Categories
Conflict & disaster Liberty Politics & government

[2132] Of isolationist, non-interventionist, libertarian foreign policy

I am not particularly warm to Obama due to his economic policy. Shadows of protectionism and greater government intervention lurk somewhere. His foreign policy however is a cause to celebrate. The Obama that spoke in Oslo as he delivered his Nobel Prize speech is the Obama that I like. His speech on the need of war, of just war, and peace, was moving. Not only was it moving, it makes sense and addresses the nonsense of eliminating war as proposed by some in the anti-war movement. He backed up his assertion by acknowledging the existence of evil in the world. And evil must be confronted.

Obama is right when he said that there is no glory in war. The same sentiment can be felt here in Sydney at the ANZAC War Memorial. The memorial is not there to glorify war but rather, to honor sacrifices of men and women. It is not glorious because the human suffering it brings is immeasurable.

Yet, when a war is fought to defend principle of liberty, when tyranny threatens to rob individuals of liberty for any reason, a war in the name of liberty is unavoidable. Peace under tyranny is insufferable and peace under such condition is not one a free person should aspire. Better conditions are attainable. Of course, these better conditions can be attained relatively peacefully but when all routes are exhausted, it is really hard to condemn the use of force.

How true it is when Obama said that a “non-violent movement could not have halted Hitler’s armies.” Negotiation failed. Britain could not pacify Germany under the Nazi by acquiescing to the latter’s occupation of Czechoslovakia. No. Germany wanted more. The only peace Hitler’s sought is a peace incompatible with the idea of freedom. He wanted submission. Thus war was inevitable.

This aligns perfectly to libertarian principle of non-aggression axiom. Force cannot be not used except in self-defense.

Expanding this principle which is meant to cater individuals is however problematic. The easiest is to accept, however flawed such consideration is, a state as a person with rights to some extent. In doing so, it rationalizes the concept of self-defense vis-à-vis the state. That comes with it the idea of state sovereignty, just as individuals are sovereign over themselves.

It is flawed, because it ignores violation of individual rights outside the boundary of the state, where the victims are non-citizens, whereas individual rights, individual liberty require defending, ideally everywhere. The legitimization of use of force only in the name of self-defense in terms of the state necessarily dismisses any call of action for any oppression of liberty in foreign land.

A digression is necessary lest confusion reigns. Such non-aggression axiom for the state does not in any way prevent the state or individuals from criticizing such suppression in foreign land. Rather, the state cannot use force to prevent that oppression.

The logical path to adoption of non-aggression axiom to the state is one of non-interventionist, or even, in a restricted sense, isolationist. It is isolationist because all tyrannic developments in the world outside of the state’s boundary unrelated to the immediate security the state is given a blind eye. The United States did this prior to World War II. While such isolation has its root in the Jeffersonian ideal, which is clearly adversed to entangling alliances, the effect is the same. The same isolationist ideology brought upon the failure of League of Nations. The era of the Great Depression further demonstrated the far-reaching influence of isolation where the devastating Smoot-Hawley Tariff Act was put in place in the name of protectionism although the non-interventionist in libertarian context is only one involving force, not trade. Ron Paul explains this beautifully during his campaign in 2007 as a Republican nominee for the office of the President of the United State of America.

Such isolationist position held by the United States only truly evaporated after it was clear to it that it was very much part of the world, when Japan successfully attacked Pearl Harbor in 1941. The US has since become a global power with interventionist tendency. Perhaps, too much interventionist tendency.

I am aware of the problem of isolation and non-intervention arising from non-axiom theorem much, much acutely. I struggle with it because while tyranny is the great enemy of liberty, fighting tyranny everywhere can be exhausting, especially if one considers economic reality of scarcity. Furthermore, that does not answer the need, from time to time, to react, especially with legitimate force, against atrocity like what happened in Rwanda or Bosnia. Or, maybe, just maybe, even Iraq.

Iraq is a problem to me. I began with opposition to the war and now but I am unsure if my opposition is entirely right. Saddam Hussein was a dictator and he was ruthless one at that. Former United Kingdom Prime Minister Tony Blair in an interview not long ago said that even without weapon of mass destruction, he would have gone to war anyway.

My oppostion to the war was because of the flawed rationale of the war. Iraq did not weapon of mass destruction — never mind the controversy on the term itself — when the accusation was made. The failure of the United States and its allies under the infamous Coalition of the Willing to find those weapon is enough to demonstrate the folly of it all.

Yet, if the rationale — made as the main rationale and not as a side rationale as it was thrown in support of the war — had been against the murderous act of Saddam Hussein’s regime, I would probably, under libertarian condition, have supported the war throughout, realizing full well of its violation to state sovereignty. Call it splitting hair but I take great concern on rationale, even if the result is the same. Though I may resign to the convenience of Mao’s black cat, white cat from time to time, the end does not always justify the mean.

