Categories
Economics History & heritage

[2910] Few lessons from post-war 1940s Malayan supply-side crisis

We are experiencing a supply-side crisis. The lockdown is inducing labor shortage, and it has the potential of exerting lasting damage on the economy if not handled properly.

It seems to me that the last time Malaysia or any of its components had a supply crisis was in the 1940s during World War II and during the immediate post-war period. Productions of various kinds were devastated, leaving many without jobs and forced into subsistence. The war not only destroyed productive capacity, but also suppressed demand.

The end of the war brought demand back up quickly. Unlike demand however, production took time to get back to speed. Wars had destroyed all the equipment, and killed off many that worked at the mines, plantations, factories and shops. Rebuilding those and reemploying the workers took time.

That meant massive unemployment in the meantime.

Massive unemployment also meant employers had great bargaining power: wage growth was weak if any. Faced with unemployment, weak wage growth and spiking prices, social discontent was prevalent. This was one of many reasons the communist movement gained sympathy among the masses: industrial sabotage became a norm which worsened efforts to restore production.

There are a few lessons to take from the economics of post-war 1940s. Disrupted supply chain in the form of business failures and labor shedding took time to recover, and could not move as fast as demand. When demand returned with supply failing to do the same, that demand went unfulfilled. This led to massive shortages and subsequently, massive inflation. Never mind the social issues and the complex 1940s political situation.

In this sense, the negative economic effects of the war lasted beyond the war.

Coming back to today, our mines, plantations, shops, offices and other facilities obviously do not suffer similar war devastation. And the social reality is different and undeniably more stable though racial tension that originated from the war continues to linger.

But our current supply-side crisis, now lengthened to 4 weeks, is heightening the risk of business failures and job loss. That means reduced potential and once the crisis is over and demand back up, that reduced potential means shortages and significantly higher inflation, and higher prolonged unemployment. Growth could be depressed for some time until the potential returns to its pre-crisis period. The negative economic effects of this supply-side crisis would last beyond the actual crisis.

This is why we need to protect the potential now. Prevent business failures. Protect jobs. This is so that once the crisis is done, we could press on the demand paddle right away without having to wait for some time to repair the supply transmission. We do not have to suffer a lasting effect of this crisis.

Categories
Conflict & disaster

[2327] No to foreign military intervention in Libya

There is a civil war in Libya and the one that started it is Muammar Gaddafi. He is a vicious man. The way he violently handled peaceful protests against his government justifies the rebellion that is underway in the country. Between the Gaddafi government and the rebels along with the protesters, I find it impossible not to support the rebellion morally. Despite that, I cannot support any foreign military intervention that sides with the rebellion.

The talk of military intervention gained prominence when there was suggestion to impose a no-fly zone in Libya. The fact that two US warships are approaching the waters off Libya heightens the possibility of US intervention in Libya.[1] It is a relief when US Defense Secretary Robert Gates poured cold water on the suggestion.[2]

At the risk of sounding sadistic, I do not support intervention because I like to see how the civil war will play out in the end. If the rebels and protesters won the war eventually, then it would be relatively easy to justify the new government arising from the popular rebellion. The new government would be formed popularly and organically.

Any foreign military intervention will rob some legitimacy from the new government. Accusation of US imperialism will fly, possibly making the rebellion less popular inside and outside of Libya. Furthermore, in times when the whole Arab world appears to move forward towards a more democratic environment, such external intervention is unhelpful.

Meanwhile, Gaddafi does have some support in Libya, however deluded he is about the level of support he has. There are still people fighting for him. These supporters would definitely try to justify Gaddafi’s so far outrageous claim of foreign intervention in Libya. Having an actual military intervention will hand Gaddafi and his supporters some undeserved moral victory.

Besides, the rebels themselves have stated that they do not want foreign government to intervene.[3]

If the rebels loses, then the Gaddafi government will further lose its legitimacy because the rebellion is seen by many as a popular movement.

