Thursday, September 30, 2010

Why I Think

Let me continue with my why-how series from personal experiences. (I must confess that I am extremely uncomfortable doing this series because I feel I am baring too much of my personal self in public - just like taking a shower in a communal room for the first time.)

I have done Why-How I Blog and Why-How I Work. The next logical one is Why-How I Think and Why-How I Live. (I am getting into deeper and deeper waters.)

I think because I want to be. (This is a poor parody of Descartes.)

I think because I want to be myself. Truly myself.

I think so that I know that what I think, say and do is based on my own reasoned conviction, and not as a result of some accidental historical background conditioning - and I have to add unconsciousness conditioning as opposed to some mindful self-inflicted self-inflicted conditioning when I want form good habits for myself - of which thinking and thinking right are crucial ones.

I think because I am extremely dismayed by the untoward consequences of unthinking whereby ostensibly sensible nice people can suddenly turn into scary monsters when some hidden spots are pressed and an entirely strange new being springs out - like the genii from Aladdin's lamp when rubbed the right (or wrong) way.

I think so that I can be a more stable person when dealing with myself and my loved ones and friends and strangers I meet and strangers I do not meet.

This is important so that I do not constantly surprise myself by the things I think, do and say, and I do not frightened others by them. The unpredictability can be predictable but it is better to be predictably predictable even if it removes some of the excitement out of life.

After all, I find human beings constantly searching for certainty in an uncertain world - the permanent shelter we want to to keep the elements away from us, the field and animals we keep for a constant supply of food, the priests we constantly keep by our sides in case we should quite suddenly have to depart, the cash we keep in our pockets (for transactions and speculation, according to guru Keynes), the many houses and cars and watches and cameras we have just in case we need to reach out and touch them in order to find ourselves, the friend we keep in our circles just in case we need them to do things for us, the insurance that we want when we know that there is no one human being who can vouchsafe for any one of us about what and when of the things that happen in life (most of the times to others but sometimes to us).

I think so that I can face my responsibilities squarely in the face. I can live a much more certain and boring life - by focusing on doing the same things over and over again in order to perfect my craft, the un-excitement of which requires internal resolve and determination and will and energy.

Alternatively, I can make my life as exciting as possible by running away from my parents, my spouse, my girl/boyfriends, the police, the taxman, the taximan, the bosses, the subordinates, the fellow workmates, the traffic jams, the work load, and myself.

I think so that I do not have to press down others so that I can look good.

I think so that I can realise that the world is big enough for every human being and every animal and every plant and every bacteria and every parasite.

Finally, I think so that I can face life squarely in the face. I think, therefore I welcome death as I welcome life.

I think so that I welcome whatever comes my way.

I think so that I can face facts.

I think so that I can submit to the inevitably of life and non-life.

Wednesday, September 29, 2010

Fighting The Keynesian Multiplier

This may be a good time for me to elaborate on my little private fight against the Keynesian multiplier.

The Keynesian multiplier was a little trick which Keynes used to argue for fiscal stimulus for the purpose of generating jobs. His argument went something like this: "See, you can spend some public money and it will trigger private investments which will add up to a multiple of the original sum, if the trigger effects are allowed to work themselves out properly."

If the government spends RM100 on public works, and that amount is spent on fully on local materials and local workers, then the RM100 will go into the pockets of businessmen and workers. If they keep, out of that RM100, RM20 and spend RM80, that RM80 will generate additional income of RM80 in round two. The RM80 becomes the new income and if RM16 are saved and RM64 spent, then it creates an additional income of RM64 in round three. Etc, until infinity.

Mathematically, this is an infinite series. If the whole series is added up, it goes neatly into a formula 1/(1-c). In the economic system, that c is the propensity to consume C/Y and (1-c) is the rate of saving. If the rate of saving is 20% of income, as we assumed above, the multiplier is 5 (from 10/2).

Consultants working in Malaysia have been very happy to use a multiplier of 4 to expand the benefits of every little (or big) government spending programme.

I am only very concerned that the application of a multiplier of 3 or 4 or 5 may unduly exaggerate the benefits of budget spending.


If we extract 2009 figures from Bank Negara's Annual Report 2009, we get Y=661.8 and C=435.2 in current prices. This gives a consumption rate of 65.8% or a savings rate of 34.2% and a multiplier of 2.9 (1/0.342). We can say this is about the maximum average multiplier we can apply for Malaysia.