Regardless of the issue of state sovereignty, the economic reality of scarcity does bring this into question. We simply cannot fight tyranny everywhere, every time. Going to war to fight every tyranny is unrealistic because it is expensive in many ways including those beyond monetary consideration. One of this consideration is the disturbance of equilibrium. Fighting tyranny everywhere every time may encourage too much lawlessness that brings instability, even if stability means oppression. This, as it should be noted, a contradiction to the idea that there can be no peace if there is no liberty. This in fact, returns us back to non-interventionist policy while, largely, ignoring tyranny outside of our boundaries. Yet, another contradiction. In my humble opinion, while one seeks to smoothen out contradictions, the least problematic contradiction should be the favored one until a solution is found to take away the contradiction and be supremely consistent logically. As far as those oppression are outside of our boundaries and unrelated to us with us having our liberty secured, non-interventionist maybe the way forward.

Perhaps, when Obama mentioned Germany, he was alluding to Iran. The issue of Iran and nuclear proliferation was raised. Making parallel out of Germany and Iran maybe too much because it is always easy to judge something in hindsight. While the story of Germany has past, the story of Iran has not and there is no certainty that Iran ultimately seeks war. For Germany during World War II, non-aggression axiom was violated. Iran has not crossed that line yet, if it would at all. We should not resign to fatalism.

Again, we simply cannot fight tyranny everywhere, every time. At least, not under current global institutions.

In the setup of a state, fighting and correcting wrongs, although not everywhere and every time, is possible in many places and many times through the setting up of a credible judiciary and arms that enforce rule of law in terms of liberal democracy. Perhaps, if the same rationale for the state is expanded to the global level, the same success of the state can be emulated at the global level.

Obama, rightfully, mentioned this in his speech while he also rightfully said he does not have all the solutions. He spoke of institutions. And he gave the United Nations as an example; not a shining example but a success example to some degree nonetheless. There is a possibility that humankind can face the problem of evil more successfully than any god’s had, and not resort to Dr. Pangloss’ ridiculousness. As some phrase that I heard a while ago goes, the affairs of men are too important to be left in the hands of the gods, anyway.

This is a way circumvents the problem of non-aggression axiom for states and confronts the problem of evil by having a third, supposedly impartial party doing so.

This however is a slippery slope for libertarians — and even others — for such argument opens to the path of global government. That, is a monster much harder to fight against when the government is illiberal. Such monster would turn the global anarchy we are in as an utopia.

It would be alright if the global government is a government based on a liberal constitution protecting typical individual rights of men and women and everything in between but judging the world as it is unfortunately, with merely crass majoritarian democracy and the global government, I am uncertain how long such government’s liberal constitution would last, assuming it would begin with a liberal constitution, given the illiberal setup of a majority of states, if these states should be represented to a global legislative assembly without veto power. The farce of the United Nations Human Rights Council is enough a proof to this concern of mine: how could countries which have utmost contempt for individual rights, be the standard bearer of human rights?

If it exacerbates the problem of evil, then it should be rejected.

Categories
Economics Environment

[2131] Of compensation yes but there are concerns

It appears that Malaysia and other similar countries with significant forest cover may end up as winners out of the ongoing 15th Conference of the Parties to the United Nations Framework Convention on Climate Change in Copenhagen. Whether these set of countries will be net winners are another matter altogether but as far as compensation for maintaining forest cover, or within the context of COP15, carbon sink goes, reports are coming out that this is one aspect that is going pretty well.[1]

The economics behind such compensation is as sound as the economics behind carbon tax or cap and trade. It is about pricing externality.

The difference between such compensation and carbon tax or cap and trade is that the former addresses positive externality while the latter addresses negative externality. That is in econolese. In English, it means paying someone for doing something that affects others in a good way and penalizing someone for doing something that affects others in a bad way. It is about accounting for spillover effect. In a way, it is a full cost accounting.

While I am excited at seeing an economic theory being put into practice, I am curious at how exactly will it be implemented. The biggest issue here is related to opportunity cost. The compensation will have to be big enough to address the problem of opportunity cost faced by owners of forest.

Some forested land may not be opened even without compensation. That put the opportunity cost of such land very low. I would imagine, some countries would not admit to that and instead, would overestimate their opportunity cost. It is not hard to come up with a plan to open up new land, project its economic value to some monstrous value that could be outrageous compared to actual situation and have that as the opportunity cost.

I know, forest has its inherent value. I am sympathetic to that argument. Inherent value however is hard to measure, and no one will pay for it despite all the sound moral argument defending it. The best way to price forest by its concrete opportunity cost: what other alternatives are possible to have a covered land and what is the value of that alternatives?

While I do support such compensation, these concerns must be resolved conclusively. Else, the arrangement will be a farce that only redistribute wealth unfairly.

