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Books & printed materials Politics & government Pop culture Society

[2986] Maybe it was Klosterman’s The Nineties

Klosterman’s generation may believe in something or they may not. But they more likely to believe in it, if not by too much.

That something could be almost anything and that is the attitude taken throughout The Nineties, a 2022 book written by Chuck Klosterman. That is not to say he takes no position on an issue. He does and I feel he understands the 1990s (from Gen X perspective) exactly through this prism: a prism that suggests disagreements during the decade (in the US) was never too big to matter by too much. This idea is repeated several times throughout the book but the point achieves clarity at the very end when he discusses the competition between George Bush and Al Gore during the 2000 US Presidential election.

Klosterman argues that in the run up to the election, both candidates were really standing on the same policy platform and that made it impossible for many voters to decide who should be voted in based on substantive matters. So difficult it was that Klosterman highlights that voters were deciding who to decide based on whom they prefer to have a beer with. The answer is Bush, who was more affable and less aloof than Al Gore. So similar were the two that a third candidate—Ralph Nader—became the credible second candidate, as Bush and Gore merged into one candidate in the mainstream consciousness.

Of course, things changed after the election and definitely after the 9/11 attacks. And that was really the last time politics were taken so unseriously by US voters, or so Klosterman argues. Differences since began to become so big that that kind of ambivalence during the 1990s could not exist anymore.

But the book is not primarily about politics. The Nineties mostly tries to capture the mood of the decade and that means multiple references to hit songs and major movies. While I regularly refer to Wikipedia or YouTube to immerse myself into a book, this the first time I went through Spotify to listen to songs while reading. Nirvana’s Smell Like a Teen Spirit gets an early mention as the author explains how the band from Seattle changed everything we understood about rock music. Yes, Nirvana is more grunge than rock, but Klosterman rationalizes songs such as In Bloom evolved as a rebellion against the overcommercialization of rock, which itself was pioneered by unruly teenagers in the 1950s. When rock stars of the 1990s wanted fame and wealth, Nirvana (and Kurt Cobain especially) represented a new breed of artists who despise those. It was uncool to be famous and wealthy. Feeling so guilty of his success, Cobain took a gun and shot himself in the head. There are several other songs that Klosterman goes in detail. Alanis Morissettte’s You Oughta Know. Tupac Shakur’s is another. Each has an outsized influence on the 1990s US.

Reiterating the ambivalence of the 1990s, Klosterman discusses Seinfeld in a segment of the book. It is a comedy sitcom famously about nothing. What follows is a discussion on television programming, on how many sitcoms received high ratings only because they were aired in certain prime slots and that those slots were in high demand because many viewers were too lazy to switch channels after watching something earlier. People were watching only because, to paraphrase Klosterman who in turn quoting George Costanza, “because it’s on TV”, in reply to the question why would anybody watch it. Not because it was good or anything else.

But not all fell into that logic. Some drove the market and were ‘Must See TV’. Friends did that. Here, Klosterman describes Friends in the ambivalent contradictory way: “None of the characters were supposed to be cool, so the audience didn’t need to be cool in order to understand why they were appealing.” And there is Frasier, described as “a white-collar show openly obsessed with intellectual sophistication. Characters casually joked about Jungian philosophy, Sergei Rachmaninov and Alfred, Lord Tennyson… But its dynastic grip on critics and Emmy voters galvanized a paradox: Frasier was seen as brilliant television because it focused on characters who would never watch television.”

Again, later on the author’s commentary on the Star Wars prequel that came out in 1999: “Movie critics disliked The Phantom Menace, but diehards hated it more… Lucas tried pretty goddamn hard to satisfy an entire generation of strangers who likely wouldn’t have been satisfied by anything he delivered. Did such a mean-spirited categorization bother him? Maybe. But not really.”

You get the drift.

I find the yes-no-maybe noncommittal construction as slightly offputting. Yet, beyond the noncommittal statements are brilliant assessment of the 1990s. Maybe, the decade was that complex that it is difficult to be sure what was really going on, unlike the decades after that seem to be governed more by black-or-white logic; either you’re with us or against us even in the face of ever more complex world.

