Categories
Economics Politics & government

[2959] Budget 2023 and Undi Banjir are examples of BN irresponsibility

Barisan Nasional believes the yet to be approved Budget 2023 is an asset to them, with their supporters are taking it as their election manifesto. Unfortunately for them, a yearly government budget is no replacement for a 5-year manifesto. To me, using Budget 2023 as a manifesto, with its process halted midway, is a sign of irresponsibility.

Irresponsibility, because we are no longer living in at a time when BN is assured of returning to power. It could be PH, PN or any other permutation out there. If a different government gets elected, the budget process will have to be recalibrated. Any government will want to execute their own agenda. Indeed, even if BN gets into power, there is no guarantee Budget 2023 will not change. Even BN PM candidate is uncertain, with assurance given incredible.

The smooth running of the government should sit beyond partisan politics, but BN places that below their political fortune. The risk of disruption to the budget process is of no cost to them, but only to the people of Malaysia at a time when the global economy is risking recession.

Such irresponsibility of course should be apparent to many in the past two years through various instances of double standard in the application of rules during the Covid-19 pandemic that brought so many unnecessary deaths.

But such irresponsibility should not be a surprise. After all, BN wants a general election during flooding season. Just like during the pandemic, they are willing to gamble our lives for their partisan benefits.

The Budget 2023, unapproved, and risked being redone, is just yet another example of BN irresponsibility.

Categories
Books & printed materials Politics & government Society

[2958] Reviewing We Are Marching Now

I try to read (and finish) at least a book a month. That is a slow, given there are hundreds of titles in my to-be-read list. So long is the list, that I have stopped updating them altogether, realizing keeping track of my appetite is a futile exercise. But when We Are Marching Now by Danny Lim came out, I put it right into the list and bought it when the author launched his book at Central Market in downtown Kuala Lumpur. I paused my current read—Bill Hayton’s The South China Sea, which is about the history of China’s territorial claim in the area—and started going through my latest purchase.

I enjoyed the book. It was an easy read.

While reading it, I struggled to think of similar books published in Malaysia. By similar, I mean a book in the style of investigative journalism. There is Billion Dollar Whale but that is not a Malaysian publication, though it is about the country. While I have not read it, Money Logging by Lukas Straumann is another. I have not read too many investigative genre myself. My last read before Billion Dollar Whale was Bob Woodward’s The Agenda about the Clinton administration.

I might be wrong, but it does look like We Are Marching Now is one of its kind, as far as Malaysian publication is concerned. If not, then it has to be a very rare breed at the very least. That makes it refreshing within the context of local publication.

As for the topic of the book itself, I have a short remark: the book is about the genesis of Bersih, understood through various interviews the author had with personalities involved in the early days of the organization. I think the author did a good job weaving the interviews together to form a coherent narrative.

Additionally—others have mentioned this—it is worth highlighting that political parties played a crucial role in making Bersih a success.

I think this is an important point to be remembered by civil activists who value non-partisanship above everything else. It is not easy to gain public support and then corral it towards a cause. More often than not, political parties excel at that, more than anyone else. Yes, party politics are messy and self-interested. Events in the past two or more years have been nothing but angering. But when it is done right, these parties could be a powerful force for good, as in the case of Bersih.

I have been to all of the Bersih protests, and here, I want to leave you with, possibly, the favorite of mine, out of thousands I snapped from those protests:

By Hafiz Noor Shams. Some rights reserved. Creative Commons. By attribution.

Categories
Economics Politics & government

[2957] Pakatan Harapan should avoid kitchen sink manifesto

Election is nearing and among policy-minded voters, it is not difficult to spot manifesto discussions. As someone with some implementation experience in government, let me say the last Pakatan Harapan manifesto was difficult. I knew this before I was pulled into the whole business: I reviewed the manifesto and summarized it as the following: the economic plank was “difficult to stomach wholly” but the other parts, particularly the institutional agenda, were what we needed. Given my concerns were institutional in nature, I was willing to give a blind eye to the economic plank, and support the institutional aspect wholly.