There are other complications.

1. The calculation assumes that all the increased incomes are spent on locally produced goods and services. But leakage in Malaysia is very high because of the inability to produce world-class products which are the targets of those spending. E.g. High-spend railway line. In the example above, of the RM100 spent, RM80 could go to imports (rail engine, steel, foreign consultants, foreign workers, corruption money) and only RM20 could be spent on local goods and services. So the multiplier will be only 20% of the 2.9 or 0.6 which is less than the original amount spent (i.e., RM60 out of RM100).

2. The trigger effects may not have the chance to go to infinity. The first round is RM100 spent, and RM80 goes to imports, and RM16 consumed on local stuff. We will be lucky if the RM16 gets recycled in the local economy. If it is spent on a foreign product, then the whole of the RM16 disappears. So, the multiplier in this instance is only RM16 out of RM100 or 0.16.

It is for problems like these that our stimulus packages do not get to stimulate the economy. The whole idea of simply throwing some cash into the system and hoping that things will reboot themselves is a fantasy of policy makers who do not have a clue as to what they are doing.

And I blame the Keynesian multiplier taught in Form 6 or First Year economics to be at fault.

It is because of the impotence of the multiplier that I have been trying to fight all this while for a clarity of the programme or the economic strategy that the government is pursuing. There is a need to get the whole economic system to move in tandem in order for the movement forward to be sustainable. The government (our money) simply does have the cash to keep propping up the economy. If the baton is now given to the government-linked companies, I have to be more fearful.

We now have a strategic economic misalignment - our system with the rest of the world - and our system needs to be re-aligned. (I am tempted to pursue the analogy of re-aligning the four wheels altogether.) We have to get the economy back to the path of indigenous excellence (and I use the word "indigenous" here broadly to include all citizens, all locals) so that we can generate a good multiplier internally - so that a little home-grown investment can go a long way (and bankers do not have to worry about borrowers absconding abroad). We just have to try to plug the holes in our system.

Tuesday, September 28, 2010

5 Ways To Transform The Economy

I think I have been make amends to my previous post by writing what I expect the transformation of the Malaysian economy to be like.

1. External Environment

We have to take cognisance of the external environment - what we expect it to be like until 2020 and how are we going to react to it.

While the United States is still the largest economy in the world, there is a now a formidable global economic force in China and some say India. Europe will remain the centre of luxury products to feed the new rich of Asia. Indonesia may see a sharp transformation of its economy if it manages to lock into China through the new and quite impressive ministerial team.

The opportunities for Malaysia will still be in commodities, with focus now on palm oil and its downstream activities. It is not clever to just be selling the palm oil - we have to go into processing, i.e., palm oil-related industries with focus on research and manufacturing. If our plantation companies are stuck merely at planting and harvesting, then we are stuck in the middle income.

Electrical and electronics I am quite apprehensive. We cannot compete on assembly. We have to go into R&D. We have to beef up our universities - and they say they cannot be KPIed.

2. Domestic Environment

The domestic environment is probably going through its third-level expectational changes. At the first level, the New Economic Policy has created gains for a small section of the Bumiputra community (as a result of piecemeal proactive measures rather than across-the-board policy) which created discontent among the large majority of the Bumiputra community and the whole of the non-Bumiputra community.

At the second level, this discontent leads to lack of confidence in the universal goodness of government policies and consequently voting by feet. Redistribution without serious reinvestment creates a lethargic domestic private sector which therefore is substituted by foreign direct investment.

At the third level, there is now the struggle to keep the New Economic Policy (argued on rights). The challenge is to find new proactive measures which are not unilateral transfers but instead investments in human and social capital so that there will be less intrusive or discouragement to the confidence of the rest of society. In fact, there is a real need to find ways that encourages both the Bumiputra community (those who have benefited and those who had not) and the non-Bumiputra community.

There is a need to spell out a bit more clearly in practical terms the meaning of things for the nation to move forward as one.

3. Research and Innovation

The managing of expectations and the building of confidence in Malaysians in the future of this nation (and not just the confidence for foreign investors to make money off Malaysia and Malaysians) is crucial for Malaysians themselvesto start investing in the future of Malaysia. This involves pouring blood, sweat and tears to projects in Malaysia, using Malaysian resources and for the needs of Malaysians. In this context, indigenous investments must mean investment by Malaysians, Bumiputra or otherwise.

