Sundew Garden 茅膏菜园

The Problems with Obama - Part 2

2009-02-17T00:54:00.000-08:00

Part 1 of this article discussed two problems with the Obama presidency: The vague slogan of change and world pundits' rejection of Republican policies based on hatred of George W Bush.

This part continues with three more problems and starts by asking: What's wrong with love?

Ideological war of love vs trade

Medical care and welfare are the other favourites of the Democratic Party. Were it so easy to give, the Republicans and politicians the world over seeking the same votes would have promised the same, at least for their own self interest. Why not?

The differences between the Republican and Democratic Party's tax, medical care and welfare policies respectively simply boil down to this: Republicans demand 'tough love' and Democrats promise 'easy love'. One views welfare as a privilege; the other as a right. This is an ideological battle as old as civilization itself, not just in America.

There are only three ways to get what we want outside of Robinson Crusoe's island. They are violence, love, or trade. Most of us can rule out violence as a preference, even though we cannot seem to avoid it when love and trade fail.

The second option is Love. The giving of love necessitates the loss of the essence of liberty, fairness, individual responsibility, and even productivity. And only family, charity and religions should practise love on the helpless. The government should not deliver love - not because it does not have the power but precisely because it has too much power to do so. Asking the government to distribute loving care will only require new laws that will make the government more powerful, centralised and overbearing.

Government intervention necessitates the implicit threat of violence – to collect tax to finance love. It is amazing how many smart minds adore Henry Thoreau's passive resistance to taxation on Walden Pond, yet find all kinds of pretenses to raise taxes to be 'progressive'.

The third option to get what we want is by trade. Trade is the only fair and responsible means to get what we want - without resorting to private or government coercion and without having to beg others to sacrifice themselves. Today's younger and non-business-owning voters might have preferred 'government love' - hence many Democratic Party policies – because being used to familial and collegial environment, they misjudge the risk of inviting government violence. It's also not surprising that authoritarian governments reject free trade because trade transfers decision power to the people, away from the government.

It is no coincidence that terrorists repeatedly bombed the towers named World Trade Centre, until they succeeded. The different levels of trust for 'government love' is also one reason why the Republicans and Democratics tend to react differently to foreign military interventions, making Republicans look 'hawkish' and Democratics permissive.

As for the world's intellectuals and journalists, almost all of us were born into leftist, activist, or loving families. We can go through half a lifetime before running into Ayn Rand's pristine logic that defends money and trade in 'The Money Speech' in her novel 'Atlas Shrugged'. It is a real shame Rand is not made required reading in high schools all over the world.

Campaign debt to the left

The fourth problem with Obama is the campaign debt he owes to the left and labour unions who contributed money and grassroot election efforts. Lobbyists and labour unions can be as oppressive and corrupted as the big businesses when they gain political clout. For example, the main thing the labour unions want is to get rid of secret ballot in union election. That will hand union bosses potentially oppressive organisational power.

One of the labour union's prime targets, Wal Mart, grew to be so big because it provides consumers with the largest volume of products at prices consistently favoured by and favouring the consumers. The low prices ensure that consumers - including union workers themselves - can maximise the enjoyment of their income or the fruits of their own labour.

Minimum wage is another union favourite. The times when minimum wages were high were also the times when more inner-city unskilled teens could not find jobs. Why hire young punks when you have to pay a high 'minimum' wage not matching their skills? Remember wages make up a huge percentage of the cost for service businesses which tend to be prime employers of low skilled workers.

Unions, when made too powerful by the law, can hold a society at ransom with strikes. It will discriminate against legal immigrants that help to regenerate a society and this tends to lead to racism. Excessively powerful labour unions ignore the economic principle that the employer absorbs a whole range of risks of pre-paying for business idea, capital, material and salary.

The American economic resilience is substantially based on its labour flexibility. While the world outside counts its recessions in years (and Japan seemingly in decades), the US usually counts its recession in quarters. Any loss of labour flexibility in the US will crank down the speed of adjustment in the US - which is everyone's export destiny. This should send a shiver around the world - as it has if you have noticed today's endless market crashes.

Loss of checks and balances

The fifth problem about Obama is a substantial loss of checks and balances in the four pillars of power in the US political system - the administration, legislature, possibly the judiciary and the media.

Furthermore, over the next four years, Obama will likely have opportunities to replace retiring supreme court judges. He will be in a position to tilt the US Supreme Court towards the left. Fair-minded as he may want to be, Obama will be greatly pressured by a powerful Democrat-led legislature and his election debt to labour unions and left-leaning lobbies. When and if that happens, all three branches of the government of the world's only remaining super power will fall under the influence of the Democratic Party policy of government love, intervention and protectionism.

How about the Fourth Estate - the Press? Unabashedly left-leaning and generally pro-Democratic. Why is it different this time? When the Republicans were in power, there was always the Press acting as the opposing thumb. When Bill Clinton was president, there was the Republican Congress to check on him and the gridlock ensured budget balance and medical care restraint. When Democrats took the Lower House in 2006 and gradually the Upper House in 2007, there were enough Republican filibusters. But post-November 2008, these restraints are essentially gone.

However, between the next four to eight years we can expect political abuses and scandals, which can come in the form of pushing through badly-thought-out, self-dealing and bloated legislation and spending on tax, energy, medical care, union regulation and mortgage financing, not excluding corrupted and over-zealous aides as the other possibilities.

