Thursday, August 26, 2010

Meritocracy & Racism: Philosophy, Politics & Economics

Let me try to write something here to see whether I can be as polite as I have been made out to be.

Meritocracy is a philosophy of the conduct of human society where the view is that the betterment of the whole can be obtained from the efforts of a few who are best that are available in the nation. The purpose is to keep pushing the frontier of material progress as a basis for the spiritual enlightenment (although I will concede it is possible to push for spiritual progress as a basis for material enlightenment).

That, of course, where merits are spread among human beings of all races is a god-given reality which we have no choice but to accept. But to suggest that merits are naturally inherent in particular races of people is a gross generalisation that bears no resemblance to reality. But, in the normal teaching of young children, the exhortation is always on effort to cultivate talents inherently bestowed by god on all human beings, whatever those talents might happen to be.

It will be a sad case for society if the leaders of society predetermine what talents should be cultivated for two reasons: (a) other potentially interesting or useful talents which could save mankind will not be cultivated; and (b) the obvious talents which now seem to be useful may be a manifestation of past desires and hence the likely consequence of mass unemployment of perfectly trained graduates with no opportunities to exploit them.

Meritocracy is a philosophy which strikes a chord in the heart of every rational man and woman.

I blame the designer of the course on philosophy, politics and economics who puts the politics before the economics.

Meritocracy, in its original state, is an economic concept of social advancement, admittedly concocted during the era of the rise of science and technology and the industrial revolution. Given the problems of the world, especially of overproduction, there may be a case of less-than-the-best-of-meritocracy to lead the band in search of prosperity. Houses are now too small to contain all the TVs, refrigerators, washing machines and cars that households wish to buy.

Politics, in itself, is already a very difficult game to play, especially where the whole objective is power and wealth and the refusal to die (hence the need to build monuments).

Political power is got from the people, and the method is often through the art of lying with style and stirring up of emotions where none seem to have existed before.

It is an unfortunate result of the end of colonialism - it ended because Britain could not longer justify keeping the colonies on economic terms in view of the social responsibilities that came with the rise of the welfare state - that the new concept of nationhood was promoted and somehow given independence for.

The notion of nationhood gives rise to the idea that there is a nation, or is it a race (or some other configuration) that gets rise of the past of being subjugated by foreigners.

In the world before the British colonial rule, people of different races and races from all parts of the world were living together - all over the world. Globalisation is not a new concept - people have been mixing about for a long long time, in order to perpetuate and strengthen their genes.

That a people feel extremely uncomfortable with people of a different colour, culture or religion is feeling that can only come from fear - and this cannot be the most pleasurable way to live.

Fear is ignorance which can only be removed with knowledge and wisdom, and which can only be acquired by openness, exposure and interaction.

By preaching exclusivity, insularity, and isolation, the end result is inevitably polarisation and this is the recipe for racial strife.

There is much for everybody to learn, and each must learn from the other. If business acumen is the goal, then one must mix with people who are good at doing business. If personal peace and tranquility are the goals, then one must mix with the religious or spiritual.

The learning process must be made available to everybody so that those who are interested to better themselves can find the avenue in which focused efforts can be made. To be followed, naturally, by competition to see who is better and this can be done in a friendly manner.

Human society and culture will evolve as people struggle to survive or to find pleasure in a world with rising population and diminishing natural resources. As we struggle for ourselves, we must not forgot our neighbours whom we can help as well.

It is unfortunate for all of us if we have to fight tooth and nail with each other for survival. This means the beautiful society as we know Malaysia to be is gone.

Wednesday, August 25, 2010

How I Blog

Very carefully.

I am writing this as a follow-up to "Why I Blog" after the "Why I Work" and "How I Work". Somehow, there is a natural logical sequence to one's train of thought, and the things one writes goes seem to have a life of their own.

It is tempting to treat each post like an anonymous shot into ether, meaning no harm whatsoever except to vent one's frustration. I think this is a very dangerous thing to do. Ether may respond in ways that one can never imagine, and by then it may well be too late - even if one were to say sorry.

