Categories
Economics

[1060] Of tax reduction, not subsidy increase please!

Crude oil prices have been falling lately and certain quarters are calling for the reduction of fuel prices in Malaysia. That call includes implicit demand for increase in subsidy. Anwar Ibrahim is one of them.

I oppose any subsidy increase that distorts the market. In fact, to combat externalities caused by fossil fuel consumption, I advocate the imposition of tax to internalize the externalities. Unfortunately, taxation is politically unpalatable. As an alternative to subsidy increase or taxation, I propose a policy better than subsidy increase as well as pragmatic at the same time; a third way — a proportionate decrease in taxes.

That means any saving made by the government through the reduction of subsidy as well as the fall in crude oil prices should be fully used to fund tax cut across the board.

The term saving here needs to be defined. Saving means the amount would need to be paid by the government for subsidy if crude oil prices had not fallen from the price level when the latest subsidy regime was announced.

Why is this policy better than the call to increase subsidy?

This policy is less distortionary. Not only it does not increase distortion caused by subsidy, it also reduces distortion caused by taxation through tax reduction. Apart from economic consideration, tax reduction might have favorable impact comparable to the political effect of subsidy increase effect — it would please the mob, for better or for worse.

Categories
Environment Science & technology

[1059] Of global warming on the front page of The Star

Last December, Utusan Malaysia had global warming as the subject of its front page. Today, it is The Star:

Copyrights by The Star. Scanned by Mohd Hafiz Noor Shams. Fair use.

More:

BANGI: The warming of the Indian Ocean in the past 20 to 30 years — brought about by global warming — could have played a part in the unusual weather which caused flooding in Johor and other parts of Malaysia.

Climate expert Associate Prof Dr Fredolin Tangang said the rising temperature of the Indian Ocean, brought about by a series of events starting with the melting of ice in Greenland, could have caused the unusual and adverse weather conditions in South-East Asia.

An oceanographer based at Universiti Kebangsaan Malaysia’s School of Environmental and Natural Resource Sciences, Dr Fredolin said the Indian Ocean was cooled by a natural phenomenon which oceanographers labelled the “Great Ocean Conveyor Belt.”

The conveyor belt or thermohaline circulation is featured in The Day After Tomorrow and Al Gore’s An Inconvenient Truth. The Day After Tomorrow is fiction of course. A great fiction, that is.

While we talk about flood, El Niño might have finally shown its head:

SHAH ALAM: There may be dry months ahead for Selangor.

Mentri Besar Datuk Seri Dr Mohd Khir Toyo said weather reports indicated that the state might face a drought caused by the El Nino phenomenon from February to August.

El Niño was declared official as early as September last year. Despite the massive flood-causing torrential rain, El Niño is supposed to bring in drier season to Southeast Asia. I am not a climatologist but I do try to keep up with any event that has the slightest link to global warming and climate change at large. It is because of the contradiction — heavy rain in spite of the effect of El Niño — that I posed this question: is the record rainfall in Johor part of a larger trend?

I hope the question will be answered by a report commissioned a few weeks ago by the government.

And then of course, on February 2, the publication of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change which will discuss global warming from a global perspective.

Categories
Liberty

[1058] Of liberalism and democracy

It has been said that democracy is the worst form of government except all the others that have been tried.

— Winston Churchill, November 30, 1874 — January 24, 1965

Many have elevated democracy from a mere tool to such sacredness that the absence of democracy practically guarantees worldwide scorn. Despite the popularity of democracy as a form of government, there is nothing inherently good about democracy. Democracy is a tool and like any tool, it could be used for betterment or otherwise. Keeping that in mind, democracy guarantees only one outcome: right or wrong, the majority wins.

There are many things that cannot be decided through majority vote. I vividly remember during one of my multivariate calculus classes, my instructor challenged us to a mathematical problem. After giving us reasonble time to solve it, he surveyed the class in a way a democracy would. The majority, including me, produced the wrong answer. Upon tallying the result, the instructor announced that “mathematics is not democratic.”

Indeed.

Perhaps, I am guilty of overusing the words “means” and “ends” to the point of banality. Nevertheless, democracy has never been the end and will never be the end. Many advocates of democracy confuse the ends and means of a society. A tool — democracy — can never be the end and there can be no question about that, especially to liberals.

While democracy has been associated with liberalism in modern times, it had not always been the case. Early liberals were suspicious of democracy; Voltaire for instance preferred monarchy instead of democracy. There were many reasons for distrusting democracy. One is the possible disrespect of individual liberty by the majority; tyranny of the majority, so to speak.

A murder is still a crime regardless whatever the masses say. Transgression of liberty is still wrong, regardless what the majority thinks.

In liberalism, participation in a society does not signal a surrender of individual rights to the society. Participation in a democracy does not translate as the participator surrendering or delegating his liberty to the majority.

The day democracy violates individual liberties is the day democracy stops being an asset and becomes a liability. By that, I am not repudiating democracy. Democracy does have its benefits. And in no way I am expressing support for authoritarian rule. Liberalism does not start from the top, be it human or a supreme being; it starts from the bottom, the people that form any state.

I am simply implying that democracy cannot be used to justify transgression of individual liberty. Therefore, a superior democracy, with all things equal, is liberal democracy. Simple majoritarianism just will not do.

Categories
This blog

[1057] Of impersonation is not tolerated here

So, whoever you are, be warned. I will delete it without hesitation.

Also, I am tired of spams. Therefore, I have added an anti-spam measure. I apologize for any inconvenience caused by the new function.

Categories
Economics Environment

[1056] Of Exxon surrenders!

After being attacked from all sides by the greens and allies, one of the great global warming deniers surrenders (via via via):

Jan. 12, 2007 — Oil major Exxon Mobil Corp. is engaging in industry talks on possible U.S. greenhouse gas emissions regulations, a move experts said could indicate a change in stance from the long-time foe of limits on greenhouse emissions.

Why does Petronas plan to act on global warming?

I wonder, where does Petronas sit in the climate debate?

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reservedp/s — from Making Waves of Greenpeace:

A couple years back, our intrepid Greenpeace US research team — through their work on the ExxonSecrets website — exposed the role that Exxon-funded Competitive Enterprise Institute (CEI) was playing in trying to ensure Global Warming didn’t impact US energy policy — absurdly in one case being asked to play political assassin by folks in the Bush Administration’s Council for Environmental Quality who thought the Bush Administration EPA chief wasn’t skeptical enough about climate change. (They uncovered a nice little smoking gun memo exposing the collusion.)

Two years ago, I blogged about ExxonSecrets.