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Economics Politics & government

[2417] Being honest about crime

There are always victims in an economic recession. It can push individuals into desperation and force them potentially to do something that they would not otherwise do. It can turn the man on the streets into a criminal.

There is a relationship between economic recessions and unemployment rates and there is a relationship between unemployment and crime rates. An empty stomach has a way of convincing that the wrongness of stealing is only a secondary worry to the concern of the stomach. Rule of law can be meaningless in times of desperation.

The hungrier one gets because of external circumstances, the greater the erosion on one’s belief in the rule of law. The reward of specific types of crime becomes enticing.

Although there are risks involved in committing the crime, its relative immediate reward has the potential of immediately relieving hunger. A little chance of not going hungry is better than no chance at all.

Before these sentences are misconstrued as a justification or even an encouragement for criminal activities, let it be known the difference between describing and prescribing. One describes without making value judgment. One prescribes with value judgment. This is an effort at the former.

The relationship between economic recession (or perhaps the term economic downturn is a better phrase to escape the banality of technicalities) and unemployment rate is well-established. This requires no further exposition. The relationship between unemployment and crime rates is also well-explored.

What makes exposition important for the latter is that in Malaysia, there is an increasing tendency to ignore it. In its place, there is a belief that an alphabet soup causes the decline in reported crime rate.

That narrative needs to be assessed and then made blunt in the interest of sincerity. Partisan political discussions sometimes can push honesty aside for political convenience. It is all about brownie points. The utility of free speech is essential in putting less-than-honest assertion in perspective.

There are many documentations proving how unemployment contributes to crime rate. Karin Edmark in 2005 showed how ”unemployment had a positive and significant effect on some property crimes in Sweden.”

Property crimes can be associated with theft, which can be associated to what can be called as crime of the stomach. In 2002, Eric Gould, Bruce Weinberg and David Mustard found a similar result for general crime rate for young, unskilled labor in the United States, between 1979 and 1997.

Steven Raphael and Rudolf Winter-Ebmer in 2001 found the same relationship in the United States in the 1990s. They wrote ””¦a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate.”

There is little reason why it should be different for other parts of the world, including Malaysia.

It is highly instructive to learn that if indeed actual crime rate had decreased in Malaysia, it happened only while the economy was recovering, thus creating the jobs needed to reduce unemployment.

It is equally instructive that crime rate was on the rise around the same time the Great Recession was at its peak, adversely affecting external demand for Malaysian goods and through that, jobs in Malaysia.

In February 2009, the unemployment rate was 4.1 per cent. In the same month in 2010, the rate was 3.6 per cent. Out of the 12 months, the 11 months of 2009 had higher unemployment rate than the same month a year later. If anybody requires any reminder, it was 2010 when the domestic economy was recovering at a worthwhile rate. The year 2009 was just horrible.

The severity of that number can be put in better context. The annual rate for 2006, 2007 and 2008 was around 3.3 per cent. In 2009, it is estimated to be 3.7 per cent. The estimate for 2010 is already lower than the year before, at 3.5 per cent.

As for the 2010 crime rate, the crime index fell by about 15 per cent compared to the previous year, according to a Bernama report. It also stated that the ”achievement was a result of the Royal Malaysia Police’s (PDRM) 12 initiatives to battle crime nationwide,” those initiatives being the Government Transformation Program. The arrogance and the dishonesty are truly remarkable.

The narrative of the results from the government’s effort at combating crime must compete with the mainstream uncontroversial economic one. This is not to say government effort is worthless, but for it and its supporters to claim too much credit, or in this case all the credit for the alleged drop in crime rate without even blinking amid the well-established and stronger case between unemployment and crime rate is too much to take. That is undue credit.

It must compete, just like how the government and its supporters claimed the undue credit for the Malaysian economic recovery when in fact, it was mostly the then rising tide of global economy that lifted the Malaysian boat.

Little things do matter. Actual effort at combating crime by the government and the wider public do matter and they are most appreciated. Nevertheless, do not be dishonest about it. Such dishonesty will discredit all the good real things done.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malaysian Insider on August 21 2011.

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Personal

Protected: [2416] Here we go again

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Conflict & disaster Liberty

[2415] A legitimate good riddance to Gaddafi

Months ago, the Libyan rebellion appeared to be flattering. There were advances but despite indirect support from several world powers, forces loyal to dictator Muammar Gaddafi were able to defend their position. At one time, the rebels were pushed back to its home city in the far east. That in fact was the last time I truly gave attention to the Libyan conflict, until today.

I woke up today with CNN, the BBC and Al-Jazeera showing live scenes from Tripoli. The rebels are overrunning Gaddafi forces. News are making round that Gaddafi’s sons have been taken under custody by the rebels. This is a piece of wonderful news in time when the Arab Spring itself is turning out into almost a disappointment, and especially in Syria where a massacre is under way. This near victory by the Libyan rebels against the Libyan tyrant is a big encouragement to the participants of the Arab Spring, perhaps provide little pushes needed to keep the flame alive in the whole region.

I know those on the far left of the political spectrum are framing the struggle in Libya as the US against native government. For all their opposition to US “imperialism”, Gaddafi’s tyranny goes unmentioned.

