Ubah the Hornbill says hi.
Categories
Author: Hafiz Noor Shams
For more about me, please read this.
You know how that one particular argument against fiscal stimulus goes. There is a temporal mismatch between crisis period and the actual spending. The bureaucracy and incomplete information act to delay the implementation of the stimulus. If transparency is of a concern, then it will further affect the timeliness of the stimulus spending. The crisis may end well before stimulus spending is done, making the stimulus useless and may even hurt the economy by crowding out private spending.
Well, there is not a theoretical concern. Malaysia is a concrete example.
As of March 2011, more than 2 years after the RM67 billion stimulus spending was announced, more than 20% of spending component of the stimulus (which was really RM20 billion and not RM67 billion; RM7 billion of actual spending as announced in the first stimulus package and RM13 billion for the second) has yet to be spent. This is recorded in the Hansard: read page 74 of the Hansard dated March 29 2011.[1]
Twenty percent unspent as of March 2011.
Now, consider that the Malaysia economy might have recovered as early as December 2009. And everybody knows that the first quarter of 2010 grew by 10.1% from a year ago in constant prices. So, how much stimulus money had been spent by the end of 2009?
December 2009 is an important point because it is arguable that the economy did not need any stimulus by then anymore, if one believes in the efficacy of stimulus spending.
If the growth of the stimulus spending had been linear, then by December 2009, about 30% would have been spent, which is about RM6 billion. To be honest, the spending is unlikely to take a linear function. I personally suspect the figure is lower. Nevertheless, it does give you an idea how much money could have been spent by December 2009.
The point I am driving that it is possible that a majority of the spending was useless as far as cushioning the recession.
The 30% figure is obtained by assuming that nothing was spent prior to the announcement of the second stimulus package in March 2009, which is, really, not a bad assumption. We know that by May 2009, only three quarters of a billion of the first fiscal stimulus was spent. Only half a billion was spent by March 2009. Given that the economy lost RM20 in the first quarter of 2009 compared to a year ago,[2] half a billion was nothing.
Contrast the RM6 billion money spent with this: between 2008 and 2009 alone, the economy contracted by RM64 billion in nominal terms.[3] Remember that the source the recession for Malaysia was reduced international trade. In the same period, net exports itself fell by RM23 billion in current prices.[4]
I also wonder how much resources had been deprived from the private sector due to government spending. The crowding out effect is a concern given that a considerable chunk of this spending was done in time when the stimulus is not required. Signs of crowding out were seen as early as July 2009.
If one accepts the excess capacity argument that government spending does not crowd out the private consumption or investment because of excess capacity due to low demand in times of recession, then that argument has become very tenuous with the spectacular growth seen in the last several quarters. Meanwhile, the crowding out argument becomes much, much stronger.
[1] — Pakej rangsangan ekonomi pertama berjumlah RM6.695 bilion telah dilaksanakan dengan prestasi perbelanjaan mencapai 93.2 peratus. Pakej rangsangan ekonomi kedua terbahagi kepada perbelanjaan fiskal dan bukan fiskal berjumlah RM60 bilion daripada peruntukan fiskal yang berjumlah RM13.26 bilion. Prestasi perbelanjaan setakat sudah hampir 77 peratus. Jadi masih ada sedikit lagi tetapi nampaknya sedang berjalan dengan baik. [Page 74. Hansard. March 29 2011]
[2] — See Gross Domestic Product at Current Prices 2007 – 2009 by the Department of Statistics Malaysia. Retrieved April 3 2011]
[3] — See page 5 of the Malaysia Economics Statistics – Time Series 2009 by the Department of Statistics Malaysia. Retrieved April 3 2011]
[4] — See page 48 of the Malaysia Economics Statistics – Time Series 2009 by the Department of Statistics Malaysia. Retrieved April 3 2011]
I am tired of politics revolving around personality. With it comes excessive feudal culture and ugly mudslinging all too frequently. One can never truly escape it but there are other issues of actual importance if one wants to take a break from the ugliness of it all. These other issues are the ones that truly affect our livelihood. These issues involve our jobs, our savings and our taxes, among others.
Until very recently, Malaysian politics was grazing at the level that makes politics a worthy field to match its name. From military procurement to the mass rail transit system and to nuclear power, things that matter took the limelight.
For a period, there was nuance in the political debate held in the public sphere. It was a breath of fresh air from the stale old stuff of race and religion.
