Categories
Economics Science & technology Society

[2917] Urban life will not go away with WFH and digital technology

Last week, I participated in a discussion panel on urban poverty and urbanization. Over the course of the session, a fellow discussant highlighted the potential of working-from-home phenomenon in reducing the need for urban centers.

I am unsure if I could agree with the suggestion.

First off, such decentralization is possible. It is not out of this world. The COVID-19 pandemic has prompted discussions on living away from cities. We could work from everywhere now. Some have even thought perhaps it is time to go rural altogether. There is a logic behind it.

Beyond the panel, there is a rethinking about high-density area. As it goes, maybe we should spread it out a little to make our society more resilient against future outbreaks. WFH is one of the ways that could be achieved. We can work remotely, and therefore we do not need a place in the city. Ditch the city, the slogan might sound.

If pandemic is the only thing to worry about, sure. Decentralizing the population into many smaller low-density towns would be the way forward.

But cities are not just about working culture, and pandemic is not the only thing that concerns us.

If I remember my lesson back in university, there is such a thing as agglomeration. If enough companies—and indeed people—gathered together, they would enjoy some kind of economies of scale in more than one way.

In terms of services, the more people there are in a place, the cheaper it is to deliver those services. This is relevant to both public and private services. Think of mass transit, or better city trains. Super-expensive to build and operate. Having it in Kuala Lumpur might make sense with its 2 million-4 million people depending on the definition used to define the city along with its satellites. Less so in smaller cities such as Kuantan that does not even hit one million population mark. Malacca Town with its low population city has a monorail, but we all know it is a bad, expensive joke.

And it is not just mass transit. Think about utilities. Think of roads or better in these days of interconnectivity, fiber optics network. It is cheaper to lay the cable for city use, like in Kuching, than in the interior of Sarawak. Indeed, communication tower is generally the preferred cheaper method of expanding internet services into rural areas.

There are plenty of examples across many sectors. Cost consideration alone make cities capable of providing services rural areas struggle to provide.

Large population is also a theme central to growth theory. As one growth theory puts it, beyond capital accumulation and technological progress, population growth is really the ultimate driver of growth. With population, comes new ideas. Edmund Phelps long ago wrote the following that pretty much summarizes mainstream growth theory:

One can hardly imagine, I think, how poor we would be today were it not for the rapid population growth of the past to which we owe the enormous number of technological advances enjoyed today… If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis, I would not do it for fear of losing Mozart in the process. [Edmund Phelps. Population Increase. Canadian Journal of Economics. August 1968. Page 511-512]

To put it simply, technological progress itself is a function of population growth.

Good stuff tend to be created when people congregate in a place. New observation, innovation, idea exchange and all that happen more often among large population located in a dense area than in a sparsely populated space. The residents of large cities also make sophisticated demands arising from urban life. Without these demands, nobody would think of the solution and no progress would be made.

There might be an optimal population size. But for Malaysian cities, I think we could make it denser. I prefer denser cities not just because of the factors mentioned above and more, but also because the toll sprawls exert on the environment. Big cities tend to share resources better.

Finally, it is true that the pandemic lockdown has proven that we have the technology to work from home.

But it also proves we do not enjoy being stuck at home.

We do not just live within the space of our four walls. It is the culture, the connections and the values that matter as well. We yearn society. I yearn the city.

Many options available in the cities are available on the internet not because online services are taking over those services previously provided physically. Rather, the internet accommodates the provision of those services. It does not make cities irrelevant. Ultimately, those very services are made possible by cities.

Categories
Economics Politics & government

[2916] Change must lead to greater political stability

Early on during the Pakatan Harapan government, a majority of market investors were concerned about Malaysia’s policy direction. The magnitude of political change Malaysia experienced in 2018 undoubtedly brought uncertainty. Such uncertainty needed to be addressed. To allay those concerns, the Ministry of Finance then frequently engaged with representatives from various funds invested in Malaysia.

A great deal of these funds were fixed income investors. So, they were concerned with the state of public finance. What will the government’s spending priority be? What will the projected deficit level be? How is tax collection with the GST abolished? How is the health of the banking system? How is the government facing the trade war between China and the US?

Such questions were easy to answer because the storyline was clear and plans were in place. Data was available and progress updates could be shared easily. Close engagement and high transparency level alleviated a great deal uncertainty in the market.

One concern was difficult to handle however. Mahathir had promised to handover power to Anwar Ibrahim. But the transition date was blurry. “When?” they asked.

“When” was an important question. Transition could mean, and likely would mean, policy change. And with it, investment rationale.

However the Ministry answered it, they could not be convinced and some of them were the biggest funds in the world.

Regardless whether they believed the transition plan, they were in the opinion that Malaysia could focus better on the economy if it had addressed its political uncertainty. Specifically, the trade war was once-in-a-lifetime opportunity for Malaysia to move up the value chain and gain from the reorienting global supply chain. Yet to the investors, political transition was distracting Malaysia from the task at hand.

