Friday, October 30, 2009

How Not To Be Innovative: The Case Of Mixed Parentage

Under 1Malaysia, one has to be careful about the purity of one's blood.

Cases reported here.

1. Marina Undau, 18, of SMK Simanggang scored 9As and 1B in the SPM examinations last year. She thought she could undergo a university matriculation programme, but was rejected by the Ministry of Education because was deemed not to be a Bumiputra. Her father is Iban but her mother is Chinese.

2. Lymie from SMK Kuching Town No 1 scored 9As and IB in her SPM examinations but was also rejected because her father James is Iban-Bidayuh but her mother is a Chinese-Iban.

The decision on the classification of whether a person is a Bumiputera or a non-Bumiputera for the purpose of entering the national universities or its matriculation programme is made by the Student Intake Management Division, Higher Learning Department and Higher Education Ministry.

The classification is apparently based on Article 161a of the Federal Constitution:
"(6) In this Article "native" means:
(a) in relation to Sarawak, a person who is a citizen and either belongs to one of the races specified in Clause (7) as indigenous to the State or is of mixed blood deriving exclusively from those races; and
(b) in relation to Sabah, a person who is a citizen, is a child or grandchild of a person of a race indigenous in Sabah, and was born (whether on or after Malaysia Day or not) either in Sabah or to a father domiciled in Sabah at the time of the birth.
(7) The races to be treated for the purposes of the definition of "native" in Clause (6) as indigenous to Sarawak are the Bukitans, Bisayahs, Dusuns, Sea Dayaks, Land Dayaks, Kedayans, Kelabit, Kayans, Kenyahs (including Sabups and Sipengs), Kajangs (including Sekapans, Kejamans, Lahanans, Punans, Tanjongs and Kanowits), Lugats, Lisums, Malays, Melanaus, Muruts, Penans, Sians, Tagals, Tabuns and Ukits."

1. Is the Ministry of Higher Education run by people of lower education?
2. Is it trying to mix education with politics?
3. Is the federal government trying to undermine another of its state governments?
4. Doesn't the article read dated and rigid and disregarding the dynamics of human love and emotions?
5. Is the ministry concerned about supporting students with good marks - the future leaders of the nation?

Tuesday, October 27, 2009

The Economics of Wasteful Spending

For those who think that quick spending by the government including the construction of mega projects is the way to go for stimulating the economy, then wasteful spending is really not a bad thing.

It does not matter how one spends the money so long as one spends it. They may even quote the great mighty Lord Keynes to lend support to their thinking - "You can employ men to dig holes on the road...."

There is a certain truth in this kind of thinking. The whole idea is to put cash into people's pockets so that they can spend in order to keep factories running so that people can continue to be employed by these factories.

At the macroeconomic level, it does not really matter how the money is spent - because we are thinking in the aggregate - not that the microeconomic workings are not important but that they are not being considered yet.

At the extreme, we could have money being printed and passed in boxes from the mint to the central bank who then delivered the cash to the government to be distributed - by some criteria - to the people.

The people receiving the cash would in principle spend on the things they need - like rice and salt - and then are happy. This is the political side. This is how elections in the free world are won.

But the economic consideration is slightly tricky. You want to see how that cash is used, specifically whether that cash can be used to stimulate production of products that people want. If the additional cash does not trigger additional effort on the part of the people, then the whole economy is in deep trouble. You have money without effort. This may sound like utopia for individuals, but it spells disaster for the whole nation - because it is not sustainable. More money can be printed - for forever - but the nation is likely to be incapable of doing anything else.

So when we are talking about "stimulating" the economy, we are talking about how to excite people into effort or more effort because they have become motivated to become active in the economic mainstream. There are incentives that they can see, incentives that excite them to excellence, that there is reward at the end of the day - either in terms of cash, awards or mere recognition from peers or community.

The money part is an important and crucial part, but it is only one small little part. The money is required because of the structure of the modern economic system, where there is such a great dicotomy between production and consumption - of the right stuff - that without money, we as individuals are dead in society.

The money part is the wheel that moves. The real part is the exercise of men and women in their daily existence - of the things they do to make themselves feel alive, every day, every moment.

The judge of the correctness of our government spending is whether it is exciting the right thing in the people. This is how we know whether we are heading the right direction, and whether we are going to have an economic future.

Blogs & Budget 2010

I haven't been writing of late basically because I have been very busy, including three weeks of ale and fish and chips. Second, I feel there is nothing worth my trouble to put thoughts to print - not even Budget 2010. Third, blogging has failed to become a pleasant thing for me to do. I write to entertain, not to please. I write to provoke, not to justify. The sanctity of the freedom to think and write is paramount - I am wry of thought-police.

Nonetheless, there are 3 things I can say about Budget 2010.

1. Budgets, by definition, are basically about the government's finances. Should the government balance its budget? Yes, if you can't borrow any more. No, if you can continue to live on credit. This question is important because it affects all the other issues. Budget 2010 promises to bring down the deficit as a proportion of the national income. This percentage balloons in recent years for two reasons: that the national income failed to grow or even contracted, and that as a result the government borrowed more to try to beef up the economy. This is a double whammy for the target percentage but it is something that one should expect. Once the economy recovers strongly, we will see a sharp reduction of that percentage by virtue of the improvement in the denomination of the measurement. Budget 2010 expects its deficit to fall to 5.6% of GDP from 7.4% in 2009 as a result of a sharp reduction in the Federal Government's operating expenditure - if this effort fails, the deficit will be back up to 7%. But it doesn't matter.

2. The direction of Federal Government spending especially development expenditure is crucial because it is strategic. It is a bit off the point when the government is talking about the efficiency of spending - although important for the purpose of stopping a corrupting culture - but not for saving the economy from nosediving further or turning it around. The government should spend to build new foundations for the new economy. Properly educated children is necessary but not sufficient. We have to lay the foundations for our technological base. Importing expensive foreign machines is a first step so long as we have money. But getting our young men and women to invest their time and talents to build sophisticated things need to be encouraged. I am happy with some encouragement for the arts (RM200 million) but I hope will not be squandered on some undisciplined wannabes. Creativity is serious business.

3. The 15% flat income tax for Iskandar Corridor is a curious case. While it is now unfair by being preferential, it cannot be removed at all in future without the collapse of Iskandar. The only future move for it must be, if it proves itself to be good, to apply it nationwide. The whole country should be competing with the rest of the world, and not Iskandar competing with the rest of the country.

In all, Budget 2010 is champagne without the bubbles. To be fair, it is only an annual budget. The bigger directional one must be the 10MP.