Categories
Economics

[2170] Mengenai apabila kerajaan mencipta masalah, salahkan pasaran bebas

Bekas Presiden Bursa Saham Kuala Lumpur Salleh Majid menulis tentang dialog yang beliau hadiri di dalam Utusan Malaysia hari ini.[1] Beliau menyenaraikan pelbagai masalah yang dihadapi Malaysia, masalah yang diakui kewujudannya oleh kerajaan Barisan Nasional hanya selepas Pilihanraya Umum 2008. Masalah-masalah ini kemudiannya dijadikan sebagai alasan untuk mengaminkan campur tangan kerajaan di dalam ekonomi negara serta polisi Barisan Nasional. Walaupun masalah-masalah ini wujud, ia tidak boleh dijadikan alasan untuk campur tangan yang lebih hebat kerana kerajaanlah yang menjadi sumber kepada kebanyakan masalah-masalah ini.

Sistem pendidikan yang lemah disebut sebagai satu punca kepada struktur ekonomi negara yang tidak menyakinkan. Siapakah yang mempermainkan sistem pendidikan kita? Siapakah yang mengikat kaki dan tangan pelajar serta tenaga pengajar? Siapakah yang memperbodohkan beberapa generasi rakyat Malaysia demi kepentingan politik? Kerajaan.

Karenah birokrasi kerajaan adalah satu lagi faktor yang diketengahkan. Adakah birokrasi tersebut disebabkan oleh pasaran bebas?

Kemudian disebutnya masalah korupsi dan rasuah. Ini adalah perkara yang kelakar. Siapakah penyebab utama perkara tersebut berleluasa? Pasaran bebas? Bukankah bahagian eksekutif kerajaan yang dikuasai oleh Barisan sekian lama yang telah meluaskan kuasa mereka sehingga sistem timbal balik hilang reputasinya? Bukankah kerajaan persekutuan dan negeri Barisan Nasional yang sewenang-wenangnya menggunakan duit rakyat untuk kepentingan parti? Bukankah punca korupsi itu adalah kerajaan?

Kewujudan kartel dan monopoli adalah masalah yang besar. Tetapi, siapakah yang menggalakkan pembentukan monopoli ini? Siapakah yang menggalakkan industrialisasi secara penggantian import di Malaysia? Siapakah yang menyekat pemberian lesen? Kerajaan! Kerajaan! Kerajaan!

Beliau akhir sekali menyebut beberapa negara yang mengalami masalah ekonomi yang kononnya disebabkan oleh sikap free for all. Beliau menyebut tentang Sepanyol, Portugal, Itali dan Greece. Tetapi, bukankah masalah negara-negara ini adalah saiz defisit fiskal yang besar yang disebabkan oleh perbelanjaan kerajaan yang tidak terkawal? Adakah kemampuan kerajaan-kerajaan ini untuk mengawal keadaan fiskal mereka disebabkan pasaran bebas? Mereka yang memperjuangkan pasaran bebas kebanyakan mahu saiz kerajaan dikurangkan. Penyokong pasaran bebas mahukan perbelanjaan kerajaan dikurangkan lalu mengatasi masalah defisit.

Jadi, mengapa salahkan pasaran bebas apabila kerajaan yang menyebabkan semua ini?

Ini penipuan yang tidak boleh dibiarkan.

Yang lebih mengarut lagi, masalah-masalah ini ditulisnya akan menjadi lebih teruk jika pasaran bebas dilaksanakan. Kerajaanlah penyebabnya, tetapi beliau tidak mengakui akan kebenaran ini. Malah, menurut beliau, kerajaan perlu campur tangan untuk mengatasi masalah ini.

Ini adalah satu pegangan yang mungkin lucu, jika ia tidak pernah memusnahkan negara ini.

