Wednesday, June 17, 2015

Morality & Rights

If we were to live alone by ourselves in isolation in the middle of nowhere, we can practically do anything we like and we will not bother anyone else. Except probably ourselves only because, maybe, we want to live long - but how long is long we would not know if we were to be all alone - or even healthily, if we know what it is to be healthy if we were to be all alone. There will be no morality and we will have complete rights.

Morality is an issue that comes up when we try to live together in peace and harmony with each other. We try not to offend others nor do we want others to offend us. That is why all communities have their own sets of manners and courtesies and customs. The social rules are usually not made up artificially but after many years of trial and error and the consent of generation after generation.

A community will develop along a strict code of conduct when somebody decides to put down all the commonly acknowledged rules on paper (or carved in stone). This strict code of conduct is likely to be biased, religiously or politically. It will be followed until it reaches its golden age. This happens in the high societies of India, China, Europe and even the more ancient tribal societies of Africa, South America and even Asia.

In their golden age, the societies stagnates because they could not change anymore. Everything has become so rigid that every deviation is immediately eliminated. The form of social manners is unchanging.

This stagnation can go on for a long time, but eventually it will break down. The gene pool deteriorates and society degenerates. Or, new thinking is introduced through interactions with different societies. New ideas are formed that either challenge the existing orthodoxy or new ideas that no one has ever thought of before. The line between right and wrong becomes thinner and blurrier and sometimes disappears completely. As this happens, there is less compulsion from the moral police and more exertions of individual rights.

In modern societies, it is the sacred right of individuals to defend common sense and fight against the tyranny of the ignorant. The ignorant are usually self-serving persons who exercise the little power that they have to the great annoyance and irritation of everyone else whom they can bully. They do not know what they are doing but they wish others to know that they are important because they have this power, small though it may be.

Ignorance is everywhere and the only solution is honesty, integrity, and common sense which all together comes under the word "wisdom".

Thursday, June 11, 2015


Since he mentioned it, I thought I might just as well add in my bit of understanding of our recent economic history.

I disagree that the weakening of the ringgit in the past during his tenure was due to currency traders who were speculating on the ringgit in order to make money out of the ringgit. Of course, it is the business of currency traders to make money out of currency trading, either up or down, but not unchanged and hence the currency trading business was killed (along with a major portion of the financial industry) with the subsequent currency peg. The currency controls that were installed to reduce the outflow of currency were at the very centre of the subsequent loss of investor confidence in Malaysia as a country where you can trade without the rules being changed halfway at the convenience of top politicians. The loss of investor confidence has not recovered even until today, so that the slight sign of trouble is a signal to get out of this country, literally.

The ringgit was trading at around 2.70 against the US dollar for a while in late 1980s. When money flowed in to invest in privatised infrastructure companies, the ringgit went up to 2.50 and our foreign reserves swelled. Everybody was happy and congratulated themselved on a job well-done in running a successful economy. The stock market was up because of the inflow of short-term speculative funds and the government was using this temporary to fund long-term infrastructure. In so far as the foreign stock traders are concerned, they were waiting for the signal to get out of the Malaysian stock market. The signal came from Thailand when the Thai Farmers Bank could not pay back an offshore loan syndication for a private real estate development. The Thai central bank refused to support the Thai Farmers Bank and this was rumoured as the Thai central bank running out of money. All the stock investors from Europe bailed out, or tried to bail out out of Asia and this exodus of funds is now called the Asian Financial Crisis of 1997.

It must be obvious when funds which had been accumulating year by year for twenty years suddenly wanted to exit within a day or a week, it is similar to the crowd trying to rush out of a cinema in panic. As the central bank refused to support the currency, the value of the currency dropped. This gave opportunity to currency traders to short the ringgit in the hope of selling ringgit cheap and honouring the trade with cheaper rinngit later. But the market should be self correcting because once the currency traders think that the currency cannot go down any more, they will then have to quickly reverse their position and in the process strengthening the ringgit subsequently. Rumour had it that the policymaker panicked and was angry and slapped his close buddy who shorting the ringgit as well. Then he imposed the peg.

It is incredible that Malaysia, which has undergone a major economic policy change to open up the economy and to encourage growth such as that is now such a deficit of labour that we have to import many foreign workers for almost all economic sectors, has been suffering from a weakening of the ringgit since 1997. Why couldn't the ringgit go back to 2.50 or 2.70?

It is clear that there has been a persistent outflow of funds from Malaysia ever since we opened up the economy for rapid growth since the late 1980s. While we have seen the rapid development of real estate as plantation lands are converted, we are also seeing a heavy congestion of our roads as we expand our national car project. Instead of encouraging savings and investment, we are encouraging consumption and speculation in the stock market and the property market. The main driver for the economy seems to be the government spending itself to bankruptcy.

Could it be that the money that is being made from consumer indebtedness and government spending is causing the outflow of funds as Malaysia becomes less an attraction for investment as it is being overpriced?