Categories
Politics & government

[1177] Of do away with those divisions

Apart from being known for its communal nature, Malaysian politics suffers another division. While its communal division is observable at the inter-party level, the other division occurs at the intra-party level.

If one is to scan through the Malaysian political landscape, to the best of my knowledge, each and every one of Malaysian political party is divided into the main branch, the women branch (Wanita) and a branch for young men (Pemuda) and women (Puteri) each. The main branch is dominated by veteran males and these veterans are the de facto heads of the party.

I do not favor this kind of division. It heavily biased to the incumbents, especially old male incumbents. This results in young politicians receiving limited exposure to real policy making processes. On top of that, the current system is heavily biased to the males as women are expected to be active in their own branch rather than the whole party. Given its male-biased setup, the situation is the worst for aspiring young female politicians. As insulting as it sounds, this system seems to suggest that those not in the main branch are incapable of providing leadership.

Further, this setup is a major reason why Malaysia will not see a woman prime minister. As long as the system stays favored by the majority, men will dominate the national political scene.

This division, at risk of making myself redundant, separates each segment of the party’s population and strongly discourages interaction, or rather competition among, for the lack of better term, biological based groups. This active discouragement directly increases security for incumbents and veterans in the main branch of the party. Women, young men and young women are expected to be active in their own branches instead of the the party all over and thus, the lack of challenges to those in power. While there are individuals in the three groups that exert influence over the whole party, the number is fairly limited and is more of an exception rather than a rule.

I do not hesitate to venture that the restriction to competition is one possible reason why there is a lack of high quality politicians among political parties in Malaysia. The effectiveness of good democracy in guaranteeing meritocracy is blunted by the current system. Those with the best qualification are bogged down to relatively useless functions in a party that typically engage in emotional rhetoric and nothing else.

Yet, there is a benefit of having these various branches; it creates training opportunities for young newcomers. That training provides valuable experience that could be utilized once the time is right. But surely, similar training could be obtained through active participation in the main branch.

Further, I am in the opinion that those positions in inferior divisions are redundant. Perhaps, limited proper posts in the party in the face of the need to satisfy followers, these redundant positions become an important tool to garnering and maintain support. In way or another, the system reinforces Malaysian feudalistic politics.

For all the points stated and more, a real reformist party needs to eliminating these divisions. Bring down the walls, create a competitive atmosphere inside the political party and trust me, the party will come out stronger. Apologies to Mr. Friedman but the political parties of the future is flat.

Categories
Economics

[1176] Of appreciating ringgit to slow down export too

In November 2006, I mentioned how the Mundell-Fleming model works by applying it to the then-current economic situation in Malaysia. Among many points that were mentioned in that post is the connection between government spending and net export. The rationale is, greater government spending drives up the interest rate and encourage capital inflow, which later, appreciates the Malaysia ringgit. The appreciation hurts export as local good become relatively more expensive compared to foreign goods.

For the past two or so weeks, the issues of too much net capital inflow to Malaysia as well as increasingly large foreign reserve are popping up and has fueled rumor on further liberalization of the Malaysian ringgit. Though the current appreciation is definitely not exclusively caused by government spending, I have no doubt that the thumb prints of government spending through the Ninth Malaysia Plan is somewhere the Malaysia economy.

Further, about a month ago, the executive director of Malaysian Institute of Economic Research (MIER), Mohamed Ariff criticized the idea of having too big foreign exchange reserve:

THE size of foreign exchange reserves held by central banks the world over is often viewed by analysts, investors and policy-makers as a key indicator of macroeconomic strength. This notion is pitifully assailable, not only because inter-country comparisons are fraught with pitfalls, but also because the bigger-the-better argument does not hold water.

[…]

A robust domestic economy would also shift the focus from preoccupation with exports, current account surpluses and large reserves to internal dynamics that would drive imports closer to exports and the balance of payments closer to equilibrium with current account balance and stable external reserves. [When larger reserves may not really be good. NST. February 9 2007]

It would be interesting to observe the Malaysian export trend in the next few months if the ringgit appreciates further. I however am convinced that export will slow down, induced, in part, by both stronger currency and weaker demand in the US.

Another thing is, at the Wall Street Journal Asia:

A mild slowdown in the U.S. could actually further the government’s efforts to rein in growth. It might also encourage Chinese companies to focus more on serving domestic consumers than overseas ones—another shift China’s leaders are trying to promote. [China’s export engine survive a U.S. slump. WSJ Asia. April 10 2007]

In other words, China might actually look forward for a slowdown in the United States to cool down its economy. But admittedly, the article suggests that a minor slowdown in the US would not hurt China too much. That however does not change my mind that China could not be Malaysia’s savior if an US slowdown occurs, for reasons stated here.

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

p/s — on Saturday morning, I came across this:

PETALING JAYA: The year-on-year slide in Malaysian exports for the month of February cannot be attributed to the strengthening trend of the ringgit, said Second Finance Minister Tan Sri Nor Mohamed Yakcop.