The blog is not like the Hyde Park corner-type of freedom of speech one may imagine oneself to exercise. In Hyde Park, one can conceivably stand on a upturned soap box and mouth anything that comes to one's head, and then go home to sleep with the empty soap box. However, one would be very suspicious if one notices that there is a man standing behind the bushes with a tape recorder and taping your little spew - thinking, why are you doing that? In blogging, we are doing exactly the recording ourselves - and I think I should be very very careful indeed which what I am trying to say in my blog, no matter how anonymous one may pretend the blog may be. (Even in newspapers, your anonymity is not protected when a gun is held to the head of the editor.)

I make this point about care because, once in a while, a commentator would remark that my sentences are too polite.

I think one should be polite, or try to be polite. It is the only decent thing to do, to show respect to the reader, as well as the issue that one is addressing. Once that respect is gone, then there is really no point in all the effort that goes into the (thinking and) writing a piece of work.

I always associate writing with effort because Winston Churchill said, "That which is written without effort should be read without effort." The effort is in dissecting the issue in the hope of coming up with an answer to a problem.

I am not sure that I would write in hope of stirring up violence, of which we already have too much - others are doing an excellent job in that without me helping to stir the pot.

The Churchill statement also brings out another point about blogging - how much effort do we require the posts to be read. Most people associate blogs with lightness of touch and content. Even so, posts can be hard to read and understand because they are badly written (typos aside).

There is need for effort to ensure a certain flow of argument and ideas down to a natural conclusion. That comes with a bit of practice (effort).

There are issues that are naturally very involved in concept or implication and these need effort to be drawn out carefully, strand by strand. In this, effort is also required to separate the logic from the emotion or judgement, of which the latter should be reserved in order to let the readers form their own conclusions.

It is only by exercising some form of consistency in the thought process that human beings can each other of the right things to do together, as a community.

I used to lump all the difficult pieces together in order to sustain the flow. This could be difficult for readers when there are many different ideas to deal with. Nowadays, I am a bit more charitable and intersperse the "serious" stuff with "light" pieces like this one.

Thursday, August 19, 2010

Some Theoretical Issues in the Malaysian Economy

After my recent trips into nostalgia, it is time for me to head back to the world of harsh realities. Given recent events, I thought a theoretical perspective may be interesting, in order just to get to a different plane.

The reality is always harsh, as the jungle is always neutral. It is how each of us or a group of us traverse the difficult terrain that we get to the other side, not levelling the ground (by someone else) so that everybody can sit and fall asleep (by doing nothing), although it might be useful if someone who has gone through the journey before could signpost some of the danger points.

I have always thought, and still think, that Malaysia is very forward in its socio-economic thinking by bringing out the New Economic Policy explicitly for implementation. In any modern society, the issues of growth and distribution are the twins that always appear in any national agenda. My only unhappiness is that there has not been much discussion about how a more egalitarian society can be created in Malaysia, although there has been much discussion on this issue of social justice in modern economic and political literature. It is as if Malaysia is stuck with its foot in the mud of 1969, unable to extricate itself from the political rhetoric of the time and getting itself out and become relevant in the modern borderless world where sovereignty of all sorts is being threatened. As the global economy construct changes, the issues of growth and distribution change as well, and hence the required solutions to the problems.

Growth is often pursued in modern societies at the expense of distribution because of the very nature of this capitalistic and market-oriented economic system where incomes are not earned evenly across the social strata, where different communities consume at different rate in relation to their incomes, and as a result, savings are done also at different rates. Wealth, being created out of investments and hence out of savings, is therefore unevenly distributed, and some would say, unfairly, by going to those how know how to create it, and eluding those who desperately are in need of it.

It is now recognised that the modern economic world is built by those who are the best, the most capable, and the most brilliant - but not necessarily the most noble nor the righteous. The modern economic world is a world of output and production of goods and more importantly now of services which, could be compared to the olden days of alchemy and magic but today of the financial and derivative kinds, and not excluding the age old services of prostitution, drugs, robbery and murder. The modern economic world is therefore a mishmash of all sorts of people of able minds and bodies.

The diadvantaged are typically those who are not in the travelling band, because they cannot be - the very young, the very old, those nursing the very young and very old, the handicapped, those disturbed of minds, the unschooled and untrained and hence unable to be of service to others. Or simply those who are caught in a time warp oblivious to the shenanigans of modern economic activities. These are those whose welfare the modern society must try to look after in order that we all feel that we are doing our bit to alleviate the necessary suffering of this world.

