I am resisted acquiring the set since its release in 2009, arguing the stereo set is good enough and it is not that inexpensive. After all, it was just another ploy by the marketing guys to extract more hard earned money from the average consumer. But, last week, in a moment of fiduciary irresponsibility (the kids are still studying), I relented and bought it. Printed in Japan.
The mono sound jumps out. The mono sound is clear and tight, with a punch which creates excitement in the music that engages every sense of one's being. The boys are having fun, and I am having fun. That's entertainment.
The old CDs for the first four albums are also mono but unremastered. There is a loss of clarity. The new remastered stereo albums are a significant improvement over the unremastered in terms of definition, but the remastered mono stands out on clarity, tightness and punch. Ringo has never sung so well before, with his drumming a significant contributor to the songs and not a mere last minute addendum.
The brilliancy of the mono over the stereo is therefore the definition as well as the tightness of sound which ensues as one. Stereo, the new technology of the late sixties and early seventies, is an attempt at polarisation with a view to creating a greater "soundstage" at home (as if in a concert hall) - and this could be the manufacturers' way of doubling their sales by selling two speakers at one go rather than one by one. This could be related to increasing affluence where houses and homes get bigger and there is more space in the living room for the income earner to relax and enjoy after a hard day's work in the office.
The stereo tries to create an artificiality of sound through their separation to create an illusion of space. Some instrumental sounds are placed on the left and some on the right, with yet the key ones such as main vocal and drums would be placed in the centre to provide a centrality to the sound right in front of the listener - on the assumption that the listener sits comfortably in the centre in a large armchair. To enhance the illusion - and the ideal - some hifi freaks even suggest drawing the curtains and listening in the dark in order to create space.
The attempt to separate sound goes even further into the quadraphonic (4.0) and the 5.1 for the home theatre (with centre and subwoofer) all now is the rage as people imagine that sound could be given more space through separation and alienation.
Cohesion in sound and the creating of sound can take a more destructive path when the idolised Beatles each could not stand each other anymore (probably because increasing wealth has created increasing intolerance for others' idiosyncrasy) that they are quite happy to each go their own separate ways - and pursue their "solo" careers which, in my mind, though fairly successful were not as brilliant as the Beatles as a group. Each had their own peculiarity which were accentuated to the extent of being a bore, whereas the Beatles as a group was a much more considered attempt at creating good and enjoyable songs for the enjoyment of the public, by paring down on the outrageous and keeping things to the centre of an infinite variations.
The Beatles in mono, therefore, is a brilliant act and piece of work which combines the best of the group and of what is good in sound technology. Listening to The Beatles in mono is an enlightening experience, which shows how the simple and sharing and working together can be good and beautiful. Much better than the dominant of a member over the group or the pursuit of their solo careers.
The Beatles in mono could be a lesson for Malaysia, on how keeping the nation together is such a critically important thing.
Wednesday, June 29, 2011
Monday, June 13, 2011
The Middle East Turmoil & High Oil Prices
I was struck by this simple juxtaposition: As the people in the Middle East become unhappy because of the difficulties of earning a good living and high cost of living, Iran, with the help of Venezuela, Iraq, Algeria, Angola and Libya, fought against the Saudi's efforts to increase output by 1.5 m bpd and soft the price of oil in Vienna on June 9. Apparently, the opposition comes from those without the capacity to pump more and are thus unlikely to benefit from the scheme. Saudi has the capacity and it can unilaterally do it and gain extra revenue, while helping to bring down the price of oil.
This is quite interesting. That governments do see a difference in the budget and the welfare of the people. The Middle East is in a position to try to lower the price of oil and in effect reduce some inflationary pressures from high commodity prices and hence the cost of living. If their region is in turmoil as people take to the streets, lessening retail prices may help to cool those pressures on the ground.
But this is not going to happen. Governments need a good budget to spend and they do not appear to be spending in a way that will directly benefit the people. The people can suffer and it is none of the business of the governments - so long as the governments can be elected or re-elected into power through strong party membership that takes care only of party members. The people can take to the streets and the governments are quite happy to shoot their own people - just to stay in power.
All this is interesting only if my assumptions are correct. Some may argue that the general uproar in the Middle East is a product of technology and that people are taking to the streets because they now know that can congregate in the streets at the same time. I would not confuse the means with the ends.
There could be another argument that says that people are simply fed up with the same old people in governments and they want new faces with fresh ideas, and they are making these protests with great distress to the physical body as well as the mental anguish and hence no amount of cheap prices will help to quell that unrest. This must be really tough then.
The upshot of all these is that the problem in the Middle East is something that the Middle East itself can solve, by itself. Whether it will or not depends on how cohesive the Middle East communities are among themselves, or they are simply bitter enemies among themselves to the bitter end. If they are enemies, then they are ripe for manipulation from outside the region, and there is great incentive for causing unrest especially when the control of resources is concerned.
There is a lack of intellectual leadership in solving the Middle East problem. If the Middle East is uniquely different from the West, it should strive to exert its own uniqueness and identity. If not, then, the Middle East is no different from anywhere in the world, where sectarianism seems to rule the day with the inability to see the sameness in all human beings to the chief cause of trouble. There could even be animosity among brothers. If this is the case, the problem is pure greed and the scramble for power. We just need one or two evil men (and women).