Looking back, the economic manifesto rode on popular anger quite effectively. That explained the kitchen sink approach taken by its authors. GST, monopoly, living costs, corporate corruption and other concerns were all meshed into one big document, which did not jive together. The authors knew what they wanted.

Unfortunately, riding the wave, and actually executing the policies were two very different things. Mahathir famously said ‘we’ did not expect to win, and so did not expect to implement those promises. Manifesto bukan kitab suci; manifesto isn’t a holy book. That highlighted the difficulties associated with the economic aspects of the manifesto, especially after GST was abolished just weeks after the 2018 election, and more importantly, before the Finance Minister was sworn in to bring SST back.

The next election, Pakatan Harapan can do better. They need to do better because the same mid-2010s anger is no longer there. There is little to match that economic anger, save the stubborn but relaxing global food prices and rising recession risks.

If I were to write the manifesto all by myself, I would reiterate the institutional aspects and reuse a good chunk for the 2022/2023 general election, and come up with a new one for the economic side. On the economics, I would reject the 2018 kitchen sink approach. I would instead set up overarching national goals. What do I mean by that?

In the kitchen sink approach, almost everything economic-related concerns were siloed off with little concerns to bigger concerns. One way to put it simply is that the proposed solutions were necessarily single-minded and siloed that the same proposed solutions ignored their effects on other things, like government finances and economic growth. At the implementation stage, at times this left those solutions contradicting each other, leaving individuals implementing those siloed solutions fighting each other and accusing the other side as blocking manifesto fulfillment. For instance, when Pakatan Harapan abolished GST without regards to policy sequencing, notwithstanding the previous problem with refunds (truly, the additional government revenue was lowered than BN admitted), how exactly the government would finance other parts of its economic promises? PTPTN? Highways? Petrol subsidies?

As you can see, the kitchen sink approach works from funding supply first, and then effectively takes the funding demand as an afterthought. This caused the troubles Mahathir identified so early. You ended up with insufficient funding supply to meet rising funding demand.

In the overarching national goals, it should work the other way round: start from funding demand-side first, and then work the funding supply-side afterwards.

To do this, we have to ask ourselves, what do we want for Malaysia?

Do we want to maintain our largely free, government revenue-financed healthcare system?

Do we want a welfare system given the damage Covid-19 has done to the financial security of many Malaysians?

Do we want a good education system? What kind?

Do we want better cities? Transport policy?

Do we want stronger defense?

Do we want to climate change infrastructure? Energy policy?

What?

This requires deep discussions among many parties, from lay users to experts. It has to be multidisciplinary, exactly so to avoid the silo problem that the 2018 Pakatan Harapan manifesto suffered (and contemporaneously, the Ministry of Health’s ongoing white paper).

And this way, we can be honest when it comes to taxation: taxes have to rise.

The truth few willing to say loudly because it is unpopular is that the Malaysia government lacks funding to do a whole lot of things due to low taxation. We can raise the deficit ratio, but even so it would not be enough to meet various legitimate demand associated with basic functions of government like health and defense (let us not talk about unorthodox fairy tales about ‘printing money’). For a country aspiring to be a “first-world” with worsening demography (but still young), our tax (and the bigger government) revenue to GDP ratio is low. That fact has caused unnecessary outsourcing of basic functions to the private sector. The same fact is the reason behind a whole lot of off-budget borrowings and spendings, which are nontransparent and significantly raises corruption risk in an environment where underfunded institutions cannot play their check-and-balance role properly.

To tell this truth, you have to tell the funding demand-side story: what do you want?

Of course, not all wants can be entertained lest the same problems besetting the 2018 manifesto would come back. You cannot want a well-run public transport system while wanting blanket petrol subsidies and eye-roll-worthy car duties cut. You cannot want a working revenue-funded health system while supporting tax cut for private insurance and spending at private hospitals. You cannot want a fully-funded education system while supporting tax cut for private education institutions. You cannot want a healthy Malaysian population but keep sugar cheap. You cannot want a good road while wanting a low road tax and cheap petrol.