That we feel like having to do charity is because we may, deep in our hearts, realise that the world we live in is an artificial world that we have created out of our own imaginings for our own fancy - based basically on little bits of paper certified by some authority to be legal tender, and that trading of those bits of paper are allowed. The modern world of investments is based on the confidence that bankers have on the borrowers to pay them back their money, and their collateral today is real estate but in the days of old when real estate was in its infancy trust and word and character of the borrowers. Now, the modern world grows quickly with the real estate as the right foot and the money lenders as the left foot.

The value of the real estate is defined by location, the value radiating out of the urban centre where the concentration is the greatest, as defined by the number of people or business per unit area. It is this interplay of the supply and demand forces that defines the value of the rent and the land. It is this different rate of output that determines that (sharp) differences between the value of the real estate in urban centres and the rural areas (the latter defined mostly by agricultural output, which can be intensified by plantation technology).

The battle therefore is on the rate of output and the rate of improvement in productivity. Economists know that the rate of improvement is the slowest in the primary sector, with rapid growth during the industrial revolution and the Japan-type revolution of the manufacturing engineering, and now the services sector propelled by ICT and globalisation.

It is a challenge to try to reduce the difference in productivity in the rural areas and the urban areas. But it is this reduction that will resolve the disparity in distribution in a traditionally agricultural society that is rapidly modernising. Over time, the trend could be in the form of the growing importance of urbanisation where old towns become bigger towns, and new villages become new towns. The importance of urbanisation is economic efficiency in the provision of basic amenities such as education, health, and security which are critical for uplifting livelihood of communities.

In the end, the linkage with the rest of the world will define whether Malaysia will become a successful global trading partner. In this sense, successful Malaysians will be those who are resourceful, agile and open to new ideas with an affinity to dealing with communities other than themselves.

With the focus on the livelihood of Malaysia, the correct approach to measuring the improvement in the economy is the GNI or GNP, and not GDP. When the focus is on GDP, the focus tends to concentrate on foreign investors. With GNP, the focus will the opportunities that are being offered or made available to Malaysians, whether those opportunities are at home or abroad. GNP should be an integral part of the 1Malaysia concept, for it counts Malaysians whether they may be.

There is a serious need for discussions on the Malaysian economy to focus on issues where positive policies can take place.

Tuesday, August 17, 2010

How I Work

After having written on why I work, I will now write on how I work.

I had visions of a life in economic theory when I was studying economics as an undergraduate, but my father said, "One degree one person only. You have many brothers and sisters." I searched and found a studentship and told my father, "You only have to buy me an air ticket." He said, "This I can do." Off I went and did my Masters, but left half a year into the PhD programme. I could not imagine throwing scarce resources and my youth onto a thesis topic which would be of interest to my professor but not to me, and I could not get a professor who could supervise me on a topic which was of interest to me but not to him. Everybody was so caught up by the little pieces that they had to publish in order to keep their jobs that there was no investment being made on the fundamental theoretical issues of my interest. I had long been dissatisfied with the state of economic theory purely because it was (and is) too caught up in the mathematics at the expense of content, and also because I felt that there must be life after Keynes (in economic theory). Furthermore, I was deeply interested to know how the Malaysian economy functions and there was no better way than for me to come home and work. I became a professional student of economics, and still am.

One of the first little research projects that I did involved collecting the numbers for the money supply and GDP and various other series. As I busied myself, one of the many homegrown first-class undergraduates in the organisation came up and asked me what I was doing. My answer was "To find out the chief cause of inflation in Malaysia." She quickly replied, "It's easy. Either demand pull or cost push." I looked up, flabbergasted. I could only retort, "But, which one?"

This gives me the first clue of what I would later discover to be an underlying problem in our society, that there is no proper research and that people are quite happy spewing off conventional theories or theoretical conclusions without a clue as to whether they are relevant to the situation we are in. My greatest peeve with academic research is the mindless application of local data to particular hypotheses concocted in other countries, that there is little attempt made to see what is happening right before our very eyes at home. (At the very least, Ungku Aziz was original with his sarong index.)

For me, therefore, work is just getting paid for being a student - the wages being my studentship, so to speak. When I got my first job with that auspicious organisation, the personnel manager asked me, "Are you sure you want this job for RM750 a month?" My masters was valued the same as a local undergraduate. My answer was, "This is more money than I'd ever had." There were reasons for such undervaluation. The first thing that they were interested in was to make sure that you passed the civil service examinations on the national history, the national code, the setup of the government and a whole host of other things. Everybody, on first admission, was called an administrative officer. The degradation of an organisation starts from the degradation of its human resources. The performance of an organisation is circumscribed by the quality of the leadership.

