Categories
Politics & government Society

[2847] We care because we are capable of empathy

It’s a big, big interconnected world out there. And that interconnectedness, ironically, makes the world smaller is a non-physical sense. Economically, socially and politically. Our lives are no longer affected purely by domestic matters. To some, the foreign affairs segment in the newspapers is an abstraction but for some others, the lines demarcating domestic and foreign concerns are blurry.

These remain the days of globalization still, however the Trumps, the Le Pens, the Farages and all those who long for a smaller world are trying to rewind the clock. They may yet be successful but for now they have a lot to undo. In the meantime, many have multiple homes and multiple affiliations with friends traversing national boundaries, opposing such undoing and rewinding.

For Malaysians, the war in Ukraine so far away across the Asian continent painfully proves the fact foreign affairs are home affairs too. Many Malaysians could not find the country on the map, but it still has an impact on the Malaysian psyche. And Malaysians did care for development in Bosnia during the Balkan War and in Kosovo. They do care about the conflicts in Palestine, in Syria and in Iraq. And to take a trivial example, there are Malaysians who care about the fate of foreign, English Premier League teams, despite not being English themselves.

The refugee crisis in Myanmar is also a Malaysian concern, because these oppressed men, women and children are coming to or passing by Malaysia. Whether we like it or not, we have to act in one way or another. Pretending the imaginary lines on a 2-dimensional map as an impregnable wall ensuring that is not our problem will not help by one bit. And to turn back the boats is not just an illiberal policy, it is heartless.

In the several years after the 9/11 attack, I became a victim of profiling at US airports, just because of my nationality and my Arab-sounding name. Security personnel would put me under extra security measures and screening. That discouraged me from leaving the US for home for the next four years for fear I would face immigration troubles upon reentry at the airports. I knew of other international students who needed to report to the Homeland Security office regularly, and I feared being subjected to the same requirement as an entry condition.

And so, I spent my entire time as a student in Michigan travelling throughout the US, reaching New York, DC, Miami, San Francisco, St Louis, Chicago, Sioux Falls and more. I remember how it felt like to drive the car through the Great Plains from the Great Lakes, or how peaceful it was staring into the night sky from the bottom of the Tuolumne Canyon just north of Yosemite in California. I learned to love America for the wonders it brought to my young mind.

Indeed, my political beliefs to a large degree were shaped in the US. However flawed the US is with all of its hypocrisies, it is still the greatest liberal democracy that the world has. It is the Athens, the Rome, the Baghdad, the Cordoba and the Delhi of our time. Just because of that, I looked up to it. Because of this and because I spent a significant portion of my early adult life there, if I had a second home, the US would be it.

When Trump and his followers do what they do, and among others equating the US to Russia, I feel that is an undoing of what the United States of America is supposed to be in my eyes, a foreigner, who looks kindly to the east across the Pacific. Trump is killing the US that I know, and by that, threatening the idea of liberal democracy all around the world (even in Malaysia where our democracy is becoming increasingly flawed and more authoritarian). That makes me angry.

The Trump’s ban, now challenged in the courts, adds further to the anger. My alma mater, the University of Michigan, is celebrating its 200th anniversary this year. And I am entertaining thoughts of returning to Ann Arbor to catch the festivities and walk down the memory lane. Trump’s ban, could potentially affect me. I still remember my experiences at various US airports during the Bush era. I thoroughly dislike the discrimination and I do not wish on others what I went through.

So, I do care for things that if happening in the US. The world is interconnected enough that I have real attachments to the US. Needless to say, I have friends in the US too.

But one does not need to have personal ties to the US to be worried about development in the US. It is just like how some of us are concerned about the oppression in Xinjiang, or in Iran, or in Egypt, or in the Philippines or anywhere else without the need to have any personal connection.

Even if we cannot think of ways which a reclusive, protectionist US could affect Malaysia — it will by the way: HSBC economists think Malaysia will be one of the top four economies to be worst affected by a protectionist US — we can still care because we have empathy for other human beings. Injustice or discrimination anywhere is still wrong and we can take a position on the matter. We can make personal judging based on our values. We have enough room for empathy those near and far beyond our shores.

