Thursday, November 8, 2012

First & Third Rate Minds

I have been piqued for months by this little question: How do you tell the difference between a first-rate mind and a third-rate mind.

Here we are, racking our brains day-in and day-out to figure out things, to understand things, and to try find simple and practical solutions to the many problems that we have to deal with in our attempt to live a satisfactory life.

We try to see things from all angles, at various levels of details, or various levels of abstraction. We apply logic, lateral thinking or even inspiration. We try to think out of the box or get into the groove. At the end of it, we may have some semblance of a perspective, a definition of the problem, or a way to think about the problem.

Now, when you want to communicate your ideas, you will talk to people and you will get responses.

When you talk to a first-rate mind, you will get further discussion on your ideas, an elaboration, or even a new perspective. You get enlightenment. You see clearer. You think clearer. You get a clarity for which you are grateful.

But, how do you know when you talk to a third-rate mind? What are the indications? After all, everybody imagines that he or she is brilliant. He or she may even be your boss or a person of authority. This may not be an uncommon situation. Society can be filled with people who do not really care for how they think. Let's say, they are not rigorous. So long as they can get by with a flippant excuse, they are happy. So how would you know. My experience is this: I don't understand what you say, but I disagree.

Wednesday, September 26, 2012

Budgeting For Inflation

When rampant inflation sets in, everybody is under siege - it is as if smog has descended and blanket the whole scenery and we all cannot see clearly.

The government, just like everybody else, now has problems trying to balance its budget. Higher prices and costs mean that the same money now buy fewer things - or that if the government wants to do the same number of things with the same number of people as before, then it needs more money. Worse, there is further escalation in costs as the workers working for the government and elsewhere in the economy also want to have more money to maintain the same standard of living as before - failing which they will have to live with less, and those on the margin will have to suffer physically.

It is no surprise that the first tenet in economics is to control inflation. It is a cardinal sin of the policy makers today, especially monetary authorities to have abrogated their duties and go with the flow for the sake of political expediency. This sin has created a new problem - of whether to continue with the circus or to bring down the tent. There appears to be no halfway house - and keeping up with the act may be yet again the most expedient way to go forward; the show must go on.

The government cannot use this budget to raise revenue to make up for its shortfall - the deficit cannot be closed in the foreseeable future. The internal problem of the government's finance department must be how the government can continue to maintain its market rating so that its borrowing does not before unduly more expensive. But the real problem of the government is that it cannot make sure that its deficit-funded projects will be productive and multiplier-expansive - there has been a far greater emphasis on creating big immediate impact rather than consistent and permanent impacts over the immediate and longer run. The disciples have not understood the words of the master well enough.

If the government's aim is to spend so that the people can benefit but that it does not now know to do it properly, it is then better that the government reduces its imposition on the poor people who have to pay tax even though the people are struggling to make ends meet. The government should introduce tax measures that will unburden. One way of unburdening itself from the people is for the government to reduce its tax on the ordinary individual taxpayers by an increase in their tax allowances as well as adjusting its tax brackets for inflation.

Since prices have at least doubled for many things that ordinary households use, the most simplest thing that the government can do in the budget for the people is to double its tax allowances: tax allowance for self and dependent from RM9,000 to RM18,000, books etc from RM1,000 to RM2,000, children from RM1,000 and RM4,000 to RM3,000 and RM8,000, medical for parents from RM5,000 to RM10,000, for example.

The new tax schedule is proposed as follows:
Taxable income (RM)
First 50,000 - 0%
Next 50,000 - 5%
Next 50,000 - 7%
Next 50,000 - 9%
Next 50,000 - 11%
Next 50,000 - 13%
Exceeding 300,000 - 15%.

An important impact of unburdening the ordinary professional worker is that you do not want the worker who has supposedly a decent job with a decent training and a decent family to be scrounging around for deals and outside projects just because of rampant inflation which has hit his or her family's daily household expenses and pushed his or her income into the higher bracket.

It is fair to say that 5,000 a month in KL is insufficient and 10,000 a month may just allow one to live without undue financial worries and without undue luxury as well. For now, I think this is where everything starts. If the government wants to think about GST after the elections, it is not to early in this budget to prepare the background for a fair taxation system for the individual taxpayers. The government has squandered its tax resources on foreign companies which have used our precious scarce natural resources for their global profits. It is time that our government makes the local environment conducive for home-grown players of the economic game in a serious and significant fashion.

Tuesday, September 25, 2012

The Problem of Wealth For The Nation

The problem of wealth for the nation is when the wealth is just a pile of clay which, a thousand years from now, will be just rubble.

It is understandable when an individual craves for physical wealth because that wealth brings about luxury and freedom from unwanted labour. Physical wealth creates a sense of security, a confidence that one does not have to worry about having sufficient comfort for the rest of one's life and that of one's next two generations (as it will be lost in the third).