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

[1] — BEBERAPA kumpulan pertubuhan bukan kerajaan (NG0), usahawan Bumiputera Semenanjung, Sabah dan Sarawak telah berpeluang memberikan pandangan mereka tentang Model Ekonomi Baru(MEB) kepada Pengerusi Majlis Tindakan Ekonomi Negara, Tan Sri Amirsham Aziz pada hari Khamis 25 Februari yang lalu. [Dialog dengan Majlis Tindakan Ekonomi Negara. Salleh Majid. Utusan Malaysia. Mac 1 2010]

Categories
Photography Travels

[2169] Of paradigm shock

I spent the last week of my holiday vacationing in Queensland. One of the days involved cruising and snorkeling around Moreton Island. Dolphins and turtles were there too.

Some rights reserved. By Mohd Hafiz Noor Shams.

At the helm of the boat, the skipper had a map laid out on a platform but I did not see him consulting the map. He has everything that he needs to navigate the waters in his head.

That scene along with its relaxing atmosphere is vanishing fast. It feels unreal now.

The first email I read from my university account has the name Romer mentioned in it. What a contrast.

Categories
Economics

[2168] Of no to the policy of One Price

Prices of the same tradable items in different places tend to converge in a perfectly efficient market. Theoretically, motivated by profits, individuals and entities act as arbitrageurs. They will continue to arbitrage until there are no more profits to be made. That is when prices equalized and that is the essence of the law of one price.

Prices may not actually converge to one price due to several factors however because market can be inefficient. Limited access to information crucial for the purpose of arbitrage may prevent convergence. Transportation cost as well as government intervention in terms of taxation and subsidization are two of several other important frictions. Instead of prices equalizing, a price spread exists to reflect those frictions even as market participants exhaust arbitrage opportunity.

This is essentially the reason why there is noticeable price differential for the same tradable goods sold in eastern and western part of Malaysia. With the South China Sea separating Malaysia into two parts, it is only natural for prices to differ between the two regions. Even under the price and supply control mechanism that exists in Malaysia, a kilogram of sugar for example, is sold 10 sen cheaper in Peninsular Malaysia than in Sabah and Sarawak. Transportation cost is a considerable barrier preventing actual convergence.

This is a source of discontent for some. Member of Parliament for Kalabakan, Abdul Ghapur Salleh of UMNO said in November 2009 said, “We’re talking about 1Malaysia, but we don’t even have one price” while alleging that the price differential is more insidious in nature — discrimination against Sabah and Sarawak — rather than simple economic friction.

It is unclear how exactly he wants effort at standardization to proceed but the approach by the federal government is clear. In the same month, Minister Koh Tsu Koon supported the idea of standardized prices across Malaysia and proposed that transportation cost be shared by all; in other words, introduce subsidy. Nearly a year earlier, Domestic Trade and Consumer Affairs Ministry wanted to do the same: subsidize transportation cost. In Sarawak itself, perhaps a harbinger preceding a possibly wider similar nationwide policy, the same ministry plans to subsidize transportation cost with the intention of standardizing prices of essential items sold in urban and rural areas under its “One Sarawak, One Price” campaign.

They are turning the law of one price on its head. Rather than letting market forces find its equilibrium where a particular price fits a particular landscape through a narrow band, the government intends to impose unnatural standardized prices for all situations everywhere to force convergence. The government intends to introduce more inefficiency to standardize prices.

The discontent over price differential is overrated. Two economists — Lee Chin and Muzafar Shah Habibullah of Universiti Putra Malaysia — published a paper in 2008 showing that prices of tradable goods between Peninsular Malaysia, Sabah and Sarawak are converging. Furthermore, the recent liberalization of cabotage policy — a protectionist policy that contributed to persistent price differential between eastern and western part of Malaysia — will likely further strengthen the natural convergence trend.

Convergence aside, to iterate the idea of how the difference is natural, the price differential has nothing to do with discrimination between the two parts of Malaysia. It is a reality that there is a large body of water separating the two parts of Malaysia. It is likely that if the transportation cost is brought down either through liberalization or improvement in technology, prices are likely to equalize, all else being equal.