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

[1] — COPENHAGEN — Negotiators have all but completed a sweeping deal that would compensate countries for preserving forests, and in some cases, other natural landscapes like peat soils, swamps and fields that play a crucial role in curbing climate change. [Climate Talks Near Deal to Save Forests. Elisabeth Rosenthal. New York Times. December 15 2009]

Categories
Economics

[2130] Of sugar prices today and 20 years ago

Sugar price per kilogram in Malaysia in 1989 was RM1.20, according to the Food and Agriculture Organization of the United Nations (FAO).

Sugar price per kilogram in Malaysia today is RM1.45.

If sugar were the only commodity in the world for Malaysia, it would suggest that average annual inflation rate for the past 20 years was no more than 1%.

Based on consumer price index obtained from the International Monetary Fund (IMF), average annual inflation rate for Malaysia within the same time period was slightly above 3%. It is probably safe to assume that salary, over the same period grew at the same rate, with mobility of a person with respect to the so-called corporate ladder fixed.

If every assumption stands, it is clear that sugar has been growing cheaper in real price terms. Since it is subsidized, it has been growing artificially cheaper in real price terms.

I wonder what is the total size of sugar subsidy bill for the past 20 years. According to various articles in The Star, last year’s bill stood at RM720 million. It has to be in the realm of billions. How about in present value? In terms of opportunity cost?

It should be a mind-busting figure.

What a wasteful policy.

Categories
Economics

[2129] Of dedication to Paul Samuelson

One of the greatest economists of this century, and perhaps of all times too, died yesterday.

Paul A. Samuelson, the first American Nobel laureate in economics and the foremost academic economist of the 20th century, died Sunday at his home in Belmont, Mass. He was 94.

His death was announced by the Massachusetts Institute of Technology, which Mr. Samuelson helped build into one of the world’s great centers of graduate education in economics.

In receiving the Nobel Prize in 1970, Mr. Samuelson was credited with transforming his discipline from one that ruminates about economic issues to one that solves problems, answering questions about cause and effect with mathematical rigor and clarity. [Paul A. Samuelson, Economist, Dies at 94. Michael M. Weinstein. New York Times. December 13 2009]

I would say, his contributions to economics are as great as Leon and Walras’, who, back in the 19th century, together with other marginalists, first used mathematics in a big way to advance the field of economics.

Categories
Economics

[2128] Of is manufacturing out of the woods?

The Department of Statistics releases the Industrial Production Index today:

Sectors

Index October 2009

% Changes
Year-on-Year

% Changes
Month-on-Month

IPI

106.5

0.7

5.7

Mining index

96.4

-2.7

2.3

Manufacturing index

109.9

1.0

7.0

Electricity index

123.1

13.4

7.7

The important column is the year-on-year one.

The Industrial Production Index (IPI) in October 2009 posted a marginal growth of 0.7% year-on-year for the first time since September 2008. Meanwhile, the IPI in September 2009 was revised negative 6.0% year-on-year. The increase in October 2009 was due to the increases in the two indices: Manufacturing (1.0%) and Electricity (13.4%). However, the index of Mining posted a decrease of 2.7%.

Month-on-month, the IPI increased 5.7%. The cumulative index for the period of January-October 2009 declined 9.7% as against the same period in 2008. [Index of Industrial Production Malaysia October 2009. Department of Statistics of Malaysia. December 10 2009]

The manufacturing sector may finally be out of the woods. This is dependent on any revision to the figure that may occur next month however.

Notwithstanding the revision, given the centrality of the manufacturing sector to Malaysian economy, this improvement is hugely important. It provides a strong pragmatic, instead of ideological, case against the need for a third stimulus package.

The electricity is particularly indicative of possible future trend. Electricity can be argued as a leading indicator because one, it is a crucial input across a great many sectors, two, there is likely a lag between electricity consumption and completion of a goods and three, because it is an lagging input with respect to goods completion, any increase in production will be preceded by increase in electricity consumption, holding all else constant. That is why I was excited as early as July this year, as far as the IPI is concerned, when year-on-year electricity consumption first grew after it fell for an extended period.

What I would like answering is this: is the cause of the improvement in the IPI due mostly to foreign demand for domestic goods or domestic demand for domestic goods?

If it is the former, then it is likely that economic recovery, at least as far as manufacturing is concerned, has been driven largely by external demand, not Malaysian stimulus spending that is aimed at increasing domestic demand. In other words, it answer the effectiveness of the two stimulus spending. Given the huge size of external demand for domestic goods compared to domestic demand for domestic good, you know where my money is.

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

p/s — Elanor commented and brought up a factor that I regretfully missed. Accounting for that factor, it is becomes tenuous to claim that the increase in October is due to non-seasonal factor and therefore, due to underlying trend. This is so because year-on-year fails to remove seasonal effect as it typically does.

Nevertheless, being a stubborn person that I am, there is a good reason to think that the economy is improving, especially since the IPI has been improving (okay, performing less bad rather than improving) since January this year.