One example that took public debates to the next level was Pakatan Rakyat’s Buku Jingga. Although I do not necessarily agree with some of its points, I can definitely appreciate how the Buku Jingga forced both sides of the divide to raise the level of debates beyond name-calling. That is the greatest contribution of Buku Jingga.
There were other matters running parallel to this. One was the sodomy trial involving Anwar Ibrahim and Saiful Bukhari Azlan, which is still ongoing of course. Ongoing or not, the issue is dead to me. I have lost interest in it.
What made it even more forgettable were the outrageous details. Listening or reading graphic descriptions associated with the trial created a sensation that I call sodomy fatigue.
Yes, there is a feeling that the system is being manipulated at Anwar’s expense. Yes, there is a feeling of injustice committed against Anwar. Yes, he is important. Yes, he has a significant role to play in instituting a competitive democratic system in the country.
Yet, the country is not about Anwar Ibrahim. Too much energy is being invested in defending and discrediting him.
That energy invested towards Anwar can better be harnessed in other areas that affect our livelihood. For a country that censors the slightest hint of two persons kissing each other on television, there has to be something more than sex — in one way or another — to think about.
The issues of MRT, defense and others that involve billions of ringgit of taxpayers’ money are vying for primetime spots. Rather than reading about someone else’s private parts made public, I would rather focus on public goods treated as private property by the paternalistic few who think they can spend my money better than me.
Imagine my disappointment when morality becomes the centre of attention yet again, as a certain somebody with a lion’s courage alleged that a certain politician is involved in a sex scandal.
In scandal-crazed Malaysia with a sense of morality littered with hypocrisy, many simply drop the things that matter to moralize or hypothesize about others’ lifestyles. The same many are probably rushing to the Internet searching for the video of the scandal, and looking for a cheap thrill along the way.
I am sorry if that is crass. Still, is there anything that is not crass in this country anymore? Parliament is full of it. The courthouse is full of it. The boardrooms of some government-linked companies are so full of it. What is crass anyway? The word by its very self has been diluted by a pool of mud, and something else.
Sarawak is having an important election very soon. In the meantime, what does Malaysia have on its mind?
Sex.
Lim Guan Eng sent out the right message recently. He said ignore the scandal.
Ignore it indeed.
Focus on things that matter instead. Do not take your eyes off your public money, that belonging either to Sarawak, or to Malaysia at large.
First published in The Malaysian Insider on March 31 2011.
Wealth inequality can be worrying. That does not mean all wealth inequalities are worrying. The concern for inequality in this sense is overblown. Up the Gini coefficient and the trumpet is blown to sound the alarm without accounting for its context.
One out of a few ways wealth inequality can be worrying is when a small fraction of the society owns almost everything while the rest lives under abject poverty. For the majority, they are threatened by starvation almost every day. They have limited access to education and medicine. Their chance to escape poverty is close to zero.
This is a case when there is something in the economy preventing the rest from having their welfare improved. It could be poverty itself twisting the incentive system to encourage individuals to focus on current consumption rather than investing for the future (it is hard for kids to think about ABC when the stomach is growling), dictatorship (it might be the interest of the leadership to suppress the masses through heavy taxation), slavery or really, anything.
In this case where wealth is monopolized by the very few, total and average wealth of a society does not reflect the actual welfare of the society. If one wants to be precise, perhaps the welfare of the median member of the society. Take the rich outliers out and only then total and average wealth begin to reflect societal welfare.
Note that what is worrying here is not the inequality itself. It is the factors that make such inequality possible in the first place. The solutions can be interesting but that is not the reason I am writing this.
What I want to demonstrate is a situation when wealth inequality is not a concern. It is a case where the top fraction of the society disproportionately owns more than the rest of the society, but the rest lives rather comfortably — they can afford to own cars, they can afford to obtain a certain level of education, they eat well, etc. The median lives a comfortable life.
The wealth inequality of the society, however unequal wealth is distributed, does not say anything about the welfare of the society. Take the rich outliers out and total and average wealth will give a message that the society is doing pretty well. In this sense, inequality is not a concern.
The point I wish to highlight is that inequality by itself is not necessarily a concern. What makes it matters, or not, is the context.
For those who place too much concern on inequality, especially on the Gini coefficient, I have a feeling they are not accounting for the context.
Categories
[2338] Time sucked down the spiral
Oh boy. It is the end of the first quarter. When I opened up this photo of mine just now, I started to realize how quickly time flies. I took this shot nearly 2 months ago.
The speed at time passing me by scares me.
This is the stairwell of the Arc de Triomphe in Paris. It took me some effort to negotiate the flight of stairs. Back then, I thought time went by too slowly.