Categories
Economics

[1020] Of flood, aid and economics

While relief effort is underway amid criticism, the government announced yesterday that flood victims are to get monetary aid:

Fair use. The Star. December 24 2006. Scanned by Mohd Hafiz Noor Shams.

Between food or other typical aid — henceforth, I shall refer to as commodity — and cash, which actually is the best to offer?

First, assume that there’s a constant amount of amount of cash and commodity for aid throughout this blog entry.

In circumstances where commodity supply is relatively stable, aid in cash might be the best. The reason is, every person has his or her (for simplicity’s sake, let me use the pronoun “he”. For all the feminists out there, I still love you guys! Or rather, girls) own preference. A person most of the time knows what he wants or needs the best. In economics, a person’s well-being could be measured by utility function. A utility function according to Wikipedia is “a measure of the relative happiness or satisfaction (gratification) gained by consuming different bundles of goods and services“. While utility is a basic concept in economics, it’s something hard to measure by a third person and usually, the person himself knows his utility own function the best. Through the person’s own preference, he, assuming rationality and complete information, will maximize his own consumption under relevant constrictions accordingly.

In emergency where shortage is widespread however, cash aid might not be the better mean of relieving victims of any disaster. This is especially so if the cash value isn’t large enough to purchase sufficient food and other necessary survival materials such as blanket, clothes, etc. During severe shortage period, prices will be higher than during peaceful times and with a specific amount of cash, a person will be able to buy less amount of food and other things that matter vis-a-vis during stable time.

A commodity-type aid is superior to cash-type aid if and only if the cash value of commodities is greater than cash value. Cash-type aid is superior to commodity-type aid if and only if the value of cash is greater than the value of the commodities. In short, the superiority order of the two kinds of aid depends on the value of the an aid relative to the other.

It must be noted that this comparison ignores the fact that monetary aid has considerably less logistical problem attached to it compared to the other aid type.

Regardless the two scenarios, an aid beneficiary could achieve higher welfare given any aid endowment if the beneficiary could trade with, of course, other people.

Categories
Economics Politics & government

[1019] Of Krugman is ditching Rubinomics for realpolitik

The Republicans and the Democrats are the yin and yang. They balance each other in many ways. Yesterday, Paul Krugman suggests that the Democrats should stop playing a balancing role (reg. req.):

Now that the Democrats have regained some power, they have to decide what to do. One of the biggest questions is whether the party should return to Rubinomics – the doctrine, associated with former Treasury Secretary Robert Rubin, that placed a very high priority on reducing the budget deficit.

The answer, I believe, is no. … Rubinomics made sense in terms of pure economics, [but] it failed to take account of the ugly realities of contemporary American politics. …

In a saner political environment, the economic logic behind Rubinomics would have been compelling. … Since the 1990s were an era of peace, prosperity and favorable demographics…, it should have been a good time to put the federal budget in the black. And under Mr. Rubin, the huge deficits of the Reagan-Bush years were transformed into an impressive surplus.

But the realities of American politics ensured that it was all for naught. The second President Bush quickly squandered the surplus on tax cuts that heavily favored the wealthy, then plunged the budget deep into deficit by cutting taxes on dividends and capital gains even as he took the country into a disastrous war. And you can even argue that Mr. Rubin’s surplus was a bad thing, because it greased the rails for Mr. Bush’s irresponsibility.

The Economist’s View has a copy of the article.

Jugding from Stiglitz’s writings, Stiglitz would probably support Krugman. In the Roaring Nineties, I think, Stiglitz isn’t too supportive of Rubinomics and advocate instead more spending and investment on intangible and tangible public infrastructures. His rationale is that the returns from investment would be large enough to justify the cost.

Regardless, what Krugman says does make sense politically, but economically, I feared the worst if the Democrats choose to disturb, if I may say so, the balance in the “Force”.

Categories
Conflict & disaster Environment Politics & government

[1018] Of New Orleans of Malaysia

What had happened in New Orleans during the aftermath of Katrina is happening in Johor. Looting has been reported:

SEGAMAT: The ugly side of human nature has started to emerge from the floods that have hit several states — there are reports of looting and people are claiming that certain parties, including uniformed personnel, have asked for money before rescuing victims.

This is a major disaster, make no mistake of that. But where is the Prime Minister?

Just like in New Orleans, this is becoming a failure in leadership.

