1Malaysia – Where is it heading to?.

When Prime Minister Datuk Seri Najib Tun Razak first announced “1Malaysia”, I felt that it excited a large segment of the Rakyat. I was certainly excited as the slogan, if carried to its most logical conclusion could be a practical, far-reaching guide to the achievement of a true 1Nation. It can actually be vision for the government and the Rakyat to achieve.

1Malaysia is something that all the Rakyat can identify with. Most of the Rakyat had been living in peace since independence and before. Malaysia had the ugly experience of May 13, 1969 but then again, it was the result of politics rather than real hatred and enmity between the different ethnic origins. Even then, I recall that while a few of the participants in May 13 were going amuck, the bigger majority were shielding and helping each other out despite ethnic differences.

Today, however, the ghost of May 13 is unknown to the younger generation even though some irresponsible and uncreative older generation politicians keep trying to play it up. While the citizenry landscape has changed, many of the politicians’ mindset has not. There has been so many inter-marriages that it becomes almost ludicrous and cruel to differentiate Malaysians based on ethnic origins. To take the example of the former Prime Minister Tun Abdullah Ahmad Badawi who married a non-Malay (biologically as constitutionally, she may be a Malay)

In mixed marriages, while all are cousins at home, the moment they step into society, they are separated into Malay, Chinese, Indian, etc category by the adults who insist on laws and unwritten policies to this effect. It may take a while for these adults in power to realize that they will have to answer to God on the day of Judgement for infusing division from childhood purely for political ends.

The younger generation is generally embarrassed by the older generations’ insistence on ethnic segregation and ethnic based policies and speeches. Further, 50 years of Merdeka has also shown that it is untrue that solidarity based on ethnic similarity per se guarantees well-being. Even religious similarity is not a guarantee that the person who belongs to the same religious grouping with you will not oppress you. Many leaders have betrayed their own ethnic groupings many times over while others have assisted people from different ethnic groupings. Greed and treachery is not the monopoly of any one ethnic group. Good people and bad people are found everywhere.

The dramatic change in the political landscape has also educated the people that ethnicity is a wrong premise to proceed in the quest of justice for all. Today, you have almost equal number of participants from different ethnic origins on both sides of the political divide. The “Malay, Chinese or Indian political card” is now frowned upon as racist and an affront to human dignity (“perjuangan yang tidak bermaruah”).

In the above backdrop, 1Malaysia appears to give hope to the common folk that finally we can take the necessary real and bold steps to truly live as Malaysians under the Malaysian sun. This is a real hope and because I think a large segment of the Rakyat truly believes in this, it is for now a double edged sword for the Barisan Nasional Government. If Najib understands what this slogan means for the people (it does not matter what it means to him), and he can deliver it, then he will be remembered as the “Bapa Malaysia” and his BN government may get more votes at PRU13. However, if he does not live up to the Rakyat’s expectation of 1Malaysia, then, the Rakyat will find it hard to ever trust the BN again. I will so go so far to say that 1Malaysia is, in a sense an extremely powerful slogan.

I like the slogan. To me, it is the right guiding principle of governance in multi-ethnic and multi religious Malaysia. I think it can be utilized to bring forth radical and fundamental changes that will benefit the Rakyat in the long-run. It is due to this that the moment Najib announced the slogan, I began to write about what 1Malaysia should be about. I think I started writing it on my blog even before Najib could complete his eight principles of 1Malaysia on his blog!

I sincerely wish Najib all the strength and courage to actualize 1Malaysia into a reality that could make us feel truly Malaysian. To do this, the disbelievers should be removed and he must put in place people who will support him in making 1Malaysia a reality and not just a passing political slogan like “Islam Hadhari”.

Peace.

Part 3: The Economy is doomed forever? – Boom-Bust Cycles

Boom-Bust Business Cycle – democapitalists lie on the people.

Ancient Chinese warfare discipline has good advice – before you want to chart out the strategy, understand the terrain that you want to conquer. So, let’s try to do that here.

