Tag: happiness

Categories
Economics

[2858] Household income growth and Malaysian unhappiness

Some opposition politicians and supporters are prone to exaggerate when it comes to economic matters. Malaysia is bankrupt, there is no income growth, etc.

Those exaggerations make it easy for the Barisan Nasional government to disprove those allegations. But in its eagerness to do so, the government oftentimes denies that any problem even exists. This is unfortunate because the exaggerations are based on real worries on the ground. And the worries are based on real problems.

This is true when it comes to income growth of Malaysian households.

The Department of Statistics recently published its 2016 Household Income Survey, showing Malaysian households experienced average yearly income growth of 6.8% in 2015 and 2016.[1]

Minister at the Economic Planning Unit, Abdul Rahman Dahlan, pounced on the fact there was income growth and that the growth was faster than the inflation rate. He said “this debunks the popular notion that income in Malaysia is stagnant or income increment does not match the rising price of goods and services.”[2]

While he is right about income growth, he does not quite address the cause that made so many Malaysians ready to believe in the opposition’s allegation. And that cause is decelerating income growth.

Yes, income rose. But it did not rise as fast as it used to be. This I think is one of the sources of Malaysian unhappiness.

While household income grew 6.8% yearly on average in the 2015-2016 period, this is dramatically lower than the 12.4% average yearly expansion experienced in 2013 and 2014. Indeed, it is lower than growth in 2010-2012:

The drop was felt by Malaysians regardless of exaggerations. GDP growth was not doing well either in 2015 and 2016.

I drew the chart based on 15 household income surveys conducted by the Department of Statistics since 1979. There were earlier surveys but it covered Peninsular Malaysia only. Sabah and Sarawak were covered beginning 1976. I chose 1979 as the starting point because I had trouble getting CPI data up to 1976.

(I have to add for clarity, in the 1980-1984 period for instance, it means nominal household income grew more than 10% on average yearly, not that income grew more than 10% between 1980 and 1984. Huge difference between the two.)

As a side note, this chart probably explains why Abdullah Ahmad Badawi became so deeply unpopular, despite starting out so well. Abdullah was the Prime Minister from 2003 to 2009 and income growth during his years was terrible by Malaysian standards. And 1997-1999 were years of unrest in Malaysia, coinciding with the Asian Financial Crisis.

I am not going into the debate whether the 2010-2014 growth and subsequent 2015-2016 slowdown were due to the government or external factors. But the stark slowdown is real and it goes a long way explaining why Malaysians are so unhappy now. Well, partly, because there are other factors out there that include among others, the GST and those private accounts at Ambank.

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

[1] — The Department of Statistics actually reported the average growth as 6.6% yearly, not 6.8%. The 6.6% is calculated by using natural log. Given the context of the publication, I find the use of natural log as inappropriate and prefer to use compounded growth formula instead, which gives out 6.8% growth. What is the context? Percentage growth. Malaysian household income grew to MYR5,228 in 2016 from MYR4,585 in 2014. Using 6.6% as the growth rate in this context (MYR4,585*[1+0.66]^2) will not get you MYR5,228. But 6.8% will. The 6.6% figure would be right, if the Department had stated it was measuring the log difference, instead of percentage growth. Yet, the context is percentage growth, not log difference. I see the press keep on using the 6.6% in the wrong context.

[2] — “In terms of real value, median monthly household income grew at 4.4 percent, which means the Malaysian household income grew faster than the inflation rate of 2.1 percent for the past two years. This debunks the popular notion that income in Malaysia is stagnant or income increment does not match the rising price of goods and services,” he added. Abdul Rahman said for the overall incidence of poverty, it had improved from 0.6 percent in 2014 to 0.4 percent in 2016. [Bernama. Minister: Household income statistics show strong GDP benefits people. Malaysiakini. October 10 2017]

Categories
Liberty

[1049] Of the end and conflict of happiness

I painfully wrote a piece on why liberty is the end of the state to further explore another related idea that I had shared earlier. Specifically, the earlier material would affect my perception on the state. Despite that, I did not say how it would affect my view of the state. This entry explains how it would affect my view of the state.

If I had concluded that happiness is the end of the state, that would effectively mean that I should be supportive of welfare state arrangement. The support for welfare state is the would be conclusion that I am uncomfortable of.

