I was an undergraduate [then], he was a graduate student, yes. But he is actually my age [born in 1952]. He was a very young graduate student.

At Yale [yes], we were very good friends but I've lost touch with him... I became very closely associated with the Economic Growth Center at Yale.

From the first summer, I was working there as a research assistant. So I spent much of my time there and when he came in as a graduate student, I got to know him and we were in study groups together.

Well, my second name is Ghanaian. I was named after the first president of Ghana [Dr Kwame Nkrumah], for whom he worked. After he graduated from MIT [Massachusetts Institute of Technology], he went to work for the Ghanaian government for a while.
Ghanaian names are names of the day you were born... Actually [laughs], I'm misnamed in that sense... So, I have a little affinity with him and when he came to Malaysia several years ago, I did meet him very briefly.

I think "Kwame" is born on Saturday. I was born on Thursday, I think, if my mother got it right but I can't remember [laughs]. Do you remember the day you were born?

You see, you have a situation in politics, ostensibly, it's one person, one vote. In a conglomerate, it's one dollar, one vote in the economy. Now, I mean, this is a crude caricature, but this obviously means that democracy tends to be undermined by economic inequality.

There are all kinds of ways in which you can think about what the implications are. One obvious way, which is very, very important, is in the governance of the international monetary institutions.

Only one country has veto power in the IMF, that's the US, and it has come about because of the way the IMF was created in the US in 1944, and so on and so forth.
Now, if you think about life in society and you think about the phenomenon which people sometimes alternatively call "cronyism" or "social capital" -- what does it mean?

People who have access to the powers-that-be actually are able to influence policymaking in ways which ordinary mortals simply cannot. So these are some of the challenges I think which are faced ...

Let's deal with rent-seeking first because it's a term which has pejorative implications but is used very un-analytically in popular discussions. Rent-seeking is often a code word or a surrogate term for bribery, corruption, something like that.

Actually, when you think about rent, and if one is an economist, and you recognise that society for the last few centuries is not characterised by what economists fantasise as perfect competition...

Once you have imperfect competition, you have rents. The question is, how do you get those rents to enhance the quality of life in society rather than to undermine and become wasteful.

So, for example, when you approve of a rent, you call it an incentive. You want investors to do something, you provide them with an incentive, that's a rent. And they make more money precisely because you give them that incentive, whether it's a tax break or a locational incentive... These are all rents.

But when you disapprove of it, you start calling it a rent. That's not very helpful. You have to analyse and look at certain situations ... I mean, we're never going to achieve perfect competition, and it's not as if moving in that direction is necessarily going to improve the quality of life.

So, what we need to do is to recognise that rents exist, to eliminate those rents which do not have beneficial effects on society, and to make sure that those rents which may have beneficial effects on society are deployed with the minimum of waste and used to enhance the quality of life.

Now, coming back to your second point about affirmative action, I think what we find now is an increasing recognition that people have been disadvantaged for all kinds of reasons.

Women are disadvantaged because of their gender. There are people who are located in certain parts of the country or certain countries... These are all almost accidental or sometimes deliberate, but certainly cannot be justified.

So we do not have a level playing field. Let's not pretend we have a level playing field. Moving towards a level playing field may help, but it does not rectify or address historical differences, which need to be addressed.

So there is a need, very often, to ensure that historical differences are addressed through affirmative action policies. For example, preferential policies to hire more women perhaps, or people from marginalised ethnic groups, and so on and so forth.
But there are also different ways of going about it. Let me give you two very simple examples.

You can have a situation where you educate everybody and you especially educate people who have historically been neglected.

For example, women may have been neglected in some societies where there's discrimination against education for girls. Or, people in rural areas may have been discriminated against because facilities for schooling are less.

So you make a special effort to rectify that and that has certain types of consequences in terms of improving the quality of human resources and improving the life chances of the people involved.

Take a woman, for example... Wealth may be unequally distributed. Maybe 90% of the wealth is held by men. And you give that woman, for instance, half the wealth in society. How it helps the rest of the women in society is not obvious, right?

