanctions should be avoided at all coasts. We should learn from mistakes of history.
But we should not allow historical enmities to undermine peaceful cooperation. Growth cannot be attained by economic measures alone. Peace and stability will be needed, so will a good monetary and financial system.
It is time that Asia takes the initiative to convene a new Breton Woods, and to device a new monetary and financial system. It is time Asia backs a democratic united nations.
Clearly Asia initiative can play a leading rule, in the shaping of a new model of economy and political system for prospering the world. We should not seek absolute uniformity suffice it if general principle are adopted by all.
Now all this needed is Asian will.
I thank you.
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