Who does not love big dividends that could be gained through low-risk instruments?

For many Malaysians capable of saving, either voluntarily or otherwise, low-risk investment with high returns of 5%-8% yearly or even more for some, is something that has been taken for granted. This is thanks to years of expectation settings made by a set of institutions the government has put in place to encourage saving.

So much so that in the case of Tabung Haji when the fund could not even pay its depositors high dividend anymore, the previous administration felt compelled to manipulate its accounts so that it could sustain its dividend level and avoid the political backlash from its base. In fact when ASB under PNB announced a reasonable dividend of 5.5% for 2019, enough Malaysians expressed unhappiness how that was unacceptably low and how that it would remove arbitrage opportunity that existed through low-cost borrowing to invest in higher yielding but low-risk investment, like those provided by PNB.

I for one believe the way and quantum these dividends are given need to change.

The reason: the state is encouraging the wrong people to save. Specifically, the existing system encourages those that do not need to save more to save further. This in turn places a downward bias on consumption growth and the size of funds available for productive investment (not the financial ones). I have a suspicion that if we stop encouraging the wrong (and rich) people to save, we could bump consumption growth and possibly funds for productive investment up, and boost economic activities on the ground. I am suggesting the economy could grow faster if we correct this flawed incentives.

What do I mean by encouraging the wrong people to save?

This is plain to see from the distribution of wealth in two big funds in Malaysia.

Based on the latest annual report from the EPF, that is the 2018 publication, the top 10% biggest depositors owned approximately half of all of EPF fund. And EPF is the biggest fund in Malaysia, and one of the biggest in the world.

It is worse in Tabung Haji. Based on data contained within the TH Recovery and Restructuring Working Plan document, about 1% of depositors owned half of the fund. A particular news report went on to cite that one depositor (likely the top depositor) had RM190 million saved in Tabung Haji. He or she could afford to live in Mecca luxuriously just on the Tabung Haji dividends alone!

With so much money, it is a no-brainer to put excess cash into these relatively high-returns low-risk funds. And dividend rates do spike up when it comes to election times previously, which indicates that the government do have a say in determining the dividend rate if it wants to through various means.

I am arguing that the high dividend for low-risk instruments is unhealthy to the wider economy. The relatively high-returns low-risk fund creates artificial incentive to save, which leads to excessive saving behavior by the rich. That artificial incentive to save translates into artificial disincentive to spend and invest in actual economic activities beyond financial instruments.

If we could rationalize and structure the dividend in a more reasonable way – such as reducing the dividend rate progressively the higher the size of savings is or capping the amount of savings at a reasonably high but not too high level – I think we can correct this, and unleash more money for spending by the rich, or encourage them to be more adventurous with their money by investing in real economic activities, like productive start-ups and new businesses, instead of things like the stale old and safe banking and other GLC stocks.

And after all, the financial-type people are complaining that Malaysian stocks are overpriced. Is it a wonder why that is so when the size of EPF funds is outgrowing the size of assets available for investment in Malaysia?

We could still encourage people to save. But let us incentivize the right people to save. My favorite way of doing so is to raise the dividend rate for the bottom and mid-savers, and progressively cut for the top ones (after passing beyond a certain level).

The digital life is oppressive sometimes. Because we are now able to record every single second of our life, some of us are in constant fear leaving any moment left unrecorded. So much so that we have become slaves to our digital memory, and failed to enjoy the moment itself without any assistance lfrom our digital devices. I am hardly different, though I would like to think I try to fight off such urge.

To get to Antalya on the Turkish Mediterranean from Konya deep within Turkey, the bus I was on needed to pass through the Taurus Mountains. I have read about the Taurus Mountains as a child, just as I have read about the Urals, the Himalayas, the Andes and the Rockies. To be there in the Turkish plains seeing the mountain range with my own eyes was somewhat unbelievable upon reflection. The ten years old me whom had read about it in encyclopedia and on maps would have never imagined he would one day see it for himself.

Konya, as I learned latter, Iconium during the Roman days, is located at the foot of grand mountain ranges, with mountain peaks of names I do not know off without further research. As I spotted the various peaks from my hotel window, I told myself I wanted to know their names. I quickly abandoned the exercise for fear I would be prioritizing the wrong thing: I am here in Konya, and I should be experiencing it rather than researching about mountains on the horizon. It did not help that Wikipedia was banned in Turkey.

