Kuala Lumpur opened the extension to its light rail transit lines late last month and I was pretty excited about it. After years of delay, the system is finally here.

I am excited because I can now hop on a train to Subang with ease. Previously, I would either have to drive, get on a cab or take the KTM Commuter trains. The Commuters are not as convenient as the LRT. Frequency is low and it connects places which I have little reasons to go to. In contrast, the LRT extension also means I now have easy access to the Subang airport too.

Another reason for my excitement is that I really love trains. I try to ride on the train everywhere I go to observe the city and the people. Even in Jakarta when the city rail system is not as mature as those in Singapore, Kuala Lumpur or Bangkok. I also regularly read on the read, that is to say I have time for myself in contrast to, for instance, driving.

I rode on the train yesterday and made a loop from the Masjid Jamek Station to the new Putra Heights Station via Kelana Jaya, and back through the Sri Petaling Line. That took me close to 5 hours and I started at about 5PM, running for 40km-50km. The total extension length itself is about 35km.[1][2]

I could not see the outside half of the ride as it was getting dark by the time I reached Putra Heights. I think I will have to make another loop and this time, probably earlier in the day during the weekends to fully appreciate the view.

So, this is a review by a regular LRT user (yes, I am a libertarian who loves public transport. Sue me).

Bad finishing

While the trains themselves are great, so far, I feel the construction of the stations has not been done properly. I got off at several stations and I noticed mediocre finishing. There is a feeling the stations were completed in haste despite long construction delays.

I remember two particular stations with noticeable defects. The escalator at the Lembah Subang Station was creaking, making a loud noise of grinding metals. Mind you, this is a new system and it is already showing sign of stress. With all the escalator incidents elsewhere – some of it deadly – I was not fully sure it was entirely safe.

The escalator at SS15 station was also creaking albeit less loudly. I could feel it straining as I rode down. The descent speed was less than optimum and uneven at times, which possibly has something to do with the straining.

More disappointingly are the washrooms and I am writing specifically about the SS15 station. The faucets open too close to the wall of the basin, making it awkward for me and for anybody with non-midget sized hands to wash up. My fingers would hit the wall easily. I feel the pipes should have extended farther to the center of the sink instead of stopping at the edge, barely.

Several faucets were leaking too, leaving a pool of water on the floor, which turned the whole place disgusting. The dryer also did not work. This might be just a teething problem, but the history of KLIA2 (and the East Coast Highway too?) for instance, it does not inspire confidence. The extension just opened for heaven’s sake. These problems should not exist.

I did not get out of the stations because I did not want to spend too much money. It cost me less than three ringgit to make the ride, because the stations I entered and exited were close by. Neither did I get off at every station. That would the time consuming for a layperson. If I had, I am sure I could find more defects. After all, I randomly got off two stations and the hit rate of finding noticeable defects is 100%. There is a prima facie case to suspect there is a systemic problem with the line.

Who were the contractors of these stations? Given the previous controversies involving contract awards, that question will be important in running a post-mortem on the project. An audit should be carried out and its findings be made public. These contractors should be forced and fined to remedy those defects.

Interchange done right, and wrong

But there is nice stuff to say about the overall system.

The interchange at Putra Heights is done marvelously. If there is an ideal interchange in the whole wide world, this is it. It reminds me of the MRT interchange to Changi Airport in Singapore. You would just have to get out of the train, stay on the same island platform and wait from the next train to arrive on the other side, possibly 10 meters away only. No unnecessary 5 minutes walking is through a mall like in KL Sentral is required.

But I also have to comment about the interchange at Sri Petaling. I do not like it. I had to switch trains and platforms. Sri Petaling has side platforms, which means I had to get on a crossing to get to the other side. More annoyingly, the Putra Heights-Sri Petaling segment is not integrated seamlessly with the Sri Petaling Line, unlike the whole Gombak-Kelana Jaya-Putra Heights segment. I understand why I need to switch trains Putra Heights (Mahathir’s legacy), but less so at Sri Petaling.

Refreshing station designs

I short, I like the design. It feels sleek just like the Kelana Jaya trains.

More importantly, the platforms are huge compared to the old ones. It is just less claustrophobic during rush hour. The situation at stations like KLCC and Masjid Jamek can be extremely unpleasantly and packed with people. Worse, they are underground although air-conditioned stations. But things are not that much better at above ground stations like Setiawangsa, Jelatek, Pasar Seni and even KL Sentral. There just is not much platform space to accommodate massive crowd.

The large platform space at the new stations comes with large envelope cover, which is essential to a rail system in a tropical country like Malaysia. At the old above ground stations, rainstorm would make everything wet and since the flooring are marble-like, dangerously slippery too. The new stations, with the way the platforms are designed and covered, are unlikely to have the same problem, although I would think it would get hot and humid quick. I do not remember whether there was an air-conditioning system moderating the temperature but for the old above ground platforms, a simple cheap fan would work.

