Categories
Conflict & disaster Society

[2673] Integration, not expulsion for Sabah

There are several possible consequences that I fear from the ongoing armed conflict in Sabah. One of them is a public wide urge to expel Sulu and Filipino immigrants out of the state.

There is already considerable negative sentiment against the Sulu and Filipino people in Sabah even before the armed men landed to bring trouble in Kampung Tanduo in Lahad Datu. I do sometimes feel the sentiment borders on racism. Rightly or wrongly, they are blamed for many things in the state, ranging from high crime rate and job stealing to the grab of land from the indigenous people. Apart from that, the now postponed Royal Commission of Inquiry on Illegal Immigrants in Sabah highlights how illegal immigrants were granted Malaysian citizenship for political expediency.  For many Sabahans who suspect that that has been the case for a very long time now, the inquiry only confirms their suspicion.

At the same time, there is a clear security threat arising from the armed conflict. There is a question regarding the immigrants’ sympathy since many of them do share the same ethnicity as those who are or were part of the armed group. Add in the Sulu and Philippine claims of Sabah, the consternation among some Malaysians of the immigrants’ loyalty will be easy to understand.

The worst case scenario has the immigrants rebelling against the Malaysian authority in support of the claims.

The two factors — the negative perception and the possible security threat — provide for a possible recipe for the expulsion of the immigrants from Sabah.

I am unsure how widespread the support for such expulsion is and I am happy to read in the mainstream media that there have been calls not to stereotype all immigrants in Sabah, especially those with Sulu ethnicity. Nevertheless, some Malaysians do talk casually about the matter.

Given the number of immigrants in Sabah, and some of them are now legal residents of Sabah now, the policy of mass expulsion is unrealistic and inhumane. It is impractical because it will be a logistical nightmare to expel so many persons.

Besides, mass deportation has been done in the past in Sabah and in other parts of Malaysia but it does not appear to be working. And if it does work contrary to past experience, the mass deportation or expulsion will likely affect the economy of Sabah adversely.

If thousands of individuals are suddenly taken out of the economic equations, something bad ought to happen. The economic growth of the state will surely take a hit. And there is more than economic cost to the policy of expulsion.

There is arguably the more important human cost to it.

Expulsion is inhumane because for better or for worse, these immigrants have been living in Sabah for decades now.

They have built their new lives in Sabah. Their families are here. Their children were born and brought up in Malaysia. These children know Malaysia as home, and not the Philippines.

Expulsion or deportation — call it however you like — would uproot the immigrants from their lives. It would force them to begin anew when there was really no need for that. After all, they migrated to Sabah in search of a better life. They escaped the instability of southern Philippines.

Any person with a hint of humanity in them will think twice about turning those immigrants away or forcing them to return to the very place they ran away from.

In fact, I am of the opinion that expulsion would contribute to the worst case scenario more than the case where the authority would leave the immigrants alone to their lives.

In an environment where immigrants may already suffer from discrimination, the policy of expulsion would create even further discrimination against them as the authority actively tried to catch all illegal immigrants.

Naturalized immigrants would also come under the unwanted spotlight. Really, the only thing that separates legal residents from illegal aliens is identification papers. Imagine having to go through security checkpoints: profiling is inevitable in that case. More often than not, profiling creates anger. It is a pointing finger that always points accusingly and nobody likes to be accused of something, especially if they have nothing to do with the things they are accused of.

So, expulsion — regardless whether they would actually be expelled — could create anger among the immigrant communities against everything Malaysian.

That anger might translate into something more sinister.

The only humane way to address the security fear is to take that high and tough road. That demands that we integrate the immigrants into our society.

With integration, they can feel that they do have ownership of Malaysia, rather than seeing the country as a foreign land that they have no stake in. This may mean the expansion of government services like education, health and security to immigrant communities in Sabah.

Once they feel fully Malaysian, the question of loyalty will be irrelevant.

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 Selangor Times on March 15 2013.

Categories
Economics Politics & government

[2672] If nobody could default, why would anybody go bankrupt?

Let us take for granted the assertion that a government cannot default on its debt obligation if all of its debts are denominated in the local currency. For the more macroeconomic inclined, if a country controls both its fiscal and monetary policies, it can never default on its debts.

Taking the axiomatic approach notwithstanding the concerns which I put up earlier this week, there is an important political implication on the political rhetoric employed with respect to discussion regarding government finance.

