Sunday, May 15, 2016

Brexit: Frame of Argument

I am interested in this topic, so why not - I'll make some comments.

Each side is making their arguments within their own frames and those frames do not intersect.

1. The Leave group is arguing for the preservation of soverignty of the UK which they do not want to be superceded by the EU. They are not arguing that they will have nothing to do with the EU. They can still engage as closely as they can with the EU as they can with other sovereign nations. It does not mean that they do not welcome immigration, but they want immigration to be controlled by the UK authorities not the EU. They welcome EU investments and they can create incentives for them in the UK's own terms, not as the EU dictates. They want to have their own fiscal and monetary policies which are tailored to the needs of the UK economy, not the EU policies which may be good for the EU as a whole but may not be good for every nations in the EU.

2. The In group is arguing that the UK has been doing well because of the size of the common market in the EU, not just for agriculture but for everything - although in fact the UK agriculture is not quite dead as it cannot compete with the imports from the EU. The argument is that if the UK were to leave the EU, it is likely that the UK will enter into a recession, presumably because the EU will then not welcome UK imports - not because the UK will not want to export or be able to compete with the EU. There is an implied threat from the EU. There may be a reduction in the amount of investments because there will be greater scrutiny of investment proposals. The argument seems also to be that by leaving the EU, the UK will not be welcoming immigrants from the EU and therefore the economy will slow down because it will not have enough workers and that wages will go up and investments will be dampened. It is conceivable that there will be fewer immigrants with UK leaving than UK staying in the EU, but it may mean fewer unskilled workers for menial jobs in restaurants and other services in major UK cities. It may also mean lesser pressures on public services and public housing, etc. The reducation may lead to an improvement of the quality of life of the people in the UK, although they may now have to learn to do their own plumbing, minor repair works, etc.

The reality is that maybe the UK is already on the verge of entering recession just like every other advanced economies in the West as China slows down. Of course, it does not help if the Leave option creates greater market uncertainty as hence a reduction in business investments. The Tata Steel there is in trouble for example and will retrench workers if revived by another party. Things may not be rosy in the coming months. They are not likely to be caused by leaving the EU, although leaving may make a bad situation worse.

Indeed, the Govenor of the Bank of England has overstepped his role by adding the voices of the opposition to leaving. The job of the central bank is to stabilise the financial system whatever the economy. Mark Carney argued that he is only doing his job - the way he sees his job to be, which is to provide comments to the market on what the central bank sees to be the short-term conditions of the economy - which usually provides clues to the market how the central bank will react and hence the market will take pre-amptive actions to counter-act the expected actions of the central bank. But in this case, the governor merely provides an opinion of a possibility and has not offered any clue as to how the central bank will react. The implied scenario from the government is that money will flow out, as investments withdraw, not as less investments will flow in, and hence interest rates will rise and this will be costly for mortgages, I think the IMF is also off kilter.

O course, there are risks involved in taking either step - in or out. The proper debate is to focus on the risks and benefits and try to debate on their quantum. Not everyone is stupid and could not grasp the challenges. There are issues of national pride which citizens rightly are willing to pay a price for, some even with their own lives as recent wars had proven. On top of that, the British can think they can do better than the Europeans, which is not something to be dismissed. I think it is a silly argument just to rest the whole argument on the point of the economies of scale.

In the end, the EU is a political not an economic argument. The idea arose from the question of what is Europe - which led to the quest to create a European identity to which the US can identify with - as an ally during war - rather than having to deal with so many soverign states, they just have to deal with Brussels.

Wednesday, May 11, 2016


Politics is an unsavory topic for me.

The truth about politics is that there is no truth in it. Politics contains only one's own ambitions and intentions concerning power. One pretends to use that power for the public good when deep inside, one knows it is for one's own personal pride, gain or vanity. The less politicians talk about themselves the better it is for everyone.

The problem with politics is this constant battle between the social good and personal gain. It is easy before one has the power to pretend that one is benevolent, and always will be. After having just got the power, one will try to make good the promises one has made and will most often find them impossible to keep. But on discovering that one could get away from it, one would ride along with the pretense of being benevolent and continuing to make more promises than one can keep. Before long, one believes that the power is rightfully one's own and all efforts will be made to hang on to that wonderful power which enlivens one so much with live and energy, to be able to do as one wish and to be able to pronounce one's opinions as if they are good values. The corruption of power has entered the person.