In developing countries, for example, emboldened family members are the mainstay of political scandals. Over-popularity tends to lead to too much power and corruption which eventually drown previously-inspiring icons of democracy, such as in Taiwan (Chen Shui Bian and family), South Africa (Mandela and Winnie) and South Korea (Kim Dae Jung's son).

Market is forward looking

This is not a criticism of Obama the man. In fact I am excited and proud about the Obama presidency because he spent two years at my alma mater. And to be fair, it will not all be Obama's doing. The problems include the Democratic Party policies, the loss of checks and balances, the hatred for Bush that has poisoned rationality and our intellectuals' despise for money and trade.

Republicans have messed it up too, failing to hold fast to their libertarian tradition and getting themselves mired in sexual and corruption scandals when they had too much power. That contributed to their down fall by the 2006 mid-term election. McCain's campaign was unconvincing.

Although it is difficult to decipher the markets, the trick is to remember that markets are forward-looking.

Equity values (in stocks, properties, and business ventures which are really job creators) are highly leveraged on very long time horizons and therefore their prices are subject to wild swings triggered by minor departures in today's key political-economic decisions, such as whether or not the best ideas will continue to have the freedom to compete in the domestic and international markets.

The series of market crashes in the past year likely reflect an increasing realisation that Obama's policies are coming for real. Every election campaign round, speech, poll and debate increased the certainty and panic that culminated with the November 2008 election results and continues with the cabinet selection and policy preparation.

The failing World Trade Organisation (WTO) negotiations and the dimming prospect of Russia being drawn into WTO only anchor a horribly pessimistic world scenario. If we value our assets and jobs, our best hope is for WTO to be revived by a miracle and more checks and balances to be installed in the US mid-term election within two years.

Save our consumers

But there are a couple of things the world outside the US can do, specifically world opinion makers, intellectuals and the media can do a better job.

First, push Brazil and India to revive WTO negotiations and watch the market shoot up overnight.

Second, push our governments to liberate our own consumers by liberating imports, domestic services and cross-border investments. The moment we liberate domestic services such as banks, communication, transport, education, media and medicine is also the moment we expose our legislative weaknesses and endemic bureaucratic corruption.

Consumers must be freed. Why complain condescendingly about over-borrowing U.S. consumers, when hardworking Asians are forced by unfair domestic rules to distrust their own future, such that they hoard savings and forgo enjoying the fruits of their own labour?

Meanwhile, the American consumers can reap more than what they sow simply because they have a constitution and legal system in which they can trust their future with (mainly through an artificially depressed borrowing rate financed by Asians).

Asia mercantilist policies to leech wealth from the US consumers through exports are actually schemes to mask misgovernance at home. We end up leeching and oppressing our own consumers, that is, our very own selves for far too long.

CHEAH KAH SENG considers himself a student of the Austrian School of libertarian economics. An investment analyst who has watched financial bubbles build and burst since 1987, he feels contrarian opinions can be upsetting but still valuable.

This article was originally published on 2009 Feb 17, at MalaysiaKini.com at http://malaysiakini.com/opinions/98467

The Problems With Obama - Part 1

2009-02-16T00:38:00.000-08:00

Barack Obama is now the US president. You can almost hear pundits and journalists all over the world popping the proverbial bottle of champagne.

Too much consensus. Too little skepticism. I am not so sure Obama's platform is good for the world. But it's too late to warn this: Be careful what you wish for.

Every opinion maker in the world seems to have rooted for Obama, for his triumph over racial divide and slogan of "change." But even as the candidate magnanimously suppressed the race issue, Obama's grassroots campaigners and guilt-hawking media appeared happy to exploit it.

Asian pundits thrill ourselves on the race story with increasing abandon, revealing just how much more racist we actually are compared to the American voters. The conservatives in Japan must be in shock, considering it is Japan's xenophobic rejection of immigration of labour that has forced its perennial exodus of capital in search of foreign labour. This wandering Yen has sloshed around and destabilized world finance for decades, most recently via the subprime mortgage bubble. Yes, humanity and liberty issues do affect our pocket books in roundabout and mysterious ways.

Two months after election, still very few pundits are looking at President Obama and the Democratic Party's protectionist policies, the campaign debt he owes to the left and labor unions, and the substantial loss of political checks and balances in the superpower we call the US.

Even fewer see the linkage between Obama's protectionist bend and the endless financial tsunami sweeping the world. Is it coincidental that the tsunami started upon Obama's ascent in late 2007, and accelerated just as World Trade Organisation negotiation failed in July 2008?

This is going to be a very unpopular view that may cost me a few friends. But please do consider the other side of the story, as I list five problems about the Obama presidency. Much of the problem, however, lies with our left-leaning intellectuals, snug in the free world but incapable of appreciating its foundation in the free market.

Change does not equal reform

The first problem with Obama is that change is not the same as reform. Obama's promises of change are vague, unlike the ‘reformasi’ demands in Indonesia and Malaysia to abolish specific oppressive laws, or the EU merger to liberate people by harmonising commerce. Obama hasn't defined what "change" is, beyond personifying the concept and rehashing favorite Democratic policies.

His Democratic Party does not want reform. For all its complexity, our financial tsunami got out of hand when substandard housing loans ballooned since 2004. Why? Because Freddie Mac and Fannie Mae overreached. How? The Democratic Party took over the US Congress in 2006 and egged on these semi-government mortgage agencies to lend more - to those who could NOT afford the loans. Why else is it called "substandard" or "subprime?"