The price differential due to transportation cost or distance has nothing to do with the idea of unity as much as it has something to do with the idea of discrimination. In the United States for instance, gas prices in Michigan and in California are very different. Even in the same state, prices of gas in one town can be different from another town a mile away. That does not make the person who pays higher price as less American than the other person who pays lower price for gas.

This idea can be expanded to Peninsular Malaysia. The government should not standardize prices within Malaysia. This is not to say just prices between Peninsular Malaysia, Sabah and Sarawak, but within those regions as well. What a free Malaysia needs is not a Price Control Act, but a Competition Act or antitrust law to fight collusion among businesses in order to encourage competition — the most effective method at encouraging convergence and low prices — without suffocating entrepreneurial spirit.

On top of that, maybe, just maybe, the move of having manufacturers based in Sabah or Sarawak is a cheaper and a more profitable option compared to the option of transporting goods from Peninsular Malaysia or from abroad even after accounting for various other effects like clusterization.

If the subsidization program goes through, it removes that incentive and hence, the possibility of developing industries in eastern Malaysia. If a business owner could transport his or her goods free from western to eastern Malaysia, why would the business owner locate his or her factory in eastern Malaysia? There are better ports, roads, financial services — practically everything that matters in business — in Peninsular Malaysia than in Sabah and Sarawak. The subsidization program would continue to industrialize the Peninsula while leaving Sabah and Sarawak farther behind in terms of development.

Besides, the Prime Minister recently said that private initiates and market forces have to be given freer rein while subsidies be phased out. The standardization of prices across Malaysia through subsidization of transportation cost by the government clearly contradicts that. Is this a proof that there is no coordination within the government? Or does words mean nothing to the government?

For the answer to be no on both accounts, the policy of “One Price” must be rejected.

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

A version of this article was first published in The Malaysian Insider on February 22 2010.

Categories
Photography Travels

[2167] Of Melbourne makes it to my top ten list

Melbourne roared with a blue electric spark. Its ambient noise greeted me. Together, they reminded me of my experience of watching a special effect-laced movie at the cinema. Subwoofer noise always feels like an invisible force running through my chest. Waves produced by Melbourne’s trams running along its streets had the same force; the tremor jolted my ribcage.

That was the scene as I stepped out of the Southern Cross Station, a transportation hub for the city. The train line from Sydney ends here. After a 12-hour ride, I was more than eager to get out to see, feel, smell and taste Melbourne. This is a city that some have argued as one of the most livable in the world. There I was, an inspector all ready to test the veracity of that idea.

Melbourne reminds me of San Francisco because of the trams and the wires that run above the streets. I was impressed with such system when I wandered the streets of San Francisco but Melbourne changed my mind. So pervasive it is that I think it badly affects the aesthetic of the city. The wires annoy me to no end.

Some rights reserved. By Mohd Hafiz Noor Shams.

A street in Melbourne. Observe the wires.

I did learn to accept the wires as part of the city identity later.

Living in Sydney, I have always heard talks of how this city of Opera House and Harbour Bridge is better than that city in Victoria. There is a healthy rivalry between the two cities. I was there to contribute to that rivalry.

I boarded a train to Melbourne. I figured, I would like to see the Australian countryside. To my surprise, it looked very much like those in Michigan, Indiana, Illinois and other states to the west up to South Dakota, like the North American prairie. Slightly hillier but I cannot forget how those fields of long golden dry grass dominated the Midwest.

Some rights reserved. By Mohd Hafiz Noor Shams.

A typical view of the grassland.

I told a stranger who sat beside me just that. Maybe, the comparison is an overkill. The grassland is really cultivated land. The grassland in those U.S. states are natural.

She appeared above 50 of age and she was visiting her daughter at the University of Melbourne. She boarded the train at Gunning, which is a really small town in between Sydney and Melbourne. When the train stopped the town’s simple platform, she was the only person waiting.

It was through her that I learned a little bit more about Melbourne before I opened up Wikipedia days later after I returned to Sydney.