Again, our investments must be in human and social capital, as well as in scientific and commercial enterprises. Malaysians must wake up to the harsh reality that there is such as thing as technical know-how which should, ultimately, be superior to the social know-who to progress - although, admittedly, social networking is vital for individual progress in society.

4. Banking and Finance and the Capital Market

In the current global environment, there are more funds than there are good investment projects. It will be not be clever to pay a high interest rate of 5% say for financial funds. It does not bode well for the nation to guarantee foreign funds a high rate of return for the basis of undertaking some speculative real estate projects at home.

Malaysia's problem is that it has thrown the baby out with the bath water when it solved its banking problem during the financial crisis in the late 1980s. By amalgamating smaller banks into banking giants, ostensibly to ensure sufficient capital support to withstand the bad loans, the solution to the problem of the ratio of non-performing loans to total loans is to expand the loan books. Loans are thought to be more safely given out by lending to (politically-connected) single big borrowers, and the creating of collateral assets (namely, real estate). I agree that there should be a narrow cap on the loans book that goes to the real estate sector.

As a result, big banks are not structured to understand and manage and have a proper relationship with small-scale entrepreneurs. In other, big banks have killed off the small enterprises by their technical incompetence in nurturing small businesses. It is far easier for fresh undergraduates to analysis proforma balance sheets and profit and loan statement, rather than to go to the ground and understanding how the businesses are doing. Much of the paper work with banks are probably unrelated to the reality in the business world.

There is no problem with the capital market, insofar as I can see. The only problem is the lack of good businesses to invest. Businesses, especially small businesses, have discovered that it is far easier to make big bucks by conning the small investors in the stock market with their bogus prospectuses than to go out there to fight in the real business world. The excess liquidity situation does not help to identify good businesses for investment, and Malaysia's lack of competitiveness in the world does not make Malaysian firms to be good vehicles for long-term investment.

Bank officers just have to be properly trained to help grow new firms through strong relationship banking with customers.

5. Rapid Adjustments

The one consequence of a big government sector in the economy is that the economic adjustments tend to be excruciating slow or none at all. No government company has failed. No big companies associated with the government has failed. There are no distress assets to be bought on the cheap by those who have been prudent and are cash rich. The economic game continued to be in the hands of the incompetent few (or many?). Companies making losses have been given a new lease of life by restructuring and the sale of assets and as a result are now completing rundown and are in no position to compete either at home or abroad. Business decisions appear to be made without contingent liabilities to the individual directors whose are recruited from retired senior government servants.

Banks should be forced to pull the rug from under the feet of companies that are not doing well or are inefficient.


I can go on to detail out the need for a good judiciary system to settle industrial and commercial disputes and everything else to do with the business environment in Malaysia. I think I have written enough to give an idea of what I am getting it and that I probably have a legitimate basis for being not entirely happy with the Economic Transformation Programme.

The ETP should be strategic that triggers things off in the right direction. That right direction is the keenness of private domestic investors to invest in Malaysia.

How Not To Transform The Economy

I have been trying very hard not to write anything about the Economic Transformation Programme (ETP), the bare bones of which were revealed on the 22 September by the press.

It is just too easy to be cynical.

Target: To triple the Gross National Income (GNI) from RM660 billion in 2009 to RM1,700 billion by 2020 at growth of 6 per cent per annum - and I really hope they get the definition right - and create 3.3 million jobs by 2020. High income of RM46,000 per capita by 2020 from RM23,700 in 2009.

Total 131 projects worth RM670 billion proposed to 2020. 60 business opportunities to be "made available." RM115 billion to start by end-2010.

Malaysia number 1 regional hub for oil fields services, global diversity hub, revitalising the capital market, 114 km of rail lines via Mass Rapid Transit high-speed rail system to connect KL and Singapore, revitalising Klang River, and towards a duty-free haven for Malaysia for tourists.

12 National Key Economic Areas (NKEAs): (1) agriculture/palm oil, (2) oil & gas & energy, (3) electrical & electronics, (4) education, (5) wholesale & retail, (6) healthcare, (7) financial services, (8) tourism, (9) business services, (10) communications, (11) content & infrastructure, (12) Greater KL.

92% from private sector (RM1,270 billion), 8% from government (RM105.5 billion) to produce an additional GNI of RM775 billion by 2020 (presumably after taking away organic growth).

