Categories
Politics & government

[1876] Of last word before it all ends

There are so many words to be penned and typed yet, time ticked too fast. I am drained and wished nothing else at the moment except for placing my head on my trusted pillow on my bed and read the books which I should have finished last year, that would have been banned if our society was more religiously conservative that it is at the moment.

I will go to my bed in peace. I will not be perturbed by some of the hate mails I have received. I will go in peace, but only after did this:

Presumably public domain. Parliament of Malaysia.

Good night and good luck.

Categories
Liberty Politics & government Society

[1875] Of time to kill it

I am sympathetic to the Pakatan Rakyat. I helped one of their candidates during the last general elections and I hang around with people from Pakatan too often. That however does not mean that I need to agree with every little thing the component parties of the Pakatan hold. I for one categorically oppose implementation of hudud as it currently being proposed and indeed, the imposition of any religious ideal upon free individuals. For this reason, I am afraid that I have to write this, especially after Anwar Ibrahim states that PKR would not reject hudud outright and that it would only be application to Muslims. I would like both PAS and PKR to be punished for their position on hudud.

Before anything else, the importance of this election has been grossly overblown. It means nothing to both BN and Pakatan on the margin. Victory by any side does not change the balance of power in the Dewan Rakyat. BN will still hold the majority power at the end of the day.

A win by PAS will of course reduce the number of seats Pakatan requires to takeover the federal government via mass defection of BN members of Parliament to Pakatan. However, if there is anyone among us who still believes in that possibility, all I can say is that winter has passed and summer is nigh. Wake up and smell the roses.

Even within Pakatan, this election is meaningless on the margin. A win by PAS does nothing in rearranging the fact that PAS is the junior partner. PKR and DAP will remain the bigger component parties in Pakatan regardless of the outcome for the Kuala Terengganu by-election.

For BN, is this a referendum on the Deputy Prime Minister Najib Razak since that he is the designated Prime Minister of Malaysia come this March?

I am always wary of a small by-election with an awfully limited and biased sample being used as a referendum of national proportions. Not only turning this little by-election into a national referendum is statistically flawed, the BN candidate has been labeled as the BN President’s man rather than Najib Razak’s.

And of course, this by-election is not a referendum on hudud either. Hudud, as journalists on the ground have it, is hardly an issue at all. Bread-and-butter matters dominate the list of concerns of the electorate.

The issue of hudud itself cropped out almost by accident. It seemed almost like a trap set by Khairy Jamaluddin on Husam Musa in a public forum in Kota Bahru back in December. The former asked the latter if PAS would implement hudud if the party became part of the federal government. If it was a trap in the first place, Husam Musa certainly took the bait by answering it in the positive. Immediately after that, BN, especially MCA, has been milking the issue ever since.

I would like to risk digression by stating that, with little backbone, MCA hardly has the moral authority to question DAP’s position on hudud. MCA should ask UMNO on items like the use of Chinese language, on Chinese school and on Ketuanan Melayu among other things. Or even hudud for that matter.

The courageousness of MCA notwithstanding, it is with great regret that the wedge is being driven in between Pakatan so deeply at the most inopportune time much to the benefit of BN. Hudud is exactly the same issue which brought Barisan Alternatif to its demise some years ago. Hudud has been the item that plagues the unity between DAP, PKR and PAS and it is because of this hudud needs to be erased from the agenda of Pakatan.

After some years since the collapse of Barisan Alternatif, Anwar Ibrahim brought everybody far and wide together sufficiently tightly to stand up against BN. What Nik Nazmi Nik Ahmad identified as big tent politics worked beyond skeptics’ wildest dreams. What happened next was sheer delight: March 8 2008 radically changed the whole dynamic of suffocating local politics, thanks to the former Deputy Prime Minister of Malaysia. BN was downright humbled.

It has been more than 10 months now since the last general election and the scenario of January 2009 is very different from March 2008. The same impetus to support PAS as part of the Pakatan coalition is simply not there. Win or lose, January 17 in Kuala Terengganu simply does not share or even come near to the significance and the urgency of March 8. Therefore, those who disagree with PAS have the luxury to not come to the aid of PAS. Pakatan simply can afford to lose the by-election simply because the election is meaningless.