These days, it is all too common for one side of the political aisle to accuse that the other side’s proposed or current policy will bankrupt the country.

Supporters of Pakatan Rakyat will accuse the cash transfer program BR1M and the likes are irresponsible populist spending. Add those leakage and outright corruption and the country is well on its way to bankruptcy. Given the current size of government debt, they said, bankruptcy can be far off over the horizon.

Against Pakatan Rakyat’s accusation of bankruptcy, supporters of Barisan Nasional can certainly use the no-default assertion. The assertion immediately blunt attack on the size of debt the government maintains at the moment.

What becomes problematic is when the supporters of Barisan Nasional in turn say free education and higher fuel subsidy as proposed by Pakatan Rakyat are unrealistic spending and that it will bankrupt the country in no time.

If you believe in the no-default axiom, then how can Pakatan Rakyat or in fact anybody bankrupt the countries with irresponsible or corrupt policy?

Now, I am not defending the policy of Pakatan Rakyat as proposed in its manifesto. I disagree with a good number of its economic promises. But there has to be consistency in the rhetoric used.

I can understand that it is hard to keep consistent rhetoric throughout since nobody truly works inside a hive colony with the queen controlling everyone’s mind. Each person can be independent to the whole political organization and its official mouthpiece. Each person can try to defend his or her side of the divide on their own. With insufficient coordination, contradictory rhetoric can happen. It does happen.

However, that does not make the no-default and bankruptcy arguments any more consistent with each other.

Categories
ASEAN Conflict & disaster Politics & government

[2671] The last refuge of scoundrels

The United States was entrenched deeply in two major wars throughout most of the first decade of the 21st century. Just after the shocking September 11, 2001 attacks organized by al Qaeda, the US responded strongly by invading Afghanistan and removed the Taliban from power.

After a quick initial success in the landlocked country, the US went to war against Iraq on less convincing grounds. The world, which was solidly behind the US for the Afghanistan War, stood divided on the eve of the Iraq War. While the rationale for the Iraq war was shaky, the might of the US military was not. The Saddam Hussein regime was toppled soon after.

By 2003, the anti-war movement was in full swing in the US. War was firmly in the mind of the politically conscious. By now, there were wars abroad and at home. Supporters of the war presented their case and the anti-war side presented theirs everywhere. At times, it was not a debate. It was a shouting match.

It would take some years before temperatures cooled. The anti-war side eventually gained the upper hand. Barack Obama campaigned as an anti-war candidate in the 2008 presidential election. He won that election. The appetite for war was gone by the end of the decade. The US began to withdraw its troops from both Afghanistan and Iraq to focus more on its economy.

I remember the war rhetoric employed then by the pro-war groups. I remember exactly the phrase war supporters used to put down criticism of the war. The thought-terminating cliché was this: Support our troops.

Underneath the cliché was a stark case of false dichotomy. One has to either wholly support the war or oppose it unpatriotically. It is either you are with us or you are against us. There was no room for criticism. There was no in between. As George W. Bush infamously put it then, ”Either you are with us, or you are with the terrorists.”

And here we are in Malaysia at a stand-off with an armed Sulu group in Lahad Datu, Sabah which has turned into an armed conflict. There is a possibility that it may turn into a wider conflict still but I am sure we all hope that it will end as quickly as possible without further escalation.

It is unfortunate that the conflict has cost lives on both sides. It is regrettable that the Sulu group refused to negotiate the matter peacefully. Ample opportunities for a peaceful outcome were placed on the table but the peaceful option was rejected by the armed Sulu group.

The armed Sulu group had themselves to be blamed and a bloody outcome was inevitable. In that sense, many Malaysians support the current action of the Malaysian government and its military.

That, however, does not mean there are no criticisms mounted against the Malaysian side. There are signs of incompetence in the handling of the crisis. The fact that a large group of armed men entered Malaysia so easily without early detection in the first place speaks volumes of the failure of those in charge of border security.

As the crisis progressed, various ministers were still politicking with eyes inappropriately set on the upcoming but as yet undeclared general election. One of the relatively trivial top stories highlighted by RTM, Bernama and TV3 during the crisis was the expansion of the ”transformation centre” by the prime minister.

Indeed, during the crisis, the prime minister launched his Instagram campaign. He did not care to comment substantively about the ongoing crisis until, again, very late in the game.

