A cafe along Glebe Point Road needs not worry about any break ins. At night, something guards it…
As I have written, there are not many posters around in Sydney as Australians vote.
This is one of few which are up.
It is the Greens’.
In Waterloo, which is about 20 minutes to the south of the central business district of Sydney, a man in his mid-30s approached me. He offered me a leaflet. The leaflet more or less says ”Vote Liberal.” Although I cannot vote in the upcoming Australian federal election, I accepted the leaflet out of curiosity. Apart from that, it has been quiet here in Australia despite the election being just less than a week away.
Let me rephrase that and stress what actually interests me. I do not see too many posters around.
A question lingers in my head. Why is that so?
Without access to newspapers, television and the Internet, it would take an effort to realize that Australia is in its campaigning period. The atmosphere in the streets and in the city right now is no different from any other typical day. People just mind their business, as if the upcoming election is a minor distraction.
Contrast that to Malaysian elections. Election time is always carnival-like in Malaysia. It is noisy and it is colorful. Loud speeches will blare into the night. More strikingly is the poster war. Colors representing major political parties will decorate the streets. Once it is election time, you will know it, even if you are apolitical.
Some Australian friends of mine try to explain this phenomenon to me by stating that Australian politics is boring. It is really a contest between two uncharismatic politicians representing two unexciting political parties, they say. Australians are not entirely excited about it. On top of that, I live in a safe seat for Labor. There is little contest to be expected. In other words, the level of excitement translates into a poster war, or lack of it.
That explanation does not explain my experience in the United States. I lived in Ann Arbor during the 2004 presidential election. It is an overwhelmingly Democrat town. I do not remember seeing too many posters hung in public places but the election was still electrifying.
One may expect infrastructure to have some part in causing poster wars. If the communication infrastructure like television and radio is unable to relay messages, posters are effective for the job.
Now, the US and arguably Australia have a more developed communication infrastructure than Malaysia. As far as Kuala Lumpur is concerned, the level is comparable. Yet, if one wants to witness a poster war, the Malaysian capital is the place to be. Or compare Kuala Lumpur with some rural area like Ijok.
If infrastructure was an issue, Kuala Lumpur should experience less of a poster war compared to other places. In fact, there were poster wars everywhere in most previous Malaysian elections that I care to remember. Thus, the state of infrastructure does not provide a satisfactory explanation.
Being a libertarian, I find it inevitable to eventually resort to a libertarian explanation and I think it explains the phenomenon of poster war better than others do.
The libertarian explanation goes like this. Non-Barisan Nasional parties face restrictions in terms of access to the mainstream media. The restrictions naturally encourage individuals and parties to look for alternative avenues to spread their political messages or to introduce their candidates to voters. Posters and the Internet are two avenues relatively free of restrictions in Malaysia.
In Australia and the US, all parties have considerable access to the mainstream media.
Thus, there is less need for a poster war.
This may be useful in addressing the problem of a poster war. On the whole a poster war can be entertaining, more often than not those who participate in it tend to overdo it.
When you are looking at a road sign for direction and you read ”go right for Barisan Nasional or go left of Pakatan Rakyat” instead of KLCC or Bukit Bintang, you know somebody is being overzealous about those posters.
With fewer restrictions to access or even entry into the mainstream media, the problem of too many posters may be solved without resorting to more rules and regulations.
First published in The Malaysian Insider on August 16 2010.
Libertarians generally are in favor of commodity-backed currency. This is largely based on typical libertarian attitude towards the state: do not trust them.
Others who are not quite libertarian share the same idea about trust. They really have trouble believing that a piece of paper worth something when it is only backed by some promise. They rather have a piece of paper that essentially put a claim on some asset. Typically, that asset is gold although it does not have to be gold.
A step beyond the issue of trust is the fear of inflation and the belief that commodity-backed currency is not inflationary. It is a myth that commodity-backed currency is not inflationary however. Theoretically, gold supply can increase to affect the quantity of money in the economy directly and thus, creating an inflationary environment. Admittedly, there is more inflationary risk associated with fiat currency than to commodity-backed currency.
Before we go farther down the road, let me clarify one thing: I do not think highly of commodity-backed currency when it is juxtaposed with fiat currency.
As a libertarian, I need to rationalize my position through libertarian means, especially so when I am going against the libertarian stream. This entry is partly where I do that rationalization.
I would like to address the worry of inflation first because it is more general than specific libertarian concern. I will visit the libertarian concern soon after.
The inflationary concern has been overblown by proponents of commodity-backed currency, and especially by supporters of gold standard. Despite the ”˜distrust-the-government’ mantra, modern monetary institutions these days are good at managing inflation. The occurrence of hyperinflation, which is really the problem, is rare. As long as those institutions are independent under normal everyday circumstances, inflation can be contained, or at least inflation attributable to changes in money supply. Note that not all inflation is due to increase in money supply.