Nor Mohamed was reiterating economists’ view at the beginning of the month that the weakening in exports was due partly to shorter working days and a decrease in overseas purchase of items such as electrical and electronic products, transport equipment as well as petroleum products. [Minister: Drop in February exports not due to strengthening ringgit. The Star. April 13 2007]

Fair enough.

Categories
Economics

[1175] Of supply-sider versus demand-sider, round n

Approximately 40 years after the debate began, the battle between supply-siders and the Keynesians (and to some extent, monetarists) continues.

It first came to surface with Bruce Barlett’s article at the NYT:

Today, hardly any economist believes what the Keynesians believed in the 1970s and most accept the basic ideas of supply-side economics — that incentives matter, that high tax rates are bad for growth, and that inflation is fundamentally a monetary phenomenon. Consequently, there is no longer any meaningful difference between supply-side economics and mainstream economics. [How Supply-Side Economics Trickled Down. Bruce Bartlett. NYT April 6 2007]

Mark Thoma at the Economist’s View enlightens his readers on the difference between supply-side and New Keynesian schools…:

There is much more to say about all of this, I haven’t even mentioned New Classical models, but that will have to do for now. Summarizing, contrary to what is implied in Bruce Bartlett’s commentary, there are two distinct schools in economics, the RBC school and the NK school, and they have very different policy implications. Not everyone will agree with this, and that is the point I suppose, but I would argue that the mainstream view today is the NK model, though the RBC school has strong advocates and has made important contributions to our thinking (the long-run incentives Bruce Bartlett mentions are a good example). [Bruce Bartlett: How Supply-Side Economics Trickled Down. Economist’s View. April 6 2007]

…while DeLong gives a little bit summary of what is going on the next day:

Mark Thoma quotes large chunks of Bruce Bartlett’s views on supply-side economics… [A Very Good Conversation on Supply-Side Economics. Grasping Reality with Both Hands: Brad DeLong’s Semi-Daily Journal. April 7 2007]

Then, it is Paul Krugman at Economist’s View, defending Keynesianism:

The key thing is that good Keynesianism, as embodied even in undergrad textbooks of the time, was *perfectly OK*: Dornbusch and Fischer, 1978 edition, offered a description of what disinflation would look like that matches the experience of the 80s reasonably well, and the textbook does not seem all that dated even now. The idea that we needed a new doctrine to get our heads straight is just all wrong. [Supply-Side Economics: Paul Krugman Responds. Economist’s View. April 11 2007]

James Galbraith on his opposition to supply side and monetarism:

Brad DeLong’s summary of Bruce’s summary of our vulgar Keynesian policy beliefs is, here, reasonably close to the mark, except in one respect. No one in my circle doubted the capacity of monetary policy to crush the economy if pushed sufficiently far. Rather, we believed (accurately, as events would prove), that monetary policy worked against inflation *only* insofar as it brought on a brutal recession. We did not accept the monetarist/supply-side claim, which was presented at the start of the Reagan administration in official projections, that the trick could be pulled off without a recession. We were, of course, perfectly right about that.

Second, as a matter of economics, we thought that the combination of supply-side economics and monetarism was fundamentally incoherent — and we were well aware that the supply-siders and monetarists disagreed with each other more violently than they disagreed with us. As an anti-monetarist and one of the very few Democrats willing to criticize the sainted Paul Volcker, I found myself in rough alliance with the supply-siders more than once (and I have a few handwritten notes from Jack Kemp in my files somewhere). [Jamie Galbraith Speaks for the “Vulgar Keynesians”. Economist’s View. April12 2007]

Watch those comments at the Economist’s View.

Categories
Economics

[1174] Of straight from the broker: Dialog suspended!

I just received a call informing me that trading of Dialog Group Berhad in the Main Board has been suspended. I was a little bit panic upon hearing the news because I have some holding there. A search on the internet is unhelpful:

Trading in Dialog Group Bhd’s shares was voluntarily suspended early on April 12 ahead of an announcement to be made on the same day.

The share price had risen 12 sen to RM2.09 with 12.25 million shares done before it was suspended at 9.49am.

The company informed Bursa Malaysia Securities that it had requested for a suspension in the trading of its securities until 5pm on April 12. [Dialog suspended ahead of announcement. The Edge Daily. April 12 2007]

Rumor has it that it is going to be good news. As for me, I can only wait patiently.

Earlier, Dialog clinched several contracts earlier and that caused the share to jump for about 40% since late March 2007. I was one of probably many that reacted to the news and profited.

Categories
Liberty

[1173] Of court rulling must be popular?

In The Star yesterday, Minister Nazri Abdul Aziz seemed to suggest that popularity has greater importance than individual rights:

Replying to Karpal Singh’s (DAP — Bukit Gelugor) query on why a decision had yet to be reached in the Lina Joy case, Nazri said:

“The decision is difficult to make as it is very sensitive and we have to consider the consequences. Even if it is made in the right decree, the acceptance may be difficult,” he said at the Dewan Rakyat when winding up the debate on the motion of thanks on the royal address. [Commission to study religious-sensitive cases. The Star. April 11 2007]

In Malaysia, your religion is determined by the mob.