It is for this reason that one is prone to self-deception about one's own greatness and power that there should be a time limit to how long an individual can sit at the apex of the political power structure of a society, lest the ramblings of old people and lunatics become the wisdom of the day.

Ordinary people to whom politics is thrown upon them look at politicians like gods who throw scraps from heaven for their sustenance and survival. We pray for providence and goodness. The least that we dare to ask for is that the gods do not send ill winds and storms to destroy our families and our homes. We stay resolute to keep prodding on despite the odds in order to be able to take care of our loved ones; for we are heroes, and our loved ones need our protection from forces of evil from outside.

But there are those among us in a free democracy who cherish the ambition of taking power and with no money in their pockets and only a smile and sweet words, try to charm the rest of us that there is an evil that we must fight against and that they are the one who will save us. I never believe in that.

So I am caught in this lousy situation in between old seasoned liars and new seasoned liars. The dynamics of political change do not change, how the newcomers try to destroy the incumbents with all sorts of name calling and accusations which may or may not be totally correct. I care not for those accusations but I fear the unfamiliarity with the newcomers. The incumbents are long dead in their boots, gone beyond redemption.

The only consolation in this world of politics is that there is regular change of the underwear so that the stink does not nauseate. The faces of long-timers on either side of the political divide all look the same, grave and threatening but empty. They are only thinking about their dynasties. I favour constant injection of new blood, and shorter term for politicians so that no one can make a career out of such an important public function. They have got to learn to do real work sometime.

Saturday, May 7, 2016

Sarawak Election 2016

It is difficult to separate politics from economics, so here is my simple take on the recent event. The Sarawak election today concluded with BN retaining its two-thirds majority while DAP lost some seats.

The opposition was riding on the euphoria of the strong support in the Peninsular in the last election and all that it needed was for the East Malaysians to continue that momentum to complete the Last Push for the opposition coalition to take over the national government. Many Sarawakians flew back for that push but it wasn't enough. It was essentially a lost cause. Not many flew back this time and many didn't bother to vote. There was nothing much that could be done to change the national government. The only thing that was left was for a few urban diehards to register their discontent with the existing government policy which so far have had no benefit to them except policies which burden them further economically.

This being a state election, the state issues have all been substantially dealt with very quickly by the incumbent chief minister to the extent that he risked being labelled a dictator; and some did label him that. But he did not suffer from that labeling as ordinary people felt he solved real problems, and not merely engaging in rhetoric. The real problem with the previous state government was Taib but his retirement from the cm post had basically removed that sting from the opposition. The popularity of Adenan has made Taib a non-issue; we will probably see the end of the politics of character-assassination in the state.

The intense rhetoric of the opposition never sat comfortably with the people of Sarawak as they are more accustomed to soft-talk and compromises. Even when issues were raised, they were often done with great deference to traditional values. The more aggressive style of extremism verging on militancy could wipe up raging emotions, but fiery rhetoric still could not beat simple actions. But in some of the hinterland, there were concerns over ancestral land and heritage and ways of life and there were some show of resistance to radical change and modernisation.

The geography of Sarawak, being physically apart from the Peninsular, makes the development of the state difficult and expensive. This economic handicap and the inability of Putrajaya to conceive of an economic policy that is not wholly Peninsular- nor Malay-centric mean that politics as would be directed by Putrajaya would be resisted by the people, including those from the opposition. The people were listening to all the politicians as to what the politicians would do for them, and I think the people knew what they did.

The people of Sarawak had not been much bothered by the politics in the Peninsular until those politics adversely affect not just the Chinese and non-Bumiputra but also native Bumiputra. This is the time when we can see the Sarawak people acting as one and resist the enemy from without, including the current opposition. Hopefully a day will come when the opposition in the state is a bona fide state opposition, and not a branch of a Peninsular party. I am sure that the people of Sarawak are strong enough to provide their own resistance to an internal dominance.