When everybody is this wealthy in physical assets, who will provide that that uninterrupted and steady future income stream which is so very much yearned by all of us? It is not a mystery when landlords control land in town and demand high rental that poor tenants and workers have to slog for long hours every day of their lives just to pay rent. By the sweat of their brows, they provide that steady stream of income for the property owners.

In a nation of property owners, the poor workers are our unfortunates relatives and foreigners alike who have no access to private property - because their chances to ownership have been taken away from them by that asset inflation very much prized by the rich landlords. With no assets to their names, they can only earn wages by their labour or salaries by whatever little training and qualifications which they may happen to acquire through the formal education system. Do not be alarmed to see workers in small shops whiling away their lives in quiet desperation - for they are victims of the landlords.

Ours used to be a good nation when the greatest aspiration was to own one's own little house, and then devote the whole of one's little savings on a good education for one's children - the point of the education then was that each child can then chart his or her destiny and contribution to society. Now is just private property ownership, asset speculation, sloth and a complete wastage of talents - thanks to that easy money printing press.

We are now stuck in that difficult situation when the real answer to all these problems is how to find an accelerated depreciation of money. The purposeful and systematic disruption of the value of money is a remedial which much be alien to an untrained mind. It is like blood letting - a relief of pressure. Unfortunately, different parts of the system will feel different impacts - and it is always the poorly endowed ones who will have to suffer. At the end of the day, the only way that the system can lift itself up by the bootstrap is to use its own ingenuity to discover the real and present needs of human beings who are then willing to pay for those things by an exchange of their fruits of their own labour.

In a high income society, where everyone have such a high respect for one another that one is compelled to pay the other person as much for services as one would pay for oneself - which therefore means that one will end up having to do everything for oneself - which means that everyone will be equally well trained and competent - which means that one line cuts across the whole of society and everyone is equal and there are no masters and slaves.

Now, about these artificial titles that privileged people bestowed upon each other....

Monday, September 24, 2012

Mediocrity & Incompetency

I have been bothered by this issue for quite a while, and now I think I may have "thought through" sufficiently to write something intelligent about it.

While I am a keen champion of ideas and creativity, I am also quite comfortable in living with mediocrity.

It is not everyday that one can be inspired and brilliant. In most day, brilliant and inspired people are just plain mediocre.It is mediocrity that allows us to be humans, when we can behave normally and relate with people around us in a decent manner.It is mediocrity that sets the wheel of life running smoothly like clockwork (without the orange). The butcher who cuts a decent piece of meat. The noodle seller delivering a sumptuous piping hot bowl. The bus driver who braves through the traffic every second of his working time. It is this ordinariness of the day that defines our society and our way of life.

Of course, for excitement and to spice up life, we want new ideas and, if we like them, we call them brilliant. Those brilliant are few and far in between the lives of humans throughout the few short thousands of years. While each brilliance produces comfort and convenience, it is unfortunate and inevitable that someone has to pay - as, I imagine, it would be very difficult to come up with a way of living that is effortless and costless to oneself as well as others. It just doesn't jive with the concept of yin-and-yang nor the concept of completeness nor that of world where the total mass doesn't change (except when we are firing things into dark space).

But incompetency is something else. Incompetency is not mediocrity. Incompetency is purely the inability to do something successfully.

The cause of incompetency is not lack of cleverness. Incompetency is an attitude where the inability to complete the work that one has promised to do is not important. Incompetency is the result of a lack of integrity in oneself and one's relationship with another. Incompetency is the result of plain dishonesty.

In this brilliant mediocre nation of ours, we are infused by sheer incompetency.

We disregard learning and education. There is no shame in claiming to have an expertise for which one has not formal training whatsoever. This is a complete disrespect and disregard for technical professionalism, except to steal the fruits of their efforts for one's selfish pecuniary ends. There appears to be a tacit championing of people with crooked dispositions who are regarded as brilliant. It is as if we have founded our national psyche on the shifting sands of quick gain and instant result. There is no investment of time and effort on doing the right things and doing things right.

As a result, we are a nation of traders and speculators in a central-bank-propelled inflationary environment where asset holders are getting wealthier by the day and the poor wage earners and pensioners are forced to abstain from consumption so that precious resources can be reallocated for piling more bricks with more mortar. We used to be a nation of parsimonious people who focused their minds on a deliberately honest way of life. We are now caught with a mental infirmity that eschews devotion and effort. We could be incapable of work.

Thursday, September 20, 2012

Tao of Zen

Or Zen of Tao
The Tao is that which is natural
The Zen is that which is the essence
The Tao of Zen is that which is natural in its all essentials
The Zen of Tao is that which is the essence of all that is natural

Tao of Zen
That which is essential may not be thoroughly natural
And that which is unnatural may not be wholly embraceable
And therefore we are left which is embraceably natural
And we live life which is naturally bareable.

Zen of Tao
The Tao is the natural way
That which flow with the tides and the wind
And the energy and Chi which courses through
Our veins and brains and then
We feel we are awake, alive
And Zen, basic and ultimate
And extreme.