But the cover also means the glorious view of KL as seen from Wangsa Maju, Setiawangsa, Jelatek, Keramat, Damai, Pasar Seni, Asia Jaya and Universiti among others is not available at the new stations. That is a downer for me.

But I suppose the envelope cover is a blessing for Puchong stations, which are surrounded with ugly landscape.

Perhaps, if the LRT lines are to be improved further in the future, it should involve the expansion of platform space at popular stations.

Politics of credit and blame

With respect to the old station design, I do not blame the old architects and engineers. The earlier LRT system was put in place at a time when KL population was smaller. Najib Razak when launching the LRT extension line blamed Mahathir Mohamad for not investing more in public transport.[3]

This is off the mark by a mile because Najib ignored the reality of the 1990s when Subang was just expanding and Puchong was a wilderness instead of the industrial town it is now. The Klang Valley population size just did not warrant a further train investment then.

It is arguably only now that we have such population to justify further investment into the city rail system, with suburbs sprawling to the west and the south.

Najib happily takes the credits for the completion of the LRT extension project and further expansion of the KL rail network. But of course, what he did not mention is the fact that the project was supposed to be completed in 2014. Furthermore, Najib takes credits more than the completion of the project. He bashed Mahathir for not providing a comprehensive public transport system but the closer integration of the system really happened during Abdullah Badawi’s time. Indeed, the reorganization of the line management occurred post-1997 crisis under Mahathir. These integrations were the foundation Najib built on.

For a system that takes more than a generation to mature, it is hard to take credit and assign blame cleanly. Politicians should realize that.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

[1] — The Kelana Jaya Line Extension will begin from Kelana Jaya station and pass through 13 new stations, including Ara Damansara, Subang Jaya and USJ before ending at Putra Heights Integrated Station, covering a distance of 17.4km. Total length of the Kelana Jaya Line upon completion of the LRT will be 46.4km. [MyRapid. Kelana Jaya Line. Accessed July 12 2016.

[2] — The Ampang Line Extension starts from Sri Petaling Station and passes through Kinrara, Puchong, and ends at Putra Heights. The extension is 17.4km long with 12 new stations. Combined with the existing line, the total length of Ampang Line after the completion of the LRT Line Extension Project will be 45.1km. [MyRapid. Ampang Line. Accessed July 12 2016.

[3] — Prime Minister Datuk Seri Najib Razak took a swipe at Tun Dr Mahathir Mohamad today, blaming him for the underdeveloped state of the country’s public transportation network. At the launch of the Kelana Jaya and Ampang LRT Line Extension today, Najib said he made improving public transportation a priority when he became prime minister as the issue had become “increasingly serious.”

“This is because my predecessor who ruled for 22 years did not pay much attention to public transportation,” he said at the launch ceremony here.

“Therefore it created a vacuum, it caused underinvestment, it created a poorly integrated system owned by multiple people that cannot accommodate the needs of a modern city, and the traffic congestion has gotten more serious.” [Aizyl Azlee. Malay Mail Online. Najib blames ‘predecessor’ for current public transport woes. June 30 2016.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

p/s — I have also read that there is a problem of access for all the new stations. Pedestrians face barriers to entry either in the form of fence, road or unrealistic walkway. One criticism I have frequently so far is that the stations are designed for cars to drop off passengers. Sigh…

The old stations do not suffer too much of this problem and I think they are quite pedestrian-friendly in terms of access, except, maybe the Abdullah Hukum station. For the longest time and still is, that particular station stops in the middle of nowhere. Hardly anybody uses it. One hopes that would change when the KL Eco City development is completed, linking the station to the Garden and Mid Valley.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

p/s — MP Ong Kian Ming has a wider review of the train system in KL.

As an individualist, I do not condemn a whole community for wrongs of the few. I do not subscribe to collective blaming for individual crimes. Each person is responsible for his or her action. In the context of terror acts frequently committed by Islamic extremists these days, I would not ask a random Muslim to apologize for killings done by his coreligionists located thousands of miles away. To make such demand is just dumb.

It is dumb because Islam as practiced all over is diverse and its interpretation varies from group to group. The interpretations range from puritan to liberal, from medieval to modern, from mystical to logical. One interpretation can even be hostile to the other, making the act of blaming one side for the other’s violence as nonsensical.

The same diversity makes it wrong to claim ISIS and all of its terror acts done in the name of the Islamic god has nothing to do with the religion. As if there is one true Islam and only those Muslims subscribe to it. On the contrary, ISIS has everything to do with the religion.

There is no one Islam anymore. However strongly many Muslims would want to stress on the unity of the religion, the truth is that the successful proliferation of Islam beyond Arabia is due to its ability to absorb local beliefs, among other things. Its syncretic nature gives rise to its diversity.

