Categories
Politics & government

[2699] If you fail the first time Egyptians, try and try again

As a liberal, Egypt offers horrible options. I am glad I am just a lay observer from across the continent where I am unlikely need to make such choices any time in the foreseeable future.

On one side, there is the democratically elected Islamist organization Muslim Brotherhood with Mohamed Morsi as the former President. While democratically elected, they are no democrats and while in government, they were ready to abuse state institutions to cement their power. Something had to be done to counter the influence of the Muslim Brotherhood and quite clearly, millions of Egyptians, majority or not, agreed that something needed to be done. So they protested more after the original protest turned into a revolution which pulled the dictator Hosni Mubarak down. The new protest brought the whole country to a standstill, which led us to the current situation.

In an attempt to break the deadlock, the military launched a bloodless, pre-announced, quick coup d’état. Some liberals have celebrated the move. Deep inside me, I am truly happy for what has happened in Cairo.

Nevertheless, it is hard to say having the unelected military in power instead of the elected Islamists a better option. Supporting a coup d’état itself is one of the most illiberal things to do. It would be very odd for a liberal to cheer on the military ousting the elected power, a power with repulsive outlook or otherwise.

But things are not that simple especially for Egypt which is emerging from Mubarak autocratic years. If Egypt was a normal democracy, than it would be easy to say a coup d’état by the military was outright wrong, But Egypt is in a revolution that has not concluded. The objective of the revolution is the creation of a sustainable democracy. The logic of revolution has its own rules.

The country is a state in flux and it is struggling to create such democracy. As a liberal, I am hoping that that democracy is a liberal one with individual rights sufficiently protected, and not merely a majoritarian democracy where the majority can do whatever it wants at the expense of others. After all, how many dictators have been elected to power? Winning an election is an insufficient condition for a person to have respect for democracy.

Given that Egypt is fresh at the start, it is important to get things right before everything calcifies.

With that in mind, having the Muslim Brotherhood with its wide tentacles unchecked can corrupt state institutions, leaving the opportunity to create independent institutions crucial to a liberal democracy smaller by the day. Already the new constitution gives too much power to the President, in the crucial early days of the Egyptian republic. Not only that, the constitution is inadequate to separate powers that exist in the state. That gives too much leeway for the Muslim Brotherhood to corrupt the state.

And the Islamists are no liberal and they have an Islamist vision that in the past months have shown intolerance to others, like the Christians. So, I see Egypt under the Muslim Brotherhood as an oppressive regime which believes a victory at the ballot boxes gives it a free ticket to do anything. The only thing that has prevented the Muslim Brotherhood from taking off has been the military.

Democracy, as in modern democracy which really liberal democracy, is not merely about the ballot boxes. It is about rights and institutions and a majority win during one election alone does not give the power to trample those rights and institutions. Those Islamists do not understand that.

So, letting the Muslim Brotherhood through Morsi shaping the early history of the Egyptian republic excessively without strong constitutional safeguard sounds like a bad plan to me.

What the military coup does is to till land again. That gives a chance for a democracy that is more than majoritarianism to flourish. That creation of democracy is the goal of the revolution. If you fail the first time, try and try again. To waste this revolution will be one of the worst of all outcomes. They are already there and so, let them try as hard as they can.

It is only regrettable that the till was done through military might. Ideally, it should have been done through democratic process. Or Morsi should have stepped down. But the land got tilled anyway and that is a great consolation prize. I now hope that the military is merely a caretaker for a very short period before Egypt has another run on its democratic experiment. Whether I am right to hope, whether that hope is realistic, only time will tell.

Categories
Economics

[2698] Missing the TPP boat can be costly

As negotiations progress, opposition to the Trans-Pacific Partnership (TPP) is getting louder in Malaysia.

The opposition camp is focusing on possible loss of policy independence arising from the implementation of the TPP and its potential cost to ordinary Malaysians. While their concerns are legitimate and deserve attention, it is also important to know that there are possible losses from not joining the TPP.

The TPP is a proposed multilateral free trade agreement (FTA) among 12 diverse countries across the Pacific region. Those countries include Malaysia and the United States. Several other countries with reasonably large populations like Thailand have expressed interest in joining the TPP as well. If negotiations are successful, it will create the largest free trade area in the world in terms of gross domestic product.

The immediate primary purpose of having an FTA is to increase trade volume by reducing cost. That can be done by liberalizing trade tariffs or by standardizing regulations, among others. The ultimate aim of having greater trade volume is to improve the population’s average welfare. Greater trade volume means greater opportunity for increased income and more job creation.