Sorry, the above is an immediate reaction to the comments by walla about things which seem so impossible to grasp as if they are so intimately intertwined. But then when we dispense with thoughts and logic and we learn to feel, we realise that we really do know without thinking when we think we are all so knowing. To realise is to realise but the truth, and the truth can be pretty or ugly depending on your sense of hygiene. And hygiene is a modern concept propagated to reduce the immunity of human beings so that more medicines can be consumed and render our health absolutely deplorable such that we can lie in bed and not having to work with perfect excuse. But idleness is not heaven when the mind cannot rest, and that is why the emptiness is that which we strive for, running on empty, running into the blank haze, completely on trust and by instinct, when the senses are heightened and logic loses its grip.

So, what do we really do in life. Do we follow the daily news which gets nastier and nastier as if this is what the viewers want, or do we get in touch with ourselves, say hello to us and rest peaceful when our stomachs are neither too full or completely empty. Oh, how nice is it is feel nothing, when there is no pain from the sting of angry wasps nor envious men. It is when we go with the flow in apparent nothingness that there is inner quiet when money is a chore and ideas are a pain. But a little stir gives us thoughts which actualise into actions which we hope we do no harm to others or ourselves. We do not write things for public consumption which we regret later. It is hard to know when we write stupid things, especially when we try to write things which we have not read anyone else having written before and we try very hard not to plagiarise without proper acknowledgement. We cannot be too careful in public, and then we withdraw into our own privacy.

But, really, the world news today are nothing new. They are what have been expected in the months and years before, when past actions produce effects which are long in ripening. The flooding of the world with American dollars to shore up the national accounts while worsening the welfare of many in the name of good economic policy. The experts have no good ideas, only old ideas in dull minds trying to look depress as if in apology. Those on boats are happy as the tide rises, while those whose feet are on the ground are getting all wet. Even Noah's ark shall rest on the mountain top surrounded by scenes of destruction. Even those who survive shall suffer.

As the son tries to hold onto power, the jesters play their funny tunes trying to look smart. The people are not fooled, for they can feel the rising tide. While the rich drink themselves to death, the poor scrounge around the bins looking to empty bottles. Good food is reduced to pulp for the juice to be burned in cars, while the acid in the stomachs of the poor drills a hole through the wall. Words are written which are not worth reading, and thoughts crumble to dust which spread like worms in the net. Words are spoken which jar the ears, and the people look but refuse to see. We therefore shut up and contribute silence to the noisy world, so that no bad thought arises.

When the Tao becomes Zen
The Zen is the Tao
That which is basic and natural
Is the way to go.

Monday, September 10, 2012

Tim Berners-Lee

Tim Berners-Lee is not an economist. Since this blog is more about policies for growth and creativity rather than the rehash of the same economic theories that have seemed by now to have lost their flavours and relevance to the world today, Sir Tim could probably inject a dash of fresh air into our own thinking about contribution for humanity. His work in this line has not there is still hope.

I have also mentioned him in the preceding post, so this copy does seem to be connected.

(This post is done with the least effort from me. Shame on me!)

Lunch with the FT

September 7, 2012 5:01 pm

Lunch with the FT: Tim Berners-Lee

Over iced tea and eggplant pita, the inventor of the world wide web talks about Apple, Facebook and the digital divide
Tim Berners-Lee, illustration by James Ferguson©James Ferguson
Sir Tim Berners-Lee is an intimidating interviewee. It’s not so much the worry about keeping up with the brain that invented the world wide web; it’s that when you Google him (in the circumstances, there seems no shame in this method of research), you soon find he has compiled a list of answers to questions that journalists have asked too many times before.

No, he patiently explains on his website, he did not invent the internet; the web is an application that runs on the internet like a fridge uses the power grid. And no, he states, he does not have mixed emotions about his refusal to “cash in” on his invention – “You can’t propose that something be a universal space and at the same time keep control of it.” Nor will he tell you much about his personal life because “what is on the web on this page and my home page is all there is”.

“I thought once I’d put a question on the web, I’d never have to answer it again. And I thought once I got a photographer to take some darn photos of me and put them on the web, then I’d never have to be photographed again,” he says when we meet at his office at the Massachusetts Institute of Technology (MIT). “Was I wrong!”

Though it would be fitting for Berners-Lee to live some sort of open-source existence, he has never been keen on publicity. Even after starring in Danny Boyle’s Olympics opening ceremony, where he coded away at a Steve Jobs-designed NeXT computer like the one on which he created the first web server, the 57-year-old says he is rarely recognised. (NBC’s Olympic commentators told viewers, “If you haven’t heard of him, we haven’t either.”)

Boyle chose Berners-Lee’s summation of his uncommercial approach to innovation – “This is for everyone” – as a theme for his Olympics ceremony. But why, I ask, did he agree to appear in the show? He replies that he had acted a little and done “amateur operatics” in Geneva years before but this was a chance to be part of a cast of 15,000. “It was staggering.”