This is quite interesting. That governments do see a difference in the budget and the welfare of the people. The Middle East is in a position to try to lower the price of oil and in effect reduce some inflationary pressures from high commodity prices and hence the cost of living. If their region is in turmoil as people take to the streets, lessening retail prices may help to cool those pressures on the ground.
But this is not going to happen. Governments need a good budget to spend and they do not appear to be spending in a way that will directly benefit the people. The people can suffer and it is none of the business of the governments - so long as the governments can be elected or re-elected into power through strong party membership that takes care only of party members. The people can take to the streets and the governments are quite happy to shoot their own people - just to stay in power.
All this is interesting only if my assumptions are correct. Some may argue that the general uproar in the Middle East is a product of technology and that people are taking to the streets because they now know that can congregate in the streets at the same time. I would not confuse the means with the ends.
There could be another argument that says that people are simply fed up with the same old people in governments and they want new faces with fresh ideas, and they are making these protests with great distress to the physical body as well as the mental anguish and hence no amount of cheap prices will help to quell that unrest. This must be really tough then.
The upshot of all these is that the problem in the Middle East is something that the Middle East itself can solve, by itself. Whether it will or not depends on how cohesive the Middle East communities are among themselves, or they are simply bitter enemies among themselves to the bitter end. If they are enemies, then they are ripe for manipulation from outside the region, and there is great incentive for causing unrest especially when the control of resources is concerned.
There is a lack of intellectual leadership in solving the Middle East problem. If the Middle East is uniquely different from the West, it should strive to exert its own uniqueness and identity. If not, then, the Middle East is no different from anywhere in the world, where sectarianism seems to rule the day with the inability to see the sameness in all human beings to the chief cause of trouble. There could even be animosity among brothers. If this is the case, the problem is pure greed and the scramble for power. We just need one or two evil men (and women).
Wednesday, May 18, 2011
World: To Adjust or Not To Adjust
The current debate on the world economic condition gives a glimpse of why economics is a very difficult subject to master. There are all the theories, which are fine in themselves because of their own internal logical consistency of varying degree of inclusiveness of factors. The main difficulty is in the diagnosis of the problem, which is subjective and based on experience and judgment. The signs are all there. The difference could be as in the judgments of Dr Watson and Sherlock Holmes (however fictional).
We are all agreed that the world (the US) has gone through a serious bout of asset inflation and the bubble has burst. The adjustment has taken place, not in asset prices but in banks whose solvency has been supported by explicit government intervention. The judgment now is that the worst is over and the world can go on with business as usual.
(a) This supporters of this policy are congratulating themselves that they have done an excellent in preventing an all-out fallout and an inevitable recession which could lead to a depression.
(b) Banks have since recovered apparently and are now back on track to be as good as they had been.
The main argument against this affirmative solution is that there has been no adjustment or that the adjustment is insufficient for real change to take place. Those who had made mistakes in the market (mainly speculators) have not been punished by the market - which the market is supposed to do in order to ensure vigilance and discipline. The same people or type of people are still in charge and playing the game. There is no lesson learnt from the recent problem. The problem will repeat itself because the policy makers are looking for solutions in market behaviours that have brought the economy into problem in the first place.
Real adjustment means structural adjustment where the structure of the market and economy will have to change. There have to be new rules and policies and new ways of doing things. Those who have lost in the market must exit and those who have been disciplined and have capital will have the opportunities to buy foreclosure assets at realistic prices so that a new foundation could be built. In this adjustment, employees will be laid off and they have to readjust also through retraining to learn new and more appropriate skills.
This adjustment is necessary in order that the new world order will be able to come to an organisational structure which will be able to provide sufficient jobs for new entrants into the economy. Whilst in the long run, it may be an observable factor that the demography defines the pace of the economic growth. But, at present, the world is undergoing a truly significant change.
In the west, the baby boomers are now in the sixties and retiring. Being baby boomers, they are the largest representation in the demography. Smaller groups (non-boomers) will have to work the extra hour or so to support the boomers in their retirement. While pensions may be defined in nominal terms, that the inability of the new cohort to produce sufficient for themselves and the retirees mean that (a) there is inflation (if pension payments are appropriate) or (b) there is unemployment among the new cohort (if the aggregate demand is low as the retired boomers reduced their consumption).
In the east, China's increased production of consumer goods has reduced per unit cost as well as increased the global participation in industrial production by workers by a significant amount - which reduces wages (first nominal and then real). This has caused the withdrawal of employment by higher-paid workers in the west. Added to this global work pool is India, in the higher value-added sector of ICT. This sharp increase in the global volume of workers means that the west (particularly the US) has resorted to solving its problem by printing money - which we had seen and still seeing. (Whether they are translating the excess liquidity into rapid loan growth now or not is moot; they had.)
Maintaining an easy money policy is politically advantageous to do. It is like giving morphine. Fiscal policy has run its limits, constrained by common sense about government debt.
I think it was Franco Modigliani who asked the question a long ago in a published paper: Should be foresake stablisation policy, when discussing the relative merits of fiscal and monetary counter-cyclical policies. This question is now moot. We are not talking about stablisation policy. The world has changed. The structure of the world economy has changed. We are now dealing with structural change.