1. For one thing, this country has undergone a few significant transformations. We are therefore used to economic transformation and the only real issue I have is to see that the transform is for "good." What do I mean by that? A good transformation makes the economy more flexible than before, more capable of adjusting to external and internal challenges and, as a result, makes the economy stronger and more resilient. More resilient means the ability to take drastic corrections with the fading of the inefficient and the rising of newer and hopefully better champions of innovation and investment.

2. The Malaysian economy has turned from an export-oriented primary-commodity producing economy (under colonial rule) to (Transformation One) an inward-looking import-substituting foreign-investment-unfriendly regime (1970s resulting in a recession) and then quickly reverting back to (Transformation Two) an FDI-welcoming economy (late 1980s) followed by (Transformation Three) an explosion of supply-side infrastructure mega projects (early 1990s) which resulted in a financial crisis (inflation and bailouts) as a result of policy ignorance about the dangers of short-term capital flows followed a series of counter-cylical fiscal stimuli.

With the severe delay to a high income economy by 2020, there is now revealed in the ETP a flurry of projects to bring the economy quickly up to mark. Are we still stuck in Transformation Three?

3. This may be the place for me to say this. A lot of nonsense has been said about the importance of the services sector - 60% or 70% in advanced nations and 40% or 50% in developing nations and now the services sector can be enlarged in order to become an advanced or high-income economy.

The services sector in advanced nations are higher in proportion to the whole economy because their agriculture sector has disappeared due to high cost of production, and increasingly with the rise of China and India, so is the manufacturing sector. To survive, they have to use their wit which requires them to go in financial services (capital flows and corruption money from developing countries) and education (students from developing countries with bad education systems) and tourism (corruption money and windfall gains from the stock markets). It is foolhardy to compete head-on on these fronts with the more advanced economies which requires a fairly high degree of integrity and honesty in dealing with information.

In most economies especially developing economies, the services sector can only develop in conjunction with the agriculture and manufacturing sectors. It is therefore the most important that investments in these two sectors must be strong in order to pull along the rest of the economy. Without the real "real" sectors being developed, I am afraid that the "services" sectors that we are trying to develop will be related with crime, prostitution, drugs, financial fraud, social disintegration, and the corruption of standards.

4. With the infrastructure projects that are being laid out in the ETP, without any innovation or the adding of value to the economy, the projects are once again going to be financed by the future generations in the form of inflation which will only make their real income lower so that they will have to tighten their belts so that scarce resources which are meant for their consumption can be diverted to these projects. I am not against projects but they must be economically feasible if they cannot be financially feasible. The rush to meet unrealistic deadlines in order to "show results quickly" is not the way to go. Sometimes, a little hard time can be good for the soul and spur one to hard work.


A masterplan or roadmap or a project-implementation programme always smells to me a command-type militaristic economic operation. I do not know whether management consultants make good economists. The key role of a good economist is always to promote confidence and some clarity of the rules of the operating environment so that timid risk-adverse investors can be drawn out from the murky corners of their hideaways in the hope of making supernormal profits from a situation which they think no other persons have seen before. The enticement of profit from an opportunities is the trick that economists use to stimulate investments. Alas, we have to be content with a directed chess game whether the end game has probably already been decided - if they know the nature of the game that everybody is supposed to play.

I keep my fingers crossed, and wish the ETP luck for all our sakes.

Monday, September 20, 2010

A Theory of Special Interest Groups and Groupings

What is race but an accident of history frozen at a particular time.

That accident is the result of a community trying to find a sustainable livelihood, given a particular environment.

A community is a group of people who find kinship on the basis of a common factor or a set of common factors which they all share and which they can all identify with - either language, or way of life, or attire, or family members, or customs, or beliefs.

It is therefore likely that in a community with has within it many varied characteristics or features or factors, there will be as many factors.

Some factors are at individual levels - family. Some are at social levels - language, customs, beliefs, attire.

Some factors operate at national levels - language, way of life.

Some factors transcend national levels - language, beliefs.

There are therefore many permutations or groups that can be established within a community, and especially within a highly rich and diversified community.

Different groups are formed for different purposes or special interests.

Different interest groups can collude with each other in other to gain power over other groups or groupings.

When an objective is achieved, the different interest groups will split up and, if they cannot dominate the situation, will then try to work with other groups as a matter of expediency in order to gain an immediate strategic advantage, before preparing for the next move.