No pundits see the irony that Democratic Party stalwarts would rather send poor families - who couldn't yet afford regular housing loans - into fueling a late-stage, high-price, property bubble. The Democrats do this in the name of spreading wealth. Republicans share the blame for not reforming these semi-governed agencies earlier.

The pundits have it upside down: It is precisely government butting into private finances (by over-sizing Freddie Mac and Fannie Mae) that causes our financial troubles today. Liberal capitalism did not cause the problem.

If Obama's "change" means more government interference and protectionism, then today's collapsed financial foam will likely coagulate into solid depression at the real economy level, a la 1930's.

The market has been prescient as usual. Despite a political mania for Obama and even some prominent financier fans for Obama, market participants in aggregate have betrayed their true fears. Since late 2007, markets went through year-long crashes that accelerated in opposite direction to Obama's rise in the Democratic primaries, poll, debates, and election outlook.

Hatred vs Popularity

The second problem about Obama is really with the opinion makers: World pundits seem to be motivated more by a hatred for former President Bush and the Iraq War - and by association Republican candidate McCain - than by a close examination of Obama's package. Hatred is not a good basis for judgment.

In the 20-20 vision of hindsight, the Iraq War looks like a mistake, triggered by faulty intelligence about weapons of mass destruction (WMD). But the mostly left-leaning media who have forged a culture of hatred for the Bush administration consistently underplayed other valid premises to the war.

These premises are worth reviewing to show the willful and selective forgetfulness of our opinion makers: There were Saddam's proven history of using chemical weapons against Iranians and Kurds, and his cat-and-mouse game to fake and hype his WMD readiness. There were his willingness to kill hundreds of thousands at home and action to invade a country.

There had been 19 UN resolutions on Iraq since 1980s, during Saddam's reign, mostly against Iraq's aggression and use of chemical weapons. These included four resolutions since the end of the first Gulf War, leading up to the unanimously-approved Resolution 1441 warning of the "final opportunity to comply with its disarmament obligations" in 2002. (The US-led coalition, however, failed to get a "final, final" authorisation due to the opposition of France and Russia who were cozy to Saddam and arms trades.) The military force sent into Iraq in March 2003 was multilateral. US voters deemed it rational to re-elect Bush with a greater margin in late 2004.

Any disgust with President Bush needs to be balanced with these premises. To hate him so much as to uncritically transfer that hatred to McCain raises questions about the integrity or rationality of the world's pundits, intellectuals, and media led by their favorite source of quotations - the New York Times.

Opinion makers outside the US seem to have a great inclination for double standards, selective perception, hypocrisy, and self-contradictions. For example, we all want the US military security umbrella, just not to contribute money and soldiers. We wanted communism to stop at Vietnam and have counted ourselves lucky not to become Cambodia, just not to have to feel grateful for the peace and prosperity fought with young American lives.

We take the soul searching in American war movies as admission of guilt and definitive proof that the Vietnam war was a wrongful war. Many world racists detest Jewish influence, yet ignore the fact that Obama relies closely on Jewish strategists (which is nothing wrong and his right to do so), apparently because the world racists hate Bush more. Honest recent elections in Iraq don't count against Saddam's winning sham elections by 100% of votes. Shoe throwing is a black mark on Bush image, but not on journalist bias and activism.

To these opinion makers, it's fine to remain silent on terrorism, when any US military transgression becomes justification to incite hatred against the "hegemony." That is fair game even if the American scandals are exposed, investigated, adjudicated, and remedied. These are, of course, civilized procedures not trusted, and not encouraged to be trusted by governments, in Asia. The US courts hold its own country to a higher standard, but the court of world opinions seems to absolve all standards for the ladies with the hidden bomb (and their handlers).

An Asia led by intellectuals exhibiting such double standards, self-contradiction, hypocrisy, and selective perception would seem a long way from autonomous growth and sustainable peace.

Conversely, wild popularity is not proof nor requirement for statesmanship or good economic helmsmanship. Truman was a highly unpopular war-time US president; Reagan was constantly reviled. Yet today they rank as some of the greatest US Presidents. Kennedy, Reagan, Clinton, Obama all spoke at Brandenburg Gate in Berlin. Guess who was booed and protested? Reagan, who stood up to the USSR and saw to the fall of Berlin Wall.

It should have been worrying that Obama is too popular outside of the US. It reminds me of bubbles – of the political kind.

Isn't it strange that nearly half of American voters (46%) voted for McCain, while it appears 100% of the world's pundits are rooting for Obama? What do Americans know that we don't? They have to live and die right where they vote. We foreign pundits are probably a bit naive in seeing Obama as the heroic icon of the era.

Wealth: spread it or grow it?

The third problem about Obama is his Democratic Party's policies. Obama and his party's policies are counter productive to growth. His tax "breaks," if implemented as promised during the campaign, would legislate a spreading of wealth, rather than encourage the creation of wealth.

We know well what has happened to all socialist policies (including Malaysia's New Economic Policy) that tried to spread rather than grow wealth. Not only did they bring economic failures, they necessitated state intervention and oppressive laws, led to government cruelty, and in the end, fascism.