Is it then correct that the US should counter the comparative advantage of China's labour force with a low interest rate for its industries so that its industrial workers can compete - or that has the US actually foresaken its agriculture and manufacturing industries and now focuses on the services sector in order to compete. In the services sector, adjustments could be massive and rapid with a high casualty rate, such as venture capital, stock market, financial instruments, and all kinds of financial products. (It is no surprise that massive financial crimes occur in the US, and elsewhere.) It is also no surprise that WTO pushes for the opening in the east for the services sector.
In globalisation, the problem with using the services sector for growth is that it does not necessarily has to use local workers. Local workers may not be skilled enough or they do not have local knowledge. The services sector, in order to expand, especially for financial services, it has to tap the best brains in the countries they operate. While US firms may grow, US employment may not rise commensurately in that sector. This is the same issue for all MNCs. (It is therefore questionable for Malaysian employment that Malaysian GLCs go abroad and brought back nothing.)
These services MNCs do not need zero interest rate to flourish. They need a policy where credit is easy to get. The banks with their billions of unlent excess reserves would be most happen to fund grandiose schemes by US firms that span the globe.
By not allowing local asset values to adjust downwards, there is no scope for local businesses to flourish as old local businesses could be weighed down by high debt and a long repayment period which chew up revenue and discourage recapitalisation. Those with cash has no chance to buy assets at fair value, and they end up holding financial assets. In a world where excessive wealth is looking for a safe place to park in the financial market, there is always the problem of overvalued of financial assets, as real asset value are kept up by the inability of the market to adjust downward as governments around the world stablised their respective economies with artificial means.
Adjustments of course means hardship and unemployment; but this does not mean they do not exist today when unadjusted. For fear of a flash of pain, one may have to suffer long and quiet.
As economic adjustments are increasingly politicised, it is not surprising that unemployed youth are trying the oust the old and crumbled who are holding to their asset values through long established networks in the only means available to them. Greedy people are trying to hold on to brick and mortar or pieces of paper which enough paper wealth to last them a few generations, at the expense of the new generations of the rest of society. Future values and investments are concepts that need a rethink. In the end, other young people, provided they can get a job, will have to work for the descendants of these old rich.
We are all agreed that the world (the US) has gone through a serious bout of asset inflation and the bubble has burst. The adjustment has taken place, not in asset prices but in banks whose solvency has been supported by explicit government intervention. The judgment now is that the worst is over and the world can go on with business as usual.
(a) This supporters of this policy are congratulating themselves that they have done an excellent in preventing an all-out fallout and an inevitable recession which could lead to a depression.
(b) Banks have since recovered apparently and are now back on track to be as good as they had been.
The main argument against this affirmative solution is that there has been no adjustment or that the adjustment is insufficient for real change to take place. Those who had made mistakes in the market (mainly speculators) have not been punished by the market - which the market is supposed to do in order to ensure vigilance and discipline. The same people or type of people are still in charge and playing the game. There is no lesson learnt from the recent problem. The problem will repeat itself because the policy makers are looking for solutions in market behaviours that have brought the economy into problem in the first place.
Real adjustment means structural adjustment where the structure of the market and economy will have to change. There have to be new rules and policies and new ways of doing things. Those who have lost in the market must exit and those who have been disciplined and have capital will have the opportunities to buy foreclosure assets at realistic prices so that a new foundation could be built. In this adjustment, employees will be laid off and they have to readjust also through retraining to learn new and more appropriate skills.
This adjustment is necessary in order that the new world order will be able to come to an organisational structure which will be able to provide sufficient jobs for new entrants into the economy. Whilst in the long run, it may be an observable factor that the demography defines the pace of the economic growth. But, at present, the world is undergoing a truly significant change.
In the west, the baby boomers are now in the sixties and retiring. Being baby boomers, they are the largest representation in the demography. Smaller groups (non-boomers) will have to work the extra hour or so to support the boomers in their retirement. While pensions may be defined in nominal terms, that the inability of the new cohort to produce sufficient for themselves and the retirees mean that (a) there is inflation (if pension payments are appropriate) or (b) there is unemployment among the new cohort (if the aggregate demand is low as the retired boomers reduced their consumption).
In the east, China's increased production of consumer goods has reduced per unit cost as well as increased the global participation in industrial production by workers by a significant amount - which reduces wages (first nominal and then real). This has caused the withdrawal of employment by higher-paid workers in the west. Added to this global work pool is India, in the higher value-added sector of ICT. This sharp increase in the global volume of workers means that the west (particularly the US) has resorted to solving its problem by printing money - which we had seen and still seeing. (Whether they are translating the excess liquidity into rapid loan growth now or not is moot; they had.)
Maintaining an easy money policy is politically advantageous to do. It is like giving morphine. Fiscal policy has run its limits, constrained by common sense about government debt.
I think it was Franco Modigliani who asked the question a long ago in a published paper: Should be foresake stablisation policy, when discussing the relative merits of fiscal and monetary counter-cyclical policies. This question is now moot. We are not talking about stablisation policy. The world has changed. The structure of the world economy has changed. We are now dealing with structural change.