Different basis will be used to justify their existence and to garner support from the public at large - a certain sense of justice, history, morality, environment, economics, scientific objectivity, spiritual calling - although no one factor can be considered superior to the next.

The ultimate purpose of all groups is power - political power with a view to economic power or economic power with a view to political power.

The immediate purpose of every special interest group is to prevent the other group to gain dominant power.

There is advantage in gaining dominant power - you can abuse the others for your own advantage and gain, which is sometimes also called corruption - of justice, history, morality, environment, economics, scientific objectivity, spiritual calling, depending on where you do not stand.

The fight for a race is usually championed by a foreigner who is keen to be accepted by that race as one of its members - see Kublai Khan, Kangxi, Paul, Napoleon, Hitler.

Genuine members of a race typically are comfortable with who they are - and, like all decent people, wish to consider themselves as being kind and considerate and behave kind and considerate.

But in the sphere of physical construction, there is a specific level of excellence in technical knowledge without which the construction will not be stable. This technical knowledge is the basis for the modern world that we live in today and which there can be no compromise without subsequent cost. Technical superior is lost when the best in the relevant field is not properly employed.

Tuesday, September 14, 2010

Change & Progress in a Demoracy

I wish to write on the real essence of what we are trying to do in the modern and enlightened world when we deal with the idea of democracy.

In a nutshell, when we talk about democracy, we are really thinking about change. Why?

The truth is that we sentient human beings are often ignorant - about where we are, where others are, and where everything will be - so we must as well own up to our inherent lack of knowledge and wisdom - not matter how much we pretend to think.

The idea of democracy is a fine ideal - of freedom of speech and action when everybody is given the leeway to do or say whatever they like in order to be happy - which we should all strive to achieve but which we know we can never really get. It sounds a bit like heaven and hell - not getting quite the real stuff.

In practice, everything collapses to majority rule, which gives rise to the tyranny of the majority. On the other hand, a small elite must control the majority, which thus give rise to apartheid or totalitarianism. In either case, the outcome really depends on the wisdom and kindness of those in power who have the right to determine who should live and die, and who should be comfortable and who should not be.

In politics, the Greek democratic ideal is reduced to the Roman republicanism which as we know through history can descend further to the monarchy of Caesar. After Caesar, tyrants and chaos.

The real uniqueness of the American Constitution is the limitation of the term of the president. A fool or a wise man can do damage or good for a period of eight years to a nation, and no more. Let the next best person try his hand to do something for the nation. There is nothing like variety.

It is this struggle for change that the freedom of speech has a critical role to play in the nation - that every man and woman who thinks he or she is good enough can stand up and argue his or her case. He or her should have a different point of view of how things should be run, no matter how good or bad, so long as the majority agree to suffer by him or her.

Without the flexibility for the change of the government or the leadership of the nation, freedom of speech is nothing but a beautiful decorative flower that only looks nice and nothing more. There is nothing to talk about, in that case.

By the same token, it is only that the last or previous leaders of the nation, having had their turn to do good, should now keep quiet and let the new prevailing leader do his or her job.

I think its sheer hypocrisy and deep disrespect for old leaders to think that they know all the answers to the problems of the nation when they already have had their chance to ruin it roundly, by being misguided in their policies when they were in power.

It is a fact that this nation has already had tried its favourite policies which have had their fair share of successes and failures. We have been there, and done that. Let us move on and try something new, something different. It may not be the perfect solution, but at least there are other parts of the nation which deserves some encouragement as well, if not anything, but to see whether that sector is still there or alive.

Furthermore, the world has also changed, and if we keep getting pestered by the same old arguments by the same old people, then I don't thing that we are giving the younger generations a fair chance to engineer their own future. The demons of the older generations cannot be inherited by the younger generations.

If indeed this nation wants to transform itself, restructure its society and obliterate race from the economy, then I think the educated young of all races should be conscripted to labour for the nation through their own private and individual interests.

It is foolhardy for any leadership to think that public largesse can be bestowed on private individuals in the hope they will repay the public by huge acts of great success and great generosity. We all know that what goes from the public purse to private pockets will only stay in private pockets provided those pockets do not have holes in them.

I do not necessarily think that the proposals of the current government are perfect and faultless. We do not know. Some of us may not like some of them. The harsh reality is the nearly impossibility to obtain a consensus in public matters. There also must be efforts to scrutinise the policy proposals. But once the time for planning is over and the time for implementation comes, we should just implement them. We shall bear the consequences and move on.

