Category: Economics

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Economics Politics & government

[1122] Of lefties’ unconvicing argument against FTA

Opponents to the possible Malaysia-US FTA come from various backgrounds and some they have expressed legitimate concerns against the FTA. When I met Ronnie Liu of DAP several months ago, he expressed transparency as a reason to object the FTA. I could accept transparency as as reason but yet, I am convinced that transparency is not the main reason behind DAP’s objection to FTA. This is because transparency was only mentioned after I demonstrated an inconsistency in DAP’s stance in a wider context.

There are many arguments against the FTA that are simply based on simple misunderstanding of economic concepts. I will not touch on that simply however. What I am interested in discussing is the inconsistent.

DAP opposes the Bumiputra policy, in particular the NEP, because it is discriminatory. I myself am against the Bumiputra policy due to how it prevents the market from working freely. But this is not about me.

Proponents of the policy cite that the Bumiputra and really, the Malays, need time to build up its capacity to compete against other economically superior ethnic groups. Hence, the protection and privileges given to the Malays. It is common for the other side, not necessarily DAP but the lefties in general, to come back and say such protection and privileges do not build up the competency the Bumiputa needs to compete against others; it only encourages complacency among the Bumiputra.

Despite not buying into the argument for Bumiputra policy as well as stating how the policy is not helping, many of the same lefties employ the same argument used by the proponent of Bumiputra policy to support protectionism and oppose the FTA. This group argues that Malaysia needs time to build up its capacity to compete against other economically superior countries. When proponents of the FTA cites that protectionism does not encourage Malaysia to become competitive but instead, sowing complacency, they shrug it off, seemingly implying that such inconsistency as a minor inconvenient.

In the case of Ronnie Liu, he ran away from the subject and cited transparency instead.

Lefties will need to sort that out if they are to convince others to oppose the Malaysia-US FTA. Else, lefties that oppose both the Bumiputra policy and the FTA are giving the supporters of Bumiputra policy a leeway. Perhaps, stripping the lefties that moral authority to talk about one issue or the other.

Categories
Economics Liberty

[1120] Of analogizing free market as democracy

It is Saturday morning and I just woke up from sleep. Being the internet addict that I am, within 15 minutes of consciousness, I was already log onto the internet, reading my bookmark, scouring for news or any interesting reading. Somehow, through random clicking, I reached Wan Saiful’s blog and found myself downloading “Apa itu Liberal dan apa itu Liberalisme?“.

I am not sure what I downloaded it in the first place. It might be caused by the launch of a book entitled, “Apa itu Pencerahan?“, a Malay translation of Kant’s “Was ist Aufklarung?“. Liberals that do not read German might be more familiar with its English title: “What is Enlightenment?” So, perhaps, I took the recurrence of the term “Apa itu… ?” as a sign; I need to read it.

So, I read it with relative ease. With ease because there is almost nothing new in the document; I, proudly, am familiar with almost all the ideas and the cited authors. So, it is dull except at the manner the author argues for free market, which I feel is ingenious.

On the fourth page, in Malay:

…Sebagai contoh, sebab apa percaya bahawa instituisi [sig] ekonomi yang bebas itu lebih adil, pertama sebab pasaran yang merupakan satu pilihanraya setiap jam dan minit. Contohnya A dan B jual nasi lemak, siapa yang menentuka [sig] A dan B boleh jual atau tidak? Yang menentukannya adalah pasar, peti undinya adalah pasar. Jika nasi lemak A tidak sedap dia akan kehilangan undi. Keadilannya terletak di sini.

Roughly in English:

…As an example, why free market institution is fairer than the other? First, the market is an election held every minute. For instance, who would decide A and B could sell nasi lemak? It is the market; the market is a huge ballot box. If A sold low quality nasi lemak, he would lose vote. The fairness of the system is here.

Though the idea is not foreign, I had never seen it stated in such an explicit way that links democracy with free market. I think this is the first time somebody explicitly uses democracy to justify free market.

Perhaps, such presentation of free market it is nothing more than an analogy. Nevertheless, this analogy could be used to entice fervent supporters of democracy that are neutral of the liberal-socialist divide towards free market and to a certain extent, liberal democracy.

Categories
Economics Environment

[1119] Of India to sell Malaysia 220MW nuclear reactor?

