Economics Society

[2930] The biggest losers in this recession: the young

All recessions have its losers and to claim so is to state the obvious. It is more interesting to know who the losers are. Data from the Department of Statistics shows that the biggest losers in this recession are the young.

From the chart below, it is quite clear the job market for 35 years old and younger is doing badly relative to the market for older cohorts:

The chart is drawn by comparing total employment by age for each quarter relative to a pre-pandemic benchmark. In this case the benchmark is the final quarter of 2019, the last quarter before the pandemic. To illustrate:

  • there were 31,800 fewer employed persons among 15-24 years olds in the first quarter of 2020, relative to the last quarter of 2019
  • there were 202,600 fewer employed persons among 15-24 years olds in the second quarter of 2020, relative to the last quarter of 2019

So, if the number goes down, then it is bad because it shows fewer people are employed relative to the benchmark. If the number goes up, then it is good because it shows more people employed.

The data is from the Quarterly Report of Labour Force Survey. The 2020 fourth quarter report, which is the latest report, was released on February 8 2020.

Increased underemployment among younger cohorts

The change in total employment does not indicate change in employment quality. Here, I am referring to underemployment. Once again, the young are the most badly affected:Unlike in the first chart, an increase here suggests more people working less than 30 hours per week, which could be considered as a definition of underemployment (there are other underemployment definitions). They work less than 30 hours because they are likely unable to work fulltime. Therefore, an increase in this chart points to a worsening situation.

This is relevant because a person is considered employed in official statistics if he or she works for at least an hour per week. As you can see, it is a loose definition. During normal times, it is alright to use it because it works. But the situation we are in are quite abnormal and it challenges our traditional definitions.

Politics & government Society

[2929] Malaysian democracy dies and we forgot to mourn it

In 2017, political scientist Thomas Pepinsky claimed that life in authoritarian states was mostly boring and tolerable (that is tolerated by the people). He cited Malaysia where life was quite normal, despite it being an undemocratic country and mildly authoritarian. But his audience were not Malaysians, but Americans, many of whom found themselves in opposition to Trump and his illiberalism.

Pepinsky argued authoritarian states did not necessarily mean “jackbooted thugs, all-powerful elites acting with impunity, poverty and desperate hardship for everyone else, strict controls on political expression and mobilization, and a dictator who spends his time ordering the murder or disappearance of his opponents using an effective and wholly compliant security apparatus.” Life on the ground in such a state could be indifferentiable from a democracy of comparable economic development.

He was not defending authoritarianism. Instead he was warning that authoritarianism arrived more subtly that most people realized. It does not come with a bang. He wrote:

It is possible to read what I’ve written here as a defense of authoritarianism, or as a dismissal of democracy. But my message is the exact opposite. The fantasy of authoritarianism distracts Americans from the mundane ways in which the mechanisms of political competition and checks and balances can erode. Democracy has not survived because the alternatives are acutely horrible, and if it ends, it will not end in a bang. [Thomas Pepinsky. Life in authoritarian states is mostly boring and tolerable. Vox. January 9 2017]

Forward 4 years later, Malaysia has lost its democracy and we are now ruled by a dictator.

When Prime Minister Muhyiddin Yassin and his allies in 2020 wrested power from the victors of the 2018 Malaysian General Election without going through any election, his action arguably was still done within the gray ambit of democratic practices. Gray because of the 2009 mistake that began in Perak legitimizes an obscure process of selecting a government over the usual transparent process of letting the contenders prove their support in the Dewan Rakyat. The same untransparent process contributes to or exacerbates the political instability that we suffer today.

Muhyiddin’s government was never stable from the get-go. Now when it became clear he did not have the majority needed to remain in government, he carried out a self-coup through the declaration of emergency. The excuse was the COVID-19 pandemic but we know he was just pulling the wool over our eyes. As if giving more power to a government that mismanaged the pandemic was a good idea. More will die sadly. In a better situation, we would be replacing this incompetent Cabinet with one of better caliber.

That self-coup has firmly placed this government into the realm of authoritarianism. The Prime Minister is the Dictator of Malaysia. There is no democratic mandate to speak of anymore. There is only the will of the Dictator Muhyiddin Yassin.

And that happens without loud protestation.

