Author: Hafiz Noor Shams

For more about me, please read this.

Categories
Liberty Science & technology Society

[2377] Technology, central planning and the fate of organic organization of society

There are several reasons why organic decision-making is better than central planning. The complexity of the world is one. By complexity, it means nobody has the ability to absorb all relevant information in a timely manner to react effectively. In some ways, this is the economic calculation problem. It is an argument against the communist economic system in favor of the free market, the free price system specifically.

While this particular reasoning has stood well against the test of time to defend the libertarian case, I do not think it will stand forever. It has stood well against the case for central planning because there is a limit to calculation processing.

An individual can solve his or her own problems but a central planner must solve all problems that exist in the world. The central planner has no capacity to solve for the general equilibrium. There are billions, trillions or even more variables and data points to consider. The problem of central planning has always been an optimization problem however complex it is. How many can we calculate? How fast can we calculate? Can we calculate it at all?

None in the past and at the present time has done that in a grand scale or for a long time successfully.

The date when technology overcomes the restriction will arrive. When that happens, the libertarian case may approach an expiry date.

The seeds are already here. Thomas Friedman writes in The World is Flat of a global supply chain. Detailed record of inventory is kept. The workflow is traceable. Orders, stock and production all around the world of a particular company can be tweaked easily. All relevant information crucial to production is available on the spot all the time.

It is not hard to imagine how that capability can be expanded beyond the boundary of a firm. As technology progresses to make that possible, the prospect of effective central planning is enhanced.

With technological progress, eventually, whatever superiority the organic method has can be replicated by a central planner. Perhaps, the central planner can produce superior outcome in some cases where asymmetric information is present. After all, with the relevant sufficiently advanced technology, there can be no asymmetric information problem.

This is a scary notion for libertarians. It should be a scary notion for all who believes in individual liberty. It will give birth a full and perfect information aggregator that is an omniscience state or anything that may function as a state. It will create a god none can disobey. Everything the god says is for the best. This will be the real god.

My question is, when the time comes, will the case for organic organization of society be obsolete?

After considering that, I think any case in support of libertarianism cannot be dependent on technology. Else, it puts an expiry date on the philosophy.

Whenever the expiry will be, I am inclined to believe that it is will be far off into the future, possibly making the technology-dependent argument useful still.

Categories
Liberty

[2376] Suaram, a blind believer of the Universal Declaration of Human Rights

The way Suaram reasoned its position on drinking and smoking ban shocked me.

According to the group’s coordinator, the Universal Declaration of Human Rights does not explicitly mention the consumption of alcohol and tobacco as a human right but it does mention detention without trial is a violation. Because of that, Suaram supports drinking and smoking ban if the majority supports it. And because of the Declaration as well, the group does not support detention without trial.[1]

For a group that fancies itself as a human rights group, I expect more than an appeal to the Declaration. Any serious human rights group needs to have a more developed view on rights. Several Pakatan Rakyat politicians who are also members of Suaram have rightly condemned the group’s view as being simplistic.[2] (Now, I am aware that these politicians may be inconsistent with their views with regards to what I am about to share but let us ignore that at the moment for I want to focus on Suaram).

Suaram’s view will not stand any liberal test. Consider this appalling case: if detention without trial was not mentioned in the Declaration, then Suaram would have supported detention without trial. There is no two-way about it. The Declaration is the document of reference for Suaram after all. Or maybe, I should just say that it is the view of the coordinator.

Such is the inadequacy of Suaram or the coordinator’s reasoning.

A more respectable human rights group would have derived its position from the first principle instead.

I want to say this rather forcefully because I think the point on first principle is crucial.

Any libertarian will reject the Universal Declaration of Human Rights. The rejection is due to the categorization of liberties and rights into negative and positive.

Negative liberties and rights refer to absence of interference by others to a person action that does not necessarily or dangerously affect others (after reading Nozick’s State, Anarchy and Utopia, I have a little bit trouble defining this but you know what I mean). Freedom of expression is part of negative liberties.

Positive liberties and rights refer to obligation by others to aid the person to achieve the person’s positive rights. The supposedly right to employment is an example of negative rights.

Libertarians reject positive liberties. Only negative liberties are accepted and these negative liberties are simply referred to as individual rights. Libertarians, or maybe at least me, understand negative liberties as individual liberties. Because the Declaration contains positive liberties, libertarians reject the Declaration.