My greatest joy in working is in the learning and discovery of the world around me and the workings of my innermost self. It is this self-discovery that keeps me going despite the harsh reality that I had to face, and still have to. It is not easy to cope in an environment when, not only does nature by itself wishes to do you in, but the society that we live in is unfriendly. But there is nobody to prevent anyone from learning and realise for oneself what life and living is all about.

The life of an economist is an extremely interesting and illuminating one. One can observe how people seal their own fate by the decisions they make about what they wish to do and not wish to do, by the distance that they wish to travel, the effort they wish to make, the amount of responsibility they take for their own actions, and the amount of fault they place on others for their own failures or rather inhibiting their successes.

The basic economic tenet is that much of modern society can flourish rapidly to the benefit of most if not all people is through the cooperation of efforts by various groups of people and if there are surpluses to exchange those surpluses in order to improve the variety that spices up all our lives. If one group has a surplus and another group does not have, then one way forward is charity; another way may be horse trading of some sort. These exchanges aside, the first rule must be that everybody works hard, according to their own ability, in order to maximise the output of the society.

In the world that we live in, we are all trying very hard to talk of the exchange model without the effort to increase the output and if possible the surplus.

My studies in the school of the real world was somehow also guided by my father who died immediately after he had achieved his goal which was to send his six children abroad to study, though not everyone came back with a qualification. It was his sense of fairness, to give everyone of his children an opportunity in life, however good or bad they might have been. But after having us the opportunity, it was up to us to make the best of our lives. This must be a fairly standard story for many Malaysian families. But my father's influence on me was a bit more profound, I would like to think. When I had to persuade him about me doing a PhD, he asked, "On what?" I was by then interested in income distribution. My answer was, "Why people are poor?" He said, "Not clever. Better to study how people become rich!"

In a certain way, therefore, my little economics study is on how wealth is created and distributed. In the current economic model that we have, my answer is education and knowledge, investment and confidence and working together, trade and exchange and trust, and opportunities for everyone so that all abled persons can maximise their output. Life is too short for each individuals to wait for the right opportunity to be given to them. When one door closes, another opens.

By improving my understanding of what is going on, which is the same as improving my performance at work, it is not very hard to find a job. There is always someone out there looking for someone who goes around with their eyes and minds open, and think.

Eventually, as a result of sabotage by bosses who refuse to recognise my efforts, I had to move to a new industry. I have learned to embrace change and movement, and not to fear getting out of my comfort zone which is other words to fly. When colleagues and bosses want to kick you out, it means that the organisation has come to a head, to a peak, and everybody thinks there is gold at the summit. This may be a good time to move. When things or the environment looks quite gloomy and there is someone out there who is hiring, jump at the job. Something is brewing and a new industry may grow. The only problem is whether one can get oneself excited and find a way to play a useful role. If one gets could in a very difficult industry which appears to clash with one's personal value, there is always a saving grace by focusing on being the best that one can be in the job and provide as good a service that one can muster in order to help the clients. It is possible to be in the eye of the hurricane and survive.

Mastering the technical details is an important step but only one step. Learning how to serve others well is a lesson that is most meaningful only to oneself. But importantly, work as a student and learn and learn. It is the knowledge born out of curiosity that is the real reward for working. The cash is only to defray the cost of fulfilling some of one's family responsibilities, like giving back what one has taken from one's parents.

Friday, August 13, 2010

Kelantan's Gold and Silver Coins

For students of monetary theory, the issue of the gold and silver coins by the Kelantan Government that will be used for the payment of salary of civil servants, and are acceptable even for payments to Tabung Haji and Bank Islam Malaysia is an extremely interesting event. Will it work? Does Bank Negara Malaysia approve it?

The coins are supposed issued by a private gold trading company owned by the Kelantan Government. The website of the private company provides the exchange rate for the gold and silver coins to the ringgit paper money. 1 dinar = RM581, 1 dirham = RM13.

Presumably, the price of the coins must go according to the amount of gold and silver in the respective coins, as per the recipe of any commodity currency. That information, unfortunately, is not available in the public domain. But somebody which is quantitatively inclined (not me) may try to calculate the amount of metal in the coin based on the quoted price of the coin and the quoted price of gold and silver in the world market (hopefully, unless they use the local market prices).

