Categories
Economics Environment

[1807] Of Beijing would do better with congestion pricing

Beijing is notorious for its dismal air quality. I have never been there myself but many news reports have convinced me that Beijing is not really a place I would want to live in. My experience in Kuala Lumpur during the one of those hazy periods was bad enough. I also hate Los Angeles because of its constant smoggy sky and I doubt I would love Beijing for the same reason. The authority there however is trying to do something about it and among it is a requirement for all cars to stay off the streets for a day out of a week.[1] This may work in the short term but in the long run, it could be ineffective.

The policy — in its six-month trial run — calls for car with registration ending with a particular digit to be barred from being driven on the road on a particular day. With this rule, the local authority expects to reduce traffic by 6.5%. The same authority also has an ambition to take half of the cars in Beijing off the road on a very bad day: that is equivalent to 3.4 million cars.[2]

It is not really rocket science to find a way to go around this restriction: buy or use another car with its registration number different from the existing one. Or buy or use other kind of vehicle. Or use public transportation which is probably the ideal path. In any case, one unintended consequence of this policy could be an increase in car ownership per capita while traffic remains to be high, or only see limited reduction, with all else being equal.

The scary part is that in the short run, this policy might work. Individuals probably need some time to acquire new car or vehicles. And it would probably take the most of the public some time to discover a way to beat the system. The bottom line is that adaptation requires time. Slowly however, the policy would be useless as more and more individuals move to capitalize over the weakness of the policy. How long would that be would be anybody’s guess, until the results from the test run are finalized.

Why is this scary?

The trial run will last only six months. The time length is probably insufficient for the authority to obtain the necessary empirical data to prove the ineffectiveness of the policy. The way the test run is being conducted has a temporal bias and may lead those conducting the experiment to a wrong conclusion.

But fret not Beijing for all is not lost in your quest for cleaner and clearer sky! There is a proven superior market-based alternative known as congestion pricing!

Congestion pricing policy suffers no such weakness as no vehicle, save those exempted, will escape the policy, assuming enforcement is carried out. This market-based policy also has the potential of eliminating negative externalities such as traffic congestion and pollution. Another is that the policy, unlike the currently tested in Beijing, fills the city’s coffers. That money could then be used to maintain or even improve the public transportation system!

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — Traffic restrictions have been re-introduced in China’s capital Beijing, in an attempt to bring back the clear skies seen during the Olympics.

Each car must spend one day a week off the road, in a scheme based on registration numbers. [Beijing reintroduces car rules. BBC. October 13 2008]

[2] — The new rules are expected to take some 800,000 cars off the road every day, according to the Beijing Municipal Committee of Communications.

“It’s expected to reduce Beijing’s average road traffic flow by 6.5%,” a committee official told the state news agency Xinhua.

During periods of exceptionally heavy pollution, the restrictions will be increased so that half of Beijing’s 3.4 million cars will be taken off the roads, state media reports. [Beijing reintroduces car rules. BBC. October 13 2008]

Categories
Economics

[1806] Of holy macaroni! Krugman wins the Prize in Economics!

Totally unexpected!

Oct. 13 (Bloomberg) — Princeton University professor and New York Times columnist Paul Krugman won the Nobel Prize in economics for his work on trade theory. [Princeton’s Paul Krugman Wins Nobel Economics Prize (Update3). Simon Kennedy. Benedikt Kammel Bloomberg. October 13 2008]

And what did the good professor say in his blog?

A funny thing happened to me this morning… [An interesting morning. The Conscience of a Liberal. October 13 2008]

Categories
Politics & government

[1805] Of the conservatives are bringing down the McCain campaign

The McCain campaign is going downhill. As much as I would like to see him doing good as he had just weeks ago, these are hard times for McCain in part no thanks to the conservative aspect of the Republican Party. Having Palin in the equation does not help either.

The accusations thrown against Barack Obama by the conservatives are becoming too disgusting that even Senator John McCain could not stomach. Upon hearing a supporter giving off a reek of racism against Barack Obama, McCain valiantly defended Obama.[1]

This is possibly not the way to run a campaign. McCain should really promote his agenda instead of defending Obama. Yet, the conservative supporters — the part of the Republican Party which I truly hate — are forcing McCain to defend Obama in order to have some sort of decorum in the presidential race. McCain is one of those people which honorable fight means something.

I am indeed reserve a lot of respect for John McCain. This respect originates from the days when I was an undergraduate at Michigan. I was simply impressed at the senator’s willingness to break rank to do what he thinks right. His positions on social issues in comparison to average Republicans, on the environment as well as on free market particularly appeal to me. Just tell me who is brave enough to tell to the farmers in the Idaho that ethanol subsidy is unhelpful for the economy? And tell me, who is brave enough to meet the automotive workers in Michigan that they need to compete without government aid?

Even Obama is unwilling tell these groups the truth.

His defense of Obama against his own vulgar supporters earns him even more respect from me. The more his supporters irrationally attack Obama personally and viciously at that instead of focusing on issues, the more McCain would be forced to stand up for Obama. Such action would crowd out time for McCain to use to promote his own agenda.

It is just too bad that when McCain defended Obama, he was booed by his own supporters.[2] That demonstrates how unschooled the conservatives are.