On the issue of libertarian distrust of government, that does not really automatically translate into support for commodity-backed currency or more specifically, for gold standard. Private banks, for instance, can issue fiat currency. The only prerequisite to fiat currency is trust, no matter who the issuer is.
But what about trust in general, be the issuer is the government or some private entities? I would like to argue the use of commodity-currency is a society that suffers from trust deficit. I will save that for another day.
Finally, the practical reasons for fiat currency vis-Ã -vis commodity-backed one are unrivaled. One of those major reasons is flexibility: I value the flexibility that comes with fiat currency, which commodity-backed currency does not have. The flexibility is this: fiat currency can completely mimic commodity-backed ones while the reverse is untrue.
Flexibility is especially valuable in times of economic crisis. Perhaps, once I find myself in an economic foxhole, I tend to waver on the idea of limited government. But I would like to think that the flexibility of monetary policy allows the use of monetary policy as the first course of action when the other option is fiscal policy. I think this is a practical libertarian justification to the use of fiat currency.
Fiscal policy is more damaging to the idea of laissez-faire than monetary policy. Fiscal policy tend to have real programs associated with it while monetary policy is just, well, about money. Programs associated with fiscal policy often involve active government intervention in multiple fields. Meanwhile, the management of money involves only passive intervention. Between the two evils, I would vote for monetary policy. I am voting for monetary policy.
But that choice is available only when there is flexibility in the monetary policy. Without flexibility, the urge to engage on large fiscal policy can be too great to resist in time of crisis.
People do not like pain. In a democracy, doing nothing may not be viable. The democratic reality is that there is a populist element needs to be tended to, however unfortunate that is. With monetary policy, at least there is an avenue to do something and reduce the pressure for heavy government intervention.
Of course, both policies are not mutually exclusive but with monetary policy, the size of fiscal policy can be managed, compared to a scenario where there is limited monetary policy spectrum to choose from, i.e. when there is only commodity money.
The idea of the issuance of gold dinar and silver dirham as currency in Kelantan is not new but this week, the northern Malaysian state has decided to go ahead with it finally.[0] This will be a lesson demonstrating the superiority of fiat currency to that which is backed by commodity: commodity-backed currency simply does not do well alongside fiat currency.
Never mind the legality of the whole thing.
First of all, the dinar and the dirham are pegged to the ringgit.[1] This option eliminates the need to use the new currency vis-a-vis the ringgit, notwithstanding the supposedly Islamic ideal. With wider circulation, why would a person not choose the ringgit over the new currency? Call it the status quo bias but that is the reality.
Furthermore, the dinar is likely fail to fulfill the double coincidence of wants, which is necessary for any trade to happen between at least two parties. This is the reason why barter trading is not nearly as popular as trading done through a medium of exchange called money.
A far more threatening factor is the prices of metals. Sufficient increase in gold and silver prices vis-Ã -vis the exchange rate will make the money more valuable as metals than as a medium of exchange. That will create an incentive to sell the dinar and the dirham as metals, thus lowering the quantity of money in circulation. The next time metal prices go through the roof, one may expect the dinar and the dirham as a currency to collapse or at the very least becoming very, very unpopular. It will be hard to see the currency around and in use.
One possible solution to the circulation problem is that the Kelantan government may want to support the currency by printing more of them. That will prove to be a costly policy to carry out in the long run.
Alternatively, the Kelantan government may reevaluate exchange rate between the commodity-backed currency and the fiat ringgit to address rising gold prices. The higher value of the commodity-backed currency compared to the prices of the relevant metals, the more valuable it will be as currency and less as metals.
If reevaluation is the favored policy, it will be a race between the issuer and arbitrageurs: who can act first. There is an handsome profits to be made. Remember, for instance, the painful experience of the European Exchange Rate Mechanism.
Between a state government (along with the issuer) with no experience in monetary policy and countless arbitrageurs, I have a feeling the state government will not fare too well. I doubt Kelantan has sufficient reserve to support a currency, in case of a run. Somebody once said something to this effect in a different but entirely applicable scenario: the government has to win every time but the arbitrageurs need to win only once to induce a collapse of the currency.
Or, the Kelantan government can float the exchange rate. But if it does so, there is a feeling that that policy would make the dinar redundant as a currency to the ringgit, leading us back to the status quo bias.
[0] — KOTA BAHARU, Aug 12 (Bernama) — Kelantan paved the way to become the first state to introduce the gold dinar and silver dirham currency on Thursday.
Speaking when launching the Syariah currency, Menteri Besar Kelantan Datuk Nik Abdul Aziz Nik Mat said the state would strive to expand the use of gold dinar and silver dirham in all transactions, including paying civil servants’ remuneration. [Kelantan Launches Dinar Gold. Bernama. August 12 2010]
[1] — The exchange rate are RM589 to a dinar and RM13 to a dirham. See World Islamic Mint. Accessed August 13 2010.