Categories
Environment

[2504] Wrongly freed, wrongly judged

This has to be a case of taking a dim view of justice, where the judgment is too stuck in technicality. The notorious Anson Wong was freed by the Appeal Court. The judges reasoned that the earlier harsh judgment of 5 years worth of imprisonment did not take into account Wong’s guilty plead, the fact that this was Wong’s first offense and the previous judges took into account irrelevant material.

Consider this. Back in 2000, Wong was arrested in the US and sentenced to 71 months of imprisonment for wildlife smuggling. So, first offense Mr. Judge? Really? Yes, first offense in Malaysia but definitely not the first offense if the judge had taken a wider view. Wong is really an unrepentant smuggler. Did the appeal judges take that into account?

As for the guilty plead, the incentive system is perverse. If you know the evidence are mounting against you, and you know that a guilty plead would lessen your sentence, what would be the best course of action? It does not take an economist specializing in game theory to answer that. I am sure Anson Wong knows this. Back in the US, he pleaded guilty exactly because he knew was in it for. Back in 2010 in Malaysia, he knew he was in it for Malaysia. Yet, the appeal judges decided that a 5-year jail sentence is excessive.

Finally, the appeal judges said the earlier harsh judgment took into account irrelevant evidence and sentiment. Did the appeal judges take into account the pillar that Wong is to the illegal wildlife trade industry? His notoriety? His suspicious good ties with wildlife authority in Malaysia?

Why did not the judges take that into account?

This is the Malaysian legal system. It is an outrageous system.

Categories
Photography

[2503] A picture on Thaipusam

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Categories
Economics

[2502] A too convenient instance of government spending

The Malaysian GDP figures for the 4th quarter came out today, with the full year growth being slightly above 5%. Judging by the components of the GDP and their respective growth, I find the growth rate of 5% to be too convenient for the government, which projected the 2011 economy to grow between 5% and 6%. The reason is that government spending grew by close to 17%.

I shared this last month, and the 4th quarter growth for government spending was even higher than the previous quarter: 23.6% from a year ago.

I did a little calculation just now while I was finishing a GDP report for my bank. I found out that if government spending had not grown at all, that would have shaved almost a complete percentage point out of the 5% annual GDP growth. If the spending increase had been slightly more modest, the overall growth would have missed the government’s target easily. Really, it would not take much to miss the target.

I know there is a low base effect given that there was hardly any government spending growth in 2010. It is very likely that spending planned for 2010 was postponed to 2011.

But the government spending growth is still convenient, too convenient, nonetheless. This may appear to be a case of perverse incentive.

It is much like a case in Liar’s Poker:

One trader remembers that ”Lewie would say he thought the market was going up, and buy a hundred million [dollar-worth of] bonds. The market would start to go down. So Lewie would buy two billion more bonds, and of course the market would then go up. After he had driven the market up, Lewie would turn to me and say, ”˜See I told you it was going up’”¦”

Categories
Economics Humor

[2501] Happy Valentine’s day

Via Greg Mankiw, from Elisabeth Fosslien.

p/s — Oh, Dr. Goose rounds up the econosphere’s Twitterverse:

Who says there’s no romance in monetary stimulus? Those outside of the Twitter econosphere may not know that the network was recently swept by a wave of #FedValentines, as the trend was hashtagged. It began with Penn economist Justin Wolfers, who tweeted: “Like fiat money, our love is built on trust.” White House economic adviser Austan Goolsbee chimed in: “Roses are red, violets are pink, don’t listen to gold bugs — no one cares what they think.” My personal favorite belonged to the FT’s Alan Beattie: “I’d like to borrow you overnight and then hold you to maturity.” Not to be outdone, Dr. Goose contributed: “If you’re not ready for a liquidity injection, I’ll understand.”

Categories
Economics

[2500] Will there be any saving in the MRT setup?

Here is a microeconomic contract theory puzzle with the incentives do not quite line up perfectly.

According to the Financial Daily today, the MRT project delivery partner (a joint venture between MMC Corp and Gamuda) will be punished by the project owner if the cost of the project exceeds 15% of some base. Any cost overruns beyond that limit will be borne by the PDP instead of being passed to the project owner, which really is the government.

In StarBiz today, it is reported that any cost saving will go directly to the government.

This makes me wonder, will there be any saving? What incentive is there to discourage the PDP from running 14.99% above the agreed base. Is it not rational for the PDP to eat up any saving that might exist, leaving nothing for the government?

But I guess we can take comfort that a cost overrun is a likelier outcome than any saving. After all, the last time a similar project was carried out in Kuala Lumpur more or less 10 years ago, the cost ran out of order so much that the developers had to be bailed out by the government.

Some comfort, eh?