Obama's protectionist campaign stance against free trade, Nafta, and China should scare the world. It probably has - as world financial markets seeming cannot find bottoms. While mighty governments announced grandiose bail-outs of mortgage agencies, insurers, banks, home owners, and stimulus plans, the markets plunge without end.

Obama's supporters and high-profile financiers console themselves that Obama's protectionist stance is all just campaign posturing, and that he would move to the center as the president. I sincerely hope they are right. But his campaign debt to the left has piled too high, and his fundamental lack of commitment to free trade is too deeply rooted.

World trade failure is about the only development powerful enough to turn today's financial tsunami into a real, prolonged, depression. Trade failure is also the most powerful fuel for world wars. The US Smoot-Hawley tariff converted the 1930's financial crisis into full-blown, cross-Atlantic, protectionism and depression, which gave birth to fascism in Germany, Japan, and Italy, and World War II.

The pro-trade observation that "when goods don't cross borders, armies will" by 19th-century French economist Frederic Bastiat should have become the adage of our time. Instead, our intellectuals and left-leaning media who grew up in the comfort and low-cost life style of free trade advocate restricting trade freedom for the next generations.

Conversely, free trade is the most ingenious invention since "roti canai." Free trade will deliver the kind of peace that starry-eyed New Year Eve revelers and beauty pageant contestants can only wish for so romantically.

In fact, free trade has delivered. For the past 60 years, free trade has turned deadly foes (US, Germany, Japan, China) into allies, felling USSR without the launch of a nuclear missile, and raising billions of lives from abject poverty to historically unseen prosperity in Asia, South America, and Eastern Europe. What else can deliver that?

Our best hope is for President Obama to surprise us all on trade policies, and for India and Brazil to be scared by Obama and the financial tsunami into compromising on WTO negotiation.

But how can it be wrong to try to spread wealth?

See Part 2 of this article, which will be published tomorrow, about the ideological war between love and trade.

This article was originally published on 2009 Feb 16, at MalaysiaKini.com at http://malaysiakini.com/opinions/98364

Electricity bill: You may be subsidising others

2008-08-12T10:00:00.000-07:00

I refer to the Malaysiakini reports Electricity tariffs to rise by up to 20% and TNB: Power rates to be linked to fuel prices.

In the first report, the PM said electricity tariff would rise by up to 20 percent. That is not true. Household electricity bills can actually rise by up to 40 percent.

Any household which previously used RM174 worth of electricity (650 kWh, kilo Watt hour, or ‘unit’ of electricity), will now face a 20 percent higher electricity bill of RM209. Those previously using RM275 of electricity (1,000 kWh) will now be paying 30 percent more, or RM359. The percentage of increase approaches 35 percent for 1,300 kWh, and 40 percent for 2,000 kWh.

Most consumers would have received a half-and-half, old-mixed-with-new-tariff, electricity bill last month. They are only now beginning to receive a bill that is fully based on the much higher new tariff that took effect on July 1.

In your second report, TNB's CEO inadvertently revealed that those who use more than RM112 of electricity (400 kWh, new tariff) are subsidising those who use less than RM112.

"Consumers using 400 units and above are not entitled to any subsidy at all," he stated. In other words, the average price at 400kWh is where TNB breaks even, hence requiring no subsidy. If he didn't ‘mis-speak’, consumers using less than 400 kWh are paying TNB below cost, those using 400kWh are paying TNB at cost, while those using more than 400 kWh are giving TNB an increasingly fat margin, of up to a 63 percent, ‘gross’ margin.

If TNB breaks even at the tariff price at 400 kWh, then why keep raising the tariff beyond 400kWh? Using 400kWh means a bill of RM101 under the old tariff, and now RM112 under the new tariff.

That means TNB's average cost is around 28.15 sen per unit (RM112/400 unit). Yet TNB keeps raising the unit price from 30 sen per kWh at 500kWh to 46 sen per kWh beyond 900 kWh. A tariff of 46 sen is 63 percent more than the presumable breakeven average price of 28.15 sen per unit!

Why make households which use more than RM112 (new tariff) of electricity subsidise those who use less? Why portray the subsidies that are actually paid by other consumers as subsidies from TNB or the government?

Why aren't consumers who spend more than RM112 made aware that they are subsidising other families? How many ‘high-usage’ families are subsidising how many low-usage families?

It appears that families whose bill is RM150 (new tariff, 500kWh) are subsidising low-usage families by RM10 a month. Those whose bill is RM190 (600kWh) are subsidising others by RM20, and those whose bill is RM229 (700kWh) are overpaying and subsidising others by RM32.

For example, 700kWh multiplied by an unsubsidised cost of 28.15 sen is RM197 or RM32 below the over-charged bill of RM230.

If a key purpose of over-charging the ‘high’-usage families is to promote energy efficiency, then what education programmes have TNB carried out to educate the low-usage as well as high-usage families to save on energy?

If conservation is the issue, why not make the tariff structure more transparent? Why not provide a tool for consumers to calculate and compare their usage and charges before and after the tariff changes?

How can consumers kept in the dark about the true extent of the tariff impact become aware of the need to conserve energy?

Had TNB been more transparent about the true extent of tariff rises (up to 40 percent) and the cross-subsidy among consumers (those using more than RM112 subsidising those using less than RM112 under the new tariff), there might have been more debate about the lack of conservation, and other distortions.