Is it then correct that the US should counter the comparative advantage of China's labour force with a low interest rate for its industries so that its industrial workers can compete - or that has the US actually foresaken its agriculture and manufacturing industries and now focuses on the services sector in order to compete. In the services sector, adjustments could be massive and rapid with a high casualty rate, such as venture capital, stock market, financial instruments, and all kinds of financial products. (It is no surprise that massive financial crimes occur in the US, and elsewhere.) It is also no surprise that WTO pushes for the opening in the east for the services sector.
In globalisation, the problem with using the services sector for growth is that it does not necessarily has to use local workers. Local workers may not be skilled enough or they do not have local knowledge. The services sector, in order to expand, especially for financial services, it has to tap the best brains in the countries they operate. While US firms may grow, US employment may not rise commensurately in that sector. This is the same issue for all MNCs. (It is therefore questionable for Malaysian employment that Malaysian GLCs go abroad and brought back nothing.)
These services MNCs do not need zero interest rate to flourish. They need a policy where credit is easy to get. The banks with their billions of unlent excess reserves would be most happen to fund grandiose schemes by US firms that span the globe.
By not allowing local asset values to adjust downwards, there is no scope for local businesses to flourish as old local businesses could be weighed down by high debt and a long repayment period which chew up revenue and discourage recapitalisation. Those with cash has no chance to buy assets at fair value, and they end up holding financial assets. In a world where excessive wealth is looking for a safe place to park in the financial market, there is always the problem of overvalued of financial assets, as real asset value are kept up by the inability of the market to adjust downward as governments around the world stablised their respective economies with artificial means.
Adjustments of course means hardship and unemployment; but this does not mean they do not exist today when unadjusted. For fear of a flash of pain, one may have to suffer long and quiet.
As economic adjustments are increasingly politicised, it is not surprising that unemployed youth are trying the oust the old and crumbled who are holding to their asset values through long established networks in the only means available to them. Greedy people are trying to hold on to brick and mortar or pieces of paper which enough paper wealth to last them a few generations, at the expense of the new generations of the rest of society. Future values and investments are concepts that need a rethink. In the end, other young people, provided they can get a job, will have to work for the descendants of these old rich.
Tuesday, May 10, 2011
Economic Readjustment
Those of you who have been following my thoughts here would know that I am quite happy with the recent developments in the economy, i.e., that at least there are some countries such as Malaysia which are beginning to take a stand against the American nonsense (after Japan) of printing money at zero interest rates and holding the world to ransom at gunpoint.
I hope this will lead to a structural break in the global mentality. With higher interest rates, some currencies should strengthen which is a good thing. There should be a way to reflect the weekness of the US dollar. That Malaysia is amon the few countries that go this route is commendabble.
Higher interest rates and a stronger currency may help to restrain some the inflationary pressures coming from the global commodity markets. Malaysia may suffer a bit for commodity producers and the foreign investors who are here to reap the benefits of low wages as a result of the weak ringgit. But these are labour intensive low productivity activities which we could be less dependent on. We should expect some difficulties for these activities. We should expect some difficulties for speculators of properties as well as the stock market. These difficulties are nothing but the needed adjustments for higher interest rates to reduce prices as a result of some difficulties for businesses. Without these difficulties, businesses would continue to live in a dream world of more profits from little efforts and lots of inflation.
These difficulties will be good for making businesses search for higher productivity economic activities. Hopefully, a stronger ringgit will make less unattractive ringgit wages. This may help to reduce the current brain drain and, if possible, to reverse it.
But my great consolation is that with higher interest rates, now or expected, there will be enough fear among speculators. We are now seeing a reaction by speculators in the oil and commodity markets, who think that they may need to reverse their long positions. There is crack here, and the prices of oil and commodities are seeing some selling and a lowering of commodity prices.
This last bit of development, to my mind, is absolutely crucial. The higher global interest rates may mean a weakening of global demand and thus leading to a weakening of commodities prices. If downward adjustment of commodity prices is what the world needs right now. There is a need for the world to insulate itself from America in terms of monetary policy. With lower prices or lower price increases, there is a chance to stablise world politics. When this stability is established, there may be a chance for investments and real economic growth.
I hope this will lead to a structural break in the global mentality. With higher interest rates, some currencies should strengthen which is a good thing. There should be a way to reflect the weekness of the US dollar. That Malaysia is amon the few countries that go this route is commendabble.
Higher interest rates and a stronger currency may help to restrain some the inflationary pressures coming from the global commodity markets. Malaysia may suffer a bit for commodity producers and the foreign investors who are here to reap the benefits of low wages as a result of the weak ringgit. But these are labour intensive low productivity activities which we could be less dependent on. We should expect some difficulties for these activities. We should expect some difficulties for speculators of properties as well as the stock market. These difficulties are nothing but the needed adjustments for higher interest rates to reduce prices as a result of some difficulties for businesses. Without these difficulties, businesses would continue to live in a dream world of more profits from little efforts and lots of inflation.
These difficulties will be good for making businesses search for higher productivity economic activities. Hopefully, a stronger ringgit will make less unattractive ringgit wages. This may help to reduce the current brain drain and, if possible, to reverse it.
