Tag: The Malaysian Insider

Categories
Economics Society

[2259] Of more open immigration as a source of growth

Foreigners from poorer countries working in unglamorous low-skilled industries in Malaysia have it tough. Stereotyped, some Malaysians associate them with the worst.

They are blamed for various problems — from the high crime rate to stagnating wages — while their contributions to the local economy are ignored. Seeing low-skilled foreigners as a source of trouble, there are Malaysians who want to limit the number of these foreigners in the country.

In times when economic growth is an obsession, that protectionist sentiment needs to be kept in check. It needs to be kept in check because immigration can be a key to economic growth.

More generally, population growth can lead to economic growth. High population growth rate enlarges the size of an economy in absolute terms. In this respect, immigration is the easiest route to take.

That is not the main reason why immigration is a powerful tool for long-term economic growth, however. Instead, it is the potential of their children along with ours.

The larger a particular society is, the likelier it would organically host inherently exceptionally talented individuals. Creation of talents does depend on multiple factors such as quality education quality but it is impossible to deny that some people are exceptionally brilliant compared to others. In a perfectly level-playing field stripped of other effects, these individuals would distinguish themselves from the masses, regardless of environmental factors.

Economist Robert Lucas once explained this to demonstrate the link between population growth, technical progress and economic growth. He wrote: ”If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis, I would not do it for fear of losing Mozart in the process.”

These highly talented individuals would contribute to society and make it richer. By richer, it is not only in terms of material wealth but also other aspects that make life worth living.

If Malaysia is to enjoy the benefits of a larger population in the long run, it has to adopt a relatively open immigration policy. This can easily be done by granting productive foreigners who have spent considerable time in the country a pathway to citizenship, or at least a shot at permanent residency.

Some may consider this as an overly liberal policy. It is not and in fact, it is a realistic policy. Consider for a moment that there are more or less two million foreigners in Malaysia. That figure is before accounting for illegal aliens. One surely cannot believe that the government can reduce the number by a significant margin, much less boot of all of them out without hurting the economy.

Many of them have lived in Malaysia for some time. Many do speak Malay. They are acclimatized to Malaysian culture. In other words, the cost of accommodation and integration for them and for Malaysian society would not be too great.

At the same time, Malaysia does not have a comprehensive welfare system, which is a typical barrier to open immigration policy. As new citizens, they will have to work their way through. They have the necessary motivation to work and to contribute to society. This reduces the short-term cost of such liberal policy.

Implementation of the liberal policy may even give a short run boost to the local economy. Foreign workers face radical changes in their future given that they have to return to their home country once their stay permit expires.

It is reasonable to speculate that that places a limit on their spending within the local economy. If one has no future in the country, one has little reason to spend too much in that country — little incentive for them to undertake large, long-term purchases or investments at individual levels.

If they are given the chance to pursue Malaysian citizenship or permanent residency status, and if such speculation is a fact, then that limit could be removed. This could boost private demand in Malaysia.

In fact, some of these foreigners have proven to be entrepreneurial sorts. Citizenship will grant them security. That encourages them to establish private enterprises, which can only enhance the vigor of the free market and reduces the need for government involvement in business, if there is ever a need for such statist involvement in the first place.

This cannot be bad for the local economy in both the short and long run.

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

First published in The Malaysian Insider on October 1 2010.

Categories
Liberty Politics & government Society

[2243] Of discuss, debate but do not threaten

Opinions abound and they are bound to hit some sensitive nerve. When it hits, there goes another police report. There goes another demand for an ISA arrest.

The right-wing group Perkasa has been at it for some time now, calling for the arrest of various individuals for challenging what the group considers as Malay rights. Leaders of MCA and MIC meanwhile have lodged police reports against Perkasa for calling for the abolition of vernacular schools. An Umno politician recently said that nobody should question the existence of these schools because the founding fathers had agreed to it — nobody should question it; neither such an ultimatum nor threat has any place in a democratic system that cherishes freedom.

Some debates are engaging in that there are outstanding ripostes to brilliant arguments as opposing sides try to outwit each other. An exploration of ideas happens along the way to awe both participants and spectators. They are well-researched and well-argued. Malaysia requires this kind of debate for it to take the next step into the future confidently. We have the infrastructure and the institutions to take that step. What we lack is the culture. The exchange of threats reflects that.

The ones taking place in Malaysia are unimpressive by any measure. There is no witty riposte. There is no brilliant argument. There are just people who disagree with each other so badly that they want to silence the other. They are unable to conjure attractive thoughts to undermine the others’ arguments. They are not creative enough to convince the others and the spectators why they are right and the others are wrong. All they can muster is ”shut up or else.”

Worse, some of these arguments are made by members of the ruling coalition. One would expect more from them, given that they are driving the car.

When an argument is really a thinly veiled threat, it betrays something about it or those who make it. It is a weakness of intellect or laziness in thoughts. The gears in their heads stop running and their muscles begin to flex.

