This article first appeared in Forum, The Edge Malaysia Weekly on April 3, 2023 - April 9, 2023

Mariana Mazzucato’s latest book, co-authored with Rosie Collington, has an eye-catching title — The Big Con: How the consulting industry weakens our businesses, infantilises our governments, and warps our economies. The University College London economist, whose earlier book, The Entrepreneurial State, advocated the role of government in advancing major innovations, lamented in her new work the reliance of governments on consultants in the last few decades. The subtitle of the book clearly spells out how that reliance has weakened governments, and therefore undermined their potential to be entrepreneurial and innovative in the face of the challenges we face today.

The book looked behind the curtains at the relationships and the influence of big consulting firms on decisions taken by governments, under the pretext that they are neutral and objective sources of expertise during a period that saw governments outsourcing not just their “thinking” but also their “doing” in the attempt to be “business-friendly”. The juxtaposition is always that of an incapable government relying on the capable private sector for economic growth and solving problems, hence the conclusion that such a perspective infantilises governments. I find that description to be apt, one that is true in many dimensions.

The Big Con looks at the way the British government responded to the Covid-19 pandemic as a case study. The National Health Service (NHS) was sidelined in favour of private parties in its tracing and testing programme, where billions in public funds were spent without much to show for it. The parts of government that actually have real competencies and experience to do things were sidelined in favour of private parties — big consultancies — with neither the competency nor the experience. That is the “big con”, a con that weakens governments.

We in Malaysia are well reminded of the MySejahtera fiasco during the Covid-19 pandemic. The tracking and tracing software could have easily been developed by the public sector at no additional cost to the government, given the capabilities within the various parts of the public sector. The Public Accounts Committee report at the end of last year instead revealed that the cabinet eventually authorised an allocation of RM196 million to pay a private party for MySejahtera. In our case, it was not some big global consultancy but a small unknown company that supposedly — initially — developed it as a corporate social responsibility project that which eventually became something akin to a directly negotiated procurement of services by the government. It was mind-boggling in its audacity. The minister then, however, took pride that the RM196 million ceiling was less than the RM300 million sought by the private party. Indeed, he said, it was less than what was paid by the UK government for the same thing!

In the end, MySejahtera became what has happened to many government initiatives — a one-off, specific solution that does not build new capabilities. Despite paying for it, it is not a sticky thing, a thing that can be used for other purposes, a capability within the government that can be used to improve overall governing. A public good of sorts. Yes, there should be rigorous conceptualisation of any solution to a problem, but the real learning and growth take place in the doing. Nothing beats doing, but it is futile if there is no growth and learning by doing. There certainly will not be any learning if we just pay others to do what needs doing.

It is true that the public sector is wanting in many ways. There is much discussion about issues of integrity and corruption within the public sector, but I dare say there is a much larger problem of competency. The technical government departments, from health to engineering, remain competent and indeed represent a big part of national competencies in those areas, but the general administrative part of government, including the supposedly elite administrative and diplomatic service, could be much more competent. In particular, central agencies such as the Treasury and Economic Planning Unit, key economic agencies, are manned by these general administrative officers instead of technical specialists found in health or public works departments.

These central agencies need technical specialists — from accountants to public finance and tax experts to those with various specialities in economics — which require specific in-depth training. They cannot just be general administrative officers with exposure to these areas. They will not have the required depth and technical competency. These shortcomings are, however, a reflection of poor organisational design and poor leadership in the public service. It is not an inherent problem, not something that cannot be remedied and certainly not a reason to infantilise the public service.

Public sector reform, however, is made difficult because of politics, which has been infantilised even more than the public service. It was both politics and poor leadership that have resulted in the public service becoming predominantly Malay or bumiputera, making any attempt at public sector reform being seen through the racial-religious lens; a critic of the public service as a critic of the Malays and Islam since these have been conflated. That is how politics has been infantilised, that is how the Malays have been infantilised, to be ever protected by these pretenders, claiming to be their custodians while furthering their own personal interests.

So, what we have is therefore a private sector that feeds on this weak eco-system defined by an infantilised public sector and politics. That infantilised them as well. The private sector too has lost its innovativeness and competitive edge. In that sense, Mazzucato is right; the whole thing eventually warps our economy. It infantilises the government, it weakens businesses and eventually warps the economy. The country has to get out of this warped existence. The public sector needs to be reformed and the private sector needs to regain its animal spirits. The economy certainly needs fiscal policy to be more efficient and effective and private investments as a percentage of gross domestic product to be much higher. We need a better production function for the economy, which will be possible only with more investments in better and newer things.

The Gordian knot of the Malaysian conundrum is its politics — its toxic and infantile politics. Listening to some of the speeches in parliament provides ample evidence of this. Unfortunately, the political Gordian knot cannot be cut in one swoop. It requires a mature collective disposition that itself is a challenge, one that does not forsake the right directional change because of its imperfections. Time is a necessary, if not a sufficient, condition to effect change.

We should have the maturity to agree on the fundamentals of what should be prioritised, overall imperfections notwithstanding, as long as the knot is loosened progressively. Let me propose five areas that we should agree on:

• That governance should be improved; from passing legislation to effect parliamentary reforms, making political funding more transparent, separating the roles of the attorney-general to better manage hate speech while preserving the freedom of the press. The legislative agenda should focus on these;

• Addressing inequality as a central focus, be it at the household level or in the business sector, by prioritising public resources to the provision of an effective safety net and levelling the playing field for those on the lower end of the spectrum. We must prevent the emergence of a sizeable permanent underclass. This requires hard choices on the prioritisation of spending and use of taxation;

• Reforming the public sector; improve competency in its policymaking and regulatory roles and delivery of public programmes, and to have greater accountability in managing public resources via new procedures and legislation. The Fiscal Responsibility Act is one such initiative;

• Redefining public-private partnership by sharpening, not blurring, their respective roles, or making the public sector subservient, in achieving common national goals. We have to move away from socialising costs and privatising gains in this relationship; and

• The third sector, civil society organisations and the non-profit sector, is an important sector whose roles in all spheres of life, in the social and economic life of communities in the country, will need to be broadened in the light of the severe fiscal constraints. Therefore, policy and regulations including taxation policy will need to be supportive of this development objective.

Reasonable Malaysians who do not agree with each other can perhaps agree on these, and that the government and the legislative body should focus on these initiatives. Let us stop this endless dumbing-down of everything and end infantilism.

Dr Nungsari A Radhi is an economist

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