While Kuala Terengganu is not a referendum on hudud, it certainly could give some signal that could alter future actions. The right signal — a loss to PAS — could inform future election campaigns not to put hudud on the agenda. A loss in Kuala Terengganu for Pakatan could kill hudud off as an agenda of Pakatan for a very long time and hence, save the coalition from future disaster that befell upon Barisan Alternatif.

And the stage in Kuala Terengganu offers the opportunity for a kill since non-Muslims are seen as the kingmakers there.

This is where the idea that hudud only affects Muslims comes into play. The idea aims to reduce apprehension the non-Muslim community in voting PAS while the party advocates for the implementation of hudud, regardless of its afterthought qualifications. In order to kill off hudud as an agenda of Pakatan and save Pakatan from the fate of Barisan Alternatif, the repulsive idea that the non-Muslim community is decoupled from the Muslim community must be killed first.

The problem with the argument hudud only affects Muslims assumes that all Muslims are for the implementation of hudud. I definitely would not mind if hudud is implemented as long as individuals, and not at the community level, could choose between hudud — and truly, sharia — and secular civil laws. I would not mind if hudud is implemented as long as I could choose between hudud and secular civil law. Under the current proposal, I and many others do not get that choice.

I have also mentioned this before but just to stress it again, the argument that non-Muslims need not worry with the implementation of hudud also builds unnecessary walls among Malaysians, further dividing an already divided society. Furthermore, it is hard to imagine how the minority will be left unaffected if there is great development within the majority community.

If the non-Muslims are prepared to buy that argument set forth by PAS and PKR that hudud only concerns Muslims while ignoring the fact that under the proposal, Muslims who prefer secular environment instead would be forcefully subjected to religious laws, well, perhaps we all should put blind eyes to each other’s problems. If my problem is not yours, then the discrimination that the non-Malays suffer is not my problem either. Each time you suffer injustice, too bad because it shall not be mine. Those are non-Muslim problem and so, why should I care at all?

Is that the new arrangement you prefer? Shall we make that as the basis of our social contract, our new constitution?

If the answer is no, then PAS must lose in Kuala Terengganu. It is regrettable that implication is victory for BN especially when it is becoming clear that BN has learned nothing from March 8. Nevertheless, I am unwilling to sacrifice my ideal for too much political expediency. There is such thing as a limit and this whole issue on hudud, as especially the argument brought forward by PAS and supported by PKR, has gone over and beyond mine.

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

This article was first published in The Malaysian Insider on January 12 2009.

Categories
Economics

[1874] Of expropriation is not necessarily cheaper than status quo

MP Tony Pua made a statement that expropriating the LDP highway is cheaper than maintaining status quo.[1] This is not necessarily true. As typical in the realm of economics, the answer is it depends.

What exactly does it depend on?

The biggest assumption lies in the discount rate. The discount rate is required to incorporate the time value of money in any calculation. In a calculation that spans for a very long time, the slightest change in the discount rate could imply a very different solution to a particular fork. In our case, the time length is 20 years because the contract between the government and the operator of LDP only ends in 2028.

Before we inspect Mr. Pua’s comparison which leads him to call for expropriation, a brief introduction to theory of time value of money is most appropriate.

Time value of money says that rational individuals prefer to have money now rather than later. An ice-cream, for instance, is worth more today than tomorrow with all else being equal. The discount rate acts, as the name suggests, to discount the value of the ice-cream as we progress along a certain timeline.

Next, two crucial variables will need clarification.

The first is the cost of expropriation which is RM1.327 billion. This is the cost the government will have to pay if it ever plans to exercise its rights in eminent domain. The cost in my calculation is assumed to be paid in one lump sum as soon as possible.

The second cost is the cost of compensation which the cost at 0.00% discount rate is RM1.929 billion. The compensation is presumably, as it should, paid in the year that the compensation is required. After all, the compensation is really a subsidy of RM0.50 the government gives to the operator in order for the operator to reduce the toll from RM2.10 to RM1.60. While I have not read the agreement relating to the Highway, it seems that the arrangement is more or less a pay-as-you-go.