Maybe, the possible lesson here is that in order to solve our contemporary divisions, we just need to be less sure of ourselves.

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Economics

[2985] Malaysia’s EV policy risks running obsolete

The government has been incentivizing electric vehicle purchases and use as a way to boost domestic electrification trend. Those incentives come in the form of zero import duty, zero excise duty, zero road tax and non-tax on EV and/or related equipment, among others.

Whatever the early rationale behind these incentives,[1] changing global conditions are making these policies dated. Rising trade barriers across the world are affecting EVs adversely, especially those made in China. Regardless of the appropriateness of US and more relevantly European policy in response to China’s dominance in the space, these barriers would redirect Chinese EV volume from places with high tariffs to other economies without similar restrictions. These other economies—many of them are small-to-medium sized (like Malaysia)—might be the ones having to absorb oversupply. In other words, there is an EV oversupply coming our way.

Under a scenario where there are downward pressures on EV prices, would Malaysia’s set of incentives still make sense? I would argue no, especially for the retail side of the equation.

There are several reasons for the negative answer.

First, the downward pressures on prices caused by manufacturers’ need to reduce their inventories would likely be good enough to encourage domestic electrification on the road.

Second, the prospects of higher petrol prices caused subsidy rationalization exercise should already be a big incentive enough for road users to migrate from internal combustion engine to EV. This is of course depending on the government going through with the rationalization exercise.

Third, the coming oversupply would be an opportunity for the Malaysian government to shift the burden of encouraging EV from the public towards private manufacturers. After all, these are private EVs we are talking about, not public transport. And even better, the burden would be shifted towards foreign manufacturers, which many of these manufacturers originating from China.

Fourth, the government faces fiscal pressures and the migration towards EV would be a chance for Putrajaya to reap the migration dividend in the form of more duty and levy revenue. This does not mean raising those duties and levies to punitive level. It could mean just normalizing it (i.e. undo the incentives). That additional revenue could be used to either finance electrification facilities, or other pressing needs in education, health or even defense… or finance public transport projects instead of boost private vehicle ownership.

If it were up to me, I would quickly cut short these incentives. Immediate reversal of policy is likely too disruptive to be good and that suggests undoing it by end of 2024 sounds reasonable.

Otherwise, these EV incentives do have sunset clauses. I would recommend letting them lapse. But waiting until 2025 might be too long for Malaysia to benefit for changing global landscape.

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

[1] — Given early (still?) focus on luxury electric vehicles and the government being overly focused on retail side of EV supply chain, the policy might have been captured by what I would call hobbyist lobbyists, i.e. rich men who take electric vehicle as a symbol of prestige.

It definitely didn’t help with the perception when early major lobbyist was an association named Malaysian Electric Vehicle Owners Club.

If the policy had not been captured, it would have focused early on the mass market, allowed leeway for cheap but reliable Chinese brands instead of the likes of Tesla, and also would provide better stress on industrial rather than retail.

Categories
Conflict & disaster Politics & government Society

[2984] A list of challenges for Malaysia

I have been thinking about how fragile Malaysia could be lately after remembering episodes when the country looked brittle. The 1965 breakup when Singapore became independent is an example but there are other times that fit the bill: the Emergency, the 1969 riots and possibly even the crises of the late 1990s.

With the world changing rapidly, I do not think the idea of Malaysia remaining as a country could be taken for granted. Whether we survive as a country depends on how we identify and navigate various challenges. These challenges do not necessarily lead to a national breakup, but could lead to the diminution of the country in terms of economics or prestige.

Many of these challenges are actually interlinked and solutions would have to be thought through multidisciplinary lens.

