Categories
Liberty

[1329] Of bicameralism to moderate crass democracy

Democracy in its purest form is a mere majoritarianism and a society built on mere majoritarianism is a society built on pure populism. There is nothing in populism and by extension democracy that guarantees liberty. Yet, democracy has proven to be an effective decision making tool, allowing differences to be ironed out peacefully instead of by force. For this reason, libertarians — for the sake of simplicity, liberals — prefer moderated democracy and a tool that offers that possibility is a liberal constitution which guarantees negative rights. The merging of the two tools results in a system known as liberal democracy. Unfortunately, any constitution may fail under heavy populist pressure for a constitution itself is not free from revision. Here is where another moderator of populist sentiment comes into play: bicameralism.

How is that so?

Bicameralism is simply a system of two legislatives chambers divided into the lower house and the upper house.

In the name of democracy, the lower house is sensitive to popular opinion. Representatives elected into the house have only one interest at heart and that is the people. Whenever popular opinion sways for better or for worse, so does the opinion of the lower house.

There are moments when public opinion exhibits excessive instant gratification quality with little regard to future outcomes. More often than not, such moments are filled with emotion or are made possible with limited information. It goes without saying that opinion or decisions made with incomplete information may not produce the best of all possible outcomes. Worse, in times of great distrust, some groups may try to oppress the weaker communities and the weakest of all communities are the individuals. Those are the moments when democracy looms menacingly, when tyranny of the majority is most relevant. This is why liberals are distrustful of democracy.

If placed on a two-axes graph which the horizon axis represents time and the vertical axis represents public opinion through some numeral values, short term-based public opinion sways wildly as time progresses. Extreme values toward one side or another — for instance, authoritarianism or anarchy — that prevail for only a short time frame may have destabilizing effect and undo years of progress. When emotion subsides and rationality dominates, the mob, and the society in general, may regret its actions as complete information becomes available only later.

The upper house functions to smooth out the crests and troughs of public opinion. In order words, it is less sensitive to crass democracy with farther perspective in temporal horizon. For liberals, the upper house is more interested in protecting the liberal constitution rather than kowtowing to the mob.

This however does not mean the members of the house — senators — are not elected into their seats. Democracy still plays a role in the makeup of the house but its effect is far moderated than that in the lower house. This alignment of interest is achieved by granting senators longer term compared to the members of the lower house. Through this itself, the atmosphere in the upper house is calmer, where rationality overcomes emotion, emotion that appeals to the mob. In this environment, discussion could be carried in a more productive manner.

The insensitivity to public opinion however creates another problem. Due to the longer term, upper house members — or senators — do have considerable power compared to their counterparts. This is where one must tread carefully since senators are less responsive to the people. Conferring the senators with too much power may create powerful oligarchy relatively unanswerable to the people. To reasonably eliminate such possibility, a upper house of a liberal democracy practicing bicameralism has only the power accept or reject law proposed by the lower house. The upper house itself cannot introduce or amend any law. It is not an agenda setter.

It has to be noted bicameralism itself suffers from status quo bias. Whatever the status quo, bicameralism in the form expressed here is still a moderator of democracy. Like democracy, it is a tool and it is not an end. For liberals, the only end is liberty.

Categories
Sports

[1328] Of Ajax wins season opener yet again

Only one goal differentiated between the winner and the loser and Ajax came up on top for the third consecutive time against PSV:

AMSTERDAM, Aug 11 (Reuters) – Spaniard Gabri struck two minutes before halftime to guide Ajax Amsterdam to a 1-0 victory over PSV Eindhoven on Saturday, earning their third consecutive Dutch Super Cup. [Ajax land Dutch Super Cup thanks to Gabri goal. Theo Ruizenaar. Reuters. August 11 2007]

The next match for Ajax will be the third qualifying round of the UEFA Champions League against Slavia Prague. Ajax last met a Czech team in the 2006/07 UEFA Cup tournament group stage; the game against Sparta Prague ended up scoreless. About a year earlier, the Ajax and Sparta met in the group stage of the Champions League: Ajax won a game and drew another with the Czech.

For the whole season in general, Ajax will be without Babel; Liverpool bought him for approximately EUR17 million. Another star that could leave Ajax is Sneijder. That however could only happened if Real Madrid could come up with EUR27 million:

There were reports this morning that an agreement has been reached over a 25 million euro move.

However, it has since emerged that Real Madrid and Ajax are still separated by 3 million euros.

Los Merengues’ final offer of 24 million euros has been turned down, with Ajax demanding 27m in order to let their star midfielder go. [Sneijder Move In Doldrums As Ajax Demand 27M. Goal.com. August 11 2007]

That might be simply be a rumor because:

20 July: Players coming or going? That’s news. But a player staying? That’s normally not very spectacular news, but there are exceptions to the rule. Wesley Sneijder had some big news to announce at a special press conference in De Lutte today: he will stay at Ajax for another season. “This decision gives me peace of mind,” the 23 year-old midfielder said. “We can have a great season with Ajax. We’re going for the title and I believe we can reach far in the Champions League.” [Sneijder has made up his mind: “I’m staying”. Ajax USA. July 20 2007]

Kenneth Perez is another player that left Ajax. He had problem the manager Henk de Cate. I think the fact that he went over to PSV expressed that problem rather well.