Thanks to this misplaced priority, the public was left in confusion. Both the Malaysian authorities and the mass media failed to provide timely and accurate information about the situation on the ground.

For some weeks, information provided by the authorities even proved to be false and it was contradicted by later developments. It raises the question of whether the authorities were on the ball at all. The home minister is especially guilty of this. In fact, I am honestly curious what the home minister did until the military stepped in.

Instead of relying on Malaysian institutions, the public had to rely on Philippine news outlets instead. I take this as an incredible failure of the Malaysian government and the media establishment, specifically those in television and radio.

And what do these individuals and institutions ”• which have failed us ”• want us to do now?

Support our troops.

Yes, let us hide behind our collective patriotism to hide our incompetence.

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 Malaysian Insider on March 6 2013.

Categories
Economics

[2670] Be careful with the no-default narrative

There is a narrative going around in Malaysia that a government which has a majority of its debts denominated in a local currency can never default on its borrowings. For the purpose of clarity, it is the case where a national government has control over both its fiscal and monetary policy.

I have trouble with that narrative. In case of locally-denominated government bonds, it does certainly make default less likely than the case of foreign-denominated borrowings. But, that is of no guarantee of no-default.

A government for instance can certainly refuse to service its debts even if it is more than capable of fulfilling its obligation. Outright refusal happens very rarely and this is world, it is probably an absolutely disastrously crazy thing to do but I only highlight it to show that a government can default at any time and in this case, voluntarily. The debate about the debt ceiling the United States is an example of voluntary default; without further borrowings, the United States may have to default on its loans payment although it definitely can close down some of its government services before having to resort to defaulting.

Notwithstanding voluntary default, in the case of locally denominated government bonds as a sufficient condition for the outcome of no-default is dependent on the ability of the government to raise more debts to service its preexisting financial obligation when there is revenue shortfall. It depends on several matters. That includes the willingness of the central bank to monetize government debts, its willingness to commit seigniorage or the willingness of the private sector or anybody else which includes foreigners to purchase the government debts.

The most relevant factors to consider are the willingness of the central bank to monetize government debt or to commit seigniorage (money printing).

A fiercely independent central bank can easily refuse to do both, especially when the central bank has a commitment to price stability. In normal times, debt monetization and seigniorage do contribute to inflation in a big way. Without the central bank and without the power of a monetary authority, the government will default.

So, the truth is that a government cannot default of its locally-denominated debts if the central bank cooperates with the government. And if the central bank does decide to cooperate, there is cost to that cooperation.

In talking about that no-default guarantee especially within Malaysian context which both sides of the political divide do misrepresent and wrongly contextualize economic issues in supporting convenient political positions, the cost of the no-default scenario is not discussed.

Categories
Economics Society

[2669] Why does he not get a job?

I fancy myself as an economist. After more or less of six years of economic traning and several more years working as an economist, I think I can call myself as such without too much pretension. While I do like to claim that I know more economics than a typical layperson, I have to admit that sometimes, I do wonder about basic stuff that economists supposedly know like the back of your hand. When I see an unemployed begging on the streets or scouring the trash for something to sell, I really do wonder, why is he or she not working.

One can be absolutely optimistic and assert that begging or scouring the trash is a kind of employment. It is not a pretty thing to say and much less do but the person is doing something. Employment can be defined as something that one does to earn a living. One can earn a living by doing just so. There are even professional beggars too these days although the profession is not something one would put down in his or her tax return forms.

It all comes down to definitional matters and it is a matter of how tightly one wants to define the term unemployment. Truly, it is hard to imagine why unemployment exists in a very efficient economy. There is no bill on the sidewalk so-to-speak where everybody can be an entrepreneur. Begging and scouring the trash are a type of entrepreneurship if one thinks of it, however ridiculous it sounds. Those who beg on their own (discounting the professional beggars) are doing something for a living and it brings them income.

But let us make an exception. Let us just take begging, scouring the trash and the likes minus the professional kind as not employment but only something one does when one is desperately and involuntarily out of work instead. I am sure, if I was to lose my job and forced to beg on the streets, I would call myself involuntarily unemployed. I would consider it as an insult to be called employed if I was reduced to a beggar.

It is with the exception that I find it odd that somebody can be unemployed especially in an economy that Malaysia has, which enjoys pretty strong long-term growth and (very) low unemployment rate. Are the unemployed who exist really that lucky that they are one of those few involuntarily unemployed in the country?