All Muslims share several core tenets but that does not make all Islams as the same. The nature, the nuance, the outlook and the way of life of a Malaysian Muslim is very different from that living in the Middle East. Even within Malaysia, the general Islam experienced in Kuala Lumpur is very different from that in Kota Bahru.

War did advance Islam but war alone could not guarantee lasting belief. The religion had to be tolerant of some local practices to entice and keep people to its side. You could observe the result of the syncretism among the Malays in Malaysia. Traditional Malay wedding ceremony for instance has hints of Hindu influence. The Malays after all, were largely Hindus, Buddhists and animists before the arrival of Islam in the 1100s-1400s to Southeast Asia. Archipelagic Islam developed based on that old Malay (and others like the Javanese) foundation. Post-independence nation state context further influences the interpretation and practice of Islam in Malaysia and elsewhere in the region, that the state used religion to promote nationalism. Brunei is the other example where religion is a subservient tool of nationalism.

The idea that there is one Islam is not only untrue across geography. It is also untrue across time. Karen Armstrong in her book A History of God shows that early Muslims believed they were part of the Christian community. While mainstream Muslims today accept all of the Christian prophets, they do not consider themselves as Christians. Early Muslims did not share such a strong distinction. A separate Islamic identity developed only after the hijra. Indeed, before meeting the Medina Jews, Muhammad thought Christians and Jews were of the same belief and Islam was merely renewing the two religions that came from the same god. The conflation between Christianity and Judaism would not have been a mistake if Muhammad had lived centuries earlier when Jesus was preaching. Armstrong demonstrated that early Christians thought they were Jewish in religious terms and that they themselves thought they were renewing the religion of Moses.

Gerard Russell’s Heirs to Forgotten Kingdoms chronicling the old communities of the Middle East shows how minor religions like the Mandaenism sprung out of the Abrahamic beliefs by holding on to dogmas modern Judaism, Christianity and Islam now reject. Apart from the rejected beliefs, these minor religions are or were similar in so many ways to the major three faiths. These minorities are fossils from the days when the three world’s religions were rapidly evaluating their creeds and figuring out what worked and what did not. They are the living proofs that religion evolves over time, just as dinosaur fossils are proof that the Earth is older than 4,000 years.

All religions evolve and adapt to time, geography and culture and whatever other secular forces.

The one Islam may exist as a Platonic idealism but that model is irrelevant to the material world. The Islam that matters are the practical ones: the interpreted ones.

And so I do disagree with the claim that ISIS has nothing to do with Islam. ISIS’s is a disagreeable brand of Islam but it is a brand of Islam nonetheless. It is a brutal brand as a reaction to the disastrous 2000s war against Iraq and Saddam Hussein.

There is a parallel to this. A harsh puritan form of Islam appeared after the massacre and the razing of Baghdad in the 1200s-1300s by the Mongols. That Islam sought to return the religion to the early Meccan and Medinan days, rejecting intellectual progress achieved in the previous 700 years that made Cairo, Baghdad and Damascus the great capitals of the world during its times.

There is a Muslim tradition that leads to ISIS. That post-Mongol puritan Islam as rationalized by Ibn Taymiyyah informed modern day wahabbism and the salafism, which in turned influenced ISIS.

We should go further and explain why ISIS’s interpretation is so problematic. Their interpretation is that theirs is the true form and everybody else’s is false. ISIS believes theirs is the one true Islam while rejecting the diversity that exists in the religion.

That similarity, between ISIS and those who claim ISIS has nothing to do with Islam, amuses me. Both sides build their argument that their version is the one true Islam.

That logic shared by the two parties is not merely a source of amusing coincidence unfortunately. There is something more sinister about it.

Because there is only one true interpretation, then there is only one way of doing things and everything else is wrong. The religious diversity is rejected altogether. The magic word here is puralism. The corrupt Malaysian state is also guilty of this by politicizing Islam to legitimize its increasingly undemocratic hold to power, that the state is the guardian of the supposedly Platonic Islam. To add to the sense that the religion is being manipulated, I should write, the guardian of Platonic Malaysian Islam.

From where I stand, I feel the difference between the two sides is only a matter of degrees of intolerance and coercive force. I would not be shocked if it really about the ability to exert coercion for a large minority in Malaysia. After all, did a survey last year not show 11% of Malaysian Muslims sympathize with ISIS?[1]

And this is a problem. When you want to fight ISIS yet you share the same intolerance however different the degree is, your fight is logically unconvincing and turns out into choosing the lesser of the two evils.

Sometimes, we can reject all evils.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

[1] — See In nations with significant Muslim populations, much disdain for ISIS. November 17 2015.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

p/s – Tolerance to diversity itself does not make ISIS okay. There are other values more important that blind diversity, like individual rights.

I have been slacking off a little bit. My models have not been updated as frequently as it should. Reason is, one fine March day, something wiped the models out. Electrons arranged neatly disintegrated into disorder, destroying the microfoundations (heh!) of my models.

