Categories
Economics Liberty

[1647] Mengenai adakah Tony Pua seorang minarkis?

Ahli Parlimen Tony Pua berjaya menanyakan soalan yang dekat dengan hati seorang libertarian beraliran minarkisme:

Ekonomi Malaysia sekarang amat bergantung kepada penggunaan kerajaan ataupun “public sector spending”, berbanding dengan negara-negara di Asia. Mengikut perangkaan daripada Merrill Lynch, sumbangan penggunaan keraajaan di Malaysia adalah sebanyak 24 peratus, berbanding dengan Taiwan 15%, Singapura 14%, Thailand 12% dan Hong Kong 10%. Pergantungan ekonomi Malaysia kepada sumbangan kerajaan adalah tidak sihat dan apakah langkah-langkah yang akan diambil oleh kerajaan supaya sumbangan penggunaan yang lain dapat ditingkatkan? [My First Supplementary Question! Philosophy Politics Economics. May 13 2008]

Beliau berjanji untuk menerangkan lebih lanjut tentang jawapan yang diterima beliau dari Timbalan Menteri Kewangan esok setelah Hansard dikeluarkan oleh pihak Parlimen.

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p/s — Tony Pua berkongsi dengan para pembaca tentang jawapan yang diberi oleh Timbalan Menteri:

Apabila kita melihat dari segi GNP, kita melihat dari 2 sudut. Satu dari sudut output ataupun pengeluaran yang ini sumbangan dari sektor-sektor industri dan sektor-sekto industri sebagaimana kita maklum sektor perkhidmatan telah meningkat tinggi. Ini bermakna faktor key yang utama dalam pembangunan negara kita. Dari segi rancangan Malaysia, sektor perkhidmatan sekarang yang menymbang lebih kurang 53% kepada KDNK telah meningkat 59% pada tahun 2020 itu target negara kita.

Kemudian kita melihat dari sudut GNP dari sudut perbelanjaan. Perbelanjaan seperti mana yang saya nyatakan tadi, perbelanjaan swasta dari segi konsumer begitu tinggi iaitu pembelian dan pelaburan. Buat masa ini kita masih bergantung kepada kerajaan kerana kita sebuah negara ekonomi yang sedang membangun jadi kita perlu input-input kerajaan sebagaimana yang saya nyatakan tadi dalam RMK ke-9, kita belanja lebih kurang dalam RM40 bilion pada tahun 2007 dan seterusnya dalam koridor raya nanti kita akan laksanakan perbelanjaan lagi. Ini kita nampak perbelanjaan oleh pihak swasta lebih banyak dan tinggi berbanding dengan pihak kerajaan.

Di samping itu, kos ke 3 iaitu dari segi ekspot dan impot negara kita. Pada tahun ini, net ekspot negara kita hanya 0.7% dan ini dijangka akan level pada tahun hadapan kerana sepertimana kita tahu terjadinya re-section di dunia dan ia jadi leveling. [My First Supplementary Question! Philosophy Politics Economics. May 13 2008]

Yang pastinya, soalan tentang apa yang kerajaan akan lakukan untuk mengurangkan perbelanjaan awam tidak terjawab.

Saya tertarik dengan ayat berikut: “Buat masa ini kita masih bergantung kepada kerajaan kerana kita sebuah negara ekonomi yang sedang membangun jadi kita perlu input-input kerajaan…”

Saya tidak bersetuju dengan pendapat itu tetapi saya tidak berhasrat untuk membincangkan mengapa saya berpendapat sedemikian kerana saya kesuntukan masa untuk membincangkan perkara yang berat.

Walau bagaimanapun, nampaknya, pemikiran Keynesianisme masih lagi kuat di dalam kerajaan kita. Saya telah menyangkakan bahawa para Keynesian sedang ditendang keluar dari kerajaan tetapi malangnya, kesimpulan itu dibuat secara terburu-buru. Pembatalan perbelanjaan awam itu mungkin hanya satu permainan politik dan bukannya pengeseran dasar yang jujur.

Categories
Economics

[1643] Of Bernas is unbelievable

KUALA LUMPUR: Padiberas Nasional Berhad (Bernas) has blamed private commercial millers for the recent rice shortage in the local market.Bernas managing director Bakry Hamzah said private millers who controlled 55% of the local rice market had significantly reduced their production in expectation that prices would rise. [Bernas blames private commercial millers for rice shortage. The Star. May 9 2008.

Really?

Meanwhile, Malaysia spooked the global rice market:

CHICAGO, May 8 (Reuters) – U.S. rice prices soared 3-1/2 percent or 75 cents per hundredweight, Thursday’s daily maximum, after Malaysia bought a large amount of rice from Thailand and cyclone-ravaged Myanmar abruptly turned from rice exporter to a country in need of food donations.

[…]

“The Malaysian purchase was more than expected and sooner than expected … another good example of how aggressive rice buyers are right now,” a Chicago rice trader said. [U.S. rice soars 3-1/2 pct as Malaysia buys. Sam Nelson. Reuters via Guardian. May 8 2008]

Categories
Economics

[1638] Of revisiting minimum wage and food sovereignty

One of the tragedies of humanity is that of Sisyphus’. The boulder keeps rolling down the hill each time it has been pushed up.

From time to time, the same issues resurface, rejuvenating familiar debates once held in the past. Two of the issues which of great public concern at the moment, yet again, is minimum wage (no thanks to the Labor Day celebration) and food sovereignty. I have penned my opinion on both issues and in the spirit of recycling, they are:

  1. [1282] Of questioning the morality of minimum wage
  2. [1099] Of food sovereignty and comparative advantage

In the first entry, I oppose minimum wage while in the second entry, I appeal for an appeal to comparative advantage and not to food sovereignty.

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.

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[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?

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[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]