Categories
Economics Politics & government

[2890] Second best solutions, democratic compromises and reforms

I do have strong policy preference, and that preference originates from my ideological leanings. But the preference only sets the default position, or more accurately, the initial stance. I am willing to be swayed by data and models but then again, over the years, I have learned data and models can be bent so much even with the best assumptions, it can be interpreted in various ways that make the numbers never quite as objective as it is made out to be. In the end, it is the context of the numbers that is important, not the numbers themselves. Numbers alone can be meaningless in social science, and economics.

I have become less ideological over the years, especially after the 2008 global financial crisis, and my policy preference is driven more and more by empirics. But after a year in the public sector, I find my preference has not quite been assaulted by empirical results. Rather, it has been a lesson on compromise and second or even third-best solutions.

Second-best solution is arrived at when the ideal solution is not possible given some constraints. The best solution is technically possible in the sense that it is technologically or economically possible. However, the challenges from the political or social aspects make it difficult to achieve fully.

For instance, I prefer to have the ECRL be cancelled outright. It does not seem very economically viable, and there are cheaper ways to encourage connectivity across the country while developing the areas outside of the peninsular economic centers. But the need to be careful with China, especially at a time when the global economy is at risk of heightened protectionism with Malaysia dragged into an unwanted trade dispute, means my policy preference is out of reach.

And it is not merely a theoretical concern. After all, China did employ unfair trade practices on the Philippines just to punish the latter over totally unrelated issues involving the overlapping claims in the Spratlys and the Paracels several years back. China can be a big bully, as any big power can be, and Malaysia being a small open economy should not test that proposition by too much. We have been successful in pushing for our case with China, but one has to wonder where is that line that we should not cross.

That is one example of having to land on a second-best solution, with an external consideration.

But more often than not, the challenges are internal in nature.

In a democracy where consensus is absent, the available solutions are frequently second best. There are so many stakeholders to take care, making compromises a must.

Just today, a senior civil servant asked how do I feel about working in the public sector, and how does it compare against the private sector. I answered that professionally, working in the public sector was tougher than in the private sector. In the former, there were so many parties to manage and to satisfy, whereas in the private sector, one could doggedly pursue an agenda, or even bulldozed it all the way through. In a way, achieving the ideal solution is easier outside of government than inside of it.

However, that does not mean the public sector is redundant. Many things do require the public sector to work and cannot be done through the private sector alone. It is the reality of a non-anarchist world, which is true almost everywhere in this world.

This can be linked back to the manifesto of Pakatan Harapan.

The Institute for Democracy and Economics Affairs, a think tank I somewhat have a relation with, today criticized the government for being overambitious with its election manifesto, and for the government’s weak resolve in delivering its promises.[1]

I would say that the manifesto is an example of the ideal solution, and the current situation is a second-best solution.

And this does not yet account for the fact that even the manifesto is a work of compromise, and that a manifesto as an ideal is supposed to be bold (in a good way, not the Brexit shambolic way). Furthermore, many supporters of the government work on having reasonable compromise. I for one is not 100% in agreement with the manifesto. But the urgent need for reforms after years of proliferating brazen grand corruption meant compromise had to be made to achieve a goal of cleaning the country. Second-best solution was what we had, because the ideal was not achievable.

Hafiz Noor Shams. Some rights reservedHafiz Noor Shams. Some rights reservedHafiz Noor Shams. Some rights reserved

But coming back to the criticism leveled by the think tank on the government lacking sufficient resolve to deliver institutional reforms, I think I can come out and say such reforms are still coming and it is not clear whether on its own context that it would be demoted from the ideal to the second best solution. Besides, it is not as if there was no reform at all. All too often, people forget the significant reforms that are already staring them in the eyes, be it the separation of powers between the prime minister and the finance minister, wider application of open tender, greater transparency and freer media.

There are challenges even in the areas I have cited where reforms have happened. But wide-ranging reforms require time, especially in a robust democracy. Mock the line all you want, but you know it is true.

The important thing is that, we must persist. Democracy simply does not end at the ballot box. It is more than just going out to vote. A fancy deck does not a reform make, too.