If this was the dominating atmosphere on the fringes, it could all be ignored safely. They can flex their muscle all they want in dark corners populated by cuckoos. But all this is happening in the center of the public arena.

It is because it is taking place in the centre that this lamented trend cannot be tolerated. It creates a climate of fear that crowd freedom out from the center.

No one in Malaysia needs any reminders that multiple issues need resolutions. These are old legacy issues and problems we inherited from our founding fathers.

None can claim to know what the eventual sustainable solutions are. What is true is that the way for us to begin to imagine those solutions is by being free to debate all issues with reason, not by resorting to threats.

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

First published in The Malaysian Insider on August 27 2010.

Categories
Liberty Society

[2238] Of why do we have poster wars?

In Waterloo, which is about 20 minutes to the south of the central business district of Sydney, a man in his mid-30s approached me. He offered me a leaflet. The leaflet more or less says ”Vote Liberal.” Although I cannot vote in the upcoming Australian federal election, I accepted the leaflet out of curiosity. Apart from that, it has been quiet here in Australia despite the election being just less than a week away.

Let me rephrase that and stress what actually interests me. I do not see too many posters around.

A question lingers in my head. Why is that so?

Without access to newspapers, television and the Internet, it would take an effort to realize that Australia is in its campaigning period. The atmosphere in the streets and in the city right now is no different from any other typical day. People just mind their business, as if the upcoming election is a minor distraction.

Contrast that to Malaysian elections. Election time is always carnival-like in Malaysia. It is noisy and it is colorful. Loud speeches will blare into the night. More strikingly is the poster war. Colors representing major political parties will decorate the streets. Once it is election time, you will know it, even if you are apolitical.

Some Australian friends of mine try to explain this phenomenon to me by stating that Australian politics is boring. It is really a contest between two uncharismatic politicians representing two unexciting political parties, they say. Australians are not entirely excited about it. On top of that, I live in a safe seat for Labor. There is little contest to be expected. In other words, the level of excitement translates into a poster war, or lack of it.

That explanation does not explain my experience in the United States. I lived in Ann Arbor during the 2004 presidential election. It is an overwhelmingly Democrat town. I do not remember seeing too many posters hung in public places but the election was still electrifying.

One may expect infrastructure to have some part in causing poster wars. If the communication infrastructure like television and radio is unable to relay messages, posters are effective for the job.

Now, the US and arguably Australia have a more developed communication infrastructure than Malaysia. As far as Kuala Lumpur is concerned, the level is comparable. Yet, if one wants to witness a poster war, the Malaysian capital is the place to be. Or compare Kuala Lumpur with some rural area like Ijok.

If infrastructure was an issue, Kuala Lumpur should experience less of a poster war compared to other places. In fact, there were poster wars everywhere in most previous Malaysian elections that I care to remember. Thus, the state of infrastructure does not provide a satisfactory explanation.

Being a libertarian, I find it inevitable to eventually resort to a libertarian explanation and I think it explains the phenomenon of poster war better than others do.

The libertarian explanation goes like this. Non-Barisan Nasional parties face restrictions in terms of access to the mainstream media. The restrictions naturally encourage individuals and parties to look for alternative avenues to spread their political messages or to introduce their candidates to voters. Posters and the Internet are two avenues relatively free of restrictions in Malaysia.

In Australia and the US, all parties have considerable access to the mainstream media.

Thus, there is less need for a poster war.

This may be useful in addressing the problem of a poster war. On the whole a poster war can be entertaining, more often than not those who participate in it tend to overdo it.

When you are looking at a road sign for direction and you read ”go right for Barisan Nasional or go left of Pakatan Rakyat” instead of KLCC or Bukit Bintang, you know somebody is being overzealous about those posters.

With fewer restrictions to access or even entry into the mainstream media, the problem of too many posters may be solved without resorting to more rules and regulations.

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

First published in The Malaysian Insider on August 16 2010.

Categories
Economics Liberty Politics & government

[2235] Of hitting the brakes of subsidy liberalization

I am generally in favor of subsidy cuts in Malaysia. Yet, I hesitate to support the recent liberalization.

The economic rationale for liberalization is clear. Public discourse on this front has seen enough progress that liberalization is a popular position to take in Malaysia.

Let us recap the most commonly cited arguments.

Firstly, the subsidy program has an opportunity cost, as with all policies. If a government spends on one particular program, it necessarily means not spending money on others. Moreover, blanket consumption subsidy is probably the worst of all policies in terms of opportunity cost.

Secondly, there are better policies — cash transfer or tradable quotas for the needy are two examples — compared to outright subsidy. These alternative policies can address welfare concerns more efficiently.

Thirdly, the subsidy program has to be financed. That means taxation. While taxation is required to maintain a government, the level of taxation can be controlled to accommodate other concerns. There are various reasons why a low-tax environment is favorable. A bloated subsidy program does not help in this aspect.

Finally, together with a subsidy program, multiple suffocating supply and demand control regimes typically exist to support the program. As a result, the market becomes inflexible as more and more controls are set in place. The inflexibility causes hardship to more individuals than necessary.