Looking north from my bed, I remember three peaks the most. The highest had its top covered with snow. It was December after all. The other two peaks were much shorter but located nearer to me, with cup-like shape turned upside down. All were barren, with earth exposed with rocks littered its cliff, at least as far as I could tell peeking through my camera’s viewfinder equipped with a small zoom lens, pretending I was some kind of explorers, readying for the mountains.

Looking north of Konya

Konya felt like it was on the edge of a desert, with a more mundane landscape compared to Goreme in Cappadocia with its deeply Christian history that reaches to more than 900 years back into history.

But the view from Konya was nothing compared to the view from the road towards Antalya to the southwest.

The journey began tamely. The road ran on flat land southward before swerving eastward into the Taurus. Taurus means the Bull in Latin, and the Bull is the symbol of the Storm God. The mountains were named so because the ancients believed the rains brought by the Storm God created the Tigris and the Euphrates, which originated from these mountains.

The approach towards the Taurus from Konya was not as dramatic as the one I experienced in Laos. Back there, the flat land would suddenly be confronted by the mighty Himalayas. Back in Vang Vieng in Laos, a wall of one, two, three or even four kilometer high would stare you down, enquiring the puny you of your rights to be there. Here at the foot of the Taurus, the ascend was gradual and it betrayed little early on. Maybe because, I was already within the mountain complex, except I did not realize it.

So I had my camera switched off, and kept tightly inside my bag as the bus began to work its way to the Mediterranean. As the bus climbed up gently, my view was kept in check by the hills on my sides. Except quite quickly, those hills on my sides soared up into the sky, suddenly transforming into mountains with snow caps. Shallow valleys became chasms, slopes became cliffs, and daytime turned dark as the mountains blocked the sun.

I knew my camera was in my bag. I wanted to take them out. I really did. But in my mind, if I did so, I would miss something with my own eyes. And each corner revealed even more dramatic view, and even higher mountains out in the distance, and they would vanish within seconds as the trees and the rocks and the hills moved around, blocking my lines of sight. I dared not spend a minute taking my camera out. I could not take it.

And… I took my camera out and began shooting from my seat.

The pictures turned out crappy. But the memory in my head turned out just fine. Maybe for the next 30 or 50 years. We will see.

Inspired by Barack Obama’s book list, here are my top 10 books that I have read during the past decade, in no particular order.

This is quite a hard list to compile because there are so many books. And if such a list is possible, then ten is such an arbitrary number. Nevermind that this assumes the decade began with 2010, and not 2011. Nevertheless, let us not get such debate in our way.

So, what would be the criterion for listing a book? I think mine would be the book’s influence on my understanding of the world.

There is no order to the list. Listing only 10 is hard enough and I do not want to complicate it. Be warned though as there might be recency biased. I cannot remember all of the books I have read earlier during the decade.

Here we go.