But my great consolation is that with higher interest rates, now or expected, there will be enough fear among speculators. We are now seeing a reaction by speculators in the oil and commodity markets, who think that they may need to reverse their long positions. There is crack here, and the prices of oil and commodities are seeing some selling and a lowering of commodity prices.
This last bit of development, to my mind, is absolutely crucial. The higher global interest rates may mean a weakening of global demand and thus leading to a weakening of commodities prices. If downward adjustment of commodity prices is what the world needs right now. There is a need for the world to insulate itself from America in terms of monetary policy. With lower prices or lower price increases, there is a chance to stablise world politics. When this stability is established, there may be a chance for investments and real economic growth.
Tuesday, April 19, 2011
Chinese Politics, Economics & Philosophy
What do you do when your government does not take care of you - nay, even have policies carved in such as a way as to disadvantage you so that you do not have a chance?
You fight for an opportunity for yourself and your children.
You are not talking about fairness. You are talking about an opportunity - an opportunity to earn a living, an opportunity to work very hard, very very hard, even to the extent of having to do two or three people's work in order that you may have a chance to earn a living for yourself, taking only one of the lower or lowest of the two or three parts that you have earned.
It is only by sheer hard work, plus lots and lots of ingenuity can it be possible for a non-Bumiputra to irk out a decent living in Malaysia. By then, of course, the disparity has widened much much farther.
When the single simple opportunity in life that one is looking for just to survive does not even exist, because it is perceived that all the opportunities have been monopolised and that the wealth that has been amassed has been transformed into power of control and domination, you want regime change.
How does the minority cause a regime change of the majority in a democratic way?
By giving all its support to the opposite, the best that can be managed is 77:23.
This is the best that can be done at the moment.
But the message is clear. That the people who are unhappy can say register their dissatisfaction.
So far, the non-Bumiputra has made their stance. Now, among the Bumiputra, unfairness of unjust policies has also been taking place. If the discontent is intense, you can get a swing that can go to 40:60 (assuming half turned).
How do you prevent unfairness? Malaysia, and Sarawak, has gone way past the point of racial disparity. We are now entering the era of class inequality: the poor fighting against the rich, for survival. If the rich has gotten rich through plunder, then there is a limit to that plunder. We are reaching that limit. The whole country is down going into economic descent.
The only way forward is a conducive environment for investment, private investment. This is not the perfect solution, but this is the way that the modern world has learned to bear with. This world of private investment, will create with it the problems of worker welfare. This is the economic disparity. But at least, there is a way out by negotiating for better pay and conditions for workers.
At the moment, the problem is unemployment and rising cost of living. Dishing out cash handouts in "poverty-eradication" programmes is a short-term measure, important to prevent riots and buy time for better programmes to come in. It must be the encouragement of local private investments.
The whole nation should not be held back by one lone racist voice. We should fight racism and get the whole nation back to where it was in 1970, and start all over again. We have lost enough time. It is time to put excellence back into the nation, and take our rightful place in bright Asia.
You fight for an opportunity for yourself and your children.
You are not talking about fairness. You are talking about an opportunity - an opportunity to earn a living, an opportunity to work very hard, very very hard, even to the extent of having to do two or three people's work in order that you may have a chance to earn a living for yourself, taking only one of the lower or lowest of the two or three parts that you have earned.
It is only by sheer hard work, plus lots and lots of ingenuity can it be possible for a non-Bumiputra to irk out a decent living in Malaysia. By then, of course, the disparity has widened much much farther.
When the single simple opportunity in life that one is looking for just to survive does not even exist, because it is perceived that all the opportunities have been monopolised and that the wealth that has been amassed has been transformed into power of control and domination, you want regime change.
How does the minority cause a regime change of the majority in a democratic way?
By giving all its support to the opposite, the best that can be managed is 77:23.
This is the best that can be done at the moment.
But the message is clear. That the people who are unhappy can say register their dissatisfaction.
So far, the non-Bumiputra has made their stance. Now, among the Bumiputra, unfairness of unjust policies has also been taking place. If the discontent is intense, you can get a swing that can go to 40:60 (assuming half turned).
How do you prevent unfairness? Malaysia, and Sarawak, has gone way past the point of racial disparity. We are now entering the era of class inequality: the poor fighting against the rich, for survival. If the rich has gotten rich through plunder, then there is a limit to that plunder. We are reaching that limit. The whole country is down going into economic descent.
The only way forward is a conducive environment for investment, private investment. This is not the perfect solution, but this is the way that the modern world has learned to bear with. This world of private investment, will create with it the problems of worker welfare. This is the economic disparity. But at least, there is a way out by negotiating for better pay and conditions for workers.
At the moment, the problem is unemployment and rising cost of living. Dishing out cash handouts in "poverty-eradication" programmes is a short-term measure, important to prevent riots and buy time for better programmes to come in. It must be the encouragement of local private investments.
The whole nation should not be held back by one lone racist voice. We should fight racism and get the whole nation back to where it was in 1970, and start all over again. We have lost enough time. It is time to put excellence back into the nation, and take our rightful place in bright Asia.
Tuesday, April 12, 2011
Sarawak Politics, Economics & Philosophy
Politics is about power.