Because of our capacity of empathy and because of the interconnectedness of the world we live in, it is outrageous to think we have to choose between caring US-based or Malaysia-based issues. Both are causes for concerns. I care for the deplorable things happening in the US, and at the same time, I care about the 1MDB corruption scandal, or the blockade in Kelantan, along with other injustices in the Malaysian society I am living in.

Indeed, it is a false dichotomy having to choose the US or Malaysia. There is no reason why a Malaysian needs to choose between the two. We can be concerned for both, and more.

More importantly, there are liberal values and among them are that we all are created equal and all should have the same fundamental rights. This applies all around the world, not just in and around your small neighborhood.

In time when anti-liberal populists are turning national policies inward, it will be most disappointing to have liberals retreating to a small-world cocoon as well. Such inward retreat would be a betrayal of liberal belief, that liberal values are universal in nature and not provincial. We fight racism, discrimination and everything bad out there by staying true to our liberal values, not by abandoning it.

Categories
Economics

[2846] Unfairly casting aspersion on the Gini coefficient

There is a very good article published in the Malay Mail over the weekend.[1] It is about the brisk sales of high-end cars like BMW and Mercedes in Malaysia while entry-level, compact cars like Perodua are doing badly, and the consumption pattern in the economy by income levels.

[The divergence car sales by prices are part of the weird macroeconomic statistics that have been coming out of Malaysia since the GST was introduced back in April 2015, along with the collapse of oil prices. Weirdness like the consumption growth is rising nicely while big ticket items like cars and homes are not doing so well in terms of growth. In fact for cars as a whole, it has been declining. It may be some non-business cycle explanation behind this, like the widening of train network in Malaysia but for now (a person driving BMW rarely if ever take the train, for instance), let’s put that aside and maybe discuss that on another day.]

But I have one, tiny issue with the article, way, way down. The author questions the accuracy of the 2014 Gini coefficient, which suggests inequality, decreased compared to 2012, while pointing to the latest car statistics (2015-2016), which may say otherwise:

While BMW Malaysia posted its highest ever sales growth last year, its rival Mercedes posted record sales for the second straight year in 2016. A total of 9,047 Mercedes vehicles reported to have left its showrooms in the first nine months of 2016, marking a 10 per cent growth compared to the same period last year, according to Malaysia’s leading automotive online magazine Paultan.org.

In 2015, when the local economy appeared to be slowing, Mercedes sold a total of 10,845 vehicles, a record increase of 56 per cent from 6,932 units in 2014.

[…]

Based on the sales data, slower economic growth was not affecting all segments of the country equally. While those in the lower income brackets are complaining of rising costs, their more well-off counterparts have been splurging.

”What it indicates is that while the low and middle income earners are experiencing fiscal constraints, it is business as usual for the higher income group,” Muhammed told Malay Mail Online in a phone interview.

Global trend

Putrajaya has so far shrugged off the idea. According to official statistics, the country’s Gini coefficient series shows a downward trend in household income inequality from 2004 to 2012, after which it falls off drastically — the Gini coefficient was 0.46 in 2004 and only dropped by 0.3 percentage point after eight years. But in 2014, it dropped to 0.40.

I find the final paragraph (especially the final sentence) in this excerpt as slightly confusing. After laying out the situation in 2015 and 2016, the article goes on talk about the 2014 Gini data, which might not describe 2015 and 2016 very well.

Confusing, because the Gini coefficient is a low-frequency data done, at the moment, every 2-3 years together with the household income survey. Not only that, it lags severely, published only after the survey was done months earlier: the 2014 data was released in June 2015 while the 2012 data was released in July 2013. You can see its low frequency in the chart below:[2]

In contrast, car sales statistics are high-frequency data available monthly.[3] 

High-frequency data do have a lot to say about the present time. But I feel it is unfair to cast aspersion on low-frequency data from all the way back by using more recent information (2015-2016 car sales) the way the article does. It is unfair because the two datasets describe two different points of time. They are not contemporaneous data and not comparable, at least in the way it is being done.