I see the purpose of welfare state as the advancement of happiness of the society that form the state; the state’s end is happiness. It seeks something similar to the joint utility function or joint happiness as mentioned previously. A welfare state seeks a “happiness floor” for its citizens. Never mind of the measurement of central tendency because that floor could be seen as a joint happiness. For the uninitiated, joint happiness is:

A democratic system may provide a mean or median happiness — mean or median joint utility function — and the state may take that as the state’s happiness.

Having a joint happiness will inevitably violate a person’s happiness. Why?

As written earlier, joint happiness does not represent non-centrists’ view or in this case, happiness. The farther a person’s utility function away from the joint happiness, the less happy a person would be. In other words, the end of the state contradicts the end of the individual, the citizens.

Perhaps an example is in order.

Let us consider a safety net called unemployment benefits. To escape debate on the effectiveness of unemployment benefits, let assume a very generous benefit that eliminates any possible effectiveness related to the state.

Also, let us assume of an unemployed person. Unemployment deprives the person from a stream of income. A prolonged unemployment later exhausts the person’s saving and eventually, zero wealth. This adversely affect the person’s happiness and brings the person’s happiness to somewhere below a joint happiness as agreed by citizens of a state to be enforced by the state. The state therefore provides unemployment benefits to the unemployed person.

Such provision however can only be possible through taxation.

For a person, let us call the person a dissenter, that disagrees with welfare state arrangement, any taxation upon the dissenter meant for unemployment benefits reduces the dissenter’s happiness. Notice how one’s happiness has to be subsidized by another person and this effectively reduces the happiness of the latter.

So, if I had concluded that the end of the state is happiness, I would have come to two conflicting conclusions. That was what was bothering so much.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reservedp/s – another example is the film adapted from Isaac Asimov’s idea which Will Smith starred in — I, Robot. Not directly related to happiness but the reasoning is similar: citizens’ security is trampled upon for the sake of the species’ security.

Categories
Liberty

[1024] Of liberty and happiness, the mean and the end and the state

Some weeks ago, I settled with the idea that liberty is a mean to an end. This is a contrarian position vis-à-vis mainstream libertarianism. Further, I accept that the end is happiness whereas happiness is defined as the fulfillment of wants and needs. Despite coming up with the rationale, I am rather uncomfortable with the conclusion because such reasoning would affect my perception on the state, for better or for worse.

I felt I had not explored the issue with necessary depth. In effort to vanquish my uncertainty, I explored the premise further to see whether it stays true beyond individual level. Through mental exercise, I arrived at a result that places liberty as the highest political end, whenever the observed level is beyond individual level; more precisely, governance of human interaction. For my own convenience, I shall name such governance as the social contract or the state, interchangeably. I wish to demonstrate that liberty must reign supreme over happiness as far as the state is concerned.

I define social contract is an agreement that sets a minimum threshold of acceptable behavior between parties of the contract.

In the last entry on liberty and happiness, there was an implicit assumption that I failed to state. Such failure did not originate from forgetfulness but rather, it was caused by a leap in my thought process. The unstated assumption is that my mind was working on individual level. With that realization, I am now able to realign, justify and rationalize my libertarian stance on the state, as I seek to share here now.

Firstly, I want to make clear why happiness is the end of a person.

On personal level, a level within an individual itself, a person’s own happiness is of greater than anything else. The term happiness itself covers a gamut of concepts and it may include liberty itself. Happiness may contain anything, everything or nothing. It is the most general measure of a person well being. It is exactly because of happiness is the most general measure is why happiness is the end of a person. Liberty cannot be the end unless liberty is part of happiness itself. On whether liberty is part of happiness, that is up each and every one of us to decide because only we ourselves — with respect to determinist factors — could determine our preferences.

As in economics, a person has his or her own preference and it is up to the person to decide what his or her preference is. Through the preference, the person may consume whatever bundle of goods that fits his or her preference profile.

Similar premise is not applicable to the state for the following reason: the state is not an individual. The state is tool for individuals to achieve each and everyone’s end: happiness. As such, promotion of a person’s happiness is the foundation of the social contract, the state.