And then, there is another issue which I have raised earlier: we cannot fight tyranny everywhere. If intervention is justified in Libya, what about other protests suppressed violently in other part of the world? Myanmar? Iran?

I do not even support any United Nations or any other organization’s peacekeeping mission in Libya, given the current situation. The rebels seem to be winning. An international peacekeeping force by the United Nations would halt progress made by the rebels and protesters, preventing or at least prolonging possible victory that would remove Gaddafi from power and along with it, hopefully his arguably socialistic policies. I do not want any intervention that would increase the likelihood of Gaddafi staying in power. I would support a peacekeeping mission only if Gaddafi has the upper hand.

Until then, I insist all we can do — apart from humanitarian aid — is sit, watch and hope for the best in the Libyan rebels and protesters.

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

[1] — WASHINGTON — A US warship with hundreds of Marines on board headed towards Libya on Tuesday, defense officials said, as US and European allies sought to pile pressure on embattled leader Moamer Khadafi. [US warship headed to Libya: officials. AFP. March 2 2011]

[2] — Military options, such as imposing a no-fly zone to prevent attacks on regime opponents, have consequences that need to be considered carefully, Gates said. The North Atlantic Treaty Organization hasn’t decided on any specific steps. [US signals caution about Libya military intervention. Lachlan Carmichael. AFP. March 3 2011]

[3] — Ghoga said the newly formed council was not contacting foreign governments and did not want them to intervene. [US signals caution about Libya military intervention. Al Jazeera. February 27 2011]

Categories
Conflict & disaster Liberty Politics & government

[2132] Of isolationist, non-interventionist, libertarian foreign policy

I am not particularly warm to Obama due to his economic policy. Shadows of protectionism and greater government intervention lurk somewhere. His foreign policy however is a cause to celebrate. The Obama that spoke in Oslo as he delivered his Nobel Prize speech is the Obama that I like. His speech on the need of war, of just war, and peace, was moving. Not only was it moving, it makes sense and addresses the nonsense of eliminating war as proposed by some in the anti-war movement. He backed up his assertion by acknowledging the existence of evil in the world. And evil must be confronted.

Obama is right when he said that there is no glory in war. The same sentiment can be felt here in Sydney at the ANZAC War Memorial. The memorial is not there to glorify war but rather, to honor sacrifices of men and women. It is not glorious because the human suffering it brings is immeasurable.

Yet, when a war is fought to defend principle of liberty, when tyranny threatens to rob individuals of liberty for any reason, a war in the name of liberty is unavoidable. Peace under tyranny is insufferable and peace under such condition is not one a free person should aspire. Better conditions are attainable. Of course, these better conditions can be attained relatively peacefully but when all routes are exhausted, it is really hard to condemn the use of force.

How true it is when Obama said that a “non-violent movement could not have halted Hitler’s armies.” Negotiation failed. Britain could not pacify Germany under the Nazi by acquiescing to the latter’s occupation of Czechoslovakia. No. Germany wanted more. The only peace Hitler’s sought is a peace incompatible with the idea of freedom. He wanted submission. Thus war was inevitable.

This aligns perfectly to libertarian principle of non-aggression axiom. Force cannot be not used except in self-defense.

Expanding this principle which is meant to cater individuals is however problematic. The easiest is to accept, however flawed such consideration is, a state as a person with rights to some extent. In doing so, it rationalizes the concept of self-defense vis-à-vis the state. That comes with it the idea of state sovereignty, just as individuals are sovereign over themselves.

It is flawed, because it ignores violation of individual rights outside the boundary of the state, where the victims are non-citizens, whereas individual rights, individual liberty require defending, ideally everywhere. The legitimization of use of force only in the name of self-defense in terms of the state necessarily dismisses any call of action for any oppression of liberty in foreign land.

A digression is necessary lest confusion reigns. Such non-aggression axiom for the state does not in any way prevent the state or individuals from criticizing such suppression in foreign land. Rather, the state cannot use force to prevent that oppression.