But that would be the purist's view. The private company of the Kelantan Government has to pay for the minting of the coins. There is a cost to minting. I do not know whether they are deducting that (imputed) cost from the weight of the metals in the coins. If not, then they would be losing money. If yes, and if they do it incorrectly, even unwittingly, they may be accused by those who are paid those coins to have cheated.

It is, of course, a dangerous thing, according to conventional economic wisdom (as in the secular world), to allow one firm to control the trading of any commodity or product or even concept (option, for example). Is the private company acting like a gold trading company which means that it must make money even if non-profit in order to pay the salaries of the workers, or does it act like a currency board whose job is merely to ensure that there is even gold and silver coins for use in the economy. Even for the conventional currency board, there is a specific conversion of foreign reserves to the paper money. So for this gold trading private company, presumably, there will be a conversion from the paper money of the Kelantan government to the gold and silver coins. At what rate this can be done, of course, will be dictated by the prices of gold and silver in the global markets.

It is unlikely that the gold trading company can act as a central bank to the Kelantan government. For one thing, the central bank was traditionally invented to finance the government of the day; in those days, to finance war (and I suppose, in modern times, the same thing). It is unlikely that that private company can mint more gold and silver coins if it does not have the money. Of course, it can do so if it borrow paper money from the conventional banks and use that money to mint more coins.

There could be a serious shortage of the coins in the near future. It's novelty can make it into a collectors' item, which means that it may not really go into circulation. If the gold trading company, in order to not to be accused of shortchanging the users, overvalues the coins, then there is real incentive to keep the coins. If gold and silver prices are thought to be rising in future, there is also scope for speculation by hoarding. Furthermore, if there is a real shortage of coins and if the Kelantan government insists on being paid in coins, then the prices of the coins will rise even more and this will accentuate the shortage.

So, I do not think that the real central bank should worry about this gold trading company. After all, it has even problems on its hands trying to figure out the real value of the paper ringgit by making sure that the exchange rate of the ringgit is properly managed in respect to the currencies of "its major trading partners."

Since de minimis has quoted Archimedes in one of his posts, I wish in passing to mention that the Archimedes' fundamental axiom on truth. The translation I have committed to memory is this: "Given me a fix point in space, and I will move the earth for you." It applies to central banking in the fixing of the price of currency. That fix point in the world of currencies is the international reserve money which for the moment (probably not long) is the US dollar. (That was why when the US dollar tanked because its economy collapsed, the ringgit was still at the same point to the fallen hero. I am glad that some readjustment has been made to fix this out of sync exchange rate by strengthening the ringgit a bit.)

I think the issue of the gold and silver coins is very novel exercise and should be encouraged as one would encourage the issue of gold and silver wafers or bars as the marketing guys would call them.

Wednesday, August 11, 2010

Why I Work

Again, for want of something better to write, I shall touch on why I work.

Once I interviewed a fresh graduate and I asked her why she wanted to work. She answered, "To earn a living." I was quite unhappy with her answer. Does one crawl so low? Doesn't one work for something better. I hired her because I wanted to show her what work could really be. She couldn't write a proper sentence in English, and not to mention her spelling. "Is you free?" I gave her work, real work. She struggled and cried. I ignored her. It's really up to her whether she wanted to work or not. Was she really ready to do it to earn a living. In the end, when I left the industry, she cried. She is still in the job, doing quite well, I heard.

Now, the point I wish to make is that I work to live.

Of course, we are talking about privileged positions. I was privileged to be able to go to school and not having to work to help out the family income, like both my parents who had to. I did remember one incident when I was asked by my family on a Sunday to get one of my many uncles to come along and follow my father to earn some money for doing a job. I stayed back at my grandmother to play the guitar, I think, and had a jolly good time with my younger uncles. When I returned home, my mother was furious, asked why I didn't come back and joined my father and uncle and earned some extra money. I knew we were not rich but had never thought ourselves to be poor, living in a compared low-cost council flat with seven kids and a grandfather thrown into a one bedroom and one living room (the room I lived in with my grandfather). There was always food, whatever is available, and hunger was and still is a nice ingredient when enjoying ordinary food. The only thing I dreaded about meal times was that I had to help in the buying of vegetables (never remembered meat), cooking of rice over charcoal and then gas, the chopping of shallots, the washing of dishes, and the washing of kitchen floor. I went through all these chores with the songs in my head, and when there was time, to do a few drawings. Uncle Number Four could sometimes come around with a camera he borrowed and I would use up the whole film, and he was never angry with me. But, anywhere, my mum was so crossed with me, about my lack of concern for the family wellbeing, that she threw me out of the flat, followed by my schoolbag. I was rejected until my father came back and returned me to the family. My mother was happy because he had made some extra money. Later, I learnt that she needed the money to pay for the shool fees of her younger brothers and sisters.