The current political fight in Sarawak today is about the struggle for power. Whether it is the Barisan Nasional or Pakatan Rakyat, both are now trying to convince the voters why they should vote for them and not the other group. So, what is the difference between the politics in Sarawak, and the politics elsewhere?
Between the politics in Sarawak and those in the Peninsular, the current arrangements on both sides of the water are similar - racial political parties conveniently come together to form groups each with a multi-racial front. In Sarawak, on the BN national front, there is PBB which is supposed to represent the Bumiputra which is odd because you also get in it other Dayak groups such as PRS and SPDP which are Bumiputra as well, in addition to SUPP which is generally taken to be predominantly Chinese. On the other Pakatan front, Keadilan is supposed to be a front runner but in reality DAP is the stronger and both are Peninsular-based parties. Appended is SNAP which is taken to have a Dayak dominance.
What you are now witnessing in Sarawak today, as well as in Peninsular, is racial politics at its best. You have grievances even among the Bumiputra where, in the Peninsular, the gripe is UNMO-putra, whereas in Sarawak the culprit is the one and only and his cohorts. Both probably come straight out of a leaf of the NEP. The Chinese and everybody else then see themselves as orphans in an unloved disorganised family with a greedy and roving-eyed father. In Sarawak, the opposition talks of the dilemma of ungrateful urban Chinese juxtaposed against the poverty-stricken rural natives or indigenous people, when the reality may simply be the everyday fight for survival, against poverty or fear of not having enough. There is poverty in the urban areas as well as in the rural. Remember that when the rural people come to town, they become the urban poor. In towns, when the parents did well, the NEP makes sure that they do not have new opportunities.
It is a terrible thing when an affirmative policy such as the NEP has become a racist policy that is used to deprive the majority for the benefit of a few. It is equally unacceptable for the alternative to champion the interests of the now-deprived Bumiputra or non-Bumiputra to the exclusion of Bumiputra. It is this racism in Malaysian politics as well as in Sarawak that is objectionable to rational-minded citizens of this country. For this reason, thereby, my contention is that the current battlelines are drawn at the wrong points by the opposition; it could be the result of the early stages of development in Malaysia as well as Sarawak.
In all countries everywhere and for all people in all countries, the greatest fear is economic survival with eyes being opened wide as a result of the internet where the whole world is collapsed into a picture frame made of plasma or pixels. We know of everything we want to know, and while we marvel at technology, we fear for ourselves and our children. In such a world of great nervousness, there is a great demand for reassurances and governments around the world guarantee it by printing money and getting into massive budget deficits. With massive budget deficits come inflation, now on a global scale, which means that it hits also the poor little indigenous people or the non-indigenous people on the wrong or better side of Borneo. Their home-grown output, be it the processing of local foods or the processing of local materials into tourist items called handicraft, however much they produce and sell is inadequate for them to enjoy a piece of the advances of modern technology as the terms of trade is wrack-smacked against them, thanks no doubt to the multi-award multi-year winning central bank that we have in keeping this country economically competitive while the people deprived.
Under trying localised circumstances, there is nothing but humanity for all citizens of Malaysia, and some say Sarawak, to argue for a level playing field economically at the very least for everybody, be that somebody a Muslim or non-Muslim, Bumiputra or non-Bumiputra. It is time we do away with racism of any guise.
In Sarawak, the two oldest multi-racial parties are the SUPP and SNAP, and their full names say so: the Sarawak United Peoples' Party and the Sarawak National Party. Fill these two parties with well-educated, well-intentioned young and energetic people of all races - if they can work well in other countries and survived, they can do likewise in Sarawak. Let them fight on the economic ground: between big businesses and the welfare of the people. There is much can has to be done to re-position Sarawak which for now, in economic policy terms, is nothing but an adjunct to Peninsular-centric economic (and political) policies. There is a need to refocus on Sarawak as an wholesome and self-sustaining unit rather than merely a supplier of energy to the Peninsular either in the form of oil and gas or hydroelectric power. There must be a way to retain these natural resources for use locally.
I find the current political fight in Sarawak boring on fundamental issues, though not for want of theatrics by masters in their defined fields. But the outcome on 16 April can be devastation of one kind or another.
The current political fight in Sarawak today is about the struggle for power. Whether it is the Barisan Nasional or Pakatan Rakyat, both are now trying to convince the voters why they should vote for them and not the other group. So, what is the difference between the politics in Sarawak, and the politics elsewhere?
Between the politics in Sarawak and those in the Peninsular, the current arrangements on both sides of the water are similar - racial political parties conveniently come together to form groups each with a multi-racial front. In Sarawak, on the BN national front, there is PBB which is supposed to represent the Bumiputra which is odd because you also get in it other Dayak groups such as PRS and SPDP which are Bumiputra as well, in addition to SUPP which is generally taken to be predominantly Chinese. On the other Pakatan front, Keadilan is supposed to be a front runner but in reality DAP is the stronger and both are Peninsular-based parties. Appended is SNAP which is taken to have a Dayak dominance.