Borrowing Bakri Musa’s phrase: Undurlah Pak Lah!

p/s – Ego amid disaster:

KUALA LUMPUR, Dec 22 (Bernama) — Malaysia does not need foreign help to tackle the severe flood situation in the country, which so far has claimed six lives, said Deputy Prime Minister Datuk Seri Mohd Najib Tun Razak.

Najib, who is also Defence Minister and chairman of the National Disaster Management and Relief Committee, said Malaysia was capable of handling the situation and that flood relief efforts were put in motion the moment floods struck in the states of Johor, Pahang, Kelantan, Negri Sembilan and Melaka.

“We will handle it ourselves. The situation has stabilised… no need (for foreign help),” he said at a press conference at the Defence Ministry here today when asked if Malaysia would accept foreign help in tackling the disaster.

If I were the top executive person in the government, I’d accept any sincere help from anybody.

pp/s – the PM is finally back in Malaysia, more than five days after tragedy struck:

During his visit Saturday, Abdullah took a helicopter ride for an aerial view of the extent of the floods in several districts of Johor, such as Muar, Batu Pahat and Kota Tinggi.

The prime minister also saw the extent of the floods in Melaka.

Categories
Environment

[1017] Of global warming on the front page of Utusan

Today is the first time in my life I see a mainstream Malaysian newspaper highlights global warming on its front page:

Screenshots of Utusan Malaysia. Fair use. Scanned by Mohd Hafiz Noor Shams.

“Kesan pemanasan global” means “the effect of global warming”. I’d prefer the headline to be retitled “Kesan pemanasan sedunia” but that’s another issue altogether. For the article, it’s accessible through Utusan.com.my:

KUALA LUMPUR 22 Dis. — Saintis tempatan percaya perubahan cuaca sekarang disebabkan oleh fenomena pemanasan global, sekali gus memberi kesan ketara termasuk kejadian banjir di negara ini.

Pengarah Pusat Perubahan Cuaca Universiti Malaya (UMCCA), Profesor Khairul Maini Osman Salleh berkata, fenomena itu telah mempergiatkan proses-proses cuaca sehingga menyebabkan berlaku pelbagai perubahan yang mendadak dalam tempoh masa yang tidak menentu.

Very rough translation:

KUALA LUMPUR Dec. 22 – A local scientist believes that global warming is the cause behind the changing of the climate which is producing profound effects such as the current flooding in this country.

Professor Khairul Maini Osman Salleh, the direction of University of Malaya Climate Change Agency (?) (UMCCA) said the phenomena is catalyzing climatology processes to cause unpredictable drastic changes.

Of note, the article also cites on article on global warming at Wikipedia. And a few days, I wondered the connection between climate change and the magnitude of disaster hitting Malaysia nowadays. For your information too, the IPCC is expected to make a formal connection between climate change and stronger storms.

What unfortunate however is the tendency of the article to make the United States of a scapegoat:

Menurut Khairul Maini lagi, berbanding negara-negara maju yang lain terutamanya Amerika Syarikat (AS), negara ini mengambil berat mengenai fenomena pemanasan global dengan menyokong Konvensyen Kyoto mengenai Kesan Rumah Hijau.

Translation:

According to Khairul Maini, compared to other developed countries especially the United States, this country (Malaysia) places great concern for the global warming by supporting the Kyoto Procotol.

This is a disgusting statement. Not that I’m defending the United States but the statement on how Malaysia cares more about global warming, or climate change in general, than developed countries is untrue on general. Europe, the EU in particular, is the leading supporter of the Kyoto Protocol. Among the developed countries, only the US and Australia that have refused to rectify the Protocol.

If it’s true Malaysia cares more about global warming than other developed countries, then Malaysia should commit itself to the responsibilities of parties to Annex 1 of the Kyoto Protocol, even if Malaysia is not required to be a party, just like a few other developing nations. Furthermore, what has Malaysia done to reduce its emission? What is the emissions standard of Malaysian vehicles? Fuel efficiency? Suffice to say, it does not come close to the efficiency level developed countries are accustomed to. So, it’s outrageous to claim Malaysia cares more about global warming than other developed countries.

According to Wikipedia, in 2003, Malaysia produced 6.4 metric tons of carbon per capita; more than 150,000 metric tons in total. Observe how Malaysia fares in carbon emissions per capita in 2003 among countries of the world, keeping in mind the ridiculous “Malaysia cares more about global warming than developed countries” statement:

Public domain. Wikipedia. http://en.wikipedia.org/wiki/Image:CO2_per_capita_per_country.png

Nevertheless, this article is important because Utusan Malaysia is a major Malay mainstream paper. The policymakers of this country read it and it does affect the politics of this country, whatever the magnitude might be.