For my own benefits, I am listing down those challenges here:

  1. Territorial integrity.
    1. Loss of control over the waters of Sabah and Sarawak. This concern comes from China’s presence in the area. Unlike other Asean claimants, China is special due to its aggressiveness, expansive claims and refusal to abide by rules all Asean claimants largely adhere to. A significant loss of territory would involve a significant loss of petroleum revenue to all Malaysian parties, leaving revenue claims between the federal and state governments a moot point. And unlike Malaysia’s previous dispute with Singapore with respect to areas surrounding Pulau Batu Puteh, or with Indonesia with respect to the seas around Sipadan, the China trouble would likely involve the use of force and violence.
    2. The balkanization of Malaysia, with Sarawak and Sabah exiting the federation as having the highest probabilities. There has been growing secession calls based on years of unhappiness relating to unequal partnership between the federal government and the two states. One positive aspect from this is without the Borneo states, Malaysia would likely stop having serious disputes with China and that would free up the rump Malaysian state from a tricky geopolitical problem. But this would also mean that smaller Malaysia would lean towards China more.
  2. War in Asia-Pacific. A war that matters would likely involve China and the US. In this war, it would be hard to stay neutral.
  3. Foreign political influence in Malaysian society. Foreign influence is inevitable for a small, open and diverse country that Malaysia is, with a largely free and democratic environment. But with risks of international conflicts rising (prime examples include geopolitical rivalry between the China and US, wider conflict brought by Israel in the Middle East which would inflame sentiments in other parts of the world, war in the Taiwan Strait and conflicts involving non-state actors particular those relating to jihadist and adjacent groups), foreign actors would attempt to sway domestic public opinion, domestic elections and through that, political decisions that Malaysian national leadership make. There have been domestic corruption cases with links to foreign governments and high offices had been penetrated or compromised by foreign agents before. Additionally at the societal level, this could further reduce trust between ethnic groups who generally would be affected by certain international issues differently.
  4. Fragmentation of the global supply chain. This could go either way. Malaysia for the longest time has been deeply embedded in the global supply chain and this had brought the Malaysian industrial revolution of the 1970s-1990s. But it also caused the 2000s premature deindustrialization following China’s entry into the WTO in 2001. At the moment, Malaysia is benefiting from changes brought by heightened China-US rivalry (plus their respective allies) but the way Malaysia is handling it—playing both sides and creating an imperfect balance—might risk a blowback from one side or the other. We have already seen certain Malaysian companies slapped with sanctions by the US, which spells doom for those specific businesses. There are chances that Malaysia needs to choose which supply chain we want to participate in, and lose access in the other.
  5. Fiscal challenges. To address changes in the global economy and global politics (along with the retreat of the free trade consensus), the Malaysian state needs to have the necessary capacities and capabilities in various fields: education, health, defense, infrastructure, energy, various industries, etc. To develop and maintain those capacities and capabilities, the state must have the required fiscal firepower. But Malaysia has a weak-to-okay fiscal space owning to the federal government’s reluctance to address taxation issues decisively while facing growing decentralization demand along with rising expenditure requirements. This reluctance is primarily due to electoral considerations, and not so much the inability of the economy to generate such revenue. I would go as far as claiming that this fiscal challenges are partly the cause behind Malaysia’s inadequate measures in tackling other challenges cited in this list. The longer the reluctance lasts, the harder it would be to address those many challenges as those challenges do grow over time.
  6. Decentralization among Malaysian states. Many have long sought decentralization away from Putrajaya as a means to provide check-and-balance to federal powers. But recent decentralization has brought several new challenges (and amplified preexisting ones) to a small country like Malaysia. There are at least four challenges from the top of my head.
    1. Loss of revenue for the federal government. This goes back to concerns over fiscal pressures the central government faces and from there on, national capacities and capabilities. This eventually would hurt the beneficiaries of decentralization as they likely would have to pay for the same services the federal government finances, but possibly without the benefits of economies of scale.
    2. Loss of capacity caused by transfer of authority of specific issues. This depends on the power and not all transfers are negative nationally.