Unfortunately, the level of political uncertainty in the country has worsened since then.

Muhyiddin’s supporters claimed formation of the Perikatan Nasional government would calm the politics down. We now know such claim is patently false. The faintest rumors would cause our collective heart to skip a beat.

It has become so bad that policymaking is grinding to a halt. Measures needed to mitigate the ongoing recession have been weak and late. Meanwhile, unemployment rate is shooting up and it will rise further. The result: we as Malaysians are experiencing more economic pain than necessary.

Not enough has been done. Continued inadequate and untimely government response will have long-term repercussions on the prosperity of the country. Remember, Malaysia has never fully recovered from the Asian Financial Crisis. Our growth since has been slower than before. This current crisis if not handled well would reduce the pace of our growth further.

Malaysia needs political stability to address the recession well. At the rate things are going, Perikatan Nasional is incapable for providing that stability.

Pakatan Harapan sees an opportunity to retake the power it won in 2018. If it succeed, could PH provide the much needed stability?

In order to answer the question confidently in the affirmative, I think PH will need to avoid having to face the transition question all over again. Either let their candidate be the PM until the next election (presumably in 2023), or ideally, do away with the transition plan altogether.

Categories
Economics Education

[2915] Temporarily lowering labor force growth through massive government-funded tertiary education program

I do not think Malaysia has done enough in stabilizing our labor market. Policies introduced so far are inadequate in size, and have been implemented so late that its effectiveness is suspect. Each progress report by the Ministry of Finance feels irrelevant because even if all the measures recorded 100% implementation, it would still be insufficient. And the most relevant existing government countermeasures are progressing slowly.

We need to do much, much more to address the big problem we face in the labor market.

Our problem is massive unemployment

We are staring at a high likelihood of mass unemployment happening unlike anything we have seen in the recent past.

In 1998, the worst recession Malaysia has ever experienced yet, unemployment rate rose by about 70 basis points from 2.5% to 3.2%. For 2020, Bank Negara expected it to increase by about 60 basis point to 4.0%. But the projection was made well before anybody had an idea the lockdown would last more than 2 weeks. Hence, the central bank’s official view as recorded in its 2019 Annual Report is dated and any projection should be worse than what was published earlier.

Based on early indication from an unrepresentative survey by the Department of Statistics done later in late March, naïve extrapolation suggests unemployment rate could rise significantly higher. So much higher that mentioning the possible level of unemployment feels unreal. Yet, it is June now and the lockdown is still in effect though with looser restrictions.

The heightened risk of massive unemployment was the reason why we needed a much, much bigger wage subsidy program earlier. But we have failed to do so and the time for that has come and passed.

The bigger the hole, the more radical we need to be

The result: we now have a bigger hole to fill. We as a society are and will be experiencing more pain than necessary.

This comes to a minor point I want to make: the bigger the hole we need to fill, the more radical our policy response will need to be. And we have let the hole grew bigger unnecessarily due to political maneuvering and ministerial inexperience during a time of economic crisis. Make no mistake: the learning curve during crisis for a newbie will always be too steep that the optimal response will be almost impossible.

Passing the job hoarding stage

We have passed the job hoarding stage. Pass here refers to leaving the stage behind, and not in the “with-flying-colors” sense. We failed. We have failed to protect a huge number of jobs through a bigger and timelier wage subsidy program.

There is still some value to having wage subsidies. But the damage has been done and wage subsidy efficacy is weak at this point. You cannot subsidize jobs that have been lost.

We now have to move on and focus on other policies. Job creation programs are the obvious ones. There are other policies that could be implemented but I think the less obvious would be to move people out of the labor market temporarily. Call it the workforce reduction program if you like.

Brief explanation of jargons

To understand the need for workforce reduction program, one has to understand the way labor statistics works at the macro level. I promise, this will not be too technical as I myself am uninterested in explaining the technicalities.

Unemployment rate is the number of unemployed people over the labor force.

Meanwhile, the labor force is the sum of all those with a job or actively looking for a job. Those who are actively looking for a job and at the same time without a job are classified as unemployed.

The crucial part is that, the definition of the labor force does not include everybody. The too young and the too old are excluded. Those unemployed and not looking for jobs are excluded. Students are not part of the labor force. Technically, military personnel are not counted. You can argue whether these people should be included or not, but the point is, there are people outside of the labor force however you slice and dice the problem.

Here, I would like to focus on students in the tertiary level.

Minimizing unemployment given the crisis

We want to minimize the unemployment rate. To do so, we could increase the number of employed relative to the labor force to outpace the growth of the overall labor force. In common parlance, job creation. But creating more jobs is easier said than done.