Hafiz Noor Shams. Some rights reservedHafiz Noor Shams. Some rights reservedHafiz Noor Shams. Some rights reserved

[1] — The government has set a list of unrealistic goals and showcased a lack political will to fulfil other achievable promises made in the Buku Harapan GE14 election manifesto, according to the Institute of Democracy and Economic Affairs (Ideas). Ideas research director Laurence Todd (photo, above) said the think-tank’s ongoing Projek Pantau monitoring of 244 selected sub-promises found little progress made to about 30 percent of the “unrealistic goals” set in areas of education, institutional reforms and the economy. [Alyaa Alhadjri. Report card on Harapan shows ‘unrealistic goals’ in manifesto. Malaysiakini. June 28 2019]

Categories
Politics & government

[2874] The true test of this Pakatan Harapan government

Critics rushed to assign the new Pakatan Harapan government grades for its 100-day performance. MCA had the cheek to give the government a D grade. Others gave a B. If Pakatan Harapan had its own Pemandu, I am certain grade A+++ would have been announced in a pompous self-congratulatory parade.

I am unsure what grade I would give the government because of the subjective nature of the whole business. One could make it more objective by having a sheet tallying the weighted score, but I just won’t do that. Looking at my desk, I have many other things to do.

As I take a breather, all I can say is that I have my share of disappointment. Government action with respect to the recent child marriage case has been so underwhelming that I feel it is best for me not to think of it. Meanwhile, the official attitude taken against the LGBT community is not something I could defend. There are other problematic decisions, but all that points to the fact change does not happen overnight. It takes time, especially when it comes to culture.

In a democracy, changing the government alone is not enough. What is required is a change in the attitude of the people. At this moment, we need a leader who can make that happen without worrying too much about his or her approval ratings. But as I have been told, that is easy for me to say because I do not have to face the voters.

Yet, all those disappointments do not at all make me regret for doing what I did on May 9. In the days after it became clear there would be a Pakatan Harapan government, I think I understood early on how difficult it would be for change to happen and disappointment was something to be expected. Larger change needs time to happen.

And at the end of the day, before we rush to judge this government on its 101st day, I think it would be good to remind ourselves that at the very least, this government has a 5-year mandate. I would reserve my judgment until close to the end of that mandate.

This however does not mean the government should be free of criticism. Criticism is important to remind this government what is important, and to me, the most important agenda is the promised institutional reforms that will make sure the likelihood of past abuses repeating itself is low. The rest of the promises are secondary.

If we managed to set our institutions straight, then we would have a great foundation to build on in years to come beyond the 5-year period, regardless whichever side may come to power later. For me, that will be the true test of this Pakatan Harapan government.

Categories
Activism Politics & government Society

[2537] Contemplating Bersih sit-in

I am currently at home, contemplating whether I should be going to the biggest event of the year so far or stay at home in my bed, reading books or simply enjoy the Saturday. The biggest event of the year yet is the Bersih’s sit-in in Kuala Lumpur.

I participated in both the previous incarnations of Bersih and I thoroughly enjoyed the atmosphere. In the 2011 protest, I learned how it felt to be exposed to tear gas and it was not an easy experience. I joked around immediately after I recovered from the tear gas exposure that, “I am now a protest veteran.”

I have been to multiple protests. Three of them involved loitering around the police stations in Brickfields, Dang Wangi and Bukit Aman. Despite that, I do not really enjoy protesting in such manner. It is almost always tiring and running around in the city being chased by the police is not really as fun as that “police and thieves” kid game. It is stressful. In a large protest like Bersih, there are just too many variables to think about: escape route, police location, road blocks, water source, faces of people. And I do not have the stamina to run around like dogs. I just do not.

I remember how painful it was to my lungs, how the muscles were crying stop please, how the heart begged a relief before it exploded. Only the selfish mind said, go on and don’t stop. That was in the heat of the moment.

But like any rational human being, I learn and I know the experience is not pleasant. I am just not an activist who is persistent in participating in very physical and demanding exercise. I really do not have the appetite for protests day in and day out. There is a cost to participation.

Even right now, if there was no protest, I would have gone to the office to analyze monetary data for publication on Monday. I will not do that today because I know if I do go to the office to work, I will not do anything because I will be checking my Twitter account and visiting various news portals constantly, curious about a party downtown. No work will be done, that too I know.

I am still contemplating my participation and it is still several more hours before the appointed time. But whatever the decision, you can bet that I support Bersih.

Categories
Economics Politics & government

[2183] Of opposition to reforms

Malaysia requires multiple reforms. Development in recent years proves that moving away from the status quo is incredibly hard, however. This is due to opposition mounted by beneficiaries of the current system, as well as beneficiaries of circumstances.

As the Najib administration puts in effort to address criticism directed against the flawed affirmative action, it faces fierce opposition from its own base in UMNO. There are at least two proofs to back this assertion.