I have backup files, but updating them is a tedious exercise.

So, my projections, especially on quarterly basis might be off for now.

Nonetheless, it does not take much effort to look into the latest data.

And I cannot find much stuff to celebrate.

The full industrial production index for the first quarter is not out yet but for February, production grew only 3.9% YoY. Remember, 2016 is a leap year and in essence, people produced more this year compared to the last just because of the extra day. So normalized growth will be lower than that. At the same time, with all the heatwave going on, I think we also need to discount electricity production spike. It is very likely the electricity generated mostly went into cooling purposes instead of for manufacturing. My electricity bill spiked by about 100% in March. Some of my friends had it worse.

February 2016

I am unsure how much the electricity generation surge is due to mining growth recovery (is it a recovery?) however. I can run a regression model I suppose, but meh. Looking at the lines alone can tell you much about the correlation.

The new core inflation published by the Department of Statistics appears stable, suggesting consumption growth might be stable too. But who knows. With the way economy is going, there might be enough slack that increased economic activities would not affect inflation much. Import expansion for the quarter was uninspiring as well, pointing to the possibility that the economy did not go far enough toward fulfilling its potential. Stable (and low?) inflation and weak import growth mean weak consumption growth.

Export growth is also not convincing by the way.

Government spending growth might be hurting. For most of the first quarter, Brent prices were below $40 per barrel and the government really wanted to cut its deficit still. Things might be better in 2Q16, but not before as far as public expenditure is concerned.

In the end, I think growth might be about the same as the last one. Might be slightly slower too for all I know. In 4Q15, the Malaysian RGDP grew 4.5% YoY.

Maybe you know better?

The Department of Statistics will release Malaysia’s GDP figures on Friday, May 13.

How fast do you think did the Malaysian economy grow in 1Q16 from a year ago?

  • 3.0% or slower (8%, 1 Votes)
  • 3.1%-3.5% (8%, 1 Votes)
  • 3.6%-4.0% (23%, 3 Votes)
  • 4.1%-4.5% (54%, 7 Votes)
  • 4.6%-5.0% (8%, 1 Votes)
  • 5.1%-5.5% (0%, 0 Votes)
  • Faster than 5.5% (0%, 0 Votes)

Total Voters: 13

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I was in Sarawak during the 2011 election. I campaigned for the opposition in Kuching and its surrounding. I helped run a group of volunteers; run is probably an exaggeration but I will use run nonetheless. We were active in several seats but spent most of our time in Batu Kawa, about 10 miles to the south of Kuching. It was and still is a marginal seat. The young Christina Chiew won there. We as a team won.

About five years later, I am utterly disengaged from the campaign. I have no role in it. But that does not mean I feel nothing. When I read up the latest Sarawak election results from across the sea in Kuala Lumpur, I felt sad upon learning the Batu Kawa seat had changed hands, along with a handful of others.

Though expected, the results are still horrible for many who think Malaysia needs change badly. Tony Pua wrote “…on hindsight, our Sarawak battle was one of limiting the damage rather than one of consolidating our hold on these seats won in the last elections, or making gains in the rural districts.”[1]

But if I am experiencing melancholy, imagine the sense of devastation of those involved on the ground. Postings on social media say as much. They feel frustrated by the results, especially by the role of money and electoral corruption.

Even in 2011, pressure for corruption was evident. I witnessed it personally. There were several instances outside of town where potential voters explicitly wanted money in exchange for their votes. We – as far as I know – did not pay for it. I certainly would not pay straight from my wallet. There was no RM2.6 billion in my bank account, much less my pocket. Instead, we smiled, shrugged and moved on knowing we lost the battle in those instances. I was really too shocked to reply anyway.

What mattered we won the bigger battle because people were angry at Taib Mahmud so much that money would not matter enough.

But 2016 was different. There was more money it seems, and there was no Taib Mahmud. Furthermore, several friends from Kuching said residents were ambivalent about Chiew, citing her inexperience and track record. But whatever the complaints against her, the opposition, either DAP or PKR – I would put Pakatan Harapan, but there is no such thing in Sarawak – faced the Adenan Satem effect and the renewed vigor of money politics.

I can accept the popularity of Adenan. It was the same for Abdullah Badawi when the people was tired of Mahathir Mohamad. What worries me more and more is the role of money in Malaysian politics. The case of Sarawak is one where money for votes is the norm.

The obvious danger is that a wrong would never be wrong again. It is the snowball effect transforming the nature of elections. Democracy loses its meaning. Both elections and democracy as concepts risk becoming one-in-a-while cash transfer program, much like an ersatz BR1M.

It would be no mere pork-barreling anymore. It will be just bribery.

I am not condemning Sarawakian voters for participating however. In many ways, I understand why people take the money. It is a combination of desperation and power. Voters there have not much of a choice.