I am aware of the paper by Lee Hwok Aun and Muhammed Abdul Khalid which the Malay Mail article cites. But the paper utilizes car sales data that is contemporary to the Gini coefficients it uses (before that, I would like to say it is a shame that Lee had to leave University of Malaya because of the short-sighted government spending cuts). You can read the working paper here.

In contrast, the Malay Mail article is taking post-2014 car sales data to question a 2014 Gini coefficient.

So, I think the attack on the 2014 Gini coefficient from the Malay Mail angel might be overdone, and different from the Lee-Muhammad criticism. The 2014 coefficient is just unable to describe the 2015 and the 2016 situation, especially since the GST was introduced in April 2015. There was a significant structural break since the 2014 coefficient was released.

[Also, I feel it is important to note that the Gini we have here measures income inequality, not consumption inequality. We have the Household Expenditure Survey though. Just saying]

In any case, the next Gini coefficient may come out this year or the next. The Household Income Survey is supposed to be done twice in five years (last done in 2014). The latest coefficient may yet go up.

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

[1] — Syed Jaymal Zahiid. What BMW and Perodua sales data says about the economy. Malay Mail. January 21 2017.

[2] — 2014 Household Income Survey. Department of Statistics. Accessed Jan 23 2017.

[3] — Malaysian Automotive Association. Accessed Jan 23 2017.

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

p/s — I am not defending the Gini coefficient per se. I am saying the criticism mounted in that particular way is off the mark.

Categories
Personal

[2845] A generous migrant worker

I just got off work. I just got off the train. The sun was coming down and the tropical heat was subsiding.

The train station is not that far away from home and so I decided to walk home instead of getting on a bus or calling a cab.

I was not feeling that hungry but I figured, maybe I should get something light just in case. There was a Monday market nearby. I made a detour, looking for something I could munch on later at home.

The entrance was a narrow pathway with brick walls on both sides leading into a small square. Narrow, only because food vendors set up their stall on one side of the wall. They sold noodles, fruits, nasi goreng and other items typical in this corner of Asia.

Several beggars lined up along the opposite wall. The passing crowd had to navigate between the stalls, the beggars and those who stopped in the middle of the path, deciding what to buy, apparently oblivious to the foot traffic and the space constraint.

A blind old Malay man sat on an old worn tool wearing a white skull cap, ignored by the crowd. A foreign woman, possibly a Bangladeshi, in her Muslim headscarf, sat on the pavement with her palms extended out, not far from the old man. Her eyes looked down, seemed too ashamed to look up into the eyes of others. A kid, with lines on his face, sat farther away, hoping for a stranger’s generosity by selling ersatz serviette that nobody really needed.

I have been here before and I did not think much of the crowd, or the begging men and women. I was tired. I went on with my business. I walked past the crowd at the entrance, made a quick circuit in the square before deciding on a cheap meehoon for slightly more than three ringgit, packed in a white polystyrene container, apparently banned now. The seller placed the container into a flimsy red plastic bag before handing it to me. I said my thanks and he gave me a weak smile.

I headed out, passing the several beggars I mentioned earlier.

On my way out, a migrant worker was walking in. He stopped, reached out from his torn and worn wallet and pulled out a ringgit for the blind old Malay man on the stool. It did not look like he could afford to be generous, but he was generous to the old man anyway.

I walked on. I was tired and I wanted to get home as quickly as possible.

Halfway to home, walking up the hill, I slowed my pace. A sense of guilt filled my being. I felt so ashamed.

I felt ashamed for the rest of the day.

I wish I had pulled a note or two for those men and women. But no I did not.

Categories
Economics Politics & government

[2844] Evolution of corporate ownership in Malaysia

Terence Gomez is embarking on a massive project investigating quantitatively the influence of government-linked companies in the Malaysian economy. The dominance of government in business and in the economy is no mystery. What is special here is that he is analyzing the numbers more comprehensively than many had done before. He is currently focusing his research at the federal level but if I remember correctly, he plans to delve into state level bodies, looking into bodies like Kumpulan Perangsang Selangor, which are much less known than those like Khazanah Nasional.

Together with Jomo Kwame Sundaram, Gomez in 1997 wrote the go-to book — Malaysia’s Political Economy: Politics, Patronage and Profits — exploring the ownership of corporate Malaysia in the 1990s and its links to politics, namely Umno. To understand political financing during the Mahathir era, this is the book to read.