  1. Orientalism by Edward Said. This makes the list because of several things but the one thing I appreciate the most is not about orientalism — though it was enlightening — but on how history is textual: we understand history based on what has been written, not on what happened per se. That is such a revelation to me despite it being so obvious. Orientalism is also in the list because of its influence other books that I have read. The Myth of the Lazy Native by Syed Hussein Alatas for instance clearly adapted Said’s ideas within Southeast Asian context.
  2. The Malays by Anthony Milner. This should be read together with Kerajaan by the same author. The book describes and proposes the definition of Malayness and its justification will make you question the meaning of becoming a Malay. Bangsa Melayu by Ariffin Omar and Leaves of the Same Tree by Leonard Andaya are probably useful further reading.
  3. The Malay Dilemma by Mahathir Mohamad. This is an important book to read in order to  understand Malay politics. You can disagree with the content of the book, but you cannot deny its relevance in this age of heightened ethnonationalism (and during the administration of Mahathir II).
  4. Ownership and Control in the Malayan Economy by James Puthucheary. The book highlights the fact that the debate between Malay and non-Malay wealth distribution in the early days of Malaya and Malaysia totally ignored European control over the Malayan economy. The book also created a whole new research line in Malaysia.
  5. The End of Empire and the Making of Malaya by Timothy Harper. What I love about the book is its tracing of pre-independence Malayan history that sheds light on the Chinese Malaysian community’s dynamics, particularly the pre-war rivalry between the Kuomintang and the Communists, as well as the origin of Sino-Malay rivalries deep during the Japanese occcupation. The citation here is massive. In some ways, this book compresses classics like Willam Roff’s The Origins of Malay Nationalism and Boon Kheng Cheah’s Red Star Over Malaya.
  6. Imagined Communities by Benedict Anderson explains the creation of national identity. I think the book is particularly interesting when read together with Milner’s work. The two authors do offers competing explanations, but I think together both explain the creation of the old (classical?) and modern Malay identities, and in doing so,outline the full evolution of the Malay identity.
  7. A History of God by Karen Armstrong. The book traces the history of the Abrahamic religions, and it will make you realize how smooth the evolution of beliefs from the earliest of Judaism to Islam. I recommend reading Heirs to the Forgotten Kingdoms by Gerard Russell for a view of what happened to all the heterodox Abrahamic beliefs, and other pre-Abrahamic religions as a minor companion to Armstrong’s excellent work.
  8. The Theory of The Leisure Class by Thorstein Veblen. It is all about signalling!
  9. The Protestant Ethic and the Spirit of Capitalism by Max Weber. Essentially, the Reformation in Europe had removed the Church as a means of salvation. This led to the evolution of values, which suggested that work was the new means of salvation. This led to capital accumulation among individuals.
  10. The Story of Philosophy by Will Durant. A great broadbrush take about western philopshy. Durant’s work really feels like an brief encyclopedia to help you decide which work do you want to read first. Additionally, it also traces multiple ideas and how it evolved across time, from ancient Greece to industrial Europe and early 20th century. This book might be fun to read together with the fiction Sophie’s World by Jostein Gaarder.

Other notable mentions include:

  • Between the World and Me by Ta-Nehisi Coates. This is about racism in America. Some profound observations made by the author here.
  • Empire by Niall Ferguson. An apologist for the British Empire.
  • Identity by Francis Fukuyama. He describes the rise of communalism/nationalism in the 21st century and the reasons behind it, with plenty of references to Plato’s The Republic.
  • Capitalism by Juergen Kocka. This is a history of capitalism and a little bit about capital accumulation.
  • Early Islam and the Birth of Capitalism by Benedikt Koehler. Self-describing.
  • The Opium War by Julia Lovell. This is a great retelling of the Opium War, critical of both Imperial China and the British Empire.
  • A Sudden Rampage by Nicholas Tarlings. A great work detailing the Japanese decisions that led to its invasion of Southeast Asia during World War II. Be ready to revise your assumptions about the war.

They say history repeats itself. Wikipedia in fact as a page calls historic recurrence describing the phenomenon.

I have been thinking how this is relevant to this age of hyperconnectedness with information overload that is increasingly becoming beyond the capacity of human beings to analyze and verify. We already have the too long don’t read culture that permeates everywhere. When I was working at a unit inside the Financial Times, we were told to write a piece no longer than a thousand words and ideally, 500. I found that a constant challenge, with all the nuances that needed to be explained to audience without the prerequisite backgrounder.

A majority of people simply do not have the stamina to read long, whatever the reason. And social media does not accommodate nuances very well, whatever the reason. This failure to provide room for context does not do justice to truth, and instead creates room for misunderstanding or disinformation.

This is a challenge for a libertarian like me who believes in free speech but at the same time finding myself exasperated seeing rampart disinformation spread not only directly by humans, but also bots.

In terms of communication, increasingly, there is a move towards graphics. In the past, at least I feel so, graphics were merely an assistive tool. Charts for instance enhance the experience of reading complex proses. It is never easy to read, for instance, the real gross domestic product rose 4.9% year-on-year in the second quarter of 2019 over whatever percent growtn in consumption and import, or the consumer price index increased by 1.1% from a year ago, which was an acceleration from 0.7% year-on-year inflation in the previous month. Each word is contextualized and requires preexisting knowledge. A person unfamiliar with the lingoes would be lost in the sea of letters: level versus flow, base versus base, the second derivative versus the third derivative all happening simultaneously that even the best of us will make mistakes. Math clarifies these things to some levels, but charts will clarify it all the way to the bottom for all through simplification.

Charts can be dumb too, But when it is dumb, it is easy to see quickly with the necessary basic skills, unlike complex verbose proses requiring additional brain power.