There is nothing like a rigorous debate (for new ideas to do things better. The old leadership may wish to argue that he or she also has a view as a member of the public. Fair enough, then say something new.)

Wednesday, September 1, 2010

The Danger of Putting Politics Before Economics

It is true that economics is not without its shortcomings, being the study of human behaviour in contact with each other to provide goods and services to each as each person searches for happiness in this troublesome and, sometimes, too long a life.

The difficulty of the study arises because the behaviour of human beings, individually but usually as a whole, changes as their operating environment changes which, in turn, brings on new sets of behaviour. From this perspective of dynamic change, we see a tendency for collective human behaviour, and hence the economics (and the politics), to ascend (becoming more optimistic) or descend (becoming depressive).

Malaysia is in a unique situation of having a potent mix of many colourful ethnic people in an economic cauldron with the fire underneath being gently stoked by the clever few. If the fire is gentle long enough, Malaysian will meant into a homogeneous entity, probably reluctantly. However, if someone decides to stir the pot with a stick as well, the different little bits and pieces will spin in their own little eddies round and round the pot, knocking against each other as if in violent agitation.

The New Economic Policy was a policy attempt at creating a new economy. While poverty is, rightly, a universal concern, the other concern was in regard to wealth distribution.

Poverty (or wealth creation) and wealth distribution are both social as well as economic problems. Poverty is a social problem when the family unit breaks down or when people are physically or mentally handicapped. It becomes the duty of a moral community to help the unfortunate. It can be an economic problem, through lack of (proper) education. It can be a systemic economic problem, when an economy goes into a recession or when it is not creating sufficient (good) jobs.

Wealth is distributed as a product of the peculiarities of an economic system. An economic system is created to produce wealth, either for the masses, for a select few, or for the top leader. The economic system is invented by human beings, which means of course it can be changed. Different economic systems (or models) will create different results, with regard to wealth creation and wealth distribution.

Several economic systems have been tried out in the economic history world, and they are still being tried out - including the one in Malaysia. The models go from the Garden of Eden, robbery, subjugation (enslavement and forced labour), conquest, and colonialisation. Apart from the Garden of Eden model (which is favoured by roaming natives in thick jungles), all the other traditional models are based on the labour of others for the benefit of a few.

The current more popular model that is being widely promoted by academicians and practitioners of all persuasions is the model of free enterprise based on free competition and free movement of capital and labour. This is argued on the basis that it benefits more people (than other more coercive models), as they compete with each other to provide goods and services for each other in order to survive, with the incentive to labour in the form of perceived wealth.

It is argued that people are more given to hard and harder work, which is not a chore to them, because they have a choice, a choice to do the things they want to do, or a choice to do the things they do because they have a noble goal to pursue (such as a better future for their children) - which could just be their meaning in life, their raison detre for existence. But, they may not be happy to work that hard if they feel that they are being forced (directly or indirectly) to work that hard because of an artificial quirk in the system which they have no choice to get out of.

In the design of any good economic system, the thing to watch out for is the incentive to hard work now in order to reap long-awaited much-desired fruit in the future. It may just not be wealth, but education for their children.

The hidden fire under the cauldron of life is the fear of uncertainty, the fear of failure, the fear of having to beg from others, the fear of desertion, the fear of being disrespected - that drives normal sane people to slogging their hearts out, as if to expiate some unaccounted-for sins of theirs (demons, I call them).

Remove that fear and uncertainty, you have removed the incentive to hard work.

The availability of opportunity for everyone of all abilities to climb the economic ladder is arguably the most value asset of an economic system. As more individuals climb, society improves.

When the people are demoralised and despondency sets in, society crumbles.

It may be necessary to discuss economic issues in racial terms, in order to have a clear picture of which particular groups are in trouble and why. When politics gets in to solve economic problems on racist terms, by blaming economic problems on particular groups, then the stage is set for policy to take on a more racist solution, if the rhetoric is left unchecked.

The world has seen before how nasty racism can become.

Malaysia's economic problems today may simply be that old policies did not allow it to adjust to the new world economic order, as in the case of many countries, that the old economic system is obsolete. The challenge therefore is to find new economic ideas. This is also a great time for political agitation, with no one having any answer and each blaming the other.

These are indeed dangerous times, as sentiments harden into logic in narrow minds. When logic fails to persuade, as people talk at cross-purposes, emotions may just rupture, if care is not taken.