This is my first principle: negative liberties. All rights originate from those liberties. Most of my positions are derived from that first principle. And you can see how my position on drinking and smoking come from; it comes from that first principle of negative liberties.

Drinking and smoking ban interferes with individual action as defined above. Hence, libertarians reject the ban, whether or not it is mentioned in the Declaration.

(If there is conflict of rights there, then Coase theorem is there to save the day. If it involves private property, then the owner’s words are supreme.)

But the libertarian view does not matter as much here.  What matters is the first principle. You can see where the libertarian — my — position on drinking and smoking ban is derived from. Suaram lacks such rigorous reasoning.

Another angle demonstrating the inadequacy of Suaram’s view is this: if all liberties and rights are derived from the Declaration as understood by Suaram, then the Declaration is utterly inadequate to function as the document of reference in a liberal society. Many negative liberties simply would not exist and that is an unpalatable scenario for any liberal, and I use the term liberal here in the widest of all sense.

Now, here is something more insidious than naïve thinking.

There are many negative liberties unmentioned by the Declaration. Now, left-leaning individuals and entities claim to embrace a more comprehensive view of liberty. They accept both negative and positive liberties and rights.  The crucial point is that a left-leaning entity accepts negative liberties as well, notwithstanding the areas where positive rights prevail over the negative ones. It is safe to say that any person who confesses belief in liberty however it is defined at least subscribes to negative liberties.

For the negative liberties unmentioned by the Declaration, by deduction, Suaram believes the majority has the power to decide whether a person should be stripped of his or her negative liberty.

The discretionary leeway is despicable for one reason: it is the tyranny of the majority. For a self-proclaimed human rights group to see no wrong in tyranny of the majority, that is shockingly disappointing.

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

[1] — KUALA LUMPUR, June 7 — A human rights group today will support a ban on alcohol consumption or smoking should the majority of Malaysians favour it.

Suara Rakyat Malaysia (Suaram) said, however, that the Internal Security Act (ISA), which allows for detention without trial, was exempt from public opinion.

“The right to drink and the right to smoke is not explicitly spelled out in the UDHR (United Nations’ Universal Declaration of Human Rights), but the right to fair trial is,” Suaram coordinator Hasbeemasputra Abu Bakar told The Malaysian Insider today.

In a statement sent last night, Hasbeemasputra said “the state has the responsibility to make laws that regulate society and has a duty to ensure the wellbeing of the people, and gazetting no-smoking zones helps to fulfil these two roles.”

When asked why Suaram now supported the smoking ban in Malacca but opposed the ISA, the human rights activist insisted that the ISA ran contrary to the UDHR. [Boo Su-Lyn. Alcohol, smoking ban if majority wants it, says Suaram. The Malaysian Insider. June 7 2011]

[2] — SHAH ALAM, June 7 — Two members of Suara Rakyat Malaysia (Suaram) rejected today the human rights group’s backing of bans on alcohol consumption or smoking as long as a majority favour it. [Boo Su-Lyn. Pakatan reps slam ”˜simplistic’ Suaram over alcohol, smoking bans. The Malaysian Insider. June 7 2011]

Categories
Economics Politics & government

[2375] Reducing the political cost of liberalization

A price-control mechanism has its economic cost, on top of that associated with the current subsidy regime in place in Malaysia. There are also some political costs to the control. In tight times when commodities are becoming dearer, any government that dares to reset retail prices upwards invites public wrath.

There was talk of an early general election, but the rumor machines now suggest that the election will be held only later. The Barisan Nasional-led federal government needs room to maneuver before renewing its mandate.

The prime minister is under pressure to seek a mandate of his own. One has to remember that Najib Razak is running on the 2008 mandate secured by the highly unpopular Abdullah Ahmad Badawi. Not only that, the prime minister also needs Barisan Nasional to do better than it did in the last general election. He must get the two-thirds majority in Parliament to prove that his government is better than the one led by his predecessor.

That is one of the ways the political cost matters. The political cost can affect cold but rational economic calculations. This is especially relevant for those whose conviction is measured by their appetite for adventure, or lack of adventure rather. That makes it important to reduce the political cost of liberalization lest the liberalization agenda, however disappointingly incomplete it is in its current form, be left high and dry.

The local political cost that exists is unfortunate because global economic reality largely ignores local political reality. In many cases, the increase in retail prices is inevitable amid rising world prices of various commodities.

The factors fuelling the hike are real: growing population, growing affluence and therefore growing demand. That is the current long-term trend. Mere business cycles neither erase nor change long-term trends by much.