And charts are only a subset of graphics. Or infographics… whatever that redundant phrase means these days.

But graphics are becoming more than that now. Rather than an augmenting tool, I feel it is becoming the tool in disseminating information regardless of its truth. This is especially so on social media with respect to political messaging.

So, in the age of information overload that discourages reading and killing nuance, graphics are king.

This reminds me of the days of old when murals in Christian churches, friezes like bas-reliefs, and paintings were the main means of communication at a time when the population was largely illiterate. I remember clearly a famous scene from the Hindu story of the Churning of the Milky Ocean carved on the wall of one of Angkor Wat’s long corridors. The wall would show the Devas and the Asuras of pulling a long large snake acting as a rope wrapped around a mountain churning the Ocean of Milk. I could understand the bas-relief by just looking at it, though to have the full picture, I would have to read the story through text, or have someone taught me the legend.

Perhaps there is a parallel here if we contextualize illiteracy given itself time. In the modern era, illiteracy is turning into the lack of discipline to read textual nuance, while in the past illiteracy was the inability to read text.

The solution to both are graphics, or visual representation of an idea.

When I say history repeats itself, I mean we are down going back to visual representation as a means of popular communication. The then and now contexts of returning back to visual representation maybe different, but it is a repeat of past trend nonetheless.

I have a value judgment to make here on top of this. Perhaps the historic recurrence is damning in the sense that despite our massive advancement and improvement in mass education, we are becoming more stupid collectively. Technological progress in terms of information is becoming so advanced that we cannot cope with it. Relative to the frontier of information, we are being left behind so far as information becomes more massive and impossible to process by us individually without the aid of any machine.

In the past, we individually perhaps could catch up with the frontier of information even as the frontier was expanding. We could get darn close to it if we wanted. We could be polymaths.

However today, the frontier is expanding faster than we can ever hope to catch-up. We are made stupid by our own success. And visual representation is a tool to address our regression that we have to rely on it once again.

The gig economy can be many things but within the realm of ridesharing, I see it primarily as a shock absorber in the labor market. That means ridesharing is a temporary fall back plan if you have trouble in the formal market or in between jobs.

Here is an example of ridesharing as a shock absorber: if someone lost an income through job loss, he or she would not suffer 100% immediately because he or she could go to ridesharing without much cost. This shock absorber can be a minor alternative to unemployment benefits, except it comes as no cost to the government.

Because of this, I prefer to have flexibility in the ridesharing sector. Regulations could reduce the flexibility and reduce the effectively of the ridesharing sector as a shock absorber.

Yet it is quite clear that there is a need for labor protection. Regulations do have a role, especially since there is an asymmetry of bargaining power between those driving and the owner of the platform, driving by technology. In the case of food delivery, which is also a part of the gig economy, Foodpanda has market power over its food delivery workers and that market power was only matched with its deliverers’ union-like organizing successes.

When it comes to ridesharing, it does seem current regulations are reducing such flexibility and hurting the role of the sector as a labor market shock absorber. This inflexibility is caused by the need to register with the government if a person wants to participate in the ridesharing economy by driving.

Grab certainly blamed the new ridesharing regulations for reduced number of drivers on the road. This seems to be backed by complaints made by passengers over longer waiting time and higher fares. I personally I have suffered longer waiting time and higher fares, compared to before the regulations came into place. Talking to former drivers have also convinced that there are those who chose to cease becoming participants in the ridesharing sector. These point towards greater barrier to entry and hence, reduced flexibility.

I think as a compromise between the need for regulations and flexibility, perhaps there should be a two-tiers regulation:

  • For those earning below a certain threshold per month over x months, they could be exempted (partially?) from registration.
  • For those surpassing that threshold, they should be covered by current regulations fully .

The threshold is there to differentiate those doing ridesharing as a part time job and those doing it full time (or simply heavy participate of the gig economy). The shock absorber factor is more relevant to the part-timers than to the full-timers.

Admittedly, this will make implementation more complex and open the grounds for some non-compliance. There will be grey areas but I think in making the gig economy as a shock absorber, we should be tolerant of such non-compliance within some margins.

Implementation issues aside, theoretically this should be improve the role of ridesharing as a shock absorber in the labor market. It allows part-timers to join the gig economy without much cost, and making ridesharing sector as a temporary fallback.

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