Palin herself is not helpful. Apart from her disappointing uneducated remarks on various items — on Russia for instance which has been made fun by the SNL — her continuous personal and dirty attack on Obama makes McCain’s job harder. Furthermore, her recently publicized abuse of power in Alaska could only makes matter worse.[3]

At the rate things are going, unfortunately, the Republicans are likely to witness a disaster in November. If it continues like this, the Republicans would lose the centrist and independent — the groups which McCain had a hold on at the beginning of the campaign. If the Republicans lose and there is a backtrack in the advances made in the recent decades toward freer market, it would be because the conservatives handed the victory over the Democrats.

Even I, initially eager to be within the McCain’s camp, am being put off by the conservatives.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — [Rage rising on the McCain campaign trail. Ed Henry. Ed Hornick. CNN. October 11 2008]

[2] — McCain’s response was met with boos from the crowd. [Rage rising on the McCain campaign trail. Ed Henry. Ed Hornick. CNN. October 11 2008]

[3] — Sarah Palin, the Republican vice-presidential candidate, unlawfully abused her position as Alaska governor to exert pressure for her former brother-in-law to be sacked as a state trooper, an independent investigator has concluded. [Sarah Palin acted ‘unlawfully’ in feud with state trooper, report says. Philip Sherwell . Telegraph. October 11 2008]

Categories
Liberty Politics & government

[1804] Of Koh is one of the fathers of doublespeak

In The Malaysian Insider:

KUALA LUMPUR, Oct 11 — Datuk Seri Abdullah Ahmad Badawi has been dubbed the “Father of Democratic Reforms” by Gerakan president Tan Sri Dr Koh Tsu Koon.

In his opening speech this morning at Gerakan’s national delegates conference, Koh said that “as the Prime Minister, Abdullah has initiated reforms for good governance and promoted commitment to integrity. As an advocate for democracy, he has opened up more space for expression to Malaysians.” [Koh dubs Pak Lah ‘Father of Democratic Reforms’. Shannon Teoh. The Malaysian Insider. October 11 2008]

I am wary of doing the same thing.

While it is during the Abdullah administration when the Malaysian society reclaims greater democratic space and effectively larger liberty stolen from it by the state, practically none of it is due to active action by Prime Minister Abdullah Ahmad Badawi. The greater democracy is made possible through effort of various individuals willing enough to stand up and stare back at the state when the state stares at them.

PM Abdullah has failed to reform anything. Each reform he initiated is going nowhere due to opposition from within his own party.

It took free individuals to push organic reform agendas by pushing the frontier of an illiberal state away from suffocating free individuals. To have PM Abdullah enjoying the appellation denies the real contributors who stand in the front line to contest against an arm of the state, the police which is more interested in suppressing freedom rather than fighting crime.

Having the PM as the “Father of Democratic Reforms” steals the honor from those who actually fought for greater democratic space, those that fought against the PM as well as the relentless machinery of Barisan Nasional. The victory is of individuals too many to list here and not of an ineffective personality as well as the machinery that maintains deep disdain for democratic space.

If there is anybody that deserves that honor, it should be the individuals who fought for it. We do not have a “Father of Democratic Reform”. We instead have “Fathers of Democratic Reform” and the PM is not one of them.

Dr. Koh is committing doublespeak for suggesting the sobriquet for the PM. Would we thank the Nazis for losing World War II? Would we thank PM Abdullah for losing the war in our backyard?

Categories
Economics

[1803] Of the dramatic decline of the Australian dollar against the Malaysian ringgit

Just several weeks ago, it cost approximately MYR3.00 to get AUD1.00. I know this because I needed considerable amount of Australian dollar soon and I have been watching the exchange rate between the two currencies very closely to figure out when will be the best time for me to purchase the Australian dollar in bulk.

Since then, the Australian dollar has lost over 16% of its value compared to the ringgit. As a direct result, I found whatever cost I need to bare in Australia went down by the same percentage.

The decline is spectacular because of its suddenness as well as the fact that the last time the Malaysian ringgit fared so well against the Australian dollar was over 5 years ago. For this week alone, the dollar lost 8% of its value; on the day after the rate cut was announced, at maximum, it lost 6% of its value compared to the ringgit.

This is definitely a chance for me to buy up Australian dollar cheaply.

I am unsure if I should wait since I am unsure if the Bank Negara would keep the Malaysian rate at its current level. With inflation moderating and the economy slowing down, the Bank might be tempted to reduce the rate. If the interest goes down, the ringgit would likely see some depreciation against the Australian dollar.

Also, with the impressive coordinated rate cuts across the world yesterday, the ringgit has appreciated markedly against the British pound sterling and the Euro, among economies saw a rate cut.

But for those interested in the economic implication rather than my networth, does this mean the Malaysian economy is doing good?

That is hard to say because the exchange rate is not a good measure of economic health. Especially in the case between the Australian dollar and the Malaysian ringgit, it is clear that the rate differential plays a huge part in the depreciation of the Australian dollar rather than the health of the Malaysian economy per se. Indeed, the cause of the depreciation is the confidence crisis faced by the Australian economy and less to do with improvement of confidence in the Malaysian economy on general. This causal relationship becomes more convincing when the Australian dollar is depreciating in large magnitude against its trading partners.

This is an important factor to remember the next time you heard anybody trying to pass off the strengh of the ringgit against any currency, including the US dollar, as a reflection of the Malaysian economy. The relationship between the two is not quite so simple. Before believing that person, among other things, check out what is happening in the other economy first. In other words, check the various indicators of the real economy.