The pandemic is to blame no doubt. Perhaps the economic devastation worsened by this government’s complete incompetency is sapping energy away from the population. Perhaps they are tired of the failure of the Pakatan Harapan and their allies in opposition to do what was right back in November during the tabling of the 2021 Budget. The failure and disillusion breed ambivalence. Everybody is tired of the national political chaos.

All that leads to us tolerating authoritarianism. This is more so when the Dictator defends his self-coup by stating life will go on as normal, however disingenuous that sounds. The Dictator is telling us authoritarianism is tolerable.

Such a disappointment.

Politics & government

[2928] Rationalizing the camps in Umno

I had a conversation yesterday, where we tried to make sense of the political situation in Malaysia. It is a confusion situation all-around and the intricacies could only be understood by understanding the disputes in Umno, the one of the major sources of instability in Malaysia.

A systematic way to understand the troubles within the party is to ask two questions:

  • One, do they want Zahid to remain as the party president?
  • Two, do they want to remain part of Muhyiddin’s government?

The combination of the answers provides a clean division of the camps in Umno. See the graphics below:

Theoretically, there should be 4 camps.

But realistically, there are 3 camps only. This is because if a person prefers Zahid to remain as the party president, chances they would parrot his position. That means if they said yes to Zahid, it is likely they would also want out of Muhyiddin government. To signify that, I have struck one of the boxes out.

The 3 camps are:

  • Najib-Zahid camp (Yes to Zahid but no to Muhyiddin). This is the camp suffering from multiple corruption charges.
  • Hishammuddin camp (No-Yes). Hishammudin was one of the Sheraton Move architects.
  • Tengku Razaleigh camp (No-No). Possibly the weakest camp among the three.

The names listed might be inaccurate because it is based on my readings and possibly their sentiment as reported in the press.

Additionally, there are names I put in the unknown brackets, but if the questions are right, then they would eventually be pigeonholed into a camp once the time comes.

And clearly from the chart, it is not exhaustive. It is difficult to know beyond the top names who sits where. This is especially when some of these people like Noraini Ahmad and Zahida Zarik Khan seem awfully quiet, and in some ways irrelevant despite being part of the party leadership.

Finally, some people in DAP have told me it is all about power (who has what and those without are making noises). However when I look at the problem closely, it is a bit hard to systematically rationalize the division through “power.” “Power” does not reveal the camps as clearly as it should. Nevertheless, it is difficult to dismiss “power” as a factor. It might very well be an underlying dimension beneath the two questions I am proposing for benchmarking purposes.

Economics Society

[2927] M40 classification mischaracterizes the middle class, weakens the middle class and in doing so, weakens democracy in Malaysia

Who are members of the middle class in Malaysia?

Theoretically, they consist of those in the middle income distribution. The middle class is a relative position between the poor and the elites, however both are defined.

But it is not that simple. On Wikipedia alone, there are plenty of dimensions to be considered beyond income. Among the factors are education, nature of employment, social status and even as fluffy a factor as lifestyle. Wealth is another marker, which is related to income but perhaps better except its data is not as easy to get.

In Malaysia, perhaps for over 10 years now, we have chosen a specific way to define it. We do it through income distribution. We have the bottom 40 percentile households in terms of income distribution defined as the poor (the B40), the next 40 percentile households are understood as the middle class (the M40), and the top 20% household income earners are taken as the rich (T20).

The classification is needed to operationalize certain policies like conditional cash transfer that Malaysia has. Household income, whatever its weakness, is an easy proxy of status. It is needed for targeting purposes. You lose something, but it does the job. Arbitrary, but convenient and it works.

Our problem is that the same convenient arbitrary classification that works is beginning to have an unintended negative effect on social discourse. Familiar to the definitions used by the government for implementation convenience, the public is beginning to associate the M40 as the middle class, and the middle class as M40, when in fact, there are middle class people falling outside of the M40 group. Additionally, there are people inside the M40 who are not really members of the middle class. The shorthand of B40-M40-T20 is dividing the middle class crudely and consider some members of the middle class as members of the elites.

It creates a class war against the middle class just through misattribution arising from arbitary statistical definition.