So, there's affirmative action, and there's affirmative action. With, for example, educational intervention, or health intervention, you actually reach a far broader range of people to improve their life chances and they in turn contribute much more to society.

Whereas if you simply make a transfer to a particular individual, or a group of individuals, true, statistically, you might end up with a situation where women own half the wealth in society, for instance.

But it doesn't necessarily mean that women on the whole are better off. So, I think we have to get away from the sort of simple-minded "Yes, affirmative action" or "No affirmative action" and get into looking very carefully at different policies and their implications.

Oh, I'm sure that, with the benefit of hindsight, there are many things you could have done much better, more effectively... There are many things one can do much better but as far as the ethical, the moral basis, for those analyses are concerned, I have no regrets.

And I would reiterate those concerns and in fact, over the last decade-and-a-half or so, I've worked increasingly on international issues because to me, the problems are not simply problems within, say, Malaysian society... I've also raised the issues internationally, and very often, [they have] not been terribly welcomed.

There's a very controversial political scientist named Chalmers Johnson, who spent most of his career teaching at the University of California in Berkeley.

He's probably one of the most prolific and arguably one of the most influential political scientists of the late 20th century. He was offered a professorship at Harvard and he turned it down.

He said he believed he was committed to public education and he moved from the University of California in Berkeley to the University of California in San Diego. And then, he was disillusioned by the way the school he was involved in setting up was going and he quit as a matter of principle.

Now, I've never had the luxury of quitting and doing things on my own. So, I would certainly see my preferences as much more modest than what he has done.
But I do think that insofar as there are certain ethics in society, you know, one has to walk the talk, so to speak. I mean, you can't set up double standards and talk so much about doing certain things and then...

Of course in many societies, public universities are so poorly funded, the resources are terrible, and I can understand why people do not remain in public universities. But I do think that the real challenge is to improve the conditions in public universities rather than to abandon them.

I joined UKM [Universiti Kebangsaan Malaysia] actually, again by choice. I could have easily continued to work in Penang at USM [Universiti Sains Malaysia].

But I chose to work at UKM, at that time a very new university, committed to using Malay as the national language in 1977. And then in 1982, I transferred to UM. So, I've been there since, for almost 23 years... I retired at the end of [November. This interview was conducted on Nov 21].

Actually [smiles]... I miss Mahathir.

I think he was wrong on many things but he was willing to speak up on a number of issues, not always correctly, not always bearing the national interest in mind.
But in an age when there is so much pressure to conform to basically what is dictated by the powers-that-be at the international level, his willingness to speak up, I think, was very much appreciated.

Not particularly in Malaysia but internationally, I think, especially in many parts of the developing world.

I mean, an example would be France in international affairs today. Most people can't stand [President Jacques] Chirac but the fact that he is willing to dissent on a number of issues, is something which has made people sort of appreciate him.

And Mahathir was one of those who were articulate and able to command that attention. Other more serious and more careful critics, say like [Cuban President Fidel] Castro for example, simply did not have that kind of stage available.

So, in that sense, Mahathir carved a certain niche for himself... Unfortunately, he was sullied by the cronies and sycophants around him and so on and so forth. And especially for Malaysians who were much more aware of this, there was a great deal of resentment.

But I think we would be throwing the baby out with the bath water if we did not recognise his positive contributions.

Internationally, yes. Certainly. Who else is there?

I think the present regime, understandably, feels it needs to get away from the kinds of controversies Mahathir got himself into. Often, many of the things Mahathir said were either ill-advised, ill-informed, and often not very productive [or] constructive.

I'm not endorsing everything Mahathir said, by any means, but this desire to be acceptable, you know, we are back to business as normal, that kind of thing, is actually not particularly helpful. It's not very helpful particularly in the international fora.
We're now so back into keeping up with the Joneses, "Oh, Singapore has an FTA, we must also have an FTA", that kind of thing. That, I don't think is a particularly useful way [in which] to proceed.