Manifesto authors have to choose instead of putting everything into the kitchen sink. Here is where leadership is needed: decide on the policy direction instead of a Hail Mary rush.

And also, of course, manifesto has to be popular. It has to have its hooks. But those populist promises can be brought in line with the overarching themes. For example, have public transport cheap, with discount and vouchers and everything, and admit the system will always be in the red, to which the government will have to fully fund it directly (leaving financial performance for public transport system second in priority to physical performance).

Be direct about the funding demand, and through that, we can be honest about funding supply, and taxation.

I should add that the institutional aspect of the 2018 manifesto worked because it had an overarching goal: improving the overall check-and-balance mechanism and all of them are linked to one another in one way or another. It was not a kitchen sink.

To summarize it all: the next manifesto should be driven by overarching goals, instead of a laundry list of grouses. In other words, do not throw everything into the kitchen sink.

Categories
Personal Politics & government Society

[2956] Why does sending Najib to prison feel so empty so soon?

As an 18-year-old a lifetime ago, I thought Sijil Pelajaran Malaysia was the end of it. The ending. Not quite death of course, but the emphasis placed on the national examination was so great that it felt like a be-all and end-all. A terminal. Yes, there was life afterward, but that exam determined everything. Do well, and you would get to go to a good school (if you are really lucky, then you would get to go to a really great school across oceans) with some kind of scholarship. Do badly, you would be destined to mediocrity.

I did well, but I quickly learned SPM was not the last station. I went to a good school with scholarship and all, but it was not smooth sailing. University life was hard, even as I was privileged to have experienced it. I learned I was wrong, and I learned something new: life is a series of challenges. A celebration might be appropriate for surmounting each challenge, but there will always be another barrier, sooner or later.

I learned it the physical way when I unwisely went on a major hiking trip to Yosemite during my junior year. Ill-prepared, I came down the Tuolumne Canyon, all the way down to the river at the bottom to soak my feet in cool flowing mountain water. It was a long canyon 20, 30, 40 miles in length, with rugged terrain, high cliff on both sides, and the Milky Way bright up in the sky. No artificial light, no vehicle, no phone reception. The destination was upriver. Each climb to a local peak only revealed a steeper trail beyond. It was a cascade of falls that seemed to never end. If ever I entertained of idea of suicide seriously, it was there. I wanted to give up and jump down. The fatigue was too much. It felt hopeless. But somehow, I made it, with assistance of two strangers near the very top. After a hearty meal, I zoomed to Los Angeles and returned to Ann Arbor to spend my summer more banally by waking up late and play computer games all the time, inter-spaced with anime-watching and soccer games, while waiting download of large files to complete.

The jailing of Najib Razak feels a little bit like SPM, or one of those falls in that Tuolumne cascade. It was a journey of roughly 10 years, which, a huge chunk of it spent in despair and hopelessness. My little part in the whole saga seemed meaningless. The 2018 election came, and there was euphoria, but hopes were dashed soon enough. It was a miracle Najib was found guilty four years later, and his appeal dismissed. And let us not kid ourselves, he could have escaped his deserved fate if he had pushed the political button harder. Government fell twice, partly because of Najib, and Zahid, who were desperate to outsmart the system.

But the day after, life feels empty. There is a slight hopefulness, but that is it. I take it as a reminder that life is a series of cascades. A series of challenges.

The system works this time, but only because we worked to make it work, and then be let to work. There are too many times when the system has been made to succumb to corruption. Never forget that. Institutions are not automatic machines. It has to be manned (and womanned?) by good people. And Najib still has his avenues to escape his punishment.

And it is not just him who is corrupt. His collaborators are still out there, corrupting our society still.