It is accepted in current democratic-capitalistic (hereinafter referred to as “demo-capitalistic system”) thought that the economy will undergo cyclical patterns of “ups and downs” or “booms and bust”.  It has its roots in the classic business cycle theory. According to this theory, booms are initiated by a series of real inventions which in turn lead to real investment (employment of resources). Early periods of “boom” often leads to “jumping on the bandwagon” type of behaviour (economists call this competitive pressures caused by optimism) resulting in further investment than is necessary or profitable. They argue that this inevitably causes collapse or a bust of the economy. 

Business cycle economist actually welcomes this boom-bust phenomenon arguing that the economic forces will play out an equilibrium position thus achieving “efficiency of allocation of resources”! (we will have to come back to analyse this phrase). Their reasoning sounds perfectly logical and indeed up to the date of writing this article, it is accepted as an “economic truth” by none less than the economists of the renowned universities of the world (Harvard, Oxford, etc).

I have always had my apprehensions about “mutated economic theories” masquerading for centuries as premised on Adam Smith’s framework. Today we have various “sects” from the time of Adam Smith – the monetarists, the neo-classical economists, the Keynesians, etc. etc, etc. The world experience since the economic depressions of the 1930s has heightened my skepticism and in fact disbelief in these theories. The fact is, today one cannot really pinpoint what is the philosophical basis of any economic policy other than a concoction of fire-fighting measures with a view to temporarily sustaining the “economy” within the political life span of an elected leader. Other than that, it is clearly business as usual for the vested interest groups discussed earlier despite the impact on the mass citizenry.

The boom-bust theory with its justification of an equilibrium at the end of it seems to have overlooked the critical role of one greedy rascal – the banks and the financial institutions of sorts, that is, the glorified and protected ‘alongs’ (hereinafter referred to as the “gralongs”).

Recapping the boom-bust cycle: with inventions, there is investment leading to optimism and further over-investment.  This over-investment leads to a bust which in turn is said to eventually lead to equilibrium of the economy at which point it is argued that there is efficient employment of resources (hereinafter referred to as “The cycle logic”). I see the following flaws in this “logical argument’:-

1)                  The so-called equilibrium is a self defining concept. The trick is this: it does not solve any economic woes (there is still unemployment of resources) but in the world of demo-capitalistic economic thought, once equilibrium is reached, the situation is defined as efficient. You create the game and the rules, and according to the rules, the problem is solved! What about the unemployed, your ordinary mind may ask. That, in the world of the demo-capitalists is a wrong question. You should be asking: what about the employable but they are unemployed. In the past fifty years or so, it has become “employable and unemployable” and no longer “employed or unemployed”.  This is a very subtle development in the demo-capitalistic system which many are unaware of or choose to remain silent.  The implications and impact is massive – among other thing, it sustains the vested interest groups and ensures that the vast majority of the people remain worker ants in a state of dependency.

2)                  The cycle logic also overlooks the role of the gralongs. Firstly, we have to be very clear about the gralongs – they do not have any noble intentions other than to maximize their profits by creating DEBT.  Let us not get duped or conned into the jargons that have sprung in the last fifty years such as securities, bonds, mortgages, etc (nowadays they are termed in Arabic to appear divine sanctioned). Basically, they are debts.  There is nothing wrong with debt per se.  I still owe one of my staff twenty ringgit which she advanced when I was overseas. 

Back to the cycle logic, this is the missing link: there is no longer a distinction being made between “real” and “monetary”. For example, you produce a pencil and it is priced at RM10. If there are 10 pencils in the economy, the statistics will show that there is RM100 worth of pencils in the economy. Assuming, the price of pencils increase to RM20 each but the number of pencils remain the same. Statistically, your capitalist politician will boast to you that there is now RM200 worth of pencils. Statistically it has doubled! Very few will investigate and find out that in real terms, you actually have the same number of pencils. Now, assuming that your income had remained the same despite the doubling in the price of the pencil, you now may not be able to afford the pencil! Your standard of living in real terms is now worse off.  Unfortunately, we have now entered the era of the statistical dupers.