“It was a very web-like spirit,” he adds. “The whole web had always been done by people who were very internationally-minded, very public-spirited, and very excited about the outcome.”
Nobody pays much attention as we stride across campus from his office, where multicoloured scribbling decorates a white board and one wall. The professor of engineering seems anxious to get started on lunch. As he marches towards the food trucks that have become MIT institutions, he talks in a staccato rush, as if his mouth is struggling to keep up with his mind.

The academic year has yet to begin and the campus is quiet, orderly and sunny. We go through another building and out to a side street where four trucks are lined up. Berners-Lee steers me to the one with the longest queue, where the Clover Food Lab offers pitas filled with organic ingredients.

It is a hot day and we both order iced tea and cups of gazpacho. I opt for a chickpea fritter sandwich, while he picks the egg and eggplant (aubergine) pita. One of the Clover team is taking payments on his iPhone, using one of the Square credit card readers developed by Twitter co-founder Jack Dorsey. The truck has a website, Berners-Lee tells me, which I find out later advises that his pita takes 5.8 minutes to prepare. He hovers impatiently, inquiring several times after our order’s progress. He tucks a straw into his shirt pocket, alongside two pens and a pair of spectacles.

Finally, we juggle our pitas, soups and ice teas and head back to where Berners-Lee works in the Frank Gehry-designed Stata, with its jutting angles, tottering stacks of window frames and silver curves glinting in the New England light. When Gehry consulted faculty members, Berners-Lee recalls, they asked for trees, opening windows and a building with “the complexity of Italian hilltop villages”. We climb the steps of an amphitheatre to find a shady lawn where a single café table sits under a tree. Berners-Lee has reserved it for us with a low-tech slip of paper, weighed down with pebbles.

As we start on our gazpacho, which is thick and sharp with vinegar, I ask about his latest project. The World Wide Web Foundation, which he founded in 2009 to harness the web’s social and democratic power and to promote web access as a human right, has produced its first assessment of the technology’s global impact.
The Web Index ranks infrastructure, content and the web’s political, economic and social impact in 61 countries. Sweden, the US and the UK top the list; Burkina Faso, Zimbabwe and Yemen are at the bottom. Berners-Lee did some of the fieldwork himself, travelling to Uganda to visit ministers, internet cafés and hospitals.

The goal, he says, was to go beyond past studies of connectivity and ask for the first time: “Is the web serving humanity?” By highlighting barriers to what he calls “web for everyone”, he hopes to apply pressure on those obstructing the web’s advancement. “It’s an agenda,” he says. “When people in each country ask, ‘What do we do next?’, here’s a list of things in which you may have to put a little bit more effort and here are the things where really you are behind.”

Berners-Lee waves away a wasp as he admits that the index displays a concern about the flipside of his invention: the digital divide between those with web access and those without. “The [World Wide Web] Consortium and the industry and all the geeks in town are pushing [the web] up every moment to great heights, which then obviously leaves a widening gulf with the people who don’t have it,” he says.
Technology itself, notably “the on-rush of mobile” access, is helping to narrow that gap, he says. When I ask how realistic it is to hope that Yemen will ever enjoy MIT’s connectivity, he replies: “I think you might have asked that question about Uganda a few years ago but now mobile is all over Uganda.” Soon, he adds, “I think we’ll see a very lucrative investment by telcos which wire up the remaining countries, even the deep jungle perhaps.”
. . .
A childhood trainspotter who learnt about electronics from tinkering with a model railway, Berners-Lee had impeccable geek beginnings. Born in London to parents who had both worked on the first general purpose commercial computer, the Ferranti Mark 1, he was educated at Emanuel, a private school in south-west London, and Queen’s College, Oxford University, where he studied physics and made his first computer using a soldering iron and an old television set.

By 1984, after stints at telecoms and tech companies, he was working in a computing services section of the European Organisation for Nuclear Research, the particle physics lab better known as Cern, home to the Large Hadron Collider outside Geneva.

As I pick up my pita bread, I observe that his 1989 proposal for the universal linked information system that became the web reads more like an attempt to solve nitty-gritty organisational problems than a utopian dream of social change. At Cern, he was struggling to collaborate with volunteers around the world. Cern’s multinational staff moved around so much that the institution’s telephone directory was among the first databases he wanted to link up online. “The other projects I was doing were done by volunteers all over the world,” he recalls. “I wanted to be able to have it as a very collaborative play space, and still the web hasn’t fully provided what I wanted then in terms of being a really powerful collaborative medium.”

Berners-Lee’s belief that his invention is unfinished has turned the geek into an activist. “The web is a social invention as much as a technical invention,” he says. “It’s the whole cat and mouse game between the readers and writers that makes the web work.”

What also made it work, he adds, is that he and Robert Cailliau, his collaborator at Cern, “badgered” the institution not to seek royalties from the invention. The free web soon raced ahead of the rival Gopher protocol, developed at the University of Minnesota, which charged a licence fee.