The subsidy cut appeals to these arguments. If these were the only concerns, I would wholly support the liberalization exercise.

But it is not.

Two pillars form the basis for my support for liberalization. One is economic concerns. The other involves concern for freedom. Specifically, it is the idea of small government.

The weight I put on these two factors changes from time to time according to situation and the situation has changed since the last time subsidy liberalization took place. The size of subsidies and the drag these place on government finance are less of an issue today compared to a year or two ago. That convinces me to place more weight for freedom vis-à-vis economic concern, although the two concerns are not mutually exclusive most of the time.

While liberalization satisfies the economic side of the balance, the desire to see a reduction in government size is unmet.

Take the Prime Minister’s Department, for instance. Member of Parliament for Bukit Bendera Liew Chin Tong shared recently that the size of the department has more than doubled in less than a decade. The statistics regarding the size of the civil service and the government as a whole are more harrowing. All this contributes to the structural fiscal deficit that Malaysia suffers from.

The deficit caused by rocketing expenditure is an indictment of a fat old man called the government. The current government has announced its intention to reduce it, presumably by reducing government expenditure. Whether the plan will be successful is another matter altogether.

Amid the liberalization and other government initiatives that include the formation of new government-linked companies, I have a disturbing narrative at the back of my mind: Effort to free up resources is aimed at merely funding government expansion in other areas.

It is hard to predict the net effect but experience does not encourage much hope. One possible outcome is a scenario where the areas of expansion require a more active government hand compared to the one where the government retreats.

Already, government supporters are using the opportunity cost argument eagerly to justify the recent cuts. They say the government will put the money in good use. Good use or not, they are setting the ground to use the retreat as a justification to expand the other sides of government.

The opportunity cost argument is not exclusively used by government supporters. Opposition sympathizers and others do have ideas on how to spend the money. Politics may create a trade-off between economic concern and freedom in the end.

I fear that, and that fear is holding me back from supporting the recent liberalization.

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

First published in The Malaysian Insider on August 4 2010.

Categories
Politics & government

[2231] Of fluid Australian politics

It happens once every three years. That is how often the Australian Federal election has to be held. That is probably why Australian politics is as fluid as it is today.

Just how fluid is it?

Consider the fortune of Kevin Rudd, the Labor Party and its opponent the Coalition, which swung back and forth all within just a year.

In weeks prior to the ouster of Rudd, it was clear that he was becoming increasing unpopular. This is in stark contrast to the atmosphere a year ago when he was wildly popular.

Meanwhile, the Coalition — made up of the Liberals and the Nationals in the opposition — was squabbling among itself. The source of tension was Labor’s proposed carbon cap and trade legislation. Labor did not have the numbers to get it passed in Parliament. To do so, they worked with some within the Coalition, including Malcolm Turnbull, the former Opposition Leader.

It was a masterstroke by the government. While Turnbull and his fraction within the Coalition supported the legislation in one way or another, many others in the opposition did not. So bitter was the division that the Labor government under Rudd needed not do anything to come out on top. The Coalition was on self-destruct mode.

Rudd and Labor even had the option of dissolving Parliament if the legislation failed to pass. Projection at that time suggested that the Coalition could be wiped out if an election was called.

The legislation did fail. All Rudd needed to do was to finish it. Yet, he did not exercise the option. In retrospect, he should have.

After labeling the climate change as the forefront issue of his administration, his failure to get it through doomed him. There were other issues like government spending, refugees, migration, censorship and the mining tax of course but climate change was truly the battle the turned the tide against him.

He met with opposition when he first introduced the legislation on climate change. That was inevitable. When he decided not to push it, he ended up angering everyone, including the supporters of the legislation. It was yet another example of the peril of flip-flopping.

He should have called an election when he had the chance. It would have saved him from the flip-flop, the embarrassment and the backlash. Furthermore, it would have prevented the Coalition from reorganizing itself.

Tony Abbott replaced Turnbull. By the time the government tried to introduce an unpopular mining tax, Abbott went full steam ahead on the offensive along with the mining industry.

Combined with Labor’s failure and a resurgent opposition, Labor’s approval rating fell. This was worrying to Labor because election had to be called soon. The balance tipped so much that the factions in Labor decided that Rudd was a liability. The issue on tax sealed his fate.

At first, there were just rumors. Australian media were highlighting the popularity of his deputy Julia Gillard. Later, it happened: the first female prime minister for Australia.

The first thing she did as prime minister was to — so-called — clear the deck. She undid some of Rudd’s major initiatives and helped Labor salvage some points in the approval rating polls. The factions in Labor, nervous about going through an election, bet on Gillard and it worked. That is, it worked in a sense that Labor is now predicted to have enough support — just barely — to form the government in the next term.

Of course, it is yet to be seen who will form the next government in Australia. Pundits are expecting a close election. It appears that although Gillard is more popular compared to Abbott, the support for her has not translated into support for Labor so far.

That will depend on the rollercoaster ride in the next four weeks or so.

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

First published in The Malaysian Insider on July 26 2010.