Now, the cycle logic seems to deliberately or inadvertently omit the role of the gralongs during the period of upswing and downswing. Gralongs often give out debts (investment more polite!), and thus while encouraging greater increase in production and consumption they actually magnify the boom artificially. However, when there is the slightest pessimism in the market, they magnify the bust by their sudden and abrupt withdrawal of facilities - head you lose, tails they win. It is only at the time of default of payment that the banks get its hands on real goods – your property, your cars, etc.  The boom is often characterized by the ‘monetary layer’ which will burst and hurt very innocent hardworking people because the ‘real layer’ has never increased or had increased when it was not necessary. For example, allowing the construction of houses in a particular area because that area is seen profitable even though the real need is elsewhere (this another area where is a complex web of deceit going on).

Since therefore, the gralongs are playing prominent roles in the boom-bust cycle and it is no longer due to demand and supply of real goods and services, the solution seems to be to urgently review the roles of these gralongs. However, as argued earlier, vested interest groups will not allow this. Further, the boom-bust cycle has become a major deceit and a lie couched in very clever and sophisticated language and statistics. This is because, it has ignored the rise and the critical role played by the financial capitalists. 

It may sound complex but the basics are simple. Assuming we play a game of monopoly. You buy houses or hotels as the dice falls. But somewhere through the game, we decide to use (buy/sell) the currency instead to see who can win the game. The currency, which in the beginning was the medium of exchange has now become a good unto itself! At the end of the game, there will be no hotels and houses built but we will all have monopoly money!!! And if there is only one house on the board, all the others will be priced out by the person with the most amount of currency in his hand. Now wonder we are doomed!

3)                  The boom-bust cycle pretends to be a result of free market mechanism and ignores other factors such as the role of the capitalists, the oligopolies and the speculators. ……….to be continued in PART 4 – God willing.

Peace !

The Luckiest Nut In The World !!!

I thought it is good if  I post a few videos (if we can find them!) related to the topic under discussion (economy) before I post the article on "Fundamental approaches to economic reform" . The following video is a well done effort by Emily James on free trade,  liberalization of the economy, loans by world bank, IMF, WTO and in short the "current economic system". Enjoy or be sad ! Either way, hopefully you are enlightened.



Peace!

The Economy Is Doomed Forever? - Part 2

The Fundamental approach verses the current vested interest approach

by Jahaberdeen MOhamed Yunoos.

Prologue:- the vested interest groups.

Allow me to briefly clarify what I mean by the “vested interest group”. They consist of the following groups:

1) The ‘experts’ or the ‘gurus” of the current economic ‘system’. They will argue in sophisticated language and use the favourite mesmerizing trick of charts and statistics to beguile the unsuspecting and ignorant public to sustain or to continue supporting the system. They will also present the case to the public that the world has consistently benefited from the current system and explain away major defects as transient anomalies in the system which will be ironed out. They know that we are too busy “living” and too preoccupied with our respective trivia that we leave critically important things in our lives to the gurus or the experts. Believe it or not, our educational system has been designed to make us uncritical and averse to thinking and to turn us into mere worker ants. We seem to forget however, that we are created as human beings and not ants.

2) The economic/financial advisers/ executives – the fanatical disciples of the gurus or experts who have everything to lose if the entire system was revamped or thrown out. You will notice that only those who are agreeable to the axioms, theorems and processes of the economic system will be hailed as “excellent”, “brilliant” and therefore given positions to safeguard the system. Hence, we must be totally gullible fools to expect these very same people to reform the system that they want to safeguard!

3) The politicians in the “democratic-capitalistic” system of governance. The political structure is based on the basis of “vote-buying” in various forms and it has worked well for sustaining the political elites in power. There has to be major inequality between them and the majority of the citizens to enable them to lord over the citizens. It is not accidental. It is deliberate. This is called ensuring that “the playing field is not level”. The masses are forever kept in the position of dependence on their political lords. If we had landlord-peasant relationship in the past, we still have the same relationship but called differently.

With very few exceptions, all over the democratic-capitalistic world, political power has become the inheritance of select elitist families for decades.

Further more, the current political thought in so-called democratic societies accept that funding and lots of them are necessary for anyone who aspires to serve the country. Can you see the contradiction in terms which we seem to have helplessly and ignorantly accepted? The source of such funding can only come from the current economic system. Is this why capitalism, especially financial capitalism and current form of “democracy” go hand in glove with each other? These politicians have a vested interest for the system not to be reformed fundamentally.