Malaysians may not expect a Malaysians can be at peace and in harmony with all races regardless of race and religion, but Sarawak seems to have got it right in trying to work together in an amiable manner. Or is the world now so globalised that we all have to shout in order to be heard? Or are we merely seeking attention and fame, without substance? Sarawak may be an economically backward state stymied by being an adopted child, its leaders might have been blinded by greed, but after darkness a light will shine to show to path to redemption.

A strong government with a strong opposition is the way for a modern democracy to go, that would be anybody's wish. In the meantime, as the nation and its component partners learn to grow and mature in civility, a strong government with a sensible leader may be the way to go. The election results showed the wishes of the people.

Thursday, May 5, 2016

Education, Nationalism & Language

This is a perennial topic where discussion can go on forever because there are so many different angles to it. I am adding another one.

I think the key focus must be on the education of our young people for their own future and their own good. The ultimate purpose of education is individual survival of the person being educated. There is the master who has knowledge and hopefully wisdom. He is the master because he has learned to survive and now his role is to teach the young.

In traditional societies, the elders teach the young how and where to hunt and fish and plant crops and raise husbandry. To live in peace and harmony among the villagers, the elders teach manners and courtesy. There are customs of how things are to be done when certain things happens, akin to the standard practice instructions or standard operating procedure of modern organisations. The whole village also learn how to make peace with nature in hope of an abundant harvest and plentiful feasting.

At a certain point in the history of the current human civilisation enter religion which is also dictates a way of existence and survival in a certain environment, probably of a very harsh nature. The people are taught to keep faith, to defend their customs and traditions, and to kill off their enemies as self-defence or to disguise or hide their identities from their enemies. These are skills of survival.

In time, rational thinking and argument come in. The politics of democracy comes in, which is usually practised as tyranny. Religion gives way to the pursuit of material wellbeing and money. The means of survival requires young people to be able to read and write and count, be discipline and hardworking, be creative and productive and be everything that any capitalists would love to work to death for a few more pennies.

The people pay taxes for the government to employ experts to teach their kids to learn how to survive in this big and nasty world. Instead, the government twisted the system to inculcate nationalism which is a sense of identity which the elite politicians feel will enhance and prolong their longevity of their reign on earth. Instead of openness, they send in new half-baked people to indoctrinate young people that they are beholden to the false prophets for their well-being. So they lock the minds of the young people up into sterile cells where no thoughts are present except for the few propaganda items of privilege and exclusivity.

In so doing, the politicians on independence of the country from foreign exposure cut the entire nation from the rest of the world, close in onto their own limited language and old agrarian customs and foreign religions, feeling comfortable in their own familiar and shrunken world.

But the survival of the young generations and the young nation require that the young people must be open and versatile and think for themselves. They must not only learn the local languages but also the foreign languages of import. They must be encouraged to think for themselves and to argue against traditions and their elders because the outside world in which they and the nation is subject to are constantly evolving as the world tries to compete with each other. A nation that closes its door onto itself and thinking it is safe is containing itself in its own little enclosure, indifferent to the lack of the space their children and their children's children.

I have read arguments why the local language is also a language of science and discovery and I am of course not doubting that one can be in one's element thinking in one's own language. But it is not an argument against learning other languages and be conversant with them and be so good as to be able to think comfortably in foreign languages. Let not the slow ask the fast to slow down so that he can catch up.

I for one encourage multiple languages for they teach us to understand other cultures and other ways of thinking and looking at the world and each other. I am simply perturbed how limited and constrained the government of the day is, with its civil servants knowing only how to speak and write in their own local language and not being able to communicate with the rest of the world.

Focusing merely on the mother tongue is a dangerous proposition. The language used at home and in the market is colloquial. To be able to speak and write properly in the local language, there are also rules to be followed and therefore even for the native, the formal local language needs also to be learned and not everybody speaking the colloquial language will necessarily be good in the local language formally.

I conjecture that there are as many illiterate native speakers of the local language as non-native speakers. It is therefore likely that the promotion of only the local language will result in a nation full of illiterates compared to one where learning to read and write in different languages is conscientiously pursued as a matter of policy. I am saying that we should be promoting languages as a serious area of study in schools as opposed to the politicising of one language as the one and only one, to the exclusion of others.