Distortions abound whenever there are cross subsidies. For example, the over-priced tariff for large users will discourage large families, extended family houses and the caring of the old. Combined with the leeching of family finance by over-priced cars, tolled roads, overpriced Streamyx, Astro and mobile services, our apartment sizes will likely shrink and squeeze out the older folks.

We are not aware of any potential long-term social and economic impacts because there is no transparency and debate. Other than splitting families into smaller units, the penalty for high- usage electricity users may discourage cottage industries and computer literacy.

I have created an Excel spreadsheet to help others calculate domestic electricity charges before and after the July 1, 2008 tariff increase. The second sheet includes a comparison table and a chart. Your readers are welcome to distribute the spreadsheet. The overview article is available here.

The Energy Commission has also published a consumer-awareness pamphlet about energy efficiency here but beware that the electricity prices cited are outdated.

This article was originally published on Aug 12, 2008, in MalaysiaKini.com as a letter to the editor.

Private lobby group better than race council

2008-08-06T10:08:00.000-07:00

I refer to the Malaysiakini report Ramasamy: ‘Penang Indians sidelined' claims untrue.

Hindraf and Indian-based NGOs should not demand government-financed, race-based, ‘empowering’ bodies, because that will go back to the old racial politics, and may promote the ‘I scratch your back, you scratch my back’ political culture.

This will deteriorate into unethical, racist, politics. What if the Orang Asli and Chinese Hakka clan start to demand the same?

Race-based councils are also unreliable because council members can change stripes, and have split loyalty between the community and the political masters who appoint them.

What could be reasonable is to demand for temporary government committees on specific issues, such as education choices for Indian youths, survey of housing, survey of health needs, etc. But don't rely on them on a permanent basis.

Relying too much on the government or a political party will drag down even good people and their political party to become another MIC and MCA. That will be a sin against liberty and good governance.

How about Hindraf starting a privately-driven, action-oriented think tank?

It would be many times better if the activists can create their own privately-funded consolidated NGO, think tank, or lobby group to influence government policies, borrowing a page from the strategy of Chinese educators' group Dong Jiao Zhong (a consolidated NGO for Chinese school board of directors, principals and teachers).

The time may be right with the trust and grassroots momentum that Hindraf and related groups have gathered up so far. Lobby groups are a fundamental part of democracy, freedom of association, and free speech, even though they seem to only make the news when bad governance and briberies have been attempted by unethical consultants.

To ensure long-term success, such a think tank should have an independent board of directors (even independent from Hindraf), find its own focus, build grassroots and professional support, have private funding, a secretariat, a research and publication department, campaign and promotion capacities and regular meeting functions or conventions.

For staying power, any such group with a social-political mission should stay above partisan politics.

Its officials should strictly avoid party and government positions, whether elected or appointed (except when elected as independent candidates).

It should not restrict its membership by race or religion. Maintaining a cultural bias on Indian issues will naturally attract ethnic Indian supporters, who may include activists, academia, and spouses from other races.

We need such a group to last beyond governments and coalitions.

This article was originally published on Aug 6, 2008, in MalaysiaKini.com as a letter to the editor.

ACA only one left for task of housecleaning

2008-07-28T10:13:00.000-07:00

I refer to the Malaysiakini article An epic battle of three men. The epic is not really about the three men.

This is a brilliant analysis that peels off the facade of a strong Umno, to reveal possible rogues within the home affairs ministry and the public prosecutor's office. It homes in on a group that deflects blames and damages to Umno but tries hard to stay below the radar screen of public opinion.

Too many commentators are still focusing their wrath on hapless Umno politicians for recent ministerial and law enforcement mistakes.

But there are so many self-defeating bungles by Umno personalities that their antics have become anomalies. Umno politicians keep shooting their own feet! Home Minister Syed Hamid Albar was made to look like a fool on his ‘intelligence’ about non-existent protest and opposition meetings.

He also appeared clueless about the Hindraf chairperson's passport status for a while, and only recently and sneakily admitted that his ministry did give an order but did not carry through (or did a reverse?) the oder to revoke the Hindraf chairperson's passport.

The bitter ISA treatment of Hindraf leaders remains overwhelmingly counterproductive to BN's reputation.

We have the incredible deja vu of a sodomy accusation against Anwar, the provocative arrest, and redundant demands for a DNA sample - all of which only stir up bad press around the world for the Umno-led government.

The PM and home minister were misled by subordinates to constantly make prejudicial comments on Anwar and a biased defence of flawed law enforcement procedures - shredding their own credibility.

A private investigator's relieved-turned-fearful statutory declarations managed to maximise public suspicion of high government officials, the attorney-general and the police - but eventually the blame sticks only on Umno politicians.

Too many anomalies; something else must be going on. Surely our PM, the home minister and Umno MPs cannot be that dumb. To me, Umno increasingly looks like a fellow victim of conspiracy and sabotage, accompanying brother Anwar.

Still the people blame Umno because they assume Umno is the only center of power. But Umno has been severely weakened by its untenable racist and protectionist policies, ideological implosion, internal squabbles, the March 8 election, and probably many skeletons in many individual closets.

So where could be the alternative power base? Just think who would need to weaken Umno's credibility and legitimacy to fight for their own political and career survival, avoid jail time, and perhaps become king-maker?

Let's not forget that the PM is a weak gentleman who cannot clamp down on big-fish corruption. Let's not forget that the bumbling Syed Hamid is new as the head of his ministry. They may not be in control of some security apparatus.