Individuals derive happiness from a myriad of sources. Along with that, two people may share the same interest. Siamese twins might actually share the exact preferences. For some others, preference differences cannot be overemphasized.

The variation of preferences is in effect, a variation in paths to happiness. With respect to social contract or the state, this begs a question: is happiness the end of the contract? If it is, then whose happiness should the contract take as the end?

If happiness is the end of the contract, then a state — a product of the social contract — is established by its citizens to promote the happiness of its citizens.

The latter question might be answered by democracy. A democratic system may provide a mean or median happiness — mean or median joint utility function — and the state may take that as the state’s happiness. If a state decides to place happiness as its end, in which that happiness the joint utility function as decided through democratic processes is the state’s happiness, remember that there is a variation of happiness among individuals. Different preferences lead to different path of happiness while the end happiness itself would differ from person to person.

A joint utility function — I will call it joint happiness for the sake of simplicity — fails in a way that it does not represent non-centrists’ view or in this case, happiness, which is always the unfortunate flaw of democracy. The farther a person’s utility function away from the joint happiness, the less happy a person would be.

Some may even find happiness through active deprivation of others’ happiness. Some may achieve happiness but unknowingly through the deprivation of others’ happiness. What if that those people’s preferences have majority weight and make up the joint utility function?

Regardless the answer, the joint happiness itself violates the happy social contract; no pun intended. The violation is the dis-promotion of happiness of some citizens that established the state even while promoting average happiness of parties of the contract. If a person is made worse off by the contract, the rationale for the contract evaporates.

On individual level, happiness is the end because happiness is such a general term that it could comprise of practically everything. On state level, because happiness is general, it is impossible to make happiness as the end of the state — promotion of other happiness or even joint happiness might lead to dis-promotion of others’ happiness.

Unless of course, it is possible to have a minimum happiness for all coupled with non-aggression axiom, just like how libertarianism advocates a minimum but fundamental liberties for all, supported by non-aggression axiom. Non-aggression axiom states that a person may do whatever the person wishes with his or her person or property (collectively, rights) as long as he or her does not transgress other’s same rights.

If that concept is applied to happiness, then it would be: a person may pursue happiness as long as such pursue does not stop other person from pursuing his or her happiness. I have a feeling that “happiness non-aggression axiom” is an impossible concept and if it is possible at all, it is ultimately stifling to the human spirit.

A person derives happiness from consumption of a bundle of goods, be it tangible or intangible. All it takes to stifle all parties to the contract is to have a very primitive conservative person with very broad bundle of goods related to his or her preference as part of the contract. Reductio ad absurdum: say, this person derives happiness from simply knowing others cannot read. Through non-aggression principle, then everybody must not read in order not to violate the person’s happiness.

Perhaps, in order to make the happiness non-aggression axiom works, we need to categorize positive and negative happiness, as liberty could be broken into positive and negative liberties.

Positive liberty is a type of liberty which obliges a person to do something for another person with positive rights. For instance, if a person has a right to employment, then it is an obligation by somebody to provide employment for the person with the right to employment. This kind of right is usually advocated by social liberals.

Negative liberty is the other type which obliges a person to refrain from interfering with other person’s activities. For instance, a person cannot eliminate other person’s access to free speech. This form is essentially classical liberals, i.e. libertarianism.

Is it possible to have positive and negative happiness? Is it meaningful in the first place?

Coming back to the happiness non-aggression axiom and its consequences, I feel such categorization is impossible, unless happiness is liberty itself. Or unless, if we could dictate everyone’s happiness.

In short, a state that tries to promote a joint happiness will inevitably violate some if not most of the parties to the contract happiness. Thus, the end of a state cannot be happiness or even if it is, it is impossible to reach that happy end. It is impractical to have happiness as an end of the state.

What a social contract can do to promote individual’s happiness, instead of community or society happiness as reflected in joint happiness concept, is to provide a tool towards that the happy end. That tool is negative liberty.

With negative liberty, a person may do whatever he or she wishes to achieve his or her end, as long as he or she does not transgress other’s equal rights. The state’s only duty is to ensure no transgression of individual liberty. The state is a neutral umpire, not a player. For if a state is a player, transgression by the state is guaranteed.

Hence, in classical liberalism sense, liberty is the highest political end, of a state.