In the modern world, it is instructive to learn Mandarin and other Asian languages too. In fact, for the nation to place strategically in the world, we should have experts in all the key languages of the world so that we have understand at the native level what is happening all around us. We cannot simply stand alone deaf and ignorant of the world.

At the very least, I would like the civil servant to be communicating to its citizens and the rest of the world in two or three languages - Malay, English and Mandarin. At least, show that Malaysians are not incompetent and that Malaysians can relate with others.

There is a need to expose the ignorance that is hiding behind the sole use of the local language in communicating with the people in our society. We were not isolationists in the first place. We were an open society but closed in on independence. Something went terribly wrong. It is not too late to turn around and face the world proudly.

Thursday, April 28, 2016


The interesting question to ask is who makes a better governor of the central bank - an economist or an accountant.

Self-deprecating economists would joke that since economic theory has nothing to offer now that monetary policy has deteriorated into this mindless expansion of the monetary base either by helicopter money or by quantitative easing, there is really no policy value from an economist. This could indeed be true and it is indeed a serious matter. Look at the present monetary policy stance of the issuer of the international reserve money who is fearful that even a slight notch up for the interest rate is going to send the whole world down into economic chaos. Well, that has not been entirely true. The main cause of the current global economic downturn and slowdown is the political cleaning up in China. As with all spring cleaning, we all have to lift our feet up from the ground and nobody can move.

Of course, the reality is that for a small fry like our nation, we cannot have an independent monetary policy. The only thing to do is to mimic what is happening in the US. This is a no brainer.

Nevertheless, an accountant and a banker may be a better person than an economist to be the governor. The accountant will not spend but will make money by saving up. This will be good to put the government budget in order. The banker will ensure that banks do not go overboard, extend themselves and make themselves vulnerable to insolvency. The accountant banker will ensure that the house will be need and tidy.

Now, I have always argued with the matriarchs in my household that a tidy house is a house not lived in. For a house to be lived in, the occupants will be busy with many ongoing projects at the same time and therefore will have work in progress all over the house. The house will be messy but there is order in chaos. This has always been the condition in which I like to see the economy in. A vibrant economy is a messy economy with everybody busy going about their daily lives and not being bothered by others or others bothering them.

Our economy is not vibrant with the economic growth committee laying out investments and directing what projects will go on. This is central planning.

But for the central bank, it is good to have a nice and tidy central bank. We are lucky.

Tuesday, April 26, 2016

Politics & Business

Politics and business seem to be badly mixed up nowadays, with politicians blatantly doing business and businessmen playing politics. But there is such a thing as real politics and real business.

Real politics is when the government sets about pursuing policies that champion the interests of the nation and the well-being of the general public. The government is the politicians and the civil servants. Politicians are supposed to come and go while the civil servants are supposed to be professional and know their stuff. But when ignorant politicians push policies down to inept civil servants to implement or when they listen to inept advice, we have an economic disaster in the making.

The current episode is bad politics killing off real business. Nowhere have I seen such an eagerness of a government to destroy the underlying foundations of an economy. The government seems to be at war with real business. Giving the benefit of the doubt, policies may be good but the mishandling of their implementation is a sure way to destroy the dynamics of real business.

The GST is a case in point. This is not my favourite topic, but the more I hear the more I am unhappy.

1. The GST is now justified on the ground that we are undertaxed as per the GDP compared to other countries. The blame goes to the black economy and therefore the indirect attempts to capture all transactions in the economy. But for all I care, the GDP number may have been blown up to show that the economy is doing better than it actually is by inflating on the growth of the services sector. And if we realise that the most incentivised sector of the economy is the financial industry with virtually zero tax on any profit made in the stock market, then that is a big chunk of the tax gone. There are no taxes on foreign investments, and the government even gives grant to foreign firms to invest here. So now real business must be properly taxed. At the same time, the government is trying to encourage entreprenuership through start-ups when even existing businesses are struggling to survive in the current environment.

2. The government is very happy to take the GST money from real business even when the invoices are not properly made. But it does not allow claims on the same ground. Is the government a money sucking machine? The government is incompetent to run the GST, being implemented without proper preparation. However the government is going to justify itself, for sure, the GST is a downer on the economy. How the strong will surely survive, I pity the small firms that cannot withstand the burden of having to cope with having to deal with the GST, and administrative as well as the tax cost.