There are some institutional issues affecting local retail prices as well. Without hurting the trustworthiness of the government, these problems have to be solved.

Liberalize the market instead of granting monopoly power to specific firms. Make the market open instead of having deals made in the shadows. Stop signing contracts that are grossly lopsided at the expense of public money. All that can lessen the degree of the hikes in the long run.

Yet, local issues just like short-term fluctuations are unlikely to drown out long-term trends. Until new technology, new culture and new alternatives prevail over old ones — or if total world population drops — prices will generally go up to clear the markets.

Because of the dissonance between local political and global economic realities, the political cost should be reduced so that both run parallel to each other. The political cost is a disincentive to good economic policy.

Democracy coupled with entitlement culture is a recipe for irresponsible populism. This is especially true for the fuel subsidy regime where the subsidy fixes the price ceiling and in effect subsidizes everything between retail prices and world prices. Under this arrangement, the government risks hypothetically unlimited expenditure. The higher the world prices, the larger the subsidy bill.

So, how does one reduce the political cost?

The government can stop being the fall guy. To do so, the government needs to stop managing prices. Relax the control. Let prices float. Let the market take charge instead. Let those closest to the ground — the actual buyers and sellers — determine the prices.

Using the fuel subsidy as an example, the relaxation can exist together with fixed per unit subsidy regime rather than the current unfixed per unit subsidy. In this way, the subsidy burden shouldered by the government will remain constant given a consumption level. Any increase or decrease in retail prices will be due to market forces only.

This particular arrangement will reduce the political cost faced by a liberalizing government by making the link between prices and primary market participants clearer. Prices will no longer be linked to the government. With the government out of the way, then perhaps the government will receive less flak.

The question of subsidy reduction itself will not even surface because increase in world prices will not increase the subsidy bill given the level of consumption. Indeed, a typical model will suggest that an increase in world prices might actually decrease the total subsidy bill due to decreased consumption.

In the end with less flak, perhaps the liberalization agenda can go farther down the road without unnecessary undue erosion of political capital.

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 June 2 2011.

Categories
Politics & government WDYT

[2374] If held today…

If held today, what would you expect the result of the Malaysian federal election be?

  • BN government, two-thirds majority or more (19%, 5 Votes)
  • BN government, less than two-thirds majority (35%, 9 Votes)
  • Hung parliament (19%, 5 Votes)
  • PR government, less than two-thirds majority (19%, 5 Votes)
  • PR government, two-thirds majority or more (8%, 2 Votes)

Total Voters: 26

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This is a relevant question, given that some expect the election will be held in the next few months. I of course do not pretend that these polls are scientific. It is all for good fun.

Categories
Economics Politics & government

[2373] Speak plainly about the price hikes

Subsidy reduction has its pros and cons, even as on the net in the long run, it is beneficial to the economy as a whole. There is no need to soften the negative aspects by putting them in a little colorful box with ribbon on top.

The series of subsidy reduction leads to price hike and in the immediate time frame, it is burdensome. It is painful. With all the lags that exist, it is an intertemporal problem. The pain comes early, the benefits come only later.

A price hike is a price hike. It hurts in one way or another. Nobody likes to pay more no matter how small the increase is, even if the increase is justified. I myself do grudge a little about having to pay more than I used to, despite largely supportive of the subsidy reduction initiative, or some call it as the rationalization program in the spirit of euphemism.

Yet, we have apparatchiks and their agents writing and suggesting that the series of price hikes currently undertaken by the Najib administration will not burden the consumers.

These consumers are not kids. They are not kids visiting the family doctor, about to face the needle. The story of how the needle only stings like an ant is not for the mature audience.

Instead of trying to convince these consumers that the pain they feel is an illusion, those in the government and their supporters should really stick to the plainly true traditional rationale: it is wasteful. It is inefficient. It is distortionary.

Break the message down to bits and pieces that laypersons can understand (What we have instead is that these messengers misunderstand those very economic concepts themselves! They use big economic jargons without understanding the basic concepts. And these people fancy themselves as the economic planners of the country. Pfft!).

Just speak plainly.

I think the majority will appreciate it, even if it angers them.

To manipulate words and then say things that the consumers can affirmatively see, feel and conclusively disprove will compound the anger. I mean, something must have gone absolutely wrong when I, a supporter of liberalization, become angry reading these manipulated messages in the media.

Worst, these untruths will only erode any support for liberalization. These apparatchiks will have themselves to blame when everything fails.