the __earthinc

There are reports of sugar shortage in four Malaysian states. While that happens, the authority, which is the Ministry of Domestic Trade and Consumer Affairs in this case, is blaming smugglers and hoarders.

PUTRAJAYA: Low sugar cane supply in the international market has contributed to the shortage of sugar in the country, said Domestic Trade and Consumer Affairs Minister Datuk Shafie Apdal.

This is in addition to the on-going smuggling of the controlled item to neighbouring countries, he added.

On the contrary, smuggling and hoarding is not the root cause. Instead, these are mere symptoms of inefficient market. The root is inflexible price; controlled price regime.

In Malaysia, items of mundane but delicious daily want and need like chickens, salt and sugar are controlled. They’re controlled because people in the higher echelon of the Malaysian society want to protect the consumers, in particular the common people. Noble indeed but misguided.

Price is an important signal. In a free market, price fluctuates with supply and demand, constantly seeking the perfect equilibrium. If it is not allowed to seek that equilibrium, something is bound to happen. That something could be anything — smuggling activities is one of them. Currently in Malaysia, there is a price ceiling imposed on the sugar market and that price ceiling is preventing the prices from achieving its stable state.

If prices increase worldwide and Malaysia has a price ceiling on sugar, thus making Malaysian prices lower than world’s prices, a simple arbitrage demands a reasonable trader to sell sugar to the world instead of Malaysia. This is the reason why smuggling is happening; it is not because some people are naturally born criminals but rather, simple economics demands it.

Like I have said earlier, this price ceiling is there to protect the consumers, or so those in the government thought. In reality, we can clearly see how such unneeded protection is depriving consumers of sugar. This brings in a question – do we prefer higher priced sugar or no sugar at all?

I’m forcing a false dilemma on you, true. Nevertheless, distributive inefficiency is as real as it can get.

For podcast on the same topic, see post [762].

My sister has been asking MYR 30,000 from my parents for nearly 2 weeks now. The reason is Lampe Berger (tag). Upon inspection, I’m convinced this is a pyramid scheme. I told my parents that and they have been very reluctant to give my sister that cash that she needs to enter this scam. However, my mom told me that my sister has thrown RM2,000 into it and that makes me angry.

One of the documents that I managed to have a look is RZ Corporation’s (I suspect this is the real culprit behind scam) “business plan“:

For larger illustration, click here. A new window will appear.Notice that one way or another, the real flow of income is the recruitment fee. I mean, come on. They are selling aroma therapeutic piece of crap which I doubt have been medically proven. How many of those shits do one needs to sell to get back one’s RM30,000 fixed cost?

In the end, the quickest and by far the easiest way to breakeven is by telling other people to pay you RM30,000. The goods are merely the veils to cover up the swindlers’ real intention. That’s the hallmark of Ponzi or pyramid scheme.

At first, I thought this is a limited and isolated case. Only after reading Brand New Malaysian’s entry do I realize the severity of the problem. Brand New Malaysian is a local blog with considerable following.

We totally need to get back at those thieves and liars.

p/s – this guy is telling people that MUDs and MMORPGs are the same thing. Yes. Absolutely. /forward /left /starfire /heal /right /travelform /switchback
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