Huntelaar, possibly Ajax’s best buy in recent years has also been heavily subjected to rumor but the player himself has stated that he will stay at Ajax at least another year:

“People have said to me: ‘Are you sure you don’t want to make the step?’ So I gave it some thought and consciously decided that I don’t. I want to develop in Holland for another season. After that, a move abroad could be more logical. The most important thing is to keep an eye on your own development: it should continue at the right pace. Right now, I feel that I can still book progress in Holland, in every way.” [Sportweek Magazine via AjaxUSA. July 2007]

At the moment, I could only identified a few players that have been with Ajax since players like Zlatan Ibrahimovic, Rafael van der Vaart, Steven Pienaar, Nigel de Jong, Hatem Trabelsi, Julien Escudé and my favorite, Christian Chivu played together. They are Maarten Stekelenburg, John Heitinga, Thomas Vermaelen, Hedwiges Maduro, Wesley Sneijder, Jan Vertonghen and Nicolae Mitea. While that era comes nowhere to the glorious mid-1990s, I really miss that team.

There are new players too though not as much-celebrated as Babel, Sneijder and Huntelaar. One of them is a youngster Luis Suárez of Uruguay. I am unsure how good he is but Uruguayans seem to have a lot of trust in him. First brought to the Eredivisie by Groningen, Ajax managed to secure the player’s service by compensating Groningen with more than EUR7.5 million.

And then there is Dennis Rommedahl, a former PSV player and one thing I remember about him is that he is a fast winger. I am actually feeling quite uneasy about Ajax and PSV reusing each other players but I suppose the Kluivert-Stam thing kind of turned out okay, for Ajax at least.

Other new players include Jurgen Colin as well as a couple others from the Youth squad. The young player to watch is possibly Gregory van der Wiel.

Let us see how this new team will perform.

Haha, let us see how Feyenoord will perform! I can’t wait to screw them again and again, through and through!

Categories
Economics

[1327] Of that rubbish that is technical analysis

When I first got back to Malaysia, I had a few job offers and one of them was with a small Japanese broking house in Kuala Lumpur. When I thought of broking house, I told myself, finally, a chance to put all those silly call and put options calculation into practice. Instead, I discovered what nonsense chartist brokers speak in; the way they work is so repulsive and that became one of few jobs that I am glad that I gave a solid no.

I always find it surprising how elaborate technical analysts or chartists go to extrapolate past prices into the future without any regard to fundamentals of companies. What is more shocking is the number of people in the public that believe in sophisticated senseless rationale and jargons used by chartists to predict future prices. Just open the business section of any local mainstream newspaper and observe how many chartists speaking bullshit there. But then again, these newspapers take feng shui seriously…

I have a real issue with individuals that try to forecast the economy through feng shui but I am going off tangent.

Anyway, how senseless is technical analysis?

Two of the common jargons used by chartists are support and resistance lines. Chartists believe — I stress: believe. You know, like tooth fairy godmother kind of thing — that these are the lines which prices find it hard to cross. But how do they derive these lines?

They basically choose a time frame at their wimp and then draw a line that corresponds to a couple of local minimums, or maximums, depending whether one is referring to support or resistance. After drawing the lines, chartists pretend that prices would have a hard time crossing the lines. If prices do go over these lines, chartists would find new lines based on past prices and say the same thing all over again. The problem with this is that these lines almost never able to help in making reliable forecasts.

In fact, these lines are so ridiculous that anybody could draw it. You do not need a broker to draw a freaking straight line for you. Go ahead, try it yourself. You can do it.

Another term, which I hate so much is correction. What the do they mean by correction? Do they mean somebody made a mistake in recording of prices? The only correction to be made is to their support and resistance lines, which by the way, are never right in the first place. Prices reflect the available information at a particular point of time. If information changes, so would the prices.

As if these support and resistance lines are reliable to forecast prices, chartists have the cheeks to even forecast their forecast! They call such forecast of forecast as pivot point calculation. I call it bullshit.

I do admit that superficial forecasting like this may hit the bull eyes from time to time. However, it is so only when enough people actually believe in that rubbish; very much self-fulfilling prophecies. Or mostly, it is just coincidence. At least one third of the time, a chart could get it right because of pure probability, not due to piercing insight.

In actual fact, prices depend on firms’ fundamental information like growth expectation and ability of management, not past market prices. Past market prices only reflect past information and do not incorporate relevant new information. That is why forecasting future prices cannot be done by reading past prices. If chartists are so good, tell me, how many chartists predicted the fall of Transmile from RM14 to merely RM4?

Oh, oh. Please do not tell me the support line right now is somewhere above RM4. And please, do not compare technical analysis with econometrics. Most of these chartists do not have an idea what time-series analysis is.

I will say this and I will say this only once: technical analysis or whatever you would like to call it is not economics.

Categories
ASEAN

[1326] Of 40 years of ASEAN

Public domain.

Hail the coffee shop.

Categories
Economics

[1325] Of the FOMC sits today

Though reports have speculated that the Fed will leave the rate at 5.25%, recent jitters might convince the Fed to slightly trim the rate.

The FOMC sits today. So, brace yourself.

For me personally, the last few weeks have been miserable. What was a 20% returns portfolio now gives only nearly 1%. Sigh…

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

p/s — the rate stays:

US interest rates have been kept on hold, despite mounting fears about the state of the economy.

Analysts had widely predicted the US Federal Reserve would leave rates at 5.25% for a 13th month, and that was the unanimous verdict of the Fed panel. [US interest rates left unchanged. BBC News. August 7 2007]