That certainly has been true for Malaysia. In the years after the formation of Malaysia, the country embraced an import substitution industrialization policy (ISI), where imports were discouraged and actively replaced by domestic production. It did industrialize some parts of the economy but with a small population therefore small demand, industrialization efforts did not go far enough to push overall income and general welfare up convincingly. Furthermore, it was an expensive way to industrialize.

Malaysia and several other Asia-Pacific countries, most notably the four Asian Tigers, only really began to grow rapidly upon the adoption of an export-oriented industrialization policy (EOI) in the 1970s and the 1980s.

While the ISI looked inward and had limited trade, the EOI explored the world for growth to cater to global demand apart from domestic demand. With the explosion of trade volume, these countries grew rapidly soon after.

New jobs that did not even exist before were created. Average incomes of Malaysians zoomed up in a way no one had ever seen before. The result was the Asian Miracle: where others took centuries to achieve, these Asian countries took only a few decades thanks to trade.

The FTA helps support the EOI by granting low-tariff access to the international market.

Now, there are at least two effects of trade. One is the creation of new trade, which is good because it benefits the trading partners without hurting a third party. The other is trade diversion, which benefits the trade partners but hurts a third party.

There is an aphorism in support of free trade: a rising tide lifts all boats. That means trade is not a zero-sum game and the benefits outweigh the costs after all things are considered. The truth is that happens only if new trade is created.

Right now, the best way to create new trade is through a global trade agreement where every country co-ordinates with each other to liberalize its trade. Unfortunately, that global effort in the form of the Doha Round has been dead for some years now. In its place, countries are resorting to bilateral and regional trade arrangements.

While these bilateral and regional arrangements, which the Asean Free Trade Area and the TPP belong to, can create new trade, they can also create some diversionary effect to hurt countries which are not party to the arrangement. In some ways, such FTA can be thought as a preferential trade agreement, especially if the trade diversion effect is stronger than the trade creation effect.

A dramatic example effect of trade diversion would be China before it joined the WTO in late 2001. While the WTO is not exactly an FTA in a traditional sense, it functions as such.

All WTO members must treat each other equally and there is no requirement to treat non-members equally. That leads to a situation where trade barriers imposed by a member state against another member state are generally lower than that imposed on non-members. Since most countries in the world are WTO members, non-members are screwed… to put it simply.

A lot of trade flows circumvented China, the non-member. That was not because China had nothing to offer to the world but it was only because of trade diversion.

Once China joined the WTO, the trade diversion effect was reduced. Proof: China is now the factory of the world and that may not be just a figure of speech. It is worthwhile to take note that China became a global economic powerhouse when it opened up.

Here, we return to the TPP. It has the potential of becoming the largest FTA in the world. Because of its sheer size, the trade diversion effect from Malaysia missing the TPP boat can be so big that it can hurt, never mind the lost opportunity for new trade creation. It means job and income growth could be at stake, making Malaysia’s effort to catch up with the developed Asian Tigers harder than it should be.

This however does not mean the worry of the anti-TPP camp should be shoved aside. Certain provisions within the TPP may provide too much monopoly power to foreign corporations as the proposed agreement tries to put in place overly strong intellectual property rights that seem to turn the debate into the issue of market monopoly. Malaysia is already struggling to address pre-existing monopolists throughout its economy. The TPP may just exacerbate the situation by creating more monopolies in more sectors.

Nevertheless, those concerns and several others are sectoral in nature. It is wise to move out of the respective silos and look at the bigger picture from time to time.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malay Mail Online on June 27 2013.