The logical path to adoption of non-aggression axiom to the state is one of non-interventionist, or even, in a restricted sense, isolationist. It is isolationist because all tyrannic developments in the world outside of the state’s boundary unrelated to the immediate security the state is given a blind eye. The United States did this prior to World War II. While such isolation has its root in the Jeffersonian ideal, which is clearly adversed to entangling alliances, the effect is the same. The same isolationist ideology brought upon the failure of League of Nations. The era of the Great Depression further demonstrated the far-reaching influence of isolation where the devastating Smoot-Hawley Tariff Act was put in place in the name of protectionism although the non-interventionist in libertarian context is only one involving force, not trade. Ron Paul explains this beautifully during his campaign in 2007 as a Republican nominee for the office of the President of the United State of America.

Such isolationist position held by the United States only truly evaporated after it was clear to it that it was very much part of the world, when Japan successfully attacked Pearl Harbor in 1941. The US has since become a global power with interventionist tendency. Perhaps, too much interventionist tendency.

I am aware of the problem of isolation and non-intervention arising from non-axiom theorem much, much acutely. I struggle with it because while tyranny is the great enemy of liberty, fighting tyranny everywhere can be exhausting, especially if one considers economic reality of scarcity. Furthermore, that does not answer the need, from time to time, to react, especially with legitimate force, against atrocity like what happened in Rwanda or Bosnia. Or, maybe, just maybe, even Iraq.

Iraq is a problem to me. I began with opposition to the war and now but I am unsure if my opposition is entirely right. Saddam Hussein was a dictator and he was ruthless one at that. Former United Kingdom Prime Minister Tony Blair in an interview not long ago said that even without weapon of mass destruction, he would have gone to war anyway.

My oppostion to the war was because of the flawed rationale of the war. Iraq did not weapon of mass destruction — never mind the controversy on the term itself — when the accusation was made. The failure of the United States and its allies under the infamous Coalition of the Willing to find those weapon is enough to demonstrate the folly of it all.

Yet, if the rationale — made as the main rationale and not as a side rationale as it was thrown in support of the war — had been against the murderous act of Saddam Hussein’s regime, I would probably, under libertarian condition, have supported the war throughout, realizing full well of its violation to state sovereignty. Call it splitting hair but I take great concern on rationale, even if the result is the same. Though I may resign to the convenience of Mao’s black cat, white cat from time to time, the end does not always justify the mean.

Regardless of the issue of state sovereignty, the economic reality of scarcity does bring this into question. We simply cannot fight tyranny everywhere, every time. Going to war to fight every tyranny is unrealistic because it is expensive in many ways including those beyond monetary consideration. One of this consideration is the disturbance of equilibrium. Fighting tyranny everywhere every time may encourage too much lawlessness that brings instability, even if stability means oppression. This, as it should be noted, a contradiction to the idea that there can be no peace if there is no liberty. This in fact, returns us back to non-interventionist policy while, largely, ignoring tyranny outside of our boundaries. Yet, another contradiction. In my humble opinion, while one seeks to smoothen out contradictions, the least problematic contradiction should be the favored one until a solution is found to take away the contradiction and be supremely consistent logically. As far as those oppression are outside of our boundaries and unrelated to us with us having our liberty secured, non-interventionist maybe the way forward.

Perhaps, when Obama mentioned Germany, he was alluding to Iran. The issue of Iran and nuclear proliferation was raised. Making parallel out of Germany and Iran maybe too much because it is always easy to judge something in hindsight. While the story of Germany has past, the story of Iran has not and there is no certainty that Iran ultimately seeks war. For Germany during World War II, non-aggression axiom was violated. Iran has not crossed that line yet, if it would at all. We should not resign to fatalism.

Again, we simply cannot fight tyranny everywhere, every time. At least, not under current global institutions.