The scale of Gomez’s latest project on ownership is larger than anything available before. There have been work done on corporate ownership in Malaysia after his 1997 book but they provided only partial view of the whole story while nibbling at the edge.

Gomez in his lecture, which I attended at the University of Malaya earlier this year (and later at an event organized by the Institute for Democracy and Economic Affairs; Ideas is funding of the project) made the connection between previous ownership literature and showed how the majority ownership changed from the 1950s to the 2010s, the present time.

He is continuing the work pioneered by James Puthucheary, who back in the 1950s went through official colonial and Malayan documents to understand who owned what in the economy. Through that, he corrected the idea that the Chinese had controlled the economy when in fact it were the Europeans. Gomez mentioned Lim Mui Hui’s work as the other important literature in the 1970s tracing capital ownership in the Malayan-Malaysian economy in the early days of the New Economic Policy period.

Gomez in his lecture showed just as Puthucheary demonstrated decades ago that the British and other European bodies controlled the majority of the top Malayan companies in the 1950s. This changed in the 1960s and the 1970s when Chinese tycoons rose up in the list. By the 1980s and the 1990s, due to the implementation of the New Economic Policy and Mahathir’s industrialization drive, the list was dominated by Malay industrialists. The ownership list was also more diverse than it ever was, with Genting, Berjaya and YTL were among the biggest then.

But in the aftermath of the Asian Financial Crisis, something fundamental happened. Most of top Malaysian companies were owned by the government and no longer belonged to private individuals or groups. There were bailed out or acquired by the government through the Government-Linked Investment Companies. Gomez listed the usual seven: the Employees Provident Fund, Kumpulan Wang Persaraan, Permodalan Nasional, Lembaga Tabung Haji, the Armed Forces Fund, Khanazah Nasional and the Ministry of Finance Incorporated. Many of the Malay industrialist companies like UEM were now owned by the government.

Not all of those seven government-linked investment companies are the same. The EPF, for instance, is not strictly a government company, in the same Khazanah is. But nevertheless, the EPF does have an extremely strong presence in the Malaysian economy, in both the equity and the debt markets.

In a different talk of a more casual style, historian Khoo Kay Kim claimed the Germans controlled the Malayan economy before the First World War. Their influence diminished after their lost the war and was replaced by the Japanese during the interwar period. I have not read a proper document to ascertain the claim but I have read from various sources that Japanese companies were active in Malaya prior to the Second World War.

Gomez’s work has implications beyond economics. Control over of these government-linked corporations and entities enables political control and enhances political power, just has the Umno’s ties to various the 1980s-1990s Malay industrialists had kept the party’s machinery going. But unlike then, when those funds were private money from private companies (public companies privatized), the government today does enforce spending or procurement requirement to benefit certain parties. While Gomez did not cover 1MDB, the 1MDB corruption scandal, provides the starkest example of public resources being used directly and illegally to finance Umno’s (and even its president’s personal) requirement. The connection is starker and more corrupt now than ever before.

The evolution of corporate ownership in Malaysia simply does not inspire confidence, and the completion of Gomez’s work will truly show how big the beast has become.

Categories
Photography Politics & government

[2843] Comrade Takashimaya

I love this kind of contrast.

Within Southeast Asia, it is at its starkest in Vietnam.

I have been to Laos with its own nominally communist government. The hammer and the sickle would adorn lamp posts and facades in Vientianne and Luang Prabang, reminding tourists and locals alike the insecurity of those in power. But deep in the Mekong heartland, commercialization is still at its infancy, rugged and all. There are contrasts, but not like how it is in Vietnam, where consumerism is embraced wholeheartedly decades after American troops were chased out, sparking Malaysia’s first refugee crisis.

Malaysia received those Vietnamese refugees about 30-40 years ago, unwillingly. They are grateful to us, it seems, regardless of our intention.

Not much has changed today as Malaysia experiences its third refugee crisis, the second, I think, being the one caused by the civil war in southern Philippines. This time around, the new refugees from Myanmar are just a political football game to be played by the corrupt.