Let's not forget the home affairs ministry is the most powerful ministry in the country, overseeing the corrupted Immigration Department, the useful Prisons Department, the police, the Special Branch, Rela, the National Registration Department (whose control over ICs means control over voter registration and immigrant naturalisation including in Sabah) the Registrar of Societies - every institution you need to worry about.

Are we even sure such a powerful ministry should exist as a single ministry in the future? I'm not saying everyone in that ministry is corrupted. But the recent arrests of immigration top officials may only be the tip of the ice berg.

Lest anyone has any doubt about the extreme evil that some rogue elements in our law enforcement branch would go to in order to nail Anwar, we should revisit the chilling statutory declaration by Dr. Munawar Anees, scholar and one-time Anwar speech writer.

But be forewarned that the 10-year-old statutory declaration is verbally explicit, shocking, and still very upsetting. None of those perpetrators have been punished.

Had the PM forced through the implementation of IPCMC (Independent Police Complaints and Misconduct Commission) undiluted, this investigation into Anwar will be infinitely more credible to the public. Somehow he was not able to.

The new Anwar case reminds us we need to implement the IPCMC now. Better late than never. There's no expiry date on the royal commission's recommendations. Umno MPs can help to push through the IPCMC.

Umno MPs and supporters who care about the party's survival should take note and support the PM's attempt to peel away at the corrupted layers within the home ministry and other public offices. The PM has started with the immigration office.

Will he get support from Umno to go far enough? Or will Umno MPs and grassroot freeze and watch Umno being destroyed?

Just giving ACA prosecuting power is not enough, and can be easily reversed. In a counter- intuitive move, Umno leaders and grassroots should support placing the ACA under the parliament as a way to save Umno.

With the law enforcement branch, the attorney-general's office and judiciary under a cloud of suspicion of being ethically compromised, the ACA is the last institution that can be quickly strengthened to take on the crucial task of housecleaning. Do this before it is too late.

Although individual Umno MPs may have his or her own skeleton in the closet to worry about reprisal, together they may be able to overcome any hijacker and saboteur who are pulling Umno down the drain.

The dangers to Umno are leadership and reform paralysis, the utter loss of legitimacy, the destruction of the party, and the loss of the wealth that Umno has helped to create in the past.

The danger to the rest of Malaysia is the same. In this matter, our interests are aligned with Umno's.

This article was originally published on Jul 28, 2008, in MalaysiaKini.com as a letter to the editor. Dr. Munawar Anees' 1998 statutory declaration is also available here.

Seeds of Fascism Germinate

2008-06-24T10:22:00.000-07:00

Fascism in Malaysia is indeed a realistic scenario - albeit a low-probability and long-term scenario - but one that we cannot ignore.

The 2008 election earthquake has toppled some decayed trees, and today we bask in the sun in this small jungle clearing. But the jungle can fight back; federal powers can strangle any seedlings of change.

Federal budgetary grants to the states, federal development departments (to disburse oil income), the police, little napoleon bureaucrats, and federal control over local infrastructure, are instruments that the BN has used to obstruct and usurp the power of the Pakatan Rakyat state governments.

While we hope a new Pakatan federal government will plant the tree of liberty, it is not a certainty that it will have the will,ability, and duration to do so. Our corrupted culture may not support Pakatan.

External economic accidents can overwhelm it. Pakatan is also vulnerable in its reliance on the force of personality of a single person to hold it together, as argued in Who will succeed Anwar Ibrahim?

So despite our post-election euphoria, we must not dismiss these seven seeds of fascism that lie in wait:

First there is a litany of bad laws that may take decades to repeal and reform: ISA, OSA, Printing Presses and Publications Act (PPPA), University and University College Act (UUCA), Sedition Act, Society Act, Police Act, Import Publication Act, election laws, and
communication/broadcast related laws, etc.

Pakatan may not last long enough to complete the task, or would need to gain BN-like hegemonic (and oppressive) power to ramp through changes quickly.

Second is NEP, a racist-socialist policy. NEP has become a ‘zombie’ policy that transcends laws and even its own expiry. Most intellectuals view NEP as a problem only because it is badly implemented.

No. I have argued but twice that as a socialist policy, NEP will inevitably degenerate into fascism. NEP is intrinsically evil because it starts with unjust laws, requires a strongman to implement, requires centralised ‘planning’ power, and will eventually implode into authoritarianism - oppressing precisely the group that NEP is supposed to protect.

Respects power over law

Even in retirement, former PM Mahathir is painting the current PM Abdullah as ‘weak’ and undeserving, attempting to resurrect the dangerous idea that only a strongman can implement NEP optimally. This is the Malaysian version of The Road to serfdom.

Third is our political culture that respects power more than law, and
ends more than means.

At the top of the government, we have a prime minister and his deputy who have hung on to both the powerful security portfolios – home ministry (the police guarding internal security) and defence ministry (the military guarding external security).

While the PM has officially given up the home ministry portfolio, his replacement has a weak political base and leans on the PM for political support.

Further, the ministry seems to have grown a mind of its own - quite apart from the home minister himself -judging from police brutality, police rejection of the Independent Police Complaints and Misconduct Commission (IPCMC) , the stubborn and inhumane detention of Hindraf leaders that seems to run counter to the PM's wishes, recent attempts to reassert control over the media (punishing Makkal Osai and Raja Petra), unequal investigation of Opposition MPs, chief ministers and NGO protestors, and the minister being clueless regarding Hindraf chairman's flip-flop passport status.