Alternatively, we could reduce the labor force growth temporarily and then return the labor taken off from the equation back at a time when the labor market is healthier in a year or two years down the road. I think might be easier.

(I feel the need to say that both job creation and labor force reduction exercise are not mutually exclusive)

Massive expansion of tertiary education opportunities

This is my (radical?) policy proposal to help fill the hole.

I think one of the better ways to reduce labor force growth temporarily is for the government to embark on a massive publicly-funded program to get unemployed Malaysians and those suffering a high unemployment risk to go back to school. Specifically, enroll those interested in programs offered by public universities.

This program should include diploma, bachelor’s and graduate degrees. I think less for doctorate, and more for masters and below. PhDs generally serve a different purpose and the number of PhD placing in the country for a year is so low that it probably means nothing to the objective of reducing the labor force growth temporarily. This means we could give ourselves between roughly between 6 months and 2 years to repair the labor market.

I think for people wanting a second same-level degree could be given a chance to join the program.

Participants of the program could receive a reasonable stipend above minimum wage.

Other factors

While the objective of the program is to reduce the labor force temporarily, it has other factors at play:

  • Taking a portion of workers off the labor market helps balance bargaining power between workers and employers. At a time when there are a lot of workers looking for jobs and few job opening, workers are at a disadvantage.
  • The program would need massive funding into our universities, which itself could create more jobs, be it teaching assistants, lecturers or whatever positions there are associated with universities. In order words, pushing unemployed Malaysians or Malaysians at risk of unemployment could be job creating too. In any case, our universities are underfunded especially since the mid-2010s and this is a chance to address the problem.
Categories
Personal Photography Society Travels

[2914] Madness in a holy shrine

I have an English translation of the Masnavi at home. It has been on my shelves for years but I have never read it full, much like my collection of Kafka’s, or writings of Robert Nozick and Bertrand Russell, or even the Koran.

The Masnavi feels like a reference material. You do not read it whole. You open the pages once in a while and read a verse or two or three now and then.

There is criticism that most established English translations have stripped the Islamic religion out of Rumi’s poems. That have made the Masnavi secular for a wider audience outside of the Muslim world; Rumi has been removed from his Islamic context. Meanings have been corrupted from its original intention.

My miseducation had misdirected my expectations when I was in Konya visiting Rumi’s tomb. He died here in the 13th century when this part of Turkey was ruled by the Seljuks. The tomb is officially called the Mevlana Museum. Rumi, or in full Jalal Ad-Din Muhammad Rumi, was a teacher, a master, a Maulana. But the tomb was no museum. It is a major shrine. And the population of Konya, I was told, is deeply religious but in a different way.

Growing up as a Muslim in Malaysia with religious education pummeled into me early on with questions discouraged, I had come to think of shrines as something absolutely unorthodox, bordering cultish. The religious authority in Malaysia strongly discourages worshipping at shrines fearing it could lead to effective apostasy at worst. In Keramat in Kuala Lumpur, a Muslim shrine was removed by the government to prevent the Malays from visiting it. By a long shot, Malaysia is not Saudi Arabia. But some aspects of it could be felt.

Rumi's tomb

And so it was a sight to see people coming in droves into the large shrine praying in front of Rumi’s large heavy sarcophagus.

The stone coffin, itself under a massive tall green dome, is lifted off the ground by a set of four legs. I, a person whose understanding of Rumi had been divorced from the Islamic context and understanding of Islam must have had approached puritanism from the perspective of these devotees in this shrine, was dumbstruck by the religiousness surrounding me. I did not expect to be in a pilgrimage, but I found myself stuck inside one.

It was all around me. Old women in black dressing covered from head to toes without a veil prayed toward Rumi’s remains while tearing up. There is no god but Allah, and Muhammad is his messenger… and Rumi the teacher. It was as if Rumi was a prophet himself. The Masnawi after all was nicknamed the Persian Koran. I was unprepared for this. Their devotion was true.

Many were determined to make their way to the front, pushing those in the way out harshly. A majority of them were Turks, but I spotted some Iranians too and other foreigners by listening to the language they spoke. They must have seen me as a nuisance, a foreigner standing in the way, not praying as they did.

As I observed, I came to disapprove what I saw. It was not so much due to my religious education, but rather due to the situation at hand. I can understand how holy the experience could be, but in the believers’ eagerness to reach for the scared, they pushed and shoved others in their way with a greediness and disrespect that should have no place in a holy place. The madness was understandable but disagreeable. It felt too worldly to deserve a place in this tomb beside the maulana.

I frowned each time I was pushed aside.

I felt angry but relented. If I needed to be patient, perhaps here inside the tomb was a place to practice patience. After all, I came with a secularized understanding of Rumi. I had no rights to judge them.

Categories
Earthly Strip Economics

[2913] The Earthly Strip: Mak Cik Kiah’s recession

And The Earthly Strip makes a return.