{"id":9140,"date":"2011-10-10T20:31:44","date_gmt":"2011-10-10T12:31:44","guid":{"rendered":"http:\/\/maddruid.com\/?p=9140"},"modified":"2011-10-11T10:51:42","modified_gmt":"2011-10-11T02:51:42","slug":"2436-some-change-in-way-of-life-can-encourage-emigration","status":"publish","type":"post","link":"https:\/\/maddruid.com\/?p=9140","title":{"rendered":"[2441] No target, no central planning"},"content":{"rendered":"

Milton Friedman once visited Hong Kong in 1963. He met\u00a0John Cowperthwaite, the financial secretary of Hong Kong, whom was credited for enabling Hong Kong to become Asia’s foremost financial center through his free market policy. Friedman asked him “about the paucity of statistics” in Hong Kong. Cowperthwaite replied, “If I let them compute those statistics, they\u2019ll want to use them for planning.<\/a>[1]<\/small><\/sup><\/a><\/p>\n

Statistics has its uses and it does help us understand our society better. It describes phenomena objectively instead of forcing us to rely on conflicting anecdotes that are dependent on point of views. First and foremost, statistics has descriptive power.<\/p>\n

But not all individuals believe in only the descriptive power of statistics. Some believe too much in the\u00a0prescriptive\u00a0aspect. Statists tend to belong in the latter group. PEMANDU is afflicted with it too, arrogantly trying to manage the economy when the economy itself is organic.<\/p>\n

I reject targets placed on something as organic as the economy. While the government does have a role to play, to set a target on the economy mistakes the economy as a business entity or a firm, pretending as if the planner is the CEO, where there is none really.<\/p>\n

The dangers of having a set of targets like having specific real GDP growth rate are plenty. One of them is the incentive for the government to spend too much just to meet its target. There is a conflict of interest when the target is set by the very entity that is meant to achieve it (this is also partly the reason why I am skeptical with a lot of KPIs set by the government: incentive to set them low to make themselves good).<\/p>\n

This adverse incentive is bad for public finance and ultimately, for taxpayers.<\/p>\n

More generally, having those targets encourages central planning.<\/p>\n

But this entry is not meant to bash PEMANDU. I think I have criticized PEMANDU\u00a0so much that I am bored\u00a0of it already. This entry is meant to criticize Anwar Ibrahim.<\/p>\n

Anwar\u00a0Ibrahim is smart. When he realizes that the Najib administration is targeting possibly an unrealistically high real GDP growth rate given the global economic circumstances, he challenges it and demands accountability from the federal government. He wants a special parliamentary sitting to meet if the federal government fails to meet their target later in the year.<\/a>[2]<\/small><\/sup><\/a><\/p>\n

I disagree to the demand for accountability. It is not so much I would like to give the Najib administration a free ride. It is only because I disagree with having a target in the first place. To demand accountability only strengthens the path to the target. That means central planning.<\/p>\n

This is a case where accountability is not so hot.<\/p>\n

\"Mohd\"Mohd\"Mohd<\/center><\/a>[1]<\/sup><\/a>\u00a0\u2014 The difference in the economic policies followed by Hong Kong and Britain was a pure accident. The colonial office in Britain happened to send John Cowper-thwaite\u00a0to Hong Kong to serve as its financial secretary. Cowperthwaite\u00a0was a Scotsman and very much a disciple of Adam Smith. At the time, while Britain was moving to a socialist and welfare state, Cowperthwaite insisted that Hong Kong practice laissez-faire. He refused to impose any tariffs. He insisted on keeping taxes down.<\/small><\/p>\n

I first visited Hong Kong in 1955, shortly after the initial inflow of refugees. It was a miserable place for most of its inhabitants. The temporary dwellings that the government had thrown up to house the refugees were one-room cells in a multistory building that was open in the front: one family, one room. The fact that people would accept such miserable living quarters testified to the intensity of their desire to leave Red China.<\/small><\/p>\n

I met Cowperthwaite in 1963 on my next visit to Hong Kong. I remember asking him about the paucity of statistics. He answered, \u201dIf I let them compute those statistics, they\u2019ll want to use them for planning.\u2019\u2019 How wise! [Milton Friedman. The Hong Kong Experiment<\/a>. Hoover Digest<\/em>. July 30 1998]<\/small><\/p>\n

<\/a>[2]<\/sup><\/a>\u00a0\u2014 KUALA\u00a0LUMPUR, Oct 10 \u2014 Datuk Seri Anwar\u00a0Ibrahim today demanded Parliament reconvene for a \u201dspecial sitting\u201d\u009d if Putrajaya fails to meet its \u201dunreasonable\u201d\u009d gross domestic product (GDP) growth forecast.<\/small><\/p>\n

The opposition leader today poured cold water over Datuk Seri Najib Razak\u2019s Budget 2012 tabled on Friday, claiming the prime minister\u2019s predictions and his administration\u2019s alleged penchant for unbridled spending would likely worsen the country\u2019s deficit.<\/small><\/p>\n

Anwar\u00a0also predicted the Najib\u00a0administration would table a supplementary supply bill by mid-2012, seeking for additional funds just as it did in June this year. [Clara Chooi. Anwar\u00a0wants special Parliament meet if GDP aim unmet<\/a>. The Malaysian Insider<\/em>. October 10 2011]<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Milton Friedman once visited Hong Kong in 1963. He met\u00a0John Cowperthwaite, the financial secretary of Hong Kong, whom was credited for enabling Hong Kong to become Asia’s foremost financial center through his free market policy. Friedman asked him “about the paucity of statistics” in Hong Kong. Cowperthwaite replied, “If I let them compute those statistics, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[203,697,1370,72,1334],"class_list":["post-9140","post","type-post","status-publish","format-standard","hentry","category-economics","tag-anwar-ibrahim","tag-central-planning","tag-conflict-of-interest","tag-free-market","tag-pemandu"],"_links":{"self":[{"href":"https:\/\/maddruid.com\/index.php?rest_route=\/wp\/v2\/posts\/9140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/maddruid.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/maddruid.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/maddruid.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/maddruid.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9140"}],"version-history":[{"count":9,"href":"https:\/\/maddruid.com\/index.php?rest_route=\/wp\/v2\/posts\/9140\/revisions"}],"predecessor-version":[{"id":9197,"href":"https:\/\/maddruid.com\/index.php?rest_route=\/wp\/v2\/posts\/9140\/revisions\/9197"}],"wp:attachment":[{"href":"https:\/\/maddruid.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/maddruid.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/maddruid.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}