    3. Loss of policy cohesiveness which challenges the central authority to improve certain areas such as energy security. In other words, policies would likely see fragmentation. But again, this depends on the fields. Some fields may benefit from diversity of solutions but some others, not. I fear for many policymakers especially at the state level, they lack the competencies to see such a thing.
    4. The loss of Malaysian customs union, specifically, tax-based taxes that discourage national trade and weakens the common market. This is a threat for overall national economic growth as it would be a drag on trade growth.
    5. Weakening of the Malaysian identity, hence the loss of societal cohesiveness and further erosion to social capital.
  7. Climate change. Malaysia will require investment and spending to adapt to the new reality of climate change. These investments and spending include infrastructural like sea barriers, fresh water supply, shift of energy use, electrification and spending such as compensation for maintenance of forest cover, tree planting as well as expenditure to raise the capacity of health and emergency services. Without the necessary fiscal power, Malaysia would likely not able to mitigate some of the effects of climate change, and/or adapt as well as we need to be. This would likely need further expansion.
  8. Ageing society. Malaysia still has a young workforce, with the overall population median age at 30 years old but the situation will change in the next 20-30 years.
    1. This will require investment in health facilities made in the near future, which is dependent on the government’s fiscal strength. There is the private sector of course but it is unlikely to provide a comprehensive coverage at an affordable cost to the public that a universal public system could.
    2. The lack of a universal safety net will be a problem.
    3. An ageing society also would demand greater labor force likely through migration if the country is to grow economically further.
    4. Economic growth in such a demography would likely be weak, which raises the likelihood of social instability, given Malaysia’s low social capital that would work better with high economic growth.
    5. Pension crisis. This specifically about the government civil service’s pension through KWAP. Currently, there is a large liability gap and it is unclear it would ever be covered under business-as-usual scenario.
  9. Youth unemployment/underemployment and the danger of a growing underclass. One worrying trend is the demand for instant gratification by young adults in the form of reluctance to investment in education. They are attracted to the gig economy and they rationalize so by stating current gig income is more lucrative than going into debt for tertiary education. However in 10 to 20 years, these groups of youth would likely find themselves as an underclass as their real income stagnant and left behind by those with tertiary education rises, whose premium over those without would likely widen. The assumption of wage stagnancy for gig workers understates the problem: how would they compete with AI driven gig services? This kind of mass joblessness would create future social instability, especially as the society ages and relies on the young for tax revenue needed to fund societal needs.
  10. Political dynastic rivalry. Malaysia has only recently become a competitive democracy and we are beginning to see political dynastic rivalries that fall neatly along partisan division. There is a danger the rivalry becomes a zero-sum game as losers get prosecuted and winners get everything. In such a case, the losers would not necessarily go away peacefully or let go out power when they should. This could easily turn into a chaotic and violent equilibrium that has been witnessed in other countries.
  11. Race and religion. This is intertwined with political dynastic rivalry, but also dependent on economic growth. A weak growth along would likely raise the temperature as far as race and religion is concerned. I also think this is just a proxy to the low social capital that Malaysia has. This risk has proven to be an effective tool at derailing reforms needed to address multiple other challenges.
  12. Technological change. This is a wildcard because we do not really know how it would affect Malaysia. We still do not have a clear idea how 5G would change our lives (the way in the 1990s, we only had a vague idea how the internet would change everything). And even with AI is all the rage now, we still do not have a clear idea how it would change everything that we do. Malaysia could either ride the wave or miss the boat.
  13. Growing rich before growing old. Malaysia aims to be a high-income economy soon. Although definitionally it is easy to achieve, it might be harder to do so in a more substantive manner. It is also a race against other economies: recently China has passed Malaysia in terms of GDP per capita, which shows Malaysia is starting to fall behind.
  14. Immigration/refugee crisis. There are severe crises all around the world and the closest one is happening in Myanmar. Large waves of refugees could overwhelm the Malaysian system, which is already suffering from insufficient funding.