Who is really in charge at the Home Ministry?

We have a developing mystery, who is really in charge of the home affairs ministry these days? Who are the real masterminds? How will this ‘free will’ at the ministry develop?

At the mid-level of our political culture, aspiring-ministers and retired premier continue to expound racist and seditious rhetoric, to hope to win influence. At the ground level, the ruling party is infatuated with Mat Rempits, who are prepared to do the dirty deeds during election campaigns and toll road protests.

Fourth is the deterioration of the rule of law. Within the government, the de-facto law minister Zaid Ibrahim who proposed judiciary reform is also the one most attacked by his cabinet and party colleagues, and is substantially cowed by now. All kinds of theatricals from our former premier are allowed to obscure the need for follow-up investigation into the royal commission's report on the Lingam tape affair.

Fifth, there is a subtle blurring of the border between the police and the military. The police are a civilian security force, but use military-like IC numbers to identify themselves and to vote. Recently, the police plans to recruit retired soldiers. Although retired soldiers are valuable assets, such a targeted recruiting plan must have assumed that military training is somehow valuable for injection into the police force, a dangerous contention.

Disparage detractors

As government budget is squandered such that we underpay the police, the government turns to a less disciplined Rela to do the job. But Rela has an incredibly wide range of roles. From policing, crime-fighting (rarely done), immigration raids (their chief's pet project), crowd control, traffic control for political parties and corporations, to disaster relief.

Blurring the distinction between ‘voluntary’ police and military.. These roles can easily expand to raiding civilian homes on the excuses of ‘national security’ or ‘patriotism’, the latter already used by the Rela chief to disparage detractors

Rela should be disbanded. Yet the government plans to give Rela enforcement power that will only deeply threaten civil rights. In contrast, the government undermines the enforcement powers of important civilian institutions: Suhakam, the Election Commission,
ACA, and Securities Commission.

If Rela is meant to be as professional as the police, why not just merge it into the police? Otherwise, why give it more power?

The only reason to elevate Rela would seem to be to create a paramilitary group, with its own budget, weaponry, and command structure, unbridled by professionalism and scrutiny that civil society and police/military conventions demand.

Sixth, we have a conformist culture and education system which is an ideal fascist breeding ground. UUCA and our school system prepare students for obedience, nationalism, and endeavour to cut down dissent. Our schools are churning out unemployable youths, a hotbed for extremist ideas if coupled with sustained economic downturns . It will require Pakatan to have the right mindset and time to reverse these trends.

We have an increasing number of youths being militarised by the National Service program. And why does a ‘pro-unity’ educational programme fall under the Ministry of Defense? Then the nation's heir-apparent to the PM position is a multi-term Minister of Defense.

The World in 1920s would not have been able to imagine that down-to-earth and sensible Germans could have turned into the fascist Nazi conformers of the 1930s.

Free trade gets no respect

Seventh, we may face a looming economic and employment downturn - both self-made and international in origins. Yet, BN's past corruption has mistakenly turned off Malaysians from the economic alternatives that will save us: privatisation, free trade, and liberalisation.

We have an increasingly inflexible government finance that relies on high oil and commodity prices, debts, and excise taxes. The year 2008 will be the 11th year of consecutive federal budget deficits - of about RM20 billion each year - through mostly good years. Federal debt has tripled from RM90 billion in 1997 to RM280+ billion estimated for 2008.

While free trade has helped us beat communism by 1970s, given us growth since 1980s, and saved us from our self-inflicted crisis of 1998, free trade gets no respect from our Malaysian institutional intellectuals.

We allow our government to damage Afta with Proton and rice protections. With vested interests, we stall the Malaysia-US FTA negotiation, inadvertently helping our government to protect its cronies via government procurement. WTO negotiation is stalling and these intellectuals are happy.

Further, ‘privatisation’ has become a dirty word. Our former PM Mahathir has made sure of that, with shameful examples like Renong, UEM, MAS, Proton, toll roads and bridges, rescued mass transit systems, bad buses, and dozens more. He completely discredited
privatisation as a tool for economic growth through these pseudo-privatisation and de-facto feudalism that ‘privatises profits and nationalises losses.’ We will now have great difficulty revisiting privatisation.

Ironically, if we face any economic crisis, we will need properly-implemented privatisation to save us, to (1) strengthen government finance, (2) release the pent-up creativity trapped around our GLCs, (3) rapidly create employments by revitalizing our domestic service industries, and (4) hold down domestic prices.

Our neighbours are teetering too, no thanks to our Afta sins and their own mistake of emulating the Mahathiran model. The Thai pendulum keeps swinging between corrupted strongmen and the threat of military coups. Indonesia and the Philippines are not out of the woods with their own economic and social reforms.

Too few of our intellectuals give credit to free trade for delivering 60 years of world peace. Our intellectuals who have not absorbed the lessons from the abject poverty and oppression of communist China, USSR, central Europe of the 1970s are so much more tolerant and romantic about protectionism than today's officials from mainland China and Central Europe. The current South Korean political storm protesting US beef import only emphasises how misled and emotional the mob can become, biting the hand of free trade that feeds them.

In all likelihood, only two key factors will determine the world economic future for the next decade (we will feel that in the stock market, interest rates, inflation, our property prices, and employment outlook): We'll have no place to hide, no place to stash our savings, no place to find employment for our children, if (1) WTO negotiation collapses completely, and (2) the US turns inward and protectionist, manifested in their choice of the next US president.