While in the peninsula, the people are not scared of the sticks and carrots of development politics, the case is different for rural Sarawak. They are at the mercy of the state – at Barisan Nasional’s generosity. If your place in the rural area gets an opposition representative, you would be marginalized. If you had no power and clean water supplies, there is a guarantee you will never get it from the state. The government will use the state to punish you, much more than they use it in the peninsula.

Would you condemn Jean Valjean in prison for 19 years for stealing a loaf of bread in order to avoid starvation? I would not and I would cut him some slack.

But for how long and how far a slack?

And if the whole of population engages in such corruption, would you prosecute all of them?

It becomes an outrageously impossible notion. I feel in the end, either you too participate in the corruption because it is the way of life now, or all of us stop and grant amnesty to everybody.

But the real life is rarely the latter option. Life is a snowball. At the national level, the snowball is rolling unmelted under the hot sun into 1MDB and Najib Razak. Nobody has been able to stop Najib or Barisan Nasional.

The snowball continues rolling on unabated, becoming our way of life just as money for votes is part of Sarawak’s politics.

It is in this sense that I am not condemning Sarawakian voters. Just as many of us in Kuala Lumpur feel powerless in the 1MDB case, so too Sarawakians feel, I think, in their local context. Who are we in the peninsula, then, to condemn Sarawakians?

We feel powerless about national politics. Why should we in the peninsula blame many Sarawakians for being powerless in their own state? There is no blame game to play here if we are honest and consistent to ourselves.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

[1] — In addition to the pressing issues surrounding GST and Najib’s scandal, we emphasized repeatedly on the need for check and balance via a strong opposition to ensure that Adenan didn’t become the next “pek moh”.

Despite the seeming strength of the message, it obviously did not have sufficient traction even among the urban voters. People were sufficiently happy with the few apparent concessions Adenan gave. They were more than happy to overlook the continued corruption in the BN regime and the implications on the people via higher taxes. The rampant and blatant abuse of power by Adenan, such as banning Members of Parliament from entering the state also didn’t matter too much to them.

However, perhaps, had we not campaigned that hard, we might have lost even more seats. Therefore we must thank those tens of thousands of supporters who continued to stick to us under such trying circumstances. Hence on hindsight, our Sarawak battle was one of limiting the damage rather than one of consolidating our hold on these seats won in the last elections, or making gains in the rural districts. [Tony Pua. Paying the price for not ‘paying up’. May 8 2016]

Yet a personal God can become a grave liability. He can be a mere idol carved in our own image, a projection of our limited needs, fears and desires. We can assume that he loves what we love and hates what we hate, endorsing our prejudices instead of compelling us to transcend them. When he seems to fail to prevent a catastrophe or seems even desire a tragedy, he can seem callous and cruel. A facile belief that a disaster is the will of God can make us accept things that are fundamentally unacceptable. The very fact that, as a person, God has a gender is also limiting: it means that the sexuality of half the human race is sacralized at the expense of the female and can lead to a neurotic and inadequate imbalance in the human sexual mores. A personal God can be dangerous, therefore. Instead of pulling us beyond our limitations, “he” can encourage us to remain complacently within them; “he” can make us as cruel, callous, self-satisfied and partial as “he” seems to be. Instead of inspiring the compassion that should characterize all advanced religion, “he” can encourage us to judge, condemn and marginalize. It seems, therefore, that the idea of a personal God can only be a stage in our religious development. The world religions all seem to have recognized this danger and have sought to transcend the personal conception of supreme reality. [Page 209-210. A History of God: The 4,000-Year Quest of Judaism, Christianity and Islam. Karen Armstrong. 1993]

Bank Negara Malaysia does not publish the minutes to its Monetary Policy Committee meetings, unlike the Federal Reserve in the United States. This keeps the rationale behind rate-setting decisions murky to outsiders sometimes.

A few economists in the past several years have bugged the governor on the matter. Acquaintance Jason Fong from RAM Ratings yesterday asked Zeti whether BNM would release its MPC minutes. She provided the same answer she gave last year — I think, also asked by Jason — that maybe in the future, the central bank would allow certain PhD students to go through the minutes for their thesis. The short answer is, disappointingly, no.

The demand for transparency goes by back to professional economists’ attempt at understanding various decisions taken by the MPC. Detailed minutes would reveal who thought what, and explain the MPC statements clearly. A more transparent process would ultimately helps in projecting the Overnight Policy Rate or other aspects of monetary policy.

But yesterday, I suppose since it was her last big briefing with all the economists in town, she felt a bit generous and volunteered a longer answer. It is a good response I think, highlighting the trade-off between transparency and frank discussion.

She reasoned having published minutes could keep participants from discussing various issues freely during the meeting. Some may even be encouraged to state something just to be on record without sharing what he or she really thinks. The end result could be one where not all views will be shared and not all views are actually honest, leaving the final decisions incapable of aggregating views of the committee members accurately.  Zeti said MPC decisions are currently reached through consensus, which means, I guess, no voting.