I was privileged to go to the UK to study. Kids who did not got abroad to study would not have a chance to go the local universities because of limited places for us. My parents decided ever since when they were married that they did not want their kids to suffer like them, for without a proper education, we would not have a good future - which my father interpreted for me to be "working in an air-conditioned office" rather than "slogging under the hot sun." Theirs was a good team, each doing their part, and keeping to their joint vision which invariably was for their children. My father always said he graduated from the university of the world. He kept his eyes and ears and mind open, with the mind always computing the permutations of the possibilities of how to make one cent grow to a dollar and then a hundred. He played no stock market, nor as they would say among the shopkeepers themselves, jazz up the proper market. They were good honest and hardworking people, keeping their expenses one notch below their incomes however low that might be,and never spending more than subsistence no matter how high a particular income might happen to be. Sweat by sweat, my father saved enough for him to be confident enough to ask me, "Son, do you want to study in England." I said, "Yes, if it is possible." He said, "Go and apply."

It was therefore a privilege for me to study. It was also a great burden, for my father told me that every cent I spend contains his sweat. How could I make my father sweat - so much? It was RM7.80 to the pound sterling. I studied under immense duress. My father wanted me to be a doctor. My grades were not good enough. I asked him what he wanted me to study. He said, "Economy" because the Mat Salleh manager from Inchcape kept saying "It's the economy" when rent payment was slow.

So, economics as the study of scarce resources and opportunity cost is not something I had to think very hard about in order to understand its full significance. You have one or two bullets, and you better hit your targets, but before that to make sure that that's what you really wanted to do. Otherwise, it is pure waste. I study economics, philosophy and computer science in my first year, and did all the advanced theoretical economics after that in order to get value for money.

Studying was not the easiest thing for me. It was really hard work, to know the meaning of every word, the meaning of every sentence, and the gist of the whole book and the purpose of the whole subject matter and how it all relates to the world we live in. I gave up studying for myself, because life is an endless cycle, of the same old stuff in new skins, and how differences from biological accidents at the skin level. Has human beings gone so shallow? I found studying easy only after I studied not for myself, that I must pass my examinations for my father not to sweat without purpose, that I must understand what is going on in this 3-dimensional illusion with time so that the noble beings, no matter how lowly, do not succumb to dispair and undue unhappiness.

I have no fear about earning a sufficient wage to feed myself and my family. My only fear is that I waste my time and energy doing mindless things which serve no purpose to anybody and sometimes not even myself. I fear being a person thinking, saying and doing things which hurt or harm oneself and others. I have no right to make the world for anyone, since it is already so tough for everyone - even for the wrongheaded and greedy and mindless, for they too suffer their own foolishness.

I work to make a contribution to the society in which I live, no matter how small the contribution may be, no matter how disturbed the society I live in may have become. I work to find meaning in life. My life is useless, I do not need it. But I will use it to serve.

Wednesday, August 4, 2010

Khazanah Sukuk S$1.5 billion

Khazanah last night announced that it has issued its single largest sukuk issuance in Singapore to-date for S$1.5 billion, at 2.615% for the S$600 million 5-year sukuk and 3.72% for the S$900 million 10-year sukuk.

It was also the largest Singapore dollar issuance by a foreign issuer in Singapore, and the first Singapore dollar issuance out of the Malaysia International Islamic Financial Centre (MIFC) initiative.

The governor of Bank Negara Malaysia and the deputy managing director of the Monetary Authority of Singapore also congratulated themselves.

The managing director of Khazanah said: "We are very pleased that this transaction broadens further our active participation in international Islamic capital markets."

I am very worried when regulatory and so-called corporate leaders are very happy to get government-linked companies further into debt and in foreign currencies - presumably backed by the federal government and presumably to finance some highly-priced medical services in the so-called regional markets.