In the setup of a state, fighting and correcting wrongs, although not everywhere and every time, is possible in many places and many times through the setting up of a credible judiciary and arms that enforce rule of law in terms of liberal democracy. Perhaps, if the same rationale for the state is expanded to the global level, the same success of the state can be emulated at the global level.

Obama, rightfully, mentioned this in his speech while he also rightfully said he does not have all the solutions. He spoke of institutions. And he gave the United Nations as an example; not a shining example but a success example to some degree nonetheless. There is a possibility that humankind can face the problem of evil more successfully than any god’s had, and not resort to Dr. Pangloss’ ridiculousness. As some phrase that I heard a while ago goes, the affairs of men are too important to be left in the hands of the gods, anyway.

This is a way circumvents the problem of non-aggression axiom for states and confronts the problem of evil by having a third, supposedly impartial party doing so.

This however is a slippery slope for libertarians — and even others — for such argument opens to the path of global government. That, is a monster much harder to fight against when the government is illiberal. Such monster would turn the global anarchy we are in as an utopia.

It would be alright if the global government is a government based on a liberal constitution protecting typical individual rights of men and women and everything in between but judging the world as it is unfortunately, with merely crass majoritarian democracy and the global government, I am uncertain how long such government’s liberal constitution would last, assuming it would begin with a liberal constitution, given the illiberal setup of a majority of states, if these states should be represented to a global legislative assembly without veto power. The farce of the United Nations Human Rights Council is enough a proof to this concern of mine: how could countries which have utmost contempt for individual rights, be the standard bearer of human rights?

If it exacerbates the problem of evil, then it should be rejected.

Categories
Conflict & disaster

[1340] Of drawing parallel between the partition of Iraq and the Balkan states

The New York Times today draws a parallel between the Bosnian conflict and Iraq. The article visits one of the solutions that could end inter-communal violence in Iraq and that solution is partition, just like what happened to Bosnia, Croatia and Serbia. The article further states three reasons why the Balkanization of Iraq might not be as successful as the Balkanization of the Balkans.

Number one:

The first crucial condition for the former Yugoslav republic of Bosnia was that it was already carved up. When negotiators gathered at Dayton, the raging violence had succeeded in paring, pushing and repulsing Catholics, Eastern Orthodox Christians and Muslims into mostly coherent enclaves. War created a sustainable map on the ground. The task facing diplomats was to get it in ink.

Such a map is far from drawn in Iraq. Although two million Iraqis have fled the country and another two million are displaced within Iraq’s borders, up to five million more — 20 percent of the prewar population — would have to be moved to create an ethnically coherent place. [Divided They Stand, but on Graves. New York Times. August 19 2007]

Number two:

The second unmet condition is that by 1995 in Bosnia, all three sides had fought themselves to utter exhaustion. In Iraq today, polls show that average citizens are exhausted by the war, but militia-style fighters loyal to the three sectarian factions remain fully tooled for combat — just warming up for advanced bloodletting. Foreign fighters and foreign weapons continue to flow into Iraq over its porous borders. [Divided They Stand, but on Graves. New York Times. August 19 2007]

Number three:

Which underscores the third condition not visible in Iraq. A genius of the Dayton process was that the outside powers arming and inspiring the Bosnian violence — Slobodan Milosevic, the Serbian dictator, and Franjo Tudjman, the Croatian strongman — were at the table along with their Bosnian proxies and Muslim representatives.

With their signatures on the accords, the flames of outside agitation were extinguished.

By contrast, the Bush administration has been unwilling or unable to cajole Iran and Syria into a full diplomatic partnership to end the anti-government and anti-coalition attacks in Iraq. There appear to be few prospects of expanding direct dialogue, especially with Iran. [Divided They Stand, but on Graves. New York Times. August 19 2007]

I have shared my sentiment against turning Iraq into a 3-state federation. Nevertheless, daily reports of violence in Iraq has forced me from being against, to nearly neutral of the prospect of a federation, or even partition.