I understand her point. I would also add having secretive element into the process protects meeting participants from political backlash, much in the spirit of Chatham House Rule, where privacy is the key to robust and frank discussions.

While I do not disagree with the governor, I can think an instance where her point could be weak.

The MPC can get away with that reasoning because there is a lot of trust in the competency and the motive of the committee members. If the next governor is one who does not inspire confidence, I think the importance of transparency will outweigh the importance of having frank and robust discussions.

These days, after all, the trust deficit is not merely a mere gap anymore. It is a gaping hole.

While Zeti is respected in the industry and everywhere else, the next governor — as well as the Finance Minister (the office which effectively appoints the governor) who is also the Prime Minister of multiple conflicts of interest —presents us all with a big question mark.

There are times when books of different focus and field would run parallel with each other and reveal new insight on a specific idea, making that particular idea richer.

I recently finished Jürgen Kocka’s Capitalism where he touched on, among others, the shift of power from feudal lords to the merchant class. I am currently reading Karen Armstrong’s A History of God and this is what she has to say on the (somewhat) same subject:

The story of Elijah contains the last mythical account of the past in the Jewish scriptures. Change was in the air throughout the Oikumene. The period 800-200 BCE has been termed the Axial Age. In all the main regions of the civilized world, people created new ideologies that have continued to be crucial and formative. The new religious systems reflected the changed economic and social conditions. For reasons that we do not entirely understand, all the chief civilizations developed along parallel lines, even when there was no commercial contact (as between China and the European area). There was a new prosperity that led to the rise of a merchant class. Power was shifting from king and priest, temple and palace, to the marketplace. The new wealth led to intellectual and cultural florescence and also to the development of the individual conscience. Inequality and exploitation became more apparent as the pace of change accelerated in the cities and people began to realize that their own behavior could affect the fate of future generations. Each region developed a distinctive ideology to address these problems and concerns: Taoism and Confucianism in China, Hinduism and Buddhism in India and philosophical rationalism in Europe. The Middle East did not produce a uniform solution, but in Iran and Israel, Zoroaster and the Hebrew prophets respectively evolved different versions of monotheism. Strange as it may seem, the idea of “God,” like the other great religious insights of the period, developed in the market economy in a spirit of aggressive capitalism. [Page 27. A History of God: The 4,000-Year Quest of Judaism, Christianity and Islam. Karen Armstrong. 1993]

Heh.

Who will replace Najib Razak if he goes away?

Those skeptical of attempts to legally push him out of office raise the question out of fear nothing will change. They are afraid it would achieve nothing and switch for yet another Prime Minister from Najib’s camp.

As a result, the alternative they seem to be fighting for is to do nothing and wait for a miracle. Somehow, a righteous Superman would descend down from the stars and make everything right. Perhaps, a just god would finally take a concrete form and change our fate for the better.

It seems to me, those who ask who will replace him, are embracing the Dr Pangloss character wholly. To them, we are living in the best of all possible worlds and any change would lead to a worse outcome.

Well, I am no Panglossian.

I believe keeping Najib in power risks damaging our institutions further. Pushing him out would slow the erosion, even if the next Prime Minister is less than a desirable character.

One institution now at risk because of Najib remaining in power is the central bank. The Governor is set to retire end of April and there are concerns Najib will nominate someone new who will toe the line and stop digging down the 1MDB hole. This is damaging the independence of the central bank, which will hurt the bank’s credibility to run monetary policy. In other words, if indeed the next Governor is a Najib’s man, then it would spread the trust deficit from Putrajaya to Jalan Dato Onn. The situation has gotten so bad that, believe it or not, there is something bigger at stake here than 1MDB.

Changing the Prime Minister would minimize that risk. Keeping him does nothing at addressing the risk.

As for the question, who will replace him, and if indeed it would be yet another corruptible person, so be it and the attempt to build a better Malaysia continues on. But there is a small chance the change will be for the better. Why not take it?

Have courage.

There is also another dimension people forget: expectations. Booting Najib out creates the expectations wrongdoing will be punished and so discourages, however little, the future Prime Minister from being blatantly corrupt doing as he pleases like an absolute ruler with no democratic checks and balances. In contrast, keeping Najib creates the expectations anybody can get away with murder.

Before anybody forgets, expectations are also part of institution-building. Forging the right expectations help builds trust in our institutions.

Yet, many want to do nothing about Najib and say, we need to reform our institutions for the better first. How do we reform when our expectation is Panglossian, that we live in the best of all possible worlds?

Capital accumulation as an idea sits close to the center of modern economic growth theory. Any introduction into the field will begin with physical capital accumulation, before population growth, technological progress, human capital and even institutions are progressively thrown into the mix to explain the real world.