If Khazanah is a specialist in commercialising medical services, I shall be slightly less worried. But if Khazanah is some hot-shot financial wizard that plays with other people's money - and in this case, the taxpayers' money if its fantasy goes up in smoke - then I am very worried for all of us.

That this is the single largest sukuk to-date is worrisome for me.

Monday, August 2, 2010

Why I Blog

I am doing this post because my last post is exactly a month ago and since today is the anniversary of that solitary post for the month, I thought I had better do something about my lack of effort.

I had been busy (indeed) and away (true). But the real reason is that I had nothing to say.

After my last post, I have been quite ashamed of myself for having make capital out of some poor soul who is trying to earn a living and here I was in the safety and comfort of where I am to make snide remarks. My alarm is that many people agreed and I find myself feeling that I have committed an injustice to whoever that guy is who is trying to earn a living, even if I disagree with the way the whole thing is being set up.

The other distressing thing for me is to have found out that some good soul has pasted my post in his blog thinking that it was a brilliant piece and there I found some commentator who said what crap it was just because I had just one miserable typo. That puts me off writing.

My problem is that I am quite a lazy writer. I never check what I have written. I start with the first word that comes to my head and goes right down to the last word and then press "send." I cannot bear to read what I have written. I just wanted to say something and I say it. Does one go over the words one has just spoken?

Words that sound the same get mixed up. Am I dyslexic?

I like hishamh's recent philosophical posts - which inspire this one. Mind you, I quite like the four blogs that I follow because they are clear. hishamh is a data guy who, as we now know from recent posts, is trying to avoid mixing business with pleasure. His recently declared self-inflicted code of conduct is very long and I that is why I summarised it for him by saying that he is a data guy.

de minimis has a style of writing which is intriguing as it tries to draw you into a point of view which is particularly unequivocal. And he has a far wider range of things to say than economists like us who are stuck in their own little economic boxes. I like him because his heart is in the right place.

sakmongkol AK47 takes a militaristic approach to blogging. I like him because he has important things to say to his people.

The fourth blog is not mankiw who I follow to see what is in the mind of the America academic but walla. Walla is a parasitic blogger. He does not have his own blog but he is in everybody's blog (blogs that I know of, that is). He has a view that no one blog is adequate to contain. I like him because he takes us all to a different plane.

I mention hishamh because his recent postings get me into this long and winding post about why I blog on economic policy but think like a theorist (or so I imagine).

I think economic policy has gone down the tube around the world, because economic theory has been stuck in the past and has not managed to get out of its old mouldy cupboard into the new world.

We have to begin to think away from the old structure of thought especially in economics. I spent the last thirty years working in the real world to get away from old theory. The sad thing is that many people do not know what they are doing especially in economics because they have not understood their economic theory well when they were in university.

They have the most basic elementary view of economics. The most misunderstood is the Keynesian multiplier, which seems to be the cornerstone of every wrongly formulated policy. With the multiplier, all wastingful spending the government appears to be justifiable. You do not need to go to unversity for that kind of thinking.

I blog because I want to fight the wrongful use of the Keynesian multiplier.

I do not like to quote data because I have spent too much of my life looking at data. I want to move away from the tyranny of statistics and learn to think logically with eyes fixed on the phenonomon of the real world.

How can you describe the real world without statistics? Do statistics describe the real world?

I work with models, more theoretical than econometric, because the econometric model is rigid in structure. With theory, I can begin to think - admittedly around some "stylised facts" as economists or development economists like to say.

I find economics fascinating as subject of study because it is a study of human behaviour as we go about the daily business of living and earning a living. I think this is straight out of Alfred Marshall's Principles of Economics. I think it is still the best reason for thinking as an economist.

Human beings live in fear of the unknown and the uncertain future. We create certainty through trust that is developed out of long practices and understanding as to how things are supposed to be. With trust, many things can be built because it is economically efficient without having to go back to the fundamental test all the time. Accreditation. We used to trust nature (God), machines, money and ourselves. There are many things we are calling into question as we go creative. In econometric modelling, this is called a structural shift where data (necessarily of the past) do not contain sufficient information of the future.

I blog to explore new thoughts and new ways of thinking about the world we live in. When we are deep into things, we lose sight of the perspective. That's why I take the side view.