People, make way for green politics. It’s one of those politics that will cut through narrow and outdated communal politics, be its by ethnicity or religion.

Categories
Books, essays and others Personal

[1016] Of drunk and sobering again

I suffered temporary madness just a few hours ago. Or maybe, I was just a little drunk.

It was Friday and merely a few days before Christmas. With having nothing to do, I decided to give Kinokuniya a visit. With me running out of books to read, I felt it was the perfect time for me to go on book shopping.

Initially, I had a specific title in mind and probably one or two other titles I would decide once I actually saw them. For that one specific book, I was looking for Francis Fukuyama’s The End of History and the Last of Man. I thought, I have never read Fukuyama despite being familiar with his ideas. At the book store, I went straight to the counter, asked for Fukuyama’s and got it. One thing though, Kinokuniya placed The End of History at the history section…

The girl at the counter was cute though.

Then, the random walk amid the racks began.

First was The Undercover Economist. It was right beside Freakonomics. And yes, I admit, I haven’t read Freakonomics. I know it’s pop-econ but I feel I know enough economics that I wouldn’t feel too astounded to the facts in the wildly popular book. What’s more, I actually had read some of its content and while entertaining, I could say I’m familiar with it. Besides, I prefer not to read what most others read. As with The Da Vinci’s Code, I only read it after a friend incessantly told me I should read it day in day out. I read Da Vinci’s just to shut her up. Digression aside, I picked that book.

The third book was Amartya Sen’s The Argumentative Indian. I don’t know why I picked it up but I suspect it was because Nik Nazmi mentioned it earlier in his blog. For all I know, Nik Nazmi probably run a subliminal message that would sound like “read Sen. read Sen.” And The Argumentative Indian became the third book I picked up.

I thought I would stop at three books but soon, I spotted Richard Dawkins’ The God Delusion. I remember Dawkins from an article on New York Times. Furthermore, the title was on Kunikoniya’s top ten non-fiction list. I picked that one up too. So much for “don’t really like reading what most people like to read“, eh?

The fifth book was The Affluent Society by John Kenneth Galbraith, one of the more prominent economists in our times. I have great respect for him, despite the fact that some of his ideas aren’t too friendly to libertarianism.

The sixth was The Origin of Wealth by Eric D. Beinhocker. The reason I picked up this book is pure curiousity. At the back of its jacket, it writes “There is a revolution underway in economics and you need to know about it.” Call me a sucker but I really wanted to know about the revolution. And judging from the selection of the books, you could probably guess which section I was lingering at.

Bill Clinton’s My Life was next. People — well, my democrats-friendly friends actually — told me how great the book is. They might be biased but I do think Bill Clinton is a great President. So, one more.

The last one was History the Malay Kingdom of Patani by Ibrahim Syukri. Why I picked this one up? I thought, hey, maybe I could read this and then contribute to Wikipedia!

After all the madness, I started to sober up. The cause of the awakening was the increasingly heavy burden I was carrying. Yes, the burden was the books. And all those books probably would have burned a hole through my wallet if I hadn’t sober up.

I inspected price tags and I said to myself, “whoa!”. The whole thing cost more than RM 500. In fact, it was more like RM 800!

I didn’t plan to spend RM 800 as recklessly as I had picked up the book and so, with heavy hearts, I had to filter them out.

The first victim was The Undercover Economist. Second was The Argumentative Indian.

Then, it was History of Patani. This book in particular is priced in the most irrational way. It’s a relatively thin book but priced nearly RM 50. Clinton’s My Life is about five times as thick and cost just RM 65. Maybe, I could blame it on economies of scale!

The fourth unfortunate victim of the unwanted culling was The Affluent Society.

Ironically, the scourge cost the book that I came in the first place. Yes, I threw away The End of History.

So, in the end, I was left with My Life, The Origin of Wealth and The God Delusion.

While I’m currently happy with two titles, I’m not so sure with The Origin of Wealth though. When I got home, I immediately opened by New Years’ present and took a sneak peak of what to come. Naughty me.

The Origin of Wealth unfortunately looks like an economics thesis instead of something one could read for leisure. The appendices itself could be made into a book by itself. That’s how thick it is. Maybe I should just return and trade it for Fukuyama’s instead.

And great. I forgot that I wanted to get Sophie’s World.

Regardless, these three titles ought to keep my busy for weeks.