The middle class is special because they are largely the flagbearers of progressive values. With such values, they function as a check-and-balance mechanism in any society. Members of the middle class are not poor and that allows them to spend more time on matters other than livelihood issues. Things like corruption, environment or something that is well above something that is similar to the bottom of Maslow’s hierarchy of needs. At the same time, they individually are not rich enough to have outsized influence on society like few elites. Yet collectively, they check the power of the elites thanks to their education level. They are the bulwark preventing the elites from abusing power. They are the ones crucial in keeping a democracy from becoming crass majoritarianism.

When members of the middle class are considered as elites, middle class values would be condemned as elitist. Once identified as so, the same values would be rejected by the majority because they feel the values are meant for the few.

This is the danger of the M40 classification. The misattribution makes the middle class alien to the poor as the elites are, but without having the same influence the elites have. This weakens the roles of the middle class in protecting democracy from abuse by the elites, and from majoritarian excesses.

That is one of the costs of the B40-M40-T20 classification. It breaks the middle class, and then artificially and implicitly labels middle class values as elitist. With that, the roles of the middle class as the moderating force in our society gets weakened.

In short, the M40 classification mischaracterizes the middle class, and weakens the middle class’s role in moderating Malaysian democracy.

Books & printed materials

[2926] My readings in 2020

We are almost done with 2020!

This truly horrible year is coming to an end. The lockdown has provided me with an excessive amount of leisure time. I am using the extra time to try to finish off my book, and to catch up with my readings. In 2019 when I was truly busy, I read only 5-7 books throughout the year. This year, I have more than doubled the count.

So, here is a review of some of the stuff I have read in the past 12 months. I am listing 12 here and they are:

  • The Republic by Plato
  • Dubliners by James Joyce
  • The Weight of Our Sky by Hanna Alkaf
  • The Fall of Constantinople by Steven Runciman
  • The Constitution of Malaysia by Andrew Harding
  • The Good State by A. C. Grayling
  • Contesting Malayness, edited by Timothy Barnard
  • One Day in the Life of Ivan Denisovich by Aleksandr Solzhenitsyn
  • Billion Dollar Whale by Bradley Hope and Tom Wright
  • Palace, Political Party and Power by Kobkua Suwanathat-Pian
  • Capitalism Alone by Branko Milanovic
  • Inglorious Empire by Shashi Tharoor

The Republic by Plato, translated by Richard Sterling and William Scott (1996)

I started the year by re-reading The Republic. Well, not quite. It has been an on-and-off reading. I first flipped the pages back in May 2019 but since it was such a heavy reading—the monologues are worse than Ayn Rand’s Atlas Shrugged—I needed a lot of time to read and then digest it. This is a recurring theme: I really, really first read the few first chapters of The Republic back when I was an undergraduate more than 10 years ago.

But what is it about?

The Republic seeks to describe the idea of justice, and the way to which we could create a just (city) state. The expositions are done through a series of long dialogues between Plato’s teacher (Socrates) and a bunch of men in Piraeus in Athens during the times of ancient Greece.

I do not pretend to understand most of the ideas discussed fully. This is the kind of book you have to read multiple times to really understand what is happening. I read parts of the books in short bursts and then watched some lectures on YouTube to help with my comprehension.

In the course of explaining justice, Socrates appears to advocate a dictatorship. He believes in a benevolent kind of dictatorship ruled by philosopher kings striving towards the creation of a just state. Measures he proposed are drastic. For instance, believing Greek religions are unhelpful in teaching men and women virtues, he advocates for a complete rewriting of history and beliefs. Truth does not matter according to Socrates. What matters is the utility of history and beliefs in creating a just society. The changes are so drastic that only a dictatoc could make it.

Reading The Republic shows how certain ideas are very old. For instance, Socrates is big on specialization and division of labor, and he believes each man should focus on one thing and one thing only. A blacksmith should just be a blacksmith and nothing else. A soldier should just be a soldier and nothing else. A ruler just a ruler. While reading that part, I wondered how it might have inspired Adam Smith.

I do not intend to write a full review and I have not finished the book yet. So, let us move on to the next book.

Dubliners by James Joyce (1914)

This is a collection of short stories set in Dublin in the early 20th century. I did not finish it and do not intend to do so because I am not a fan of short stories. I picked the book up on the assumption it was not, and perhaps to prepare myself for Ulysses. I think such preparation is still so far off.

Nevertheless, I read half of the book.