Categories
Books & printed materials

[2697] Isaiah Berlin on the difference between pluralism and relativism

So much for the doubts about the possibility of understanding the past. But to understand is not to accept. Vico experiences no intellectual discomfort – nor need he do so – when he damns in absolute terms the social injustice and brutality of Homeric society. Herder is not being inconsistent when he denounces the great conquerors and destroyers of local cultures – Alexander, Caesar, Charlemagne – or glorifies Oriental literature or primitive song. This would not be consistent with conscious (or, shall I say, conscientious) relativism of values, but is compatible with pluralism, which merely denies that there is one, and only one, true morality or aesthetics or theology, and allows equally objective alternative values or systems of value. One can reject a culture because one finds it morally or aesthetically repellent, but, one this view, only if one can understand how and why it could, nevertheless, be acceptable to a recognisably human society. Only if its behaviour is not intelligible at all are we reduced to a mere ‘physicalist’ description and prediction of gestures; the code, if there is one, which would yield their meaning remains unbroken. Such men are not fully human for us; we cannot imaginatively enter their worlds; we do not know what they are up to; they are not brothers to us (as Vico and Herder supposed that all human beings were); we can at most only dimly guess at what the point of their acts, if they are acts, may be. Then truly do we have to confine ourselves to mere behaviourist reports of unexplained brute fact, or, at best, resort to the language of pure relativism, to the extent tht these men’s ends, somehow grasped as ends, seem wholly unrelated to our own. I repeat, pluralism – the incommensurability nd, at times, incompatibility of objective ends – is not relativism; nor, a fortiori, subjectivism, nor the allegedly unbridgeable differences of emotional attitude on which some modern positivists, emotivists, existentialists, nationalists and, indeed, relativistic sociologists and anthropologists found their accounts. This is the relativism from which I hold Montesquieu, Vico and Herder to have been free. This is no less true of other, more reactionary, critics of the Enlightenment: of Justus Moser, for example, in his polemic against Voltaire’s disparaging references to the absurd variety of laws and customs in the various little German principalities; or Burke, in his indictment of Warren Hastings for trampling on the traditional ways of life of the natives of India. I am not attempting to judge the validity of their objectivism or their pluralism, only to report it. Je ne suppose rien, je ne propose rien, je n’impose rien, j’expose. [Isaiah Berlin. Alleged Relativism in Eighteenth-Century European Thought. 1980]

Categories
Economics

[2696] Good news is bad news and bad news is good news

This is truly a bonked up world. Sometimes it is as if humanity as a whole does not really know what it really wants. No, what it wants, what the market wants, is to have its cake and eat it too. Ever since quantitative easing became orthodox monetary policy, signals have been mixed up that it confuses the whole market.

Take QE for instance and its effects in Asia. Experts were worried that the expansive monetary policy in the US and more so in Japan these days were fueling asset inflation in across emerging Asia and elsewhere. There is also effectively a manipulation of exchange rates even if it is unintended and done indirectly (do not call it competitive devaluation!), which helps the export sectors of economies which are committed to QE. Those who see their currency appreciating by too much blame QE.

But now that the Federal Reserve Chairman Ben Bernanke said will end when the economy recovers, the equity markets of the whole world are tanking.

From 10,000 feet high, the ridiculousness comes in the form that good news is bad news and bad news is good news. The exact reason for the end of QE is a recovered economy. Judging by the equity and bond markets’ response to Bernanke, it seems that those markets are afraid that the market is recovering.

This highlights how QE has truly detached from the real economy.

As a digression, that does not mean that the QE is not working. It merely means that QE has caused these markets to be divorced from the so-called Main St. The real economy in these QE countries with its high unemployment rate and stuff clearly does not go in tandem with equity market. In the same line, I am the accusation that “Abenomics” has failed only because the Nikkei has jumped off the cliff as missing the point about the function of QE. The QE remains an expansive monetary policy aimed at improving output and not pushing the stock market up, however the function of the stock market as a leading indicator. The fact that the stock market and all of those investment papers are not part of the GDP calculation only stresses the actual intention of QE.

Looking closer, the detachment is understandable I suppose. It is a world of cheap money where the transmission of monetary policy is imperfect. Not all of those money get to the real economy, however it lowers long-term borrowing costs.

Anyway, in non-QE countries, oh, boy! It is almost like a boom. Domestic demand is strong, the stock market goes crazy (relatively because, when the KLCI is compared to regional bourses, all one can say is meh) and yields are so low that it makes sense for the government like Malaysia to expand its borrowing.

But now with the speculation of a tapering and Bernanke’s statement of the end of QE, the same those who complained about asset inflation are panicking, begging, Ben, please, don’t send the ‘copher back home. Stock market is down, yields on government bonds are up and the ringgit got spooked.

And yes, who can forget the craziness of the Treasuries are an insurance to its own downgrade? The magic of reserve currency!

Oh well. Just another day in this crazy world of ours.

At least gold is going down and I am extremely delighted of that. And that is not crazy.

Enough ranting. I have work to do.

Categories
Photography Travels

[2695] Mountains greet thee

Bali was my final destination after two or three weeks travelling all the way by land from Jakarta. As I crossed the Bali Sea on a boat from Banyuwangi, Gilimanuk and this greeted me:

20121226Indonesia2 (123)

I do not remember the name of this mountain. It could be Prapat Agung but looking at the map, the twin (even three?) peaks might suggest it is not.