Perhaps it is unrealistic to expect anybody can be an entrepreneur. Entrepreneurship requires ideas and not everybody can come up with an idea, regardless whether it is brilliant, unoriginal or just plain stupid. So the unimaginative mind discounts the case of no unemployment based on the idea that everybody can be an entrepreneur. Never mind that not everything imaginable in this world is profitable. So instead of continuously making a loss, the state of unemployment can be the right situation to be in as it limits those losses.

That may create an opportunity for unemployment to exist especially within the mainstream economics way of understanding it: that unemployment exists because of insufficient aggregate demand in the economy. That particular understanding of the phenomenon explains the issue of involuntary unemployment. In a recession, the cause of unemployment can be painfully clear. But that is at the macroeconomic level. I am more interested in the microeconomic explanation. Maybe the macro-micro differentiation is unclean here but I hope I get to send across what I mean.

Notwithstanding the point on macro-micro dichotomy, we are far from being in a recession. That makes it hard for me to comprehend why some involuntary unemployment exists, especially those who beg on the streets and is suffering while begging. The Malaysian reality for these unemployed is such a way that begging is not the best option available, or at least if I were put in shoes of the unemployed with all of my savings and the necessary support structure that I currently enjoy were unavailable to me, I would find my hypothetical state of unemployment as insufferable. If having a paying job is always superior to being unemployed, then there are low-skilled jobs everywhere that I look and I would take it.

I see everywhere eateries dotting the streets and these eateries are always busy. Surely, they do need some extra hands. Some small effort of enquiring the operators of those eateries can be a great start to getting out of employment. And when one goes to fast-food restaurants, these restaurants are perpetually hiring. Every time I pass by McDonald’s, KFC, Pizza, whatever, the fact of vacancy is hard to be ignored. I am unsure about other industries but looking at recent manufacturing production, at the very least, it is hard to think that they are retrenching people (although in the fourth quarter of 2013, retrenchment spiked and there are reports that manufacturing plants are closing down and moving away due to minimum wage policy).

There are job search costs obviously in temporal, pecuniary and effort terms. But low-skilled, low-paying jobs do not require too much of that cost and certainly, not insider information that is typically needed for high-skilled, high-paying jobs. Maybe, the desperate cannot travel to search for job and that creates unemployment in the specific kind that I am referring to. Indeed, one needs to travel wide in Kuala Lumpur to see these vacancies and witnesses also some beggars on the streets. Still, I have seen a business advertising vacancy and there was a homeless man across the street. The cost of crossing the street cannot be so great that that street cannot be crossed. If it was in the affirmative, it would be the height of ridiculousness.

The state of homelessness may complicate the scenario because many employers need to an applicant’s contact details if the employers need to get back to the applicants. A begging homeless person has not contact details in the traditional sense. That may be the barrier to employment and it may be the inflexibility of businesses that cause unemployment in this sense. I think I can support some state action to help any homeless persons to get a job. Effort is important and if a homeless person is applying to a job, then someone and unfortunately the state, should find a way to help the homeless apply for the job while employers should be more flexible in their requirement so that the unemployed homeless do not find themselves in a conundrum: I can only get a job if I have contact details but I can afford contact details only if I have a job. Somebody needs to be break the cycle.

Being an illegal alien may also contribute to employment because the law does discriminate against illegal immigrants.

But really, even counting homelessness into account, there are many business establishment, those eateries by the streets in KL, even those restaurants by the streets under the trees, are not really much into bureaucracy. I even doubt those establishments even fully disclose their tax information. So contact information and illegal status are hardly a consideration for very small businesses.

But beyond homelessness (I have a feeling that homelessness is a small factor in the state of unemployment) and illegal aliens, within the context of Kuala Lumpur, that of a relatively strong economy and low unemployment rate, I struggle to understand why a person can be unemployed when clearly, being unemployed is undesirable to a person. Unless the person fakes his condition, some beggars that I spotted looked miserable it appeared to me that the beggars needed jobs.

I have been thinking about this for a long time now, ever since that man came up to me at a gas station and asked me for money. I refused him and I felt bad as I thought myself, maybe it was in a tough spot. I began to felt less bad when I saw him again some weeks later, and again after that multiple of times.

Why does he not just get a job?

He has no disability, physically and mentally. Clearly he is capable of work.

Is there some kind of psychological explanation?