I would likely expand this later by putting them in timeline (to describe urgency), rough likelihood of these things happening and the degree/intensity of each problem.

Categories
Books & printed materials Politics & government Science & technology

[2983] Reading Chip War and some questions for Malaysia

I had expected it to be a technical reading but I was pleasantly surprised at the ease I read through Chris Miller’s Chip War: The Fight for the World’s Most Critical Technology. It is a 400-page book published back in 2022 at a time when chip availability was still a big problem that caused delays in delivery of everything that had semiconductors in it. Those goods included small electronics like cell phones and gaming consoles as well as large items such as cars. I had to wait for almost two years for the delivery of a new car from Japan. Even as the semiconductor market conditions improved by 2023, the issues discussed by Miller in his book remain relevant as the China-US tech war heats up further and as the use of AI among the public spreads.

For most parts, Chip War goes through the history of semiconductors and it is less so about contemporary contest between China and US. In this sense, I feel the title is a slight misnomer. When I first thought of the book title, I had imagined a little bit of reading notes from my work place: supply chain, industry interlinkages, international trade, policies, tariffs, war. While the author discusses these topics, they are all subsumed under the historical narrative that covered industry development during World War II and right up to the present day. And the historical narrative, in many ways, is written around multiple personalities (scientists, engineers, military men and politicians) who played (and still play) a role in the development of semiconductors. Contemporary issues are covered in a few chapters close to the end.

The author does provide brief technical description for things like early transistors, modern chips, and advanced equipment needed to make those chips. But that does not affect the readability of the book negatively, which is good thing. It is just not that technical. Some may find the non-technicality as a negative, since more than one engineer in multiple reviews have criticized Miller for oversimplifying various processes.

The United States is the main focus of the book, given its centrality in developing and the marketing semiconductors. Several other countries are mentioned extensively too. Soviet Union/Russia for its failure. Taiwan, South Korea and Japan for their successes. And China for being the new kid on the block and how the country is challenging US technological supremacy in a way the Soviet Union never could.

Malaysia has two or three mentions throughout the book, as the country plays major roles in testing and packaging of semiconductors. Those roles are not as sexy as designing or fabricating chips, but it is still essential in keeping the industry running.

Here, I want to touch something discussed in the book that has a direct impact on a specific Malaysian policy: the development of Malaysia’s 5G infrastructure within the context of China-US tech war.

Malaysia through its state-owned entreprise Digital National Berhad (DNB) is building the country’s 5G network with equipment and expertise supplied primarily by Ericsson. The selection of Ericsson is not without controversy, with the other contender being Huawei of China. The current government under Pakatan Harapan however appears unhappy with the DNB-Ericsson arrangement and has hinted that Malaysia should have a second network built by Huawei.

Of relevance here is that Huawei has come under strict restrictions imposed by the US, restrictions which have deprived the company from the latest chips needed to run 5G network. This has forced China to hasten the development of its own indigenous chip industry and indeed since 2020 when the US first tightened export controls on Huawei, the company and the general Chinese semiconductor industry have made progress in advancing its own chip design and manufacturing capability. Yet China is behind that of the US and its allies in terms chip technology. These allies include Taiwan that run the world’s most advanced chip manufacturing facilities (TSMC’s), and the Netherlands that makes the world’s most advanced chipmaking machinery (ASML’s). China is now able to design and manufacture 5nm chips (as of 2023?) but struggles to close the gap with 2nm chips that US-centric supply chain is now focusing on.

In more general terms, China might be 3-5 years behind the US chip technology. The 3-5 years gap might sound small, but for an industry governed by Moore’s Law, it is not something someone could shrug off.

Under these conditions, my question is, would it make sense to turn to Huawei for Malaysia’s 5G infrastructure (assuming building a second 5G network makes sense at all)?

From the way Miller described it in Chip War, Huawei faces difficulties in securing advanced chips needed for 5G equipment, unlike Ericsson.

And if Malaysia does get a second 5G network to be built by Huawei, would that 5G infrastructure be inferior to the first one due to restrictions faced by Huawei ?

Or is Chinese chip technology, wherever it is on the trailing edge, good enough for Malaysian purposes?

From Malaysian perspective, this does not sound like a geopolitical concern (Sinophobia?) that some in government make it out to be. Rather, it is a practical technological concern.