First, while Perkasa is officially independent, the majority of Perkasa members ”are ordinary UMNO members”, as reported by The Nut Graph. Secondly, the editorial of Utusan Malaysia, which traditionally has been a very eager promoter of UMNO, supports Perkasa openly. Perkasa is an unrelenting critic of liberalization with respect to the affirmative action.

Perkasa and its allies fear the dumping of the current affirmative action. They are inside and they are loud. The internal opposition has already forced the Najib administration to postpone the announcement of the so-called New Economic Model several times now. How much eventual reform will occur on this particular front is suspect after deputy minister and a prominent UMNO member Mukhriz Mahathir said the new policy would have the spirit of the old New Economic Policy.

The preceding federal government also faced opposition from the inside, with respect to its effort to ensure judicious use of police power. The Independent Police Complaints and Misconduct Commission (IPCMC) proposal did not go through.

While the Abdullah administration then was already treading the path of the tattered, it still enjoyed huge majority in the House. Yet, there was no political will to deal with the police force decisively. The Enforcement Agency Integrity Commission was instead born, but critics say it is an ersatz to the IPCMC.
The Abdullah administration is now gone partly due to resurgent democratic culture in Malaysia, among other things. It is crucial to capitalize on the resurgence to seal the future of a more democratic Malaysia.

The reinstatement of local election is one way to institutionalize democratic culture. Unfortunately, standing in the path of further democratization is the Najib administration. Given the prime minister’s exhortation of the need for Malaysia to change, it is utterly disappointing to have him to prefer the undemocratic status quo.

Regardless of the outcome of all three cases, outside forces, which more often than not come in form of Pakatan Rakyat, have been crucial in pushing the case for both. Unfortunately, a warning is in order. While it can be helpful, outside force, i.e. Pakatan Rakyat, is no less influential in affecting reforms adversely.

Take the liberalization of the fuel subsidy regime under the Abdullah administration, for instance. The subsidy regime has proven to be disastrous to government finance. Massive expenditure dedicated to it sapped and is sapping resources that can be better used for other more productive purposes.

Yet, Pakatan Rakyat opposed such liberalization. In riding populist sentiment, Anwar Ibrahim even announced that he would cut fuel prices and, in effect, increase subsidy if he was in power at a time when global crude oil prices were going through the roof.

Fortunately, the restructuring of the fuel subsidy went through. Fortunately, partly because the populist path would have brought great damage to the economy in the long run. The reform is not complete yet but at least, it is moving along. What is of note is that the Abdullah administration only managed to push through the liberalization after suffering huge political cost.

Another example involves the proposed goods and services tax (GST) pushed by the Najib administration. The GST modernizes the tax system by addressing tax evasion committed by free riders who want every benefit but refuse to pay for it, or rather have others to pay for them.

There is considerable apprehension against the GST, especially when it is pushed by a government that does not have a stellar reputation in fiscal discipline and is perceived as corrupt. Yet, that in no way negates the need to reform the way government collects revenue because the solutions to all these concerns on government size and corruption are not mutually exclusive issues. They can be solved together.

Yet, Pakatan Rakyat is developing into a party of ”no”. It states that while GST is a good concept, it still opposes it due to a number of reasons. Lim Guan Eng, in an anti-GST forum, said that GST would tax everybody and painted the idea that not everybody is paying consumption tax at the moment. He backed his statement by erroneously comparing the fact of a narrow tax base relevant to income tax to the tax base of a consumption tax, which is a completely different animal.

Furthermore, quite conveniently, he was pretty much silent on two points that do not fit his narrative. First, the existence of a consumption tax in form of sales and services tax; all of us face prices after that tax at the moment, and that in effect says that everybody pays consumption tax.

Second is that the GST is to replace that consumption tax at a lower standardized rate with possible replication of existing tax exemptions, making the GST potentially not inflationary. The Institute for Democracy and Economic Affairs has made a stronger claim that the GST at the proposed rate is disinflationary.

Another argument against the GST from Pakatan Rakyat revolves around wealth inequality of Malaysia. But if the GST is not inflationary, then it should not affect inequality; if it is disinflationary, then it should have an equalizing effect on wealth inequality.

Whatever the effect of GST on price levels, the truth is that the GST system can be tweaked to satisfy a lot of concerns. Income tax rates can be lowered if there is concern about excessive burden. Rebates can be designed for some purpose. Exemptions can be made. Really, discussions on how to make GST better or more palatable than its current form need to take place. That it is not happening, though. Instead, Pakatan Rakyat is giving a solid no and prefers to ride on anti-tax sentiments. That is, in effect, a preference for the status quo.

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 March 25 2010.