Now this is a news that we do not get to hear everything. Over at Bloomberg, there is a report that India is planning to sell a 220-MW reactor to Malaysia:

Feb. 27 (Bloomberg) — Nuclear Power Corp. of India Ltd. said it’s in talks to sell small nuclear reactors to Malaysia and other Asian nations once an international embargo on India’s atomic technology ends. [India Seeks to Sell Reactors to Malaysia, Indonesia, Bloomberg, Feb 27 2007]

Now, that would soften the what-the-fuck reaction I made after reading a news report that Uncle Sam would be alright with a nuclear-powered Malaysia, and even support:

KUALA LUMPUR, Feb 27 (Bernama) — The United States said today that it would not oppose if Malaysia were to pursue a nuclear energy programme for peaceful purposes. [US Has No Objection To M’sia Pursuing Nuclear Energy Programme, Bernama, Feb 27 2007]

In recent times, the notion of nuclear-powered Malaysia was probably first mooted in 2006 by Dr. Jamaluddin Jarjis. Therefore, this development in some way should not come as a surprise.

As for me, I am still undecided about nuclear power. The fact that nuclear power could help reduce greenhouse gases emissions greatly attracts many greens to it. It may be an exaggeration but currently as far as the nuclear option is concerned, there is a great schism within environmentalism. I personally am slightly leaning towards acceptance of nuclear power as a piecemeal answer to anthropogenic climate change.

There are two things that still prevent me from fully embracing nuclear as energy.

One is waste management. There is technology out there that could safely store the waste but it is very expensive to say the least.

Second is production cost. On cost, it is quite confusing. Some say nuclear-derived electricity is cheaper than coal or gas. Some say otherwise; if the cost of construction is considered, the price of nuclear-derived electricity is higher than coal or gas. In the US, opponents of nuclear power often cite that nuclear power only become viable after heavy govenrment subsidy. If the deal goes through through, perhaps we could compare the planned roughly RM 1.3 billion 300MV coal power plant in Sabah with a power plant that would utilize the 220MW nuclear reactor.

Further, if the deal goes through, the location of the reactor would be of great controversy.

Categories
Economics

[1117] Of Friday morning starts with free trade

Protectionists always argue that free trade hurts the poor. Professor Mankiw quotes the US Treasury Secretary Paulson as the US battles its own rising sentiment of protectionism:

Thus trade helps Americans provide for their families. When special interests seek protection in the name of low-wage workers, we should acknowledge that limitations on imports do not benefit the vast majority of Americans. They deny people the freedom to choose from a broader array of goods and services, and impose a cruel tax on people who rely on low prices to stretch their family budgets. The cost of protectionism falls most heavily on those who are least able to afford it — the poor and the elderly.

It should be noted that free trade means absence of trade-distorting policies which include tariffs and subsidies.

Categories
Economics Politics & government

[1115] Of it is best for BN-led government to dissolve the Parliament soon

I thought yesterday was scary when Shanghai’s benchmark fell about 9%. Yet, I thought it was a mere blip, some sort of a random walk that usually occurs for no good reason. The Dow Jones followed suit later but I thought it was a reaction to the Chinese performance. As of noon, today, the KL Composite Index has fallen nearly 6%. As a whole, it is not pretty for the region either. This might be the start of a vicious cycle and I am beginning to change my mind about the random walk.

I would like to see data on consumer spending to find out what is really happening though. If we truly are in trouble, consumer spending should start falling. It is only unfortunate that there is a lag in reporting.

Meanwhile, talks of recession are yet again running amok:

Still, traders’ dwindling confidence was knocked down further by data showing that the economy may be decelerating more than anticipated. A Commerce Department report that orders for durable goods in January dropped by the largest amount in three months exacerbated jitters about the direction of the U.S. economy, just a day after former Federal Reserve Chairman Alan Greenspan said the United States may be headed for a recession. [Stocks Have Worst Day Since 9/11 Attacks, AP via Yahoo!, Feb 27 2007]

Alarms have been sounded earlier. That is why I am somewhat skeptical of the feel good atmosphere the Barisan Nasional-led government is trying to paint currently. The economy was relatively good last year — I am willing to accept that much — but between the future and the past, we should concern ourselves with the former, first and foremost.

With a recession expected to hit the US, and — by virtue that the country is Malaysia’s largest trading partner and that Malaysia is hugely dependent on trade — Malaysia, strategically, I feel it is best for the BN-led government to dissolve the Parliament soon. Therefore, I am agreeing with the executive director of MIER, Ariff Abdul Kareem’s opinion.

The later the general election is held, the worse the economy would perform and the worse BN would perform in the election.

Nevertheless, of course, that does not prevent us from savoring the expected Bank Negara’s announcement on last year’s GDP.