While not a fan of short stories, there are plenty of good ones inside. My favorite is about a young couple living an unhappy life in the city. The young man wants to leave Ireland for America, and tries to convince his lover to come along. She wants to migrate to America, except she feels divided about leaving her family behind, despite her family not treating her well. On the day they are supposed to leave, with both of them about to board a ship for New York, she decides against sailing across the Atlantic. It is an abrupt goodbye.

The Weight of Our Sky by Hanna Alkaf (2019)

This is a fiction set in Kuala Lumpur during the May 13 1969 race riots. The main character, a young teenager suffering from some kind schizophrenia (I think), gets separate from her mother during the riots and she set on a journey crisscrossing the city to reunite with her, on the assumption the mother is still alive.

This book is supposed to be a young adult read but the details can be a bit gore. Not Game of Thrones gore. But still. Example: the scene I remember best is the cinema on Petaling Street. A gang of rioters are barging into the hall with machetes and deciding who should live. People of the wrong skin colors are killed on the spot.

The most exciting thing about the book are the Kuala Lumpur locations cited. There is just something about being able to say “hey, I know that place” while reading the book.

The Fall of Constantinople by Steven Runciman (1965)

This is easily my favorite book for this year. It is super-engaging despite being a scholarly work. This book is truly a treasure. I found the first edition while visiting several bookstores in Istanbul last year.

The Fall of Constantinople recounts the events leading up the the Ottoman conquest of the Byzantium capital in 1453.

Runciman shows that by the 14th century before its final defeat, Byzantium was already a weakened power. Its hold to power did not extend far beyond the city walls of Constantinople.

Conflicts between Byzantium and the Ottomans were not strictly a Christian-Muslim affair. And Byzantium’s political rivals were not just the Muslims. Divisions within the Christian world meant Western Christendom based in Rome did not care enough for Constantinople. Despite pleas from Byzantium for help against a ‘common’ foe, reinforcement from Italy did not arrive until it was too late.

And it feels like Runciman blames Rome and the Italians for the fall, more than the Ottomans.

One or two chapters describe the actual battle and the most astounding detail is a maneuver carried out by the Ottomans. Constantinople was surrounded by tall thick stonewalls on all sides, with large bodies of water on three sides. The only reasonable access was through Byzantium docks on the inside of the Golden Horn, a waterway that meets the Bosporus. But entry was blocked by a strong boom preventing any ship from passing and Ottoman’s ships were not the best in the Mediterranean, especially when compared to Byzantine ships and its allies. To overcome the barrier, the Ottomans under Mehmet II transported their fleet across a peninsula for several miles and then caught the defenders on their flank. That was the beginning of the fall of Constantinople.

The Constitution of Malaysia by Andrew Harding (2012)

This book traces the development of the Constitution and changes that happened over the years. Harding believes Malaysia have had 3 social contracts: first came out of the 1946-1963 periods that began with opposition to the Malayan Union. The second was various amendments made in the aftermath of the May 13 1969 riots. And the third was in the 1990s under Wawasan 2020. These three events influenced the development of the constitution and its interpretation.

Harding finds some faults with the Constitution: the Constitution does not do enough to safeguard basic liberties, and put too much trust on parliamentary democracy. This means there are not enough check-and-balance in Malaysia and as a result, the executive has too much power. Additionally, the Constitution relies too much on exceptions that the exceptions become the rules. Harding proves this by showing the effects from the May 13 riots could still be felt today. For one, local election still has not been reinstated.

He ends the book with a hint of optimism by stating that Malaysia is gradually correcting its past mistakes (particularly errors of the 1980s) since 2008. But I wonder if he feels the same in 2020…

The Good State by A. C. Grayling (2020)

Grayling argues the Westminster model is flawed. It fails at separating powers and relies too much on party politics, so much so that national interest comes second after party interest. Additionally, the Westminster system does a bad job at preventing bad people from getting power. And the whole thing is made worse with the use of first-past-the-post. To address all the problems and more with Westminster democracy, Grayling proposes to make it more representative by implementing proportional representation

Contesting Malayness, edited by Timothy Barnard (2004)

This is a collection of papers on Malay identity presented at a symposium in Leiden, the Netherlands. Each chapter is a different paper and all papers argue that the idea of Malayness is quite complex and not as simple as presented by the Malaysian constitution with its three-test. Ultimately, the Malay identity is more fluid than many would like to admit.