She talked of the origin of the Hume Highway, the major highway that connects Melbourne and Sydney. Hamilton Hume and his partner William Hovell led an expedition searching for the water source of New South Wales’ rivers. My impression is that the expedition is something similar to the United States’ own much-celebrated Lewis and Clark Expedition, which contributed to the western expansion of the young United States of America.

She also told me stories of bushrangers. I asked her, “What were the bushrangers?”

“Bad guy cowboys, as you would call them.”

She opined that Sydney is more of a go-go city. It is the financial center of Australia after all. Sydney gives out a picture of no nonsense, by Australian standard. Melbourne in contrast is more relaxed. After being there, I concur when her.

The buildings there are more elaborate in its facade compared to ones in Sydney. In Sydney, the buildings would be sleek; function over form. In Melbourne, the concern for form is observable. The library, for instance, is just magnificent inside and outside.

Some rights reserved. By Mohd Hafiz Noor Shams.

The library in the evening.

There are statues with pillars supporting a typical roman roof. The reading room in particular is impressive, although I thought it is incomparable to that in New York, or even the intimidating Graduate Library in Ann Arbor.

Some rights reserved. By Mohd Hafiz Noor Shams.

The library’s reading room.

Some buildings, like those belonging to RMIT University, do look a tad too artistic.

Walking the city is an easy task. It is a typical grid system, better planned than Sydney is. If one loses his way, just look for Swanson or Flinders Streets. If you do not dig walking, the tram system is a good alternative, although the ticketing system is a mess. Just hop on and don’t pay for the ticket. And no, I am only half kidding. The ticketing system is a joke.

The roads are wider than Sydney’s, or than most cities that I have lived or visited, with the exception of Putrajaya in Malaysia. I rather think Putrajaya has boulevards, not streets. That makes Melbourne a less stressful city. There is more space in between blocks, providing a picture of abundance instead of scarcity. I do not know if the streets are wide because of the trams; did the wide streets come first, or did the trams simply were incorporated into the city plan early on?

Less people walked the streets too. In Sydney during comparable period, a sea of people would assault visitors’ sense. Not in Melbourne, no sir. It was only during Australia Day that the crowd went out in full force.

Melbourne’s park enhances that feeling of openness. I do like it. More to it, the sense of openness feels natural, unlike that in the all-pretentious Putrajaya.

One that Melbourne lacks is a noticeable skyline. If I were to be presented with pictures of Melbournian skyline, I would have trouble recognizing it. Even Kuala Lumpur has more impressive skyline than that of Melbourne. Sydney definitely beats Melbourne here with its Harbour Bridge and Opera House. I think Melbourne’s skyline is comparable to that of Atlanta, which itself has nothing much though Melbourne is probably twice or thrice larger than Atlanta in terms of its downtown.

Some rights reserved. By Mohd Hafiz Noor Shams.

Melbourne’s skyline.

The Federation Square is a disappointment. I heard a lot of it and I thought it was more hype than substance.

But that does not matter so much. Melbourne is still a great city. Visiting there is fun and I can imagine living there and having fun.

Talking about fun, I love the street shows. I do not know if it was a one-off event or it is just the city though. The city was hosting the Australian Open when I was there. The Open, which is a Grand Slam, is a major global sporting event.

More importantly, the food scene is great. Getting starved here seems unthinkable. I thoroughly enjoyed my food in Melbourne. I love the beach too, although Sydney has much better beaches.

All those fun has its cost. The wallet can take a hit there in Melbourne. My casual observation is that it is more expensive living here than in Sydney. This is considering that a friend from New York who came to Sydney some weeks ago complained that Sydney is more expensive than New York. How about that?

That aside (and that weird turning “hook-turn” method employed), I love Melbourne. Melbourne easily qualifies into my top ten favorite cities list.

Categories
Photography

[2166] of green leaves

Some rights reserved. By Mohd Hafiz Noor Shams.