I have applauded the government's policy on restricting foreign workers in the country for several reasons: It is time to move up the value chain. It is time to treat foreign workers here properly by paying them decent wages and offering them decent social services. It is time to take stock of the foreign workers we already have here, rather that importing more. There should be a comprehensive registration of all individuals residing in this country. It is time to ensure that foreign workers are healthy as many are employed in the food and beverage industry.

What happened? Well, real business has real problems registering their workers. End of business and end of story. The civil servants continue to enjoy their take-home pay and go on long training and long leave. (I think the annual leave of civil servants should be cut to 20 days a year and their annual training to not more than 3 days a year.)

Real business is usually small business. I don't think you can nurture young entrepreneurs when the environment is set to kill anyone struggling to make ends meet. The black market exists because not very well educated people are trying to cope in an unfriendly bureaucratic environment. I am not championing the black market. I am calling for a competent and efficient civil service.

I am of course by the racism in real business, when politics is involved in the business world. The government should champion all businesses for the national good. To have government departments championing racism is a bad sign. (I won't comment on religion.)

Politicians play politics, businessmen make money. That the right order of things. It should not be politicians making money and businessmen playing politics.

Monday, April 25, 2016


This being the 400th death anniversary of William Shakespeare, I thought I will write a bit of my relationship with his work which has nothing to do with economics.

For those of us who are now are old enough, there was a time when we had to do Shakespeare for examinations in English Literature. The exam piece changed from year to year, and for us it was Macbeth. It started in Form 4 and the task was to get ready for exams in Form 5.

While we were struggling with the play bit by bit in the first year, we were getting a bit confident by the second year. But exam was still a drag and there were many extra-curricular activities for us to participate and enjoy. One fine day, a few of us decided that the only way to force us to study really intensely on the play was to play it! We decided to tell the Principal of the school that we wanted to put up the play for the school concert that year.

We immediately tried to figure the enormity of the task we had got ourselves into. We had to decide how many people we needed to play the characters. We needed the three witches to do the opening. We needed Macbeth and Macduff to do the main fight. Lady Macbeth had to do her soliloquy. There you all, we needed only six people to get the show going.

Of course, the play being only an item in the school concert, we had a time allocation of half an hour max. We started doing what was (and still is) unthinkable and probably sacrilegious - editing Shakespeare! Well, we made a photocopy of the whole play and started crossing out all the portions that we couldn't do. That was quite a lot. There would be no forest of Birnam moving to Dunsinane Hill. There would be no bedroom scene between Macbeth and Lady Macbeth.

Costuming and the props were no problems. We dressed up in t-shirts draped over with some shawls, and short sarongs. We used tobacco and glue for beard which stunk like hell. We got the woodwork club to make swords for us. We used dustbin cans wrapped around with cloth as shields. The three witches dressed in black enhanced with lighting; the cauldron could be imagined as nobody could see in the darkness.

We used the play to sell the school concert tickets to other schools in town as a short cut way to learn the play for the exams. I think we didn't do that badly. We thought we did quite well because of the excitement of doing it and couldn't think of any other things. We did what we set out to do and did it.

On the following weekend, the local newspaper did a small write-up saying that that it was the first time that Shakespeare was staged with local costumes. We weren't bothered for we were then busily thinking about how to pass the exams and worrying about what we should do next with our lives.

I am happy to report that all the players in the play eventually all flew the nest and left the small town in search of greener pastures. We are planning a class reunion and maybe the small group of us who are still alive and well could reenact the play for old time's sake.

"When shall we three meet again? In thunder, lighting or in rain. When the hurly burly is done. When the battle's lost and won. That will be ere the set of sun. Where the place? Upon the heath. There to meet with Macbeth...Fair is foul and foul is fair. Hover through the fog and filthy air.

Is this a dagger which I see before me? The handle towards my hand. Come, let me clutch thee.

We fail? But screw your courage to the sticking place, and we shall not fail.

Unsex me here, and fill me from the crown to the toe top-full of direst cruelty."

So, it is all about power and power. There is no economics. Whoever takes the throne wins. Ha! Same old story.