Berners-Lee, who now divides his time between MIT and a computer science professorship at the University of Southampton, left Cern in 1994 to set up the World Wide Web Consortium. Known as W3C, it defends his creation’s free nature by developing and promoting open standards such as HTML5, the coding language bringing slicker multimedia experiences to computers, smartphones and tablets. His activism, he says, stems from “realising that some political and social and legal aspects need to be all clear before the technology and the system will work”.

But as he pushes for a more open web, he is battling closed systems from Apple’s iTunes app store to social networks such as Facebook. Berners-Lee throws out references like hyperlinks (in W3C meetings, those links are minuted) and he cites the Canadian journalist Cory Doctorow’s warning of a looming “war on computation” as he talks about the unprogrammable, closed platforms smartphones have become.

In 2010, Berners-Lee warned of the web being “broken into fragmented islands”. Yet Apple is the world’s most valuable company and Facebook, even after the slump following its initial public offering, is worth tens of billions of dollars. Don’t the very people who are undermining the open web seem to be winning?
“You’re asking me about monopolies,” he replies. Remember AT&T, AOL, Netscape and Microsoft, he adds. “You know about this, Mr Financial Times. There’s always an incentive to create a monopoly but the monopoly then threatens the health of the market.” When they get too dominant, he explains, monopolies lose their incentive to innovate.

Advances such as HTML5-based web applications are part of W3C’s pushback. (“Thank you for building a web app,” he interjects, noting that the FT was among the first publishers to create an HTML5 app outside Apple’s app store.) But Berners-Lee also faces battles over net neutrality (he supports regulation to stop broadband providers playing favourites with internet content), web users’ privacy fears (W3C is working on “Do Not Track” standards), and media owners’ piracy concerns.
. . .
Berners-Lee copyrighted his own website’s list of frequently asked questions, and I ask him whether web openness proponents and copyright owners can ever come to an agreement. There is a rare pause before he replies: “Umm. I hope that we can. There’s been this assumption that the web is only there for stealing music and that the most important industry is the media industry,” he says a little mockingly, “but I think it’s reasonable that I should pay for music.” There is a constructive tension between academic and commercial interests in the web, he says, likening the two forces to the wind blowing a sail one way and the water pushing a keel another, driving the boat forward.

He does not think it is reasonable that copyright infringers should have their internet access cut off, as envisaged in France under the Hadopi law. “I think you can fine people but disconnecting a family from the internet is not appropriate. It’s like a form of imprisonment. Psychologically, for a teenager, they would probably go to jail with their iPhone rather than be deprived of connectivity.”

I take another bite of my lunch. The chick pea fritter, as brown as the pita, is cut with a colourful kohlrabi, carrot and red cabbage coleslaw. It is hard to keep it from spilling out, and I notice that Berners-Lee’s side of the table is already decorated with bits of egg and diced cucumber.

Anxious governments like to ask Berners-Lee how they can foster innovation and I ask the same question. His answer surprises me: the conditions behind the invention of the web were rather specific, he says. “Like gorgeous situations when you’re sitting out having coffee, you’re looking at the Alps, when you feel as though the air is so clear you can touch Mont Blanc if you reach your hand out, then it lifts the spirit.”

Surroundings matter, he says. Gehry’s Stata Center is a building where you bump into people because “it’s so confusing that they’re quite likely to get lost and find their way wandering past your office”. Such encounters give a campus value even in the online education era, he adds. “Otherwise we could each have bought a sandwich in our respective offices and communicated over the internet, couldn’t we?”
He continues: “I think a lot of great software has been written by people who are scratching a short-term itch, something which has been niggling them for ages, but in the back of their mind they’ve got a wonderful long-term plan.”

But is there enough big academic innovation going on, I ask, or do Silicon Valley wannabes now just dream of an Instagram-style fast $1bn from creating applications that make digital snaps look like their parents’ Polaroids and selling them to Facebook?

“I’m biased to think that there hasn’t been enough. I would have liked to have seen more development around open data,” he replies. Berners-Lee, who has spent years working on the “semantic web” of machine-processable data, is a director of the UK government’s new Open Data Institute, which aims to make more official data available and to train people how to use it to commercial and other ends.

He puts aside his unfinished pita, and pulls out an iPhone, the first time he has consulted a gadget since I arrived. Stopping a passer-by, he asks her to record our lunch with a picture. Surely I should be the one asking for a souvenir, I say. “That happens too often,” he replies, adding that at one point he had “religious rules” about photographing people he meets. “It could make quite a good coffee table book about photography,” he says as we gather up the remains of our lunch. He picks up the pebbles that weighed down our “reserved” note and walks to the side of the lawn, carefully replacing them in the gravel border.

As we walk off, I ask what he was coding during the Olympics opening ceremony. When his children were young, he answers, he would tell them, “Everything you don’t understand is magic.” As they grew up, he refused to repeat his old magic tricks. “When you understand things, there’s no more magic,” he smiles. “So I think that the opening ceremony should remain as magic.”