One Day in the Life of Ivan Denisovich by Aleksandr Solzhenitsyn (1963)

This is a relative short novel set in a gulag somewhere deep in the Soviet Union. He was innocent but found himself imprisoned nonetheless. As the title suggests, the whole novel happens within a day where the author describes the working conditions within the gulag.

This is my second Sozhenitsyn’s read. The first was For the Good of the Cause, which I like better. One Day, I feel, spends too much time over-describing the scenes that it became a bit of a chore to read.

Billion Dollar Whale by Bradley Hope and Tom Wright (2018)

This book traces the evolution of the fugitive Jho Taek Low from young up to the 1Malaysia Development Berhad corruption scandal. And oh, you’ll Jho Low after reading this book.

Jho Low is painted as an international mystery man with links to various governments all around the world. He even attempted to infiltrate the White House. Jho Low is a smart criminal, working with corrupt collaborators in the Malaysian and Emirati governments (among others).

Despite 1MDB being a convoluted case (I did some work on 1MDB and even then, I had troubles keeping up which was which), Hope and Wright write the book in a very accessible way, and definitely entertaining.

My copy was signed by Tom Wright, thanks to Tony Pua… which is one of the characters inside the book.

Palace, Political Party and Power by Kobkua Suwanathat-Pian (2011)

This traces the evolution of the royal institution during the colonial times, Japanese occupation, post-independence and finally during the Mahathir era.

Most of the Rulers were mere puppets during colonial period, particularly those in the Federated Malay States. Although they lost their political power, the British were careful in raising the Rulers’ prestige to the point that the Malay masses were unaware their rajas had become mere figureheads. The real rulers were the British Resident. So powerful were they that in more than once, the colonial authority had a say in the succession process, which was supposed to be under the sole purview of the Rulers.

The Malays finally found out the truth about the Rulers when the Japanese removed the curtains that the British put up. It was during this time that the Malays really began to develop politically. By the end of the war, the Rulers’ authority had been exhausted that they could not provide the leadership needed. UMNO under Onn Jaafar successfully wrestled Malay leadership from the Rulers and the author provided examples of explicit clashes between Onn Jaafar and the Rulers that, by today’s standard, is quite shocking.

The Rulers’ political fortune was on a persistent downhill until Mahathir resigned for the first time in the early 2000s. Led by the Perak royal house, the monarchy reformed itself to become respectable again and began to assert influence beyond its constitutional roles.

Capitalism Alone by Branko Milanovic (2019)

Capitalism Alone argues capitalism is the only system in the world at the moment but that does not mean it is monolithic. From what I gather, there are two main capitalisms at play at the moment: political capitalism and liberal capitalism. There are other kinds of capitalism but those either do not exist yet, or have become obsolete.

Political capitalism is the authoritarian kind as practiced in China while liberal capitalism is the one associated with democracy.

Milanovic has an interesting theory about the roles of communism in newly independent states, in contrast to the traditional understanding of communism. While communists believe capitalism is a stage of development needed to create a communist society, Milanovic says communism is necessary to create a capitalist society.


Under colonialism, the economic system was not conducive for capitalism. Newly independent states would need their own indigenous capitalists in order to develop but colonial power was not interested in nurture, and more interested in preserving and strengthening feudal structure to control the local population, and make money for themselves.

Communism worked to abolish feudal structure and freed individuals to become free agents. In a sense, communism gave a colonized society a fresh start. Once the abolition was complete and the economy developed, communism would lose its usefulness and give way to capitalism, which was a superior way to organize a complex economy.

Inglorious Empire by Shashi Tharoor (2017)

Tharoor attempts to debunk the argument that the British was a power for good for India. He does so by listing the many wrongs commited by the colonial authority. Some of them include discriminating qualified locals over unqualified British, worsening ethnic and religion divides, dismantling preexisting societal way of life and creating a corrupt system of government.

This book feels more of a list of arguments, perhaps in the style of The God Delusion. So, it is an easy read, although you might want to get accustomed with general Indian history before reading Inglorious Empire. Perhaps, after a little intro into history, you should read Niall Ferguson’s Empire before diving into Tharoor’s work. After reading all three, then maybe, you would be better able to appreciate the debate about the legacy of the British empire.