Perhaps it requires no reminder. It should be obvious, but detractors of the Arab Spring allege that behind all this are the US and other western powers. That is not entirely true. It is not true when what matters is considered.

These powers are giving support to the rebellion, but I must add only indirectly. Regardless of the support in Libya, the rebellion is organic in nature just like in Egypt and Tunisia. It is born out of local discontent.

Remember, these western powers were caught by surprise at the intensity and the breadth of the 2011 Arab uprising. The initial responses by Obama, Sarkozy and Cameron to Tunisia and Egypt were inadequate and they were roundly criticized for failing to act against suppression of peaceful protests, fearing western support will make these organic rebellions less legitimate in the eyes of the world and more importantly, the undecided locals. That was probably due to them smarting from past mistakes. That is not exactly the reaction of a global mastermind favored by conspiracy theorists.

In Libya, suppression of peaceful protests has turned the rebellion into armed one. Somebody had to do something. The killing has to stop.

I have voiced my opposition to foreign military intervention, fearing that would rob the legitimacy of the rebellion. That fear on legitimacy did not bear out, and that eliminates my opposition to intervention. Even so, intervention has been limited to the enforcement of no-fly zone, endorsed by the United Nations for whatever it worth. And clearly, the UN-sanctioned foreign intervention was done out of reluctance: the US military was hesitant in participate in another struggle when its forces are stretched thin.

One disappointment that I have is these powers response to the discontent in Bahrain. The Bahraini government and Saudi Arabia were given a free hand to suppress non-violent protest over there. There is hypocrisy in US policy, sure.

But again, regardless of the hypocrisy, let it be reminded that many of these uprising is organic. It has native origin, not foreign. That is what important.

If the revolution is complete, when it is complete, then the next agenda should be about sustaining a democratic Libya. Not just a democratic Libya, but a Libya that is different from Gaddafi’s tyrannical socialist republic. A Libya that respects and protects its citizens’ individual rights.

Categories
Liberty Society

[2414] The Church of Hypocrisy

It is quite rich for someone to claim being victims of intolerance when the same person has no qualms discriminating against others. This refers to some Malaysian churches’ opposition to gay marriage.

That is hypocritical. Hypocrisy is exactly what some Christian churches in Malaysia are guilty of. Those churches not only oppose the gay marriage between a Malaysian pastor and his partner, they want the Malaysian authority to prevent the couple from holding a reception in Malaysia.[1][2]

Apart from the intolerance, it is alright for the churches to oppose gay marriage and homosexual relationship at large. They are entitled to their own opinion, for better or for worse. It is part of freedom of conscience. But to demand coercive action preventing the gay couple from holding mere reception is beyond the realm of acceptability.

Rights as defined in libertarianism are not these churches’ concern. These churches are not libertarians. Fine.

But moral authority is something that should bother them. To interfere in private relationship as these churches are calling for strips them of their moral authority to moralize about discrimination and justice. What gives these churches the platform to talk about justice and discrimination given their action?

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

[1] — PETALING JAYA: Several pastors have condemned their gay counterpart Rev Ou Yang Wen Feng’s upcoming marriage and want the authorities to ensure he does not hold a wedding reception in Malaysia. [No way to gay’s big day, say pastors. The Star. August 18 2011]

[2] — Mingguan Malaysia’s reports quoted various parties including the National Evangelical Christian Fellowship’s executive secretary Alfred Pais saying that homosexual practices were against the teachings of Jesus Christ. [The Star August 15 2011. August 18 2011]

Categories
Economics

[2413] Looking for inverted yield curve

There have been talks of recession hitting the United States again. Extremely shocking manufacturing data from the US today is probably partly fueling the talks.

Although prediction is a risky game, there are various indicators one can use to gauge the likelihood of a recession. One of them is the US treasury yield curve.

An inverted yield curve may signal a recession, or at least some kind of pessimism in the market. The reason is that market participants will expect rates to go down during a recession. Future inflation rate meanwhile is expected to decrease as demand dies down. With those expectations, the bondholders will not require too high a returns.

Now, despite the talks, the current curve is sloping upward.

As you can see, the three yield curves in the last few weeks have been well behaving, unlike the one about 3 years ago just after the peak of the financial crisis. The September 2008 yield was inverted up to 2-year term.

So, there is no recession in the current yield curve. At least, not yet. Quite the contrary (unless we will be seeing stagflation), there is considerable inflationary expectation beyond the 5-year term relative to now; it is a pretty steep curve. That may suggest some kind of recovery.

Nevertheless, looking at the yield curve right now might be flawed, just because the Federal Funds Rate is already close to zero. Given that the US is possibly in a liquidity trap, the yield curve cannot be inverted.

Still, a relatively flat curve could be used as a signal of recession, especially if liquidity premium theory is taken into account. If the curve keeps sinking like it has for the past few weeks (so far, it seems to be due to flight to security phenomenon), we could be seeing a flat yield curve in a couple of months. Then, the case for recession will be stronger.

Of course, the curve should be viewed in context of other data for one to have a more educated guess about the future.

Another story is that the yield curve has been sinking lower and lower. The market is telling S&P something: S&P has got it wrong.