As far as modern macroeconomics is concerned, I think I can trace the idea of accumulation as the key to growth right up to Harrod-Domar as formulated in the 1940s. The model has a naïve mechanics. William Easterly lays out the world of Harrod-Domar within the context of international aid and points out the model’s weaknesses in his 2001 book The Elusive Quest for Growth. Those same criticisms led to the articulation of the famed Solow-Swan growth model in the 1950s, which in turn was improved in the 1960s through the Ramsey-Cass-Koopmans model. About twenty years later, the so-called new growth theory with its endogenous models dominated mainstream macroeconomics.

Harrod-Domar is the earliest modern growth theory with capital accumulation at its heart that I can think of. If I try really hard, I think I could cite Karl Marx in the 1850s-1860s and even Adam Smith in 1770s although both of them did not produce a model while I do not think Marx’s idea of accumulation is directly related to growth as we understand it today. I struggle to trace the evolution of the idea beyond Marx and Smith, although a quick search on the internet points towards St. Aquinas and Ibn Khaldun, and possibly right up to Greek philosophers.

But the tracing of these models and works only describes the evolution of the idea. It is not the history of accumulation per se.

Jürgen Kocka recounts the history of physical capital accumulation in Capitalism, a nifty book on the history of capitalism. First published in German in 2014, the English translation came out this year. It is only available in hardcover currently with a price tag of MYR142. I bought a copy from Kinokuniya in Kuala Lumpur. Kocka is a German historian focusing on German and eastern European labor history.

Kocka writes consumption pattern gradually switched from a period of instant gratification when personal accumulation was hard if not impossible for the majority to a time when where they began to care for the next generation and were able to gather private wealth and transfer it to their children as inheritance. Although Kocka does not use the term, this is the intergenerational capital accumulation.

The intergenerational accumulation happened in a limited fashion in the middle age be it in Europe, Arabia or Asia. Even among the merchant class, the accumulation and transfers were limited among a few families before the Industrial Revolution. Wealth produced by a person was generally consumed within his or her lifetime, with limited opportunity for intergenerational transfer. This happened as feudalism worked in the background, the great institution that prevented the majority who were serfs from accumulating capital. The personal wealth of the serfs generally belonged to or easily extracted by to feudal lords. What is the incentive for work when the fruits could be appropriated freely by the local lords?[1]

Private wealth accumulation in Europe began only during the Industrial Revolution in the 1800s. Rapid economic pace in the cities suddenly made accumulation faster than ever in history for most. That attracted serfs from the rural areas to the town and cities which led to the crumbling of feudalism as there were fewer and fewer pairs of serf hands to work for the feudal lord. Now freed from serfdom, common workers were able to accumulate private wealth and participate in intergenerational accumulation. It was a slow process and never a straightforward one judging from the various labor unrests and even revolutions during the industrial age but it did start the process of capital accumulation among the masses nonetheless.

But even before the Industrial Revolution, early companies in the 1100s in Venice played a role in intergenerational capital accumulation. A company, a product of various traders and merchants coming together to pool resources and diversify risk extended the accumulation horizon beyond the lifetime of a person. The application of the new social technology – along with the creation of double-entry accounting to keep track of the company’s resources – means the endowment got bigger and bigger, which encouraged bigger accumulation that was possible if wealth was restricted within one’s lifetime.

Some of these traders and merchants went on to form their own banks (as company) to finance their and others’ various business requirements. Jürgen in his book points to the 1300s as the turning point, when rich trading families first established banks in northern Italy. This made the financial market more efficient, which in turn aided them and other banking consumers to manage and amass their wealth better.

The evolution of companies continued in London and Amsterdam, capitals of the trading nations England and the Netherlands. The joint-stock companies were developed and more and more individuals and entities got together to pool their resources to finance, among others, the British East India Company and the Dutch East India Company, the first true multinationals in the world.

But the greatest enabler of capital accumulation was, of course, technological progress, as stressed in the Solow-Swan model. Indeed, wealth per capita soared during the 1800s Industrial Revolution after thousands of years of largely stagnation that began in northwestern Europe.

Gregory Clark in his 2008 book A Farewell to Alms claims it happened in England and the Netherlands because they had the institutions that enabled the Industrial Revolution to take place in exactly those countries first. He goes on to suggest, controversially, that these institutions which were absent in other places led to a deep cultural change that made the industrial age possible.

Kocka does not challenge that in his book. While explaining the connection between industrialization and capitalism, he writes:

One the one hand, when industrialization began, capitalism already had a long history to look on. Not even in its proto-industrially expanded form did merchant capitalism, which was widespread throughout the world, lead inescapably to full-fledged industrialization. There are many cases illustrating this point. Conversely, the case of the Soviet Union substantiates how it is also possible for industrialization to exist in a noncapitalist form. The concepts of capitalism and industrialization are defined by different features, and it is advisable to make a sharp distinction between the two of them.