Andrew Edgecliffe-Johnson is the FT’s media editor
MIT campus
Clover Food Truck,
77 Massachusetts Avenue, US
Gazpacho x2 $6.00
Egg and eggplant pita $6.00
Chickpea fritter pita $6.00
Iced tea x2 $4.00
Total $22.00

Monday, July 30, 2012

London Olympics: A Competition?

I have been hard pushed to write anything sensible nowadays, given that the world economy, it seems to me, is going steadily down the tube. As I am only interested in identifying turning points, I have not been writing because I see none.

I left London a week earlier in order to avoid the Olympic road traffic standstill. But it didn't mean I wasn't interested or curiously over the opening ceremony which I stayed up to watch.

I liked it because it was so very British. Understated, but impressive. Snippets, but you understand. Bits hanging together, to tell the whole story. If anything, but to impressive.

Of course, we shall not forgive British for giving us the Industrial Revolution which is now polluting the whole world with its fossil-intensive mechanical devices which we have now all taken for granted as modern conveniences - of which we all pitched against the backwards of indigenous tribes whom we all pretend to sympathise.

My greatest delight was the honouring of Sir Tim Berners-Lee, the inventor of the world wide web. He is the Bill Gates who makes billionaires, but he gives his innovation free to the world - This Is For Everyone. What a marvelous gesture from one person to the whole world! It is this generosity which I think lies at the heart of the British creativity and innovation which of course Danny Boyle (is this why he included the song "Danny Boy") tried to show so spectacularly.

Did the London opening ceremony rival that of Beijing's? I think this is a silly question. London couldn't do what Beijing did, But I doubt Beijing could have done what London did - in the best sense of both. Beijing boosted its ancient history and technological advances, while London entertained with wit. I thought both brought out their cultural best - in the things they show, and in the way they did them. Enough.

You shall not be surprised if I were to tell you that the rest of my family didn't bother - that evening or the morning after. I guess my enthusiasm is not as universal as I would have hoped.

This sense of the "Britishness" of things could be a passing notion - where one cheers the underdog and celebrates serious amateurishness. To appear to be too clever is a no-no. Who doesn't love Mr. Bean, played by a first-class engineering student with a masters. But the very down-to-earth way of looking at massive change which points to nothing more than an emphasis on giving children a good education with a good reading habit encouraged by fantastic stories which fire up their imagination (and ours before) without forgetting the need to take care of their physical health - points to the essence of the soul and future of a nation. If only Malaysia understands one bit of this.

It could a passing notion, alas, because probably Danny Boyle and I are too similar in our experiences for me to enjoy his effort - with the support of (almost) the whole nation's talent. I am a bit peeved to now realise that he is even fifty days younger than me. Damn! Good job, Danny Boyle - the pipes are calling.

Wednesday, May 2, 2012

In Desperate Need For Competition

Modern economics introduces the idea of competition as a route to fairness, so long as the judgement of the masses is free and informed with no one dominating opinion. Likewise, the idea of the Olympics where, instead of fighting in battle fields, the energies of the young are pitted one against the other in fair and open competition - provided that no external unnatural artifacts or substances are used to provide unfair advantage. This ideal is extended to politics where the views of all are aired and heard and then a consensus is arrived at, hopefully in as amiable and acceptable a position as can be hoped for.

In reality, the tendency is for a few to dominate. Domination is the harsh reality. It is the ability to hold domination by a few in check that is the hallmark of a fair society. The obverse is domination by the majority which in itself is also a form of tyranny in itself. Universal fairness or consensus is therefore a special case which is hard to come by in reality.

In this imperfect world, how do we arrive at a second-best form of  fairness where the views of society is taken into consideration? In economics, the common approach is to prevent the rise of a dominant economic force or monopoly and promoting competition or smaller harmless units. This anti-trust approach runs into problem when there are foreign monopolies which the domestic government cannot control, and where the local competitors are too small to have a fighting chance. One response is to prevent the entry of foreign monopolies - but this has the problem of not being able to enjoy the fruit of foreign innovation. The theory of comparative advantages teaches that one should allow in foreign monopolies while trying to establish our own local monopolies which we can try to dominate in foreign markets. (This is interesting as the theory of international trade seems to run counter to the theory of perfect competition.)

It is in trying to dealing with the reality of monopolies or large economic forces that government has to regulate the market. The failure of the government to regulate when the market is allowed to compete freely among itself in the hope that the "invisible hand" will somehow takes care of everything has led to disastrous results in recent years in the global financial sector. (What the policymakers have failed to realise is that when the "invisible hand" works, it forces those who are incompetent to fail and this is not allowed for financial institutions because they hold in trust deposits of the public!)

In Malaysian economics, the attempt to destroy Chinese monopoly has not led to the break up of Chinese businesses into smaller units, but the creation of Bumiputra monoply which unsurprisingly work in collusion. While the monopolies stay, the only transformation is the ownership.