4) Further more, the current political thought in so-called democratic societies accept that funding and lots of them are necessary for anyone who aspires to serve the country. To get into the position where you want to contribute, you must first be wealthy! Can you see the contradiction in terms which we seem to have helplessly and ignorantly accepted? The source of such funding can only come from the current economic system. Is this why capitalism, especially financial capitalism and current form of “democracy” go hand in glove with each other? These politicians have a vested interest for the system not to be reformed fundamentally.

The political system with its need for “political funds” necessarily gives rise to the need for cronyism, nepotism and corruption. As long as the current democratic-capitalistic system and current political thought dominates, these can never be eliminated. All over the “democratic world”, you will find that top politicians have their hand deep in some critical and profitable business either directly or indirectly. They depend on the current economic “system” for their power and maintenance of lifestyles.

Have you not realized that no politician has seriously implemented a policy of complete non involvement in business by anyone who is part of the Government?


5) The capitalist lords themselves. All over the world, industries and sectors are controlled by families or select elitist groups. It is always the same people. With the capital that they have, they exert tremendous power over the shaping of opinions in all aspect of life all over the world. They have in their armoury not only capital but through it so-called experts to endorse what they want, diverse institutions (including and especially institutions of “learning” for the purposes of indoctrination), and such. It is a massive network beyond the reach and understanding of the commoner.

The vested groups will never allow for any fundamental change in the current system or thought even though it may benefit the greater majority of the people in a real sense (not cosmetic as it is now). Hence, do not expect any real change, maybe semblance of change but it is still within the same arena with the same players and hence, the same set of problems for the greater majority.

And for those who are hardcore mentally indolent - imagine you being in politics for 15 years and has never held a permanent job or in any real business, is it possible for you to own a bungalow? If you look around, you will find many such folks who not only own bungalows but are able to live lifestyles which even a hardworking lawyer or architect is unable to afford in relative terms! This is the “miracle” of the capitalistic-democratic system for its diehard disciples and worshippers.

In brief, therefore, the vested interest approach will not be interested to reform the system fundamentally. Whatever “reforms” they present will be peripherals that will not hurt the system and hence, them. Can you imagine a banker agreeing that they will now behave like all other businesses ie take business risks as usual without the mind boggling special protection that they now enjoy?

And the consistent problem with the laid back public is this: what they do not understand, they applaud. Heroes are made not because the person is ‘heroic’ but because the rest are turkeys (no offence to the turkey).

NEXT: THE FUNDAMENTAL APPROACH.

The Economy Is Doomed Forever? - Part 1

by Jahaberdeen Mohamed Yunoos

It is almost a truism to say that there will always be problems in life. I would add “in all aspects of life”. Often times, I do not see what occurs as a problem but a hurdle or an event that needs to be addressed. It only mutates into a problem when the event or thing is not addressed or is addressed but inappropriately.

For example, one may see it as a problem that one has to move from point A to point B. But to me, it is simply a life situation that needs to be addressed with several options – walk, use a bullock cart, bicycle, car, train, plane, etc. The choice of the option is critically important – short term measure or long term, expedient or fundamental and so on. Unfortunately, I have seen that Governments (due largely because of the nature of the citizens themselves) often opt for the short term and expedient option. Since it is short term and expedient, the so called ‘solution’ itself raises a host of diverse other problems. I see this happening particularly in developing countries that refuse to learn from the experiences of the developed countries.

Take the economy, for example. Up to the time of writing this article, Laissez faire or free market enterprise is being taught in the universities as if it is being practiced in any part of the world. Adam Smith’s ideas as expounded in his book “The Wealth of Nations” and the magical ‘invisible hand’ that will equitably distribute resources in the economy is a Shangri La that does not exist in real time. Today, one cannot really describe accurately what the nature of the economy of any country is.

The reality appears to be an arbitrary concoction of free market, state controlled and everything else thrown into the boiling economic pot in the spirit of fire fighting which we have been accustomed to since the depressions of the 1930s. Hence, we are crisis managing the economy all the time. The so-called economic experts justify our inability to confront the truth of our refusal to address fundamentals by inventing jargons like “cyclical phenomenon”, “overheating”, “financial meltdown”, and so on. The fact is: we are in a major world economic crisis and it will recur even if we “recover” in the short term. The crisis started long ago when we imported the capitalistic model and then became worse when it silently mutated into financial capitalism.