On the other hand, preindustrial-commercial traditions of capitalism, whenever they persisted, significantly promoted the breakthrough to industrialization, whenever that happened in the nineteenth and twentieth century. In the nineteenth century, industrialization took place within capitalist structures everywhere. Alternative models of a centrally administered economy were tried out under Communist auspices between 1917 and 1991. They proved to be inferior. China’s rapid industrialization also began to take off only when the country’s party leadership decided to loosen political controls step by step and make room for capitalist principles. There obviously was (and is) a pronounced affinity between capitalism and industrialization: for both, investments are of decisive importance. An inherent part of industrialization is the permanent search for new projects, as is constant engagement in new configurations; to this end, pointers and feedback from markets were and are irreplaceable. A decentralized structure that disperses decision-making among many different enterprises has proven indispensable. So far, any effort at industrialization expecting to be successful over the long run has presupposed capitalism. [Page 99-100. Capitalism: A Short History. Jürgen Kocka. 2016]

But accumulation did not always happen peacefully through hard work, production or technological progress. In the middle age, pillages, plunders and wars were a common way to accumulate wealth. There were a lot of cases in Europe and elsewhere as well. This continued into the 1800s during the colonial age where European mercantilism helped European powers accumulate more wealth.

Such mercantilism meant accumulation for European was the dis-accumulation for the rest of the world.

Kocka does not go into the dis-accumulation as he is focusing on European capitalism mostly. But he does mention the slave trades between Europe, Africa and America, where African slaves were used to man the plantations and fulfil European demand. It does appear to me the slave trade and European colonial policy decimated Africa.

In Asia, especially Malaya, colonialism seems to have the opposite effect. Although European powers, the British in Malaya especially, were still accumulating wealth, the colonialism did have an accelerating effect on domestic growth in the 1800s and the early 1900s. Perhaps the reason for that was that the colonial administrators in Malaya was importing European advancement along with various institutions from the Industrial Revolution, hence boosting technological growth in this part of the world.

So, was colonialism good or bad for Malaya in terms of capital accumulation? I guess the only way to answer it is to address the counterfactual: how would capital accumulation have progressed if Malacca was not defeated by the Portuguese war fleet? How would the area now called Malaysia have fared if it had never been colonized by the British and the Dutch?

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

[1] — Let me digress slightly. Anthony Milner in The Malays believes the feudalist structure explains the lack of the Malay merchant class during the 1700s-1800s. The sultan as the feudal lord owned everything and the idea of private wealth among the masses did not exist. Everything within the realm ruled by the sultan belonged to him. Milner, if I recall correctly, cited Munshi Abdullah who lamented in his writing about the lack of security to self and property of the masses due to tyranny of the sultans in the 19th century Pahang, Terengganu and Kelantan.

While this sounds like a rival explanation to Syed Hussein Alatas’ as outlined in The Myth of the Lazy Native where he postulated that European colonialists killed the Malay merchant class by regulating trade in a way that granted monopoly to European traders, I feel both arguments can be true. Milner is describing the effect of the sultans’ influence on the masses while Syed Hussein focusing specifically on the merchant class. Indeed, Milner’s point is more general and hence, the effect of European monopoly could well happen within Milner’s explanation. So, it was a double-whammy for Malay traders.

The 4Q15 GDP figures came out better than my expectation. I had projected about 4.3% YoY but the official figure came slightly higher at 4.5% YoY. However, it is still an overall slowdown as warned earlier.

GDP 2015Q4

But there is a good news here.

The blue line in the chart above representing consumption growth picked up. That is a green shoot, a hint that the economy might be turning around. Consumption weakness has been the number one reason behind the gradual slowdown we are seeing in the economy. This is why the slight uptick is an important point to note.

I do not have much details behind the stronger (but still weak!) consumption growth yet, but on the production side, there is a reason to be optimistic that this is not some no-good dead cat bouncing around. Based on the performance of the retail sector, consumers did buy more stuff:

GDP 2015Q4 production

There is also good news for people working in finance. The fourth quarter was less bad than 3Q15. The only real bad news is for people in mining. I am unsure if the drop it is all about base effect, but the situation in the oil and gas sector is not pretty regardless. I suppose QoQ readings would tell me more but I am in a hurry right now.

GDP 2015Q4 mining production

We are not out of the woods yet. Despite signs of a turnaround, the 4.5% YoY overall growth is still a slowdown. Consumption has to cover a lot of ground before we can claim to be out of the $700 million MYR2.6 billion hole. And I am worried about the employment rate given so many layoffs taking place late last year. The effects of those retrenchments might come too late to be accounted for in the 4Q15 GDP data.

Finally, for the lovers of headline figures, the curse of 1Q15 frontloading will bite back this quarter. Nevertheless, that will only be a mathematical quirk.

282 pages