The major problem with the political solution to an economic problem is that the solution concentrates on power - both political and economic. It is the abuse of political and economic power that leads to the corruption of the proper functioning of the national economy and society and the major victims in this game is the ordinary men and women for they have to be deprived of their basic means to survival and livelihood so that the elite can enjoy opulence in the midst of economic stagnation. In other words, low interest rates, low currency, persistent inflation and the inability to create sufficient decent jobs for new highly trained job seekers. There is no proper investment in technology and productivity gains.

In Malaysian politics, the domination of one coalition (as well as one man in that party) is now being fought by one coalition opposition (which is being dominated by one man). What is interesting is that a supposedly racist coalition is being challenged by a supposedly socialist-justice-religious coalition. The racist argument is now proven to be a convenient strawman for the elite to share and consolidate their grip on the economy. The general public has now become wiser after three decades of abuse. The socialist-justice-religious coalition jumps in to ride the current in the hope of taking over the power.

The call for clean elections is another way of expressing the feeling that change is imminent, "if only things are fair." The attempt by the opposition coalition (which is dominated by one person) to capitalise on that call by creating social disturbance is an indication of how healthy competition can quickly degenerate into a desperado act. Who ever says politicians are ethical people?

The current political problem is purely an economic problem which has its seed in a misguided policy of disenfranchising the whole working population by giving special privileges to one group (thus giving them the signal that they can take and do not have to work) and by telling the rest that they do not have to work so hard because not all that you work hard for will not be yours - in addition to the cut that the government (and civil servants) will take from you in the form of the income tax. Malaysia has undergone the great economic experiment of how to destroy the incentives to investment and innovation while inculcating a national culture of grab and run away.

The opposition idea of how to do the same things with "transparency and no corruption" is to work on the assumption that the current economic model with its domination by monopolies is still correct.

The old guards have all gone, the intermediate generation has gone off to other countries, and the only ones that are left are those who have decided to stay back and pick up the pieces from the economic debris. Malaysia needs new political and economic leaders to provide a new and clear vision of how to stay competitive in the new global economy.

The newly imposed minimum wage may be the best first step yet. It will have problems because it will make uncompetitive businesses unprofitable. It will also say that low skilled workers may not be the path to high income. But with an economy which the central bank and economic planners still think that low skilled labour intensive plantations and assembly lines is the mainstay, we may have a long and treacherous journey ahead. However it is, do not be fooled by the promises of desperate people.

Thursday, April 26, 2012

The Malaysian Airline Business

Now that the "low-cost" airline has successfully crippled the "national flag carrier", it does look like the small fly may eat the big bug, in small snatches.

Introducing the low cost airline cannot be to "increase competition" of the Malaysian aviation industry. You have two totally different products: one "full cost" and the other "low cost". In no way should "full cost" be thought of as "high cost" and "low cost" to be "better value". It is just the way the competitor has cleverly maneuvered itself into the public psyche that created this perception. If pricing is cost-plus, then one should be getting probably almost the same value for the services rendered.

As a corollary, it is also true that "low cost" means "low price" (which the airline is now trying to reposition itself) but not necessarily "better value." The apparent disgust that the low cost operator treats its customers must be something that the average consumer must constantly deal with which in more technical parlance means the loss of consumer rights. It is OK for the operator not to deliver as promised, but woe betide the consumer who happens to try to alter a little bit of the contract. It is this lopsidedness that is the peculiar feature of the "business model" of the low cost flyer, and not its much touted greater "operational efficiency". If you set a computer system to deal with customers who have not way to communicate back to the system, and if you program the computer system to generate a certain amount of profit from every customer, then obviously you are going to get that profit as programmed. Once the "parameters" change, as we see the low cost flyer pulling out of Europe, then you know that it is out of its depth to cope with a more challenging environment.

It is not rocket science to know that to get the average price down, every flight must operate at a certain high capacity. It is this targeting that we see to be promotional strategy of the low cost flyer, as well as the constant attempt to juggle flights in order to pack passengers into a certain targeted "high capacity" which is otherwise termed as operational efficiency.

The national carrier becomes disoriented when the low cost flyer enters the story. How does one compete with a "low cost" competitor? This is the wrong question. The correct response is how to redefine the full-cost market now that the competitor is going to soak up all the cheap customers. It is not surprising if the first impact the national carrier feels is that more than half of its customers are all gone. If we work on the simple Pareto rule of 20% business class and 80% economy class and if the normal capacity on the economy class is 60% and if half of the 80% is lost to the competitor, then you have a mix of 20% business class and 20% economy class. It is instant death to the national carrier.

The objective of the national carrier must be to concentrate on how to get back its economy class passengers. By imitating the competitor in its treatment of customers, the national carrier takes the risk of alienating itself from its customer base. Its computer system is not geared to dealing with online booking and changes to online booking. It simply does not know how to handling this cut-throat business of low price. Instead, the national carrier should build up a new market for traditional full-service flying and at the  same time overhaul its operating system to lower cost by automating more of its internal operations. Instead, the national carrier tries to become a low cost flyer and in the process simply cannot compete as the low cost competitor is king in the business of low cost flying. It automates all its external communications with the customers, an area where the old method should have given it an edge. The national carrier has fallen into a trap, all on its own doing.

