Author: Hafiz Noor Shams

For more about me, please read this.

Categories
Mudslinging

[1636] Of is MCA think tank drunk?

Why I ask?

FOR a long time Barisan Nasional’s communal approach has been translated into policies that have guided the nation’s governance and economic management. As a result, we are now laden with a hotchpotch of economic policies which are obviously in conflict.

We have in existence an old system from a socialist ideology of using price controls and subsidies to ”deliver to the poor”. We take a neo-liberalist stand to government-linked companies (GLCs) by providing them with immense and expansive immunity to regulations and real market competition, while the rest of the business community struggles in an unlevel playing field. As a country, we are not sure if we are for ”free trade” or ”fair trade”. For the man on the street, we have not even decided if the world is flat or not (economically speaking). In essence, we seem to adopt economic models that sound good at that time. [MCA must regain its vision. Fui K. Soong. The Sun. April 30 2008]

I repeat, “We take a neo-liberalist stand to government-linked companies (GLCs) by providing them with immense and expansive immunity to regulations and real market competition, while the rest of the business community struggles in an unlevel playing field.” That comes from Fui K. Soong, the chief executive officer of an MCA think tank known as Insap.

Question: since when neo-liberalism supports government intervention in the market, much less shielding government-link companies from competition?

No wonder MCA lost badly. If the think tank could not differentiate neo-liberal from statist policy or at best, misusing the term, I wonder what kind of advices it dispensed to MCA before the election. I think, if MCA wants to regain its vision, it could start by kicking Insap out.

Categories
Conflict & disaster Liberty Society

[1635] Of violent PRC citizens in South Korea fuels anti-PRC sentiment

Violence by Chinese during the Olympic flame relay in Seoul, Sunday, has ignited anti-China sentiment among Koreans.

The Beijing Olympic torch was successfully relayed from the South to North Korea, supported by enthusiastic Chinese supporters. However, the relay was marred by a clash between human rights activists and an overwhelming number of supporters, which left a sour taste in the mouth of many South Korean citizens.

Before the event, the police’s main concern was that rallies by human rights activists to protest China’s crackdown in Tibet might disrupt the relay. However, tens of thousands of nationalistic Chinese supporters flocked to streets in Seoul, resulting in an outbreak of violence against anti-Beijing Olympic protestors.

[…]

Koreans watching the relay were surprised to see the lining up of as many as 10,000 Chinese on streets the flame passed through. About 8,300 policemen were mobilized for the event. Among other questions raised were whether all the Chinese were legal residents or not; how “foreigners” could attack citizens of their host country; and why they held a demonstration here, not in Beijing, a Seoul citizen said.

[…]

Citizens also criticized the police for their lack of stern measures against the Chinese nationalists. “It is obviously dereliction of duty,” Seong Baek-ju posted on the official Web site of the National Police Agency. “How could they not do anything about these Chinese rioters.” [Anti-Chinese Sentiment Looms After Torch Relay. The Korea Times. April 28 2008]

Hmm, foreigners attacking citizens and the police did nothing against the aggressors.

Why does that sound so familiar?

Categories
Photography

[1634] Of batik for RM12

A shot from the last Raptor Watch.

Some rights reserved. By Mohd Hafiz Noor Shams.

Another shot:

Some rights reserved. By Mohd Hafiz Noor Shams.

I sent a variant of the first photo to a photography contest with a small digicam as the prize. I really do not mind having a third camera. But I have not heard from the organizer for over a month now. So, I think the result is obvious. Sigh…

Anyway, I am unsure if those paintings could be considered as batik but they sure are pretty.

Categories
Economics

[1633] Of rice is up but not vegetable

A sudden realization of a global food crisis among the public, or rather, prices increase of rice, has prompted several questions relating to supply chain and economics. One interesting economic question that I was requested to answer was why prices of fresh produce are not treading the path of rice prices?

To be honest, I have not seen the relevant data for fresh product — which by the way generally means vegetable — but the increase in rice prices is painted all over the news. But if we take the implicit assumptions of the question as true, why indeed do we not see the same pattern that dominates the rice market in the fresh produce market?

When I read the question, price effect, elasticity of demand and the Engel’s Law came to mind.

The Engel’s Law is an economic observation first expressed by statistician Ernst Engel[1] in the 19th century which states that a proportion of income dedicated to food, mostly starches, is larger the poorer a person is. I believe the Engel’s Law does answer the question to some extent.

Allow me to explain. Take a deep breath too.

An individual has some amount of income and a fraction of that income is dedicated to food. That fraction is further distribution among various kinds of food and we shall make a simple model which consists of staple food and luxury foodstuffs. We assume expenditure on other items as constant. Or, to make it easier, let us assume that we live to eat.

When price of staple food goes up, the person will have less purchasing power; that means he could buy less staple food for the same amount of money compared to before the price increase. If he wants to consume the same amount of luxury foodstuff, he will have to cut his consumption of staple food. The issue here is that it is staple food and staple food translates into low elasticity of demand. In simple English, changes in price do not affect quantity demanded by too much.

Therefore, cutting back on staple food consumption may not be the most preferred option. Thus, he cuts back on luxury foodstuffs while trying to maintain his current rice consumption level. As a result, demand for rice stays put, or falls only slightly while demand for other foodstuff falls dramatically.

This predicts a fall in prices for fresh produce demand while rice prices would stay constant, if everything else is the same.

With the background of increasing population size across the world, demand in general may be on the rise, causing a general upward pressure on prices of all goods. It has to be noted that a majority of those in a society is mostly made up of lower and middle class individuals and this is the relevance of Engel’s Law. What this explanation may lead to is this: while prices for both goods may increase, rice prices grow faster than luxury foodstuffs by virtue of constant demand for rice of an individual and decreased demand for luxury foodstuff of an individual with increasing population size.

Finally, a possible anomaly happening at the demand curve: the curve is most likely to be a vertical line perpendicular to the quantity axis or something close to that. I wish I had Matlab or something with me. I would love to run a model with the associated indifference curves.

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

[1] — Gregory Clark in Chapter 3, of his famed A Farewell to Alms insists that the statistician Engel is “not to be confused with his rabble-rousing contemporary Friedrich Engels”. Yes communists worldwide, Mr. Clark took a cheap shot at you.

Categories
Economics

[1632] Of freer trade for rice, please

Tyler Cowen writes:

At first glance, this seems understandable, because a country may not wish to send valuable foodstuffs abroad in a time of need. Nonetheless, the longer-run incentives are counterproductive.

Export restrictions send a message to farmers that their crops are least profitable precisely when they are most needed. There is little incentive to plant, harvest or store enough rice — or any other crop, for that matter — as a hedge against bad times. [Freer Trade Could Fill the World’s Rice Bowl. Tyler Cowen. New York Times. April 27 2008]

Also from Indonesia:

We know that:
a. The world rice prices hit the $1,000-a-tonne level for the first time
b. Indonesia’s rice production is estimated to be about 2m tonnes higher than consumption this year thanks to improving yields and an increase in the harvested area.

What can you infer?

Yes, sell the surplus and reap the windfall profit. I heard you said you always want to help rice farmers. [High Price Rice Quiz. café salemba. April 23 2008]

Despite having a surplus, Indonesia is restricting rice export with hope to slow down the march of local rice prices to achieve parity with prices in the international market.[1]

And, ehem, hey you protectionist Malaysians, how do you feel to be on the other end of protectionist policy now?

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

[1] — Indonesia has imposed controls over rice exports as Asian states battle food supply concerns which have been caused by soaring global prices. [Indonesia curbs its rice exports. BBC News. April 15 2008]