Fundamentals are never addressed, largely due to the existing vested interests of the very people who are supposed to be the caretakers of the economy and our paid, appointed thinkers. This will be addressed subsequently in this article. Let me move to an issue which is more easily discussed – living with misconceptions or in simple words – believing the lies that are told to us.

Everyone who wakes up wakes up accepting that we live in a free market capitalistic economy. What this implies is that people believe that, basically, demand and supply proceeds unhindered, there is movement of capital towards the creation of good and services (hence employment) and that competitiveness ensures efficiency and quality. The reality however shows this perception to be largely untrue for several reasons. I will discuss three of them here.

Firstly, there are many aspects of our life where the goods and services are not actually desired but they are just put into the market. Your needs are created for you and you do not really have much choice. Houses are built and if you can afford it (economists call this affordability as “demand’), you buy it. Demand has nothing to do with desire. If you want to buy a car, the economy dictates the process through which you can own the car – get a bank loan and service the interest.

The economy dictates that since you live in a terrace house and therefore own no land to grow your food, you have to find a job to buy your food. And to satisfy your other needs (clothing, education, medical, etc), you have to be gainfully employed.

Effectively, to live or survive in this economy, you must be healthy, and able to work until your dying day. In this economy, you will have been converted into a slave of the economy for the purposes of “sustaining” the economy. We have all, through years of indoctrination accepted this as a reality. We do not think of other available options because they will be presented as unavailable by the vested interest groups which you are blissfully ignorant.

Secondly, and I have argued this even when I was a mere student of economics, the so-called free market will mutate naturally mutate into monopolies and oligopolies. This is the natural progression of human caprice and the power of capital when left unregulated by responsible governments.

For example, small banks have systematically been eased out and replaced by a few banks – oligopoly. How much bargaining power do you have with banks? How many contract terms with the banks have you negotiated? You just sign! Everyone seems to have forgotten that commercial banks are businesses like every other business with the aim of maximising profits. However, they enjoy greater advantages and power over the so-called “customers”. Raperas must see that there are increasingly greater oligopolistic tendencies in the financial market and hence greater control over the customers. Those who control the very medium of exchange (money) needed in this economy controls your life. As a reminder, the banks are lending you "credit" - what is that??? (Another area where the public should be educated on)

Raperas should be worried that almost all the essential industries are largely in the hands of oligopolies – food, water, medical, etc. The argument often advanced is that of economies of scale and efficiency but I am certain it is going to and has lead to profiteering and bondage of the ordinary people. This will lead (if it has not already) to the phenomenon of “corporatism” – where corporations controls our lives in every aspect. Almost everyone today is getting caught up with the hype of "food biotechnology" without having thought out the longer term repercussions.

Thirdly, the rise of financial capitalism disguising as free market capitalism. Malaysians have an apt description for this phenomenon – “rise of the alongs and gamblers”. Finance capitalism has nothing to do with developing the real economy. It is characterized by the pursuit of profit from the purchase and sale of financial products such as bonds, stocks, futures and other derivatives.

It also includes the lending of capital at interest and trading in currencies. Financial capitalism destroys the philosophy behind free market. Financial capitalism puts income into the hands of those who do not produce any real goods and services – they have the “demand”. In simple language, these groups can and do price out goods and services beyond the reach of ordinary people. Some economists explain this away as "inflationary tendencies". What I am saying is this: the majority WILL get poorer sooner or later!

NEXT: The Fundamental approach verses the current vested interest approach. God Willing.

Peace.

Nazri says Dr M is a racist...and calls himself a hypocrite!

Mac, a brother blogger writes an "interesting logic" at To Think About It.

"The Selangor state government, under Tan Sri Khalid Ibrahim, claims that the BTN course is a political machine used by UMNO to brainwash/indoctrinate the people. Not having gone for any BTN courses myself, I am in no position to comment with the greatest certainty, but I can say that I am not surprised. Well actually, I am surprised that it has taken so long for this to be brought to light".

You can continue reading it here.