What you are now witnessing in Sarawak today, as well as in Peninsular, is racial politics at its best. You have grievances even among the Bumiputra where, in the Peninsular, the gripe is UNMO-putra, whereas in Sarawak the culprit is the one and only and his cohorts. Both probably come straight out of a leaf of the NEP. The Chinese and everybody else then see themselves as orphans in an unloved disorganised family with a greedy and roving-eyed father. In Sarawak, the opposition talks of the dilemma of ungrateful urban Chinese juxtaposed against the poverty-stricken rural natives or indigenous people, when the reality may simply be the everyday fight for survival, against poverty or fear of not having enough. There is poverty in the urban areas as well as in the rural. Remember that when the rural people come to town, they become the urban poor. In towns, when the parents did well, the NEP makes sure that they do not have new opportunities.
It is a terrible thing when an affirmative policy such as the NEP has become a racist policy that is used to deprive the majority for the benefit of a few. It is equally unacceptable for the alternative to champion the interests of the now-deprived Bumiputra or non-Bumiputra to the exclusion of Bumiputra. It is this racism in Malaysian politics as well as in Sarawak that is objectionable to rational-minded citizens of this country. For this reason, thereby, my contention is that the current battlelines are drawn at the wrong points by the opposition; it could be the result of the early stages of development in Malaysia as well as Sarawak.
In all countries everywhere and for all people in all countries, the greatest fear is economic survival with eyes being opened wide as a result of the internet where the whole world is collapsed into a picture frame made of plasma or pixels. We know of everything we want to know, and while we marvel at technology, we fear for ourselves and our children. In such a world of great nervousness, there is a great demand for reassurances and governments around the world guarantee it by printing money and getting into massive budget deficits. With massive budget deficits come inflation, now on a global scale, which means that it hits also the poor little indigenous people or the non-indigenous people on the wrong or better side of Borneo. Their home-grown output, be it the processing of local foods or the processing of local materials into tourist items called handicraft, however much they produce and sell is inadequate for them to enjoy a piece of the advances of modern technology as the terms of trade is wrack-smacked against them, thanks no doubt to the multi-award multi-year winning central bank that we have in keeping this country economically competitive while the people deprived.
Under trying localised circumstances, there is nothing but humanity for all citizens of Malaysia, and some say Sarawak, to argue for a level playing field economically at the very least for everybody, be that somebody a Muslim or non-Muslim, Bumiputra or non-Bumiputra. It is time we do away with racism of any guise.
In Sarawak, the two oldest multi-racial parties are the SUPP and SNAP, and their full names say so: the Sarawak United Peoples' Party and the Sarawak National Party. Fill these two parties with well-educated, well-intentioned young and energetic people of all races - if they can work well in other countries and survived, they can do likewise in Sarawak. Let them fight on the economic ground: between big businesses and the welfare of the people. There is much can has to be done to re-position Sarawak which for now, in economic policy terms, is nothing but an adjunct to Peninsular-centric economic (and political) policies. There is a need to refocus on Sarawak as an wholesome and self-sustaining unit rather than merely a supplier of energy to the Peninsular either in the form of oil and gas or hydroelectric power. There must be a way to retain these natural resources for use locally.
I find the current political fight in Sarawak boring on fundamental issues, though not for want of theatrics by masters in their defined fields. But the outcome on 16 April can be devastation of one kind or another.
Monday, April 11, 2011
Capital: Control or Free Flow
It was not so long ago when economic theorists argue that it was OK for people and capital to flow freely around the world, in the belief that it would be favourable for economic growth as well as economic welfare. Economic growth because these people and capital have to work hard to find the extra gain from existing resources - meaning more output and more output. Economic welfare because these people and capital owners have income or extra income and that by things getting cheaper the welfare of the average consumer is improved.
With globalisation and the ICT whereby the flow of people and capital can be made almost instantaneously, the free flow of people and capital can be likened to the unfortunate but relevant image of the tsunami where an extraneous force comes strongly into the domestic system, and leaves just as quickly but in that quick second, the end result is devastation. No matter how strong or how stable, no man-made system can withstand such violent forces.
The unleashing of the manpower of the Chinese people from the grips of authoritarian control to one of a freedom to negotiate and trade has caused an explosion in the manufacturing world where there is little room for the less than competitive. Either you are competitive or not competitive. The export of competitively priced goods by China has made the Chinese people the sloggers for the whole world, with very little for themselves except for the opportunity to work. The capital owners were happy to make that extra cash and they continue to pour capital in enterprises in China. In the meantime, the costs of raw materials rise around the world because of the unprecedented prolonged of China and this is causing the cost of living to rise around the world including China. While the standard of living of Chinese workers can be adjusted by raising their nominal wages, workers in other parts of the world whose livelihoods have been devastated because of their lack of competitiveness have no choice but to look for new political leadership blaming their day-to-day difficulties on corruption of the ruling elite.
US, which has the unique privilege of unlimited printing of its paper money, solves its problem of lack of competitiveness by printing still more money. As China and other parts of Asia as well as some parts of Europe and Africa benefit from the slog of the Chinese workers, those who have managed to obtain the cash that the US is printing choose to invest for short-term gains in those investments without them sinking one cent into a real piece of machinery. These are the short-term capital investors, the investors of portfolios on the stock market. These are the ones that cause havoc on the foreign markets when they come in and out, on the stock market when they come in and out, on the property market when they come in and out.