The long struggle is the reason why, the victory yesterday, feels hollow so soon. There is still a long way to go, mountains to scale.

Categories
Books & printed materials Economics Politics & government

[2955] Reviewing The Republic of Beliefs

Do laws matter? How do they matter? When do laws work? Why should a law work just because it is written on a piece of paper?

Kaushik Basu explores these questions in his 2018 book The Republic of Beliefs: A New Approach to Law and Economics. He utilizes game theory to answer the questions. Basu is an economist with wide experience in public policy.

By Hafiz Noor Shams

From the very start, he is skeptical of the power of the law as understood through Hobbesian lens. He largely rejects the idea that laws function primarily through the threat of force. In place of coercion, he places beliefs firmly at the center of the answers, with possibility of coercion working only to modify beliefs. We are governed more by beliefs, and less by coercion.

To convince his readers, he lays out the basics of game theory. Luckily for most of us, he does not write down too many formulae. In doing so, he avoids turning a good chunk of the book into a dense game theory textbook. Charts are aplenty to deliver the same messages mathematical formulae would. All I am saying here is that the book is quite readable.

The point of the crash course (or review for those familiar game theory) is to ease readers into the idea of focal points, a concept imported from psychology (was it? I am unclear here). Within the context of game theory, focal points are a subset of equilibria as understood in economics. It’s a signpost to coordinate responses. Once all prerequisites in place, Basu delivers his central thesis: laws work to push society towards a preferred equilibrium, out of many equilibria.

Laws alone do not create equilibrium. A law that forces society towards a non-equilibrium outcome will suffer from serious ineffectiveness. That ineffectiveness translates into frequent violations as rules are ignored, or circumvented via corrupt ways.

This is an important point to be learned by policymakers. I write so because I see lawmakers more often than not prefer non-equilibrium outcomes and propose complicated policy to address problems arising from such non-equilibrium. So complicated, that their proposals end up creating bigger problems (wink wink: chicken prices and palm oil subsidies in Malaysia).

Perhaps, this idea can be better explain through the problem of smuggling. Political commentators and even ministers (BN, PH, PN or whatever) have blamed the smuggling of something (cigarette, rice, gasoline, anything) on imperfect enforcement. And so, their solution is to put more money into greater enforcement. But the primary problem is not enforcement—though weak enforcement itself creates beliefs regarding (in)credibility of laws (but I will skip that part and encourage you to read the book for deeper treatment). It is about the law itself, which attempts to move society to a non-equilibrium outcome. And that non-equilibrium leads to corruption.

The prime problem, typically, lies in demand itself. Here, I believe Basu would claim, to fight smuggling, preference or behavior itself has to change. And behavior depends on beliefs.

More specific to Malaysian context, I think this is where attempt at ‘generational end-game’ for smoking will likely do more at curbing future tobacco smuggling than any ‘greater enforcement’ initiative would. There will be no cigarette to smuggle if people do not like smoking in the first place.

I think that (focal points) is the greatest insight from the book. But there are other points of interest.

One is the history of law and economics. The author goes back to Hobbes and Hume, but I am more interested in his treatment of modern history when Basu writes about neoclassical understanding of laws as provided by Gary Becker. Basu criticizes the modern economics approach towards law by stating a typical neoclassical model ignores the interest of law enforcers and other agents of the state (that include functionaries like judges and prime ministers). He zeroes in on the inconsistency of neoclassical understanding of law: citizens are assumed to be rational agents, but agents of the state taken as robots obeying everything they are told to do. In that way, neoclassical economists working on the intersection of economics and laws regularly sidestep the problem of corruption. Basu suggests, agents of the state should be considered as rational too, and their obedience should not be taken for granted. In that way, economists can tackle corruption problem more directly.

Despite his criticism of the neoclassical approach, Basu does not call for a complete culling of the school. Rather, he wants to improve those models by expanding it in a meaningful way. Indeed, the way he writes the book, it feels like a pioneering work built up on neoclassical approach.