Categories
Economics Politics & government Society

[2982] Insufficient law enforcement as a symptom of fiscal pressures

Rules and regulations would become non-credible if it is unenforced enough. Smoking ban at eateries. Running the red light. Private vehicles on bus lanes. Illegal parking by the roads. We all have seen these cases frequently that violations are expected to be the norm.

In frustration, a person recently publicly tweeted Health Minister Dzulkefly Ahmad to complain about zero enforcement of the smoking ban. The Minister replied that the Ministry indeed enforced the bans and shared some statistics of people caught violating the rules. He shared that more than 96,000 citations were given, and 42,000 alone were linked to violations at eateries. So, technically, the Minister is right. There has been a non-zero enforcement. Yet, a non-zero is not sufficient.[1]

After all, what is the percentage of 42,000 caught violators to total violations?

The actual answer might be difficult to get to without a proper survey. But we can run a guesstimate. One 2018 paper suggests there were 5 million smokers in Malaysia.[2] Let us assume several things:

  • The 2024 figure is the same as suggested by the paper.
  • 1% of the 5 million are regular violators.
  • These 1% visit a restaurant (mamak) at least once a month (12 times a year).
  • They violate the smoking ban during every visit.
  • There is no corruption.

If we agree these are reasonable assumptions (these assumptions all in all are very conservative, except maybe the no-corruption part), then the 42,000 citations (caught violations) would represent only 7% of total assumed violations (caught and uncaught). The 7% figure suggests a low rate of enforcement. The revealed preference suggests that if the 7% figure is right, then it is below the rate necessary to make the law credible.

But even if we reject these assumptions and reject that 7% guesstimate, there is also revealed preference at work here: the fact that violations keep happening suggests the actual ratio must be very low that many continue to ignore the regulation brazenly.

These smokers ignore the ban because they do not believe they would get caught. And if they do get caught at all, the cost they would suffer is low. This is true not for just the smoking violations, but other things as well.

The laws themselves are meaningless if people do not believe in it. It is the act of enforcing enough that make people believe certain laws are credible.

But enforcement is expensive. Enforcement has been funded and here is where there is a link between insufficient enforcement and the fiscal pressures the government faces. To put it differently, resources are scarce enough that funding has to be prioritized and not enough has been channeled to boost the ratio of citations/total violations.

I take this as yet another symptom of the government being underfunded, and a case of needing to raise taxation level in Malaysia from its current low levels.

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

[1] — Hi & Thanks Paul @paultantk Lest you missed these..lm attaching it here for you et al to peruse..for your ‘zero enforcement’ n ‘completely toothless’ law. [Dzulkefly Ahmad. X. Accessed March 31 2024]

[2] — Approximately 5 million Malaysian adults (22.8%), aged 15 years and over, were current smokers. The prevalence of current smokers was significantly higher in males (43.0, 95%CI: 42.0-44.6) compared to females (1.4%, 95%CI: 1.0-1.8), as a whole and across all socio-demographic groups. The Chinese (14.2%, 95%CI: 12.7-15.9) and Indians (16.5%, 95%CI: 13.9-19.4) had a significantly lower prevalence of smoking compared to other ethnic groups. Adults aged 25- 44 years (28.3%, 95%CI: 26.9-29.8) reported the highest prevalence of smoking, but those with tertiary educational attainment (14.9%, 95%CI: 13.5-16.3) and those with an income level at the lowest (16.5%, 95%CI: 14.6-18.6) or highest (19.3%, 95%CI: 17.7- 21.1) quintile had significantly lower prevalence of smokers. On the other hand, the smoking prevalence was significantly higher among the self-employed workers (35.4%, 95%CI: 33.2-37.6) and those who worked in the private sector (31.7%, 95%CI: 29.8-33.6), compared to government servants, retirees and homemakers [Prevalence and factors associated with smoking among adults in Malaysia: Findings from the National Health and Morbidity Survey (NHMS) 2015. National Center for Biotechnology Information. National Library of Medicine. Accessed March 31 2024]