For expropriation to be desirable, the expropriation cost must be cheaper than the compensation cost.

With that out of our way, let us get down to business.

If the discount rate is 0.00%, Mr. Pua would be right. At 0.00% discount rate, the cost of expropriation does not exceed the cost of compensation. Under this scenario, it makes sense to expropriate the highway from an economic point of view.

As the rate goes higher, however, the narrative veers to the direction of the other side as the differential between the two costs shrinks; the time value of money reduces the cost of compensation. This is so because all future compensations are redefined in present terms.

At approximately 3.89%, the difference becomes zero. This is where the philosophically agnostics celebrate their existence on this fair planet of ours.

Anything above 3.89%, with all else being equal, empirically leads to the logical conclusion to oppose expropriation. This is where libertarians hold wild party with contrabands filling the cocktail table.

For Mr. Pua to be right, he needs to pray that the government’s discount rate is less than 3.89%.

The following table illustrates how various discount rate affects the compensation rate and the case for expropriation.

Finally, caveat.

Mr. Pua places total compensation as RM2.2 billion with 0.00% as the discount rate while I estimate it to be only RM2.0 billion at the same rate. Why is the difference?

First of all, Pua includes a 2008 sunk cost of RM0.6 billion. Sunk cost however is irrelevant in this comparison. We are interested at projecting the future and our decisions cannot change the past, unless we decide to cook the books. To include the extra RM0.6 billion is to commit logical fallacy. A fair comparison must align the stream of payments together and only then an apple to apple comparison is possible. Regardless, Mr. Pua has been careful with that and has added the necessary qualification with respect to the RM0.6 billion. Therefore, this is hardly an issue.

Secondly, Mr. Pua mentioned that the toll is scheduled to increase to RM3.10 from RM2.10 in 2016. Yet, he did not include that in his calculation. In effort to paint a more accurate picture, I incorporate that increase into the compensation calculation while holding the fraction of subsidy (approximately 23.81% with a RM0.50 subsidy over total toll of RM2.10) constant from 2009 to 2028.

The effect of the exclusion and the inclusion of the two factors lead to the difference of RM0.2 billion.

There are several other assumptions made but I think those caveats are insignificant unless the wonks come out of their caves with their arrows and spears. In any case, the calculation is available here for public consumption.

Finally, the consideration for the time value of money is not the only indicator we should concern ourselves with if we want to expropriate the LDP. Even if the time value of money proves that it is cheaper to expropriate it, several questions remain. One of them is: can the government operate the highway more cheaply than the current operator?

It is possible that even if the expropriation cost is lower than status quo, the operation of the highway by the government may actually impose greater overall cost on the government where everybody, including those who do not use the highway. All taxpayers of which a majority do not use the highway would have to support a small group of taxpayers who use the highway.

That is not fair.

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

[1] — I have blogged earlier that after reviewing the agreement of several toll concessions, including Lebuhraya Damansara-Puchong (LDP), Cheras Grand Saga Highway, KESAS and Butterworth Outer Ring Road (BORR), the Government is able to ‘expropriate’ these highways by giving between 3 to 6 months’ notice at ‘reasonable’ prices. [Cheaper to expropriate LDP. Philosophy Politics Economics. January 7 2009]

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

A version of this article was first published in The Malaysian Insider on January 9 2009.

Categories
Kitchen sink

[1873] Of Hishammuddin Rais is my hero!

Watch Astro Awani now!

Yes, Hishammuddin Rais is on TV pawning the BN MP for Pasir Salak!

Categories
Economics Humor

[1872] Of save those porn jobs!

Ah, hell. They’ve already bailed out the financial and the automotive sectors. What is the point of resisting anyway. Let us add another sector into the list in the name of saving jobs.

WASHINGTON (CNN) — Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.

”The take here is that everyone and their mother want to be bailed out from the banks to the big three,” said Owen Moogan, spokesman for Larry Flynt. ”The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine.” [Porn industry seeks federal bailout. Rebecca Sinderbrand. Mark Preston. CCN Political Ticker. January 7 2008]

Yeah. We do not want to miss those big boobs and the ooh and the aah. No sir. Only socialism could save us all from those lonely nights.