At the end of the day, probably one of the most vital factors that determines which airline survives in this globally competitive business is its management of its cost of fuel - supposedly a major cost element. If this is set right, all the other costs are small in comparison. If the fuel cost is too high, then it has to weather it. The low cost flyer simply pass this down to the average consumer in the form of a "fuel surcharge" which really is one of the most appalling abuses of consumers in the market place. Unable to get a team to get its fuel cost right, the response to saving the national carrier is to send in a marketing and accounting team to manage the accounts, and probably not the operations. The operations can only deteriorate with neglect.

So how does one then "rationalise" the national carrier with the low cost flyer? It is as if the low cost flyer has business class travellers to bring to the table, while it will certainly try to soak up the remaining of the economy class passengers from the national carrier. There is also room for further cannibalism by the small of the big. What other experience and expertise does one have that the other does not have.

The Malaysian airline business may just be one episode that shows the general fragility of the national economic fabric. There is a lot of communications and clever talk, but all those who could do are sidelined and relegated to the dungeon to work in the galley to keep the ship going.

Wednesday, April 25, 2012

Japan: High-Income Economy

Just got back from Japan and here are some of my observations.

Before this trip, I had dropped into Japan several times on quick dips and transit simply because it was very expensive. With the strengthening of the yen, thanks, I think, to the Plaza Accord of 1985 when the US forced Japan to revalue by a third, Japan has been forced into a downward spiral. The reduced growth of the economy was then bolstered by an expansionary monetary policy ("quantitative measure") that caused the asset bubble in the 1990s and the subsequent asset deflation which is still happening. That revaluation and the asset bubble made Japan so expensive today - for Malaysians (!) who also have to be content with a depressed ringgit.

Japan today, to my eyes, has become a developed nation after years of hard work and economic growth since the end of World War II. Factories are everywhere in the smaller cities and towns. The transportation system all working perfectly and well-interlinked. The people putting their heads down, working and coming and going to work. There is that busyness which lay below the headline of a slow and anemic growth for the Japanese economy. Japan has reached the saturation of its heavy industrialisation. There is so much pollution that can be generated.

On the ground, the Japan society seems to have reached its zenith. Roads are perfectly clean and tidy, houses tidy and cute swarmed along both sides, people ever so polite and socially conscious, the traditional food perfectly healthy and well-proportioned and identically well presented everywhere - the social system working like a clock and the people simply moving along this huge conveyor belt system.

But this is a system and utopia created by the post-war heroes of Japan which are now happily enriched with their cosy little houses and the comfortably big pensions. These old people are the ones who are now challenging themselves to live long so that they can maximise the benefits of the pensions. That longevity is now being obtained through strenuous hard work of brisk working, exercising and working on projects in order to keep the mind alert. Everywhere in Japan, you see old people who are well-dressed and well-kept.

The new children who are being produced in Japan today now has to face a situation where there are no more jobs in the industrial sector. They walk by factories and feel no affinity to them. Factories have no meaning to the young people, except fatherly neglect and a lonely mother. Against the industrial perfection of Japan comes the counter-cultural revolution at the other extreme of the arts. The children all dressed untraditional in order to disgust their parents, and probably as they do that for a few more years, to find themselves. It is this undercurrent of the young generation on the search for their own soul which is exciting for me because it will represents the saviour of the Japanese society and economy.

Japan has been, so far, known for its mechanical perfection but not its innovation or inventiveness. We may now be witnessing Japan at the inflexion point. As the Japanese society rebels against tradition and structure, it learns to think for itself. By looking inward, Japan will discover a new self which we have not seen yet. This may be time for Japan to leave the stereotype that the whole world knows, and to have the confidence to reveal a new self which will incorporate the simplicity of its forbears but the new outlook of life which is better integrated with the rest of the world. This is the excitement I found when I visited Japan recently.

Monday, February 20, 2012

New Year 2012

My apologies for the long absence. Various reasons. Two-month lab. Year-end holidays. Lots of work to catch up, just as everybody is busy trying to stay in the job and in business.

The demise of Whitney Houston is sad.

Would there be nice things for us to think about and discuss in the coming new year. So, should we be trying to add more salt to the rotten stuff.

Until some nice thoughts crop up, I am sorry that that I shall rather be drinking my beer, sipping my coffee, dipping into the books that I have lined up to read and the music database that I have to organise into a decent system.

The euro is going to break. China is struggling to rise again like an injury hero determined to show. US is brain-dead, chiding the Middle East. Japan is an old man. S Korea looks interestingly alive. Indonesia is rediscovering itself. Malaysia tries hard, unbelievably hard. Singapore refuses to succumb.

We'll see how the year will fare.