Economists have long thought hard and long on what to do with these short-term capital flows. Most economists, if not all, have decided against them. How to prevent these short-term capital flows from having a bad impact on the local economy. Sterilisation - how to remove these short-term flows from the banking system. Rise in the reserve ratio of banks - so that banks can create less credit out of these short-term funds. Capital controls - these are the most drastic, how not to allow them to enter the economy at all.
In some countries in the past, Peru, I think - they even try to prevent the entry of long-term borrowings by private companies because eventually they will have to repay and they will chew up their foreign reserves and hence cause a decided deterioration in their exchange rate.
In Malaysia, there was an attempt to sterilise the short-term flows in the 1990s but failed because the central bank wanted to be nice and pay depositors their market deposit rates, and its attempt to recoup from the forex market failed. The second mistake was to use those short-term funds in the stock market for long-term investments. When the funds pulled out, the capital market collapsed. The third mistake was to capital controls to stop funds from getting out of the economy. This mistake was big. It removed all confidence investors has on the government to conduct policies properly. There is nothing wrong with capital controls. If you do not want funds to come in, don't let them in in the first place. If you let funds in in the first place, you cannot trap them and prevent them from leaving. There were other mistakes as well, such as taking the currency out of international trading and not understanding the sophisticated on the forex market. The short-selling that was pushing down the ringgit had to be covered later, and when that happened, the ringgit would have recovered to near its equilibrium which was fairly high because of the fundamental surplus on the trade balance. In any case, Malaysia screwed up and we have not properly recovered since.
The many discussions on the capital flows or controls are interesting but they are by no means simple. It is a sign of the times, that things have been cheapened by their apparent plentifulness - everywhere, things are piling all around us. The only thing we do not seem to have sufficient is green environment for healthy food for us to eat.
With globalisation and the ICT whereby the flow of people and capital can be made almost instantaneously, the free flow of people and capital can be likened to the unfortunate but relevant image of the tsunami where an extraneous force comes strongly into the domestic system, and leaves just as quickly but in that quick second, the end result is devastation. No matter how strong or how stable, no man-made system can withstand such violent forces.
The unleashing of the manpower of the Chinese people from the grips of authoritarian control to one of a freedom to negotiate and trade has caused an explosion in the manufacturing world where there is little room for the less than competitive. Either you are competitive or not competitive. The export of competitively priced goods by China has made the Chinese people the sloggers for the whole world, with very little for themselves except for the opportunity to work. The capital owners were happy to make that extra cash and they continue to pour capital in enterprises in China. In the meantime, the costs of raw materials rise around the world because of the unprecedented prolonged of China and this is causing the cost of living to rise around the world including China. While the standard of living of Chinese workers can be adjusted by raising their nominal wages, workers in other parts of the world whose livelihoods have been devastated because of their lack of competitiveness have no choice but to look for new political leadership blaming their day-to-day difficulties on corruption of the ruling elite.
US, which has the unique privilege of unlimited printing of its paper money, solves its problem of lack of competitiveness by printing still more money. As China and other parts of Asia as well as some parts of Europe and Africa benefit from the slog of the Chinese workers, those who have managed to obtain the cash that the US is printing choose to invest for short-term gains in those investments without them sinking one cent into a real piece of machinery. These are the short-term capital investors, the investors of portfolios on the stock market. These are the ones that cause havoc on the foreign markets when they come in and out, on the stock market when they come in and out, on the property market when they come in and out.
Economists have long thought hard and long on what to do with these short-term capital flows. Most economists, if not all, have decided against them. How to prevent these short-term capital flows from having a bad impact on the local economy. Sterilisation - how to remove these short-term flows from the banking system. Rise in the reserve ratio of banks - so that banks can create less credit out of these short-term funds. Capital controls - these are the most drastic, how not to allow them to enter the economy at all.
In some countries in the past, Peru, I think - they even try to prevent the entry of long-term borrowings by private companies because eventually they will have to repay and they will chew up their foreign reserves and hence cause a decided deterioration in their exchange rate.
In Malaysia, there was an attempt to sterilise the short-term flows in the 1990s but failed because the central bank wanted to be nice and pay depositors their market deposit rates, and its attempt to recoup from the forex market failed. The second mistake was to use those short-term funds in the stock market for long-term investments. When the funds pulled out, the capital market collapsed. The third mistake was to capital controls to stop funds from getting out of the economy. This mistake was big. It removed all confidence investors has on the government to conduct policies properly. There is nothing wrong with capital controls. If you do not want funds to come in, don't let them in in the first place. If you let funds in in the first place, you cannot trap them and prevent them from leaving. There were other mistakes as well, such as taking the currency out of international trading and not understanding the sophisticated on the forex market. The short-selling that was pushing down the ringgit had to be covered later, and when that happened, the ringgit would have recovered to near its equilibrium which was fairly high because of the fundamental surplus on the trade balance. In any case, Malaysia screwed up and we have not properly recovered since.
The many discussions on the capital flows or controls are interesting but they are by no means simple. It is a sign of the times, that things have been cheapened by their apparent plentifulness - everywhere, things are piling all around us. The only thing we do not seem to have sufficient is green environment for healthy food for us to eat.
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