Help Umno change

With the above seven elements, we can chart a path to a low-probability but severe scenario of fascism in Malaysia within a generation. We may even have under-estimated this probability because of the optimism surrounding the outcome of the 12th General Election.

Like a strangling fig, fascism can't take root overnight. It will take a generation's worth of economic problems, world trade protectionism, and increasing youth unemployment, for these seeds of fascism to germinate, grow, and strangle a country. But a generation's time passes in a flash.

While we hope GE 2008 will change everything, such an accidental political landslide is not stable ground. We need to do more foundation work.

We need to strengthen our systemic foundation and pillars: parliamentary and legislative reforms, judicial reform (including repealing Emergency Ordinance and ISA that interfere with the judiciary), law enforcement reform (putting ACA under the parliament, implementing IPCMC), financial reform (free up ringgit, liberalise ownership, reform EPF), electoral reforms (including direct local election), and information reform (repeal of PPPA at the same time enacting Freedom of Information Act and reform of OSA).

All these are ground-shifting rules, where a few rule changes can change the whole ecosystem. The benefits are more extensive and far reaching than even we the supporters can realise. As for the power of free trade, well, that is another set of arguments for another day.

Yet Umno, MCA, and Gerakan, are wallowing in the mud, too preoccupied with self-pity to carry out any of these reforms. Perhaps Ezam has made the right move. We should help BN and Umno out of the funk. After all, democracy is about helping the weak and the down-trodden -I mean also the down- trodden political party - to ensure enough competition among political parties, so that the minority people will have their rights protected.

Perhaps BN should even lose federal power for a while. The Taiwan story in which the corrupted and oppressive Kuomingtang (Nationalist Party) lost presidential power for 8 years, split internally, and completely reformed itself into fresh-breathe, cheerful-faced, young party, and won over the electorate again, is a worthwhile inspiration.

CHEAH KAH SENG, trained in investment and portfolio analysis, considers himself a student of the Austrian School of liberal economics. He is currently interested in how Web databases reflect individual freedom of choice and the aggregate learning process.

This article was originally published on Jun 24, 2008, in MalaysiaKini.com as an opinion piece.

Protect our freedom by protecting refugees

2008-05-23T11:16:00.000-07:00

I refer to the Malaysiakini report Don't forget Burmese refugees here too, PM told.

We also need to recall and learn from the Asean governments' maltreatment of Vietnamese boat people of late 1970's. True, we were poorer at that time, threats of communist violence and subversion were fresh in our psyche, and Vietnam was not part of Asean then. But hundreds of thousands of Vietnamese sold their belongings for gold bars, and took to the sea on unseaworthy vessels. They drowned at sea, were raided and raped by pirates, and suffered inhumane treatment in camps in Thailand, Malaysia, Indonesia, the Philippines, and to a lesser extent, Hong Kong.

We could have done the right thing if we had expanded the refugee camps, treated them more humanely, and even eventually accepted a large, although limited, number of Vietnamese as immigrants. There should only be two conditions for immigration: a promise to abide by the Malaysian laws and second to learn Bahasa Malaysia. We could eat less to support a certain number of refugees, and we could seek international funding and disburse them fully.

To the ‘economically minded’ who fear sacrificing our economic resources, I say it is ultimately self-rewarding to do the right thing. It would infuse into our society, and in our children, a self- confidence and moral strength that no money can buy.

More practically, yesterday's immigrants are today's entrepreneurs and job creators. We would have built closer cultural and business ties between Malaysia and Vietnam by today. Malaysian children - whether Indian, Chinese, or Malay - will one day need that human connection to prosper and add to their employment choices and living standard.

Same today with the Burmese. The Burmese military junta obviously could not respond rationally to foreign offers of help for this cyclone disaster because they have too much evils to hide. As long as the military junta does not collapse (due to China's support) there will be pressure for the people to take their fate into their own hands, ie, to take flight, and escape to neighboring countries in a multi-year exodus over land to Thailand, Bangladesh, China, and by sea to India and Malaysia.

What are we to do? The refugee flow may not be as dramatic as the Vietnamese boat people. But what are we going to do with more refugees? We cannot even treat today's Burmese refugees humanely. That the Burmese refugees - who are normally docile and low-profile - have been pushed to rioting inside Malaysian refugee camps is an indication of extreme official mishandling and cruelty.

It is issues such as these that make me wish for a faster change in the federal government. I would have normally preferred a ‘steady-as-she-goes’ approach. But these issues of urgent inhumanity and the inexplicable vengeance against the Hindraf 5 only pile on other longer-term reform considerations - such as the inability and unwillingness of the current government to place the ACA under the parliament, to abolish ISA/PPPA, to create a royal commission on electoral reform, to reform the police to incorporate the Independent Police Complaints and Misconduct Commission (IPCMC), and its dangerous determination to further empower Rela - that together contribute to my willingness to give up on the current federal government. (Not that we should believe any new government will carry out these reforms without civil pressure.)

Rela, the voluntary corps which is involved in abusing Burmese refugees, in particular, is an

instrument of oppression that happens to be aimed at immigrants for now. It's only a matter of time before this para-military group is empowered by new laws to refocus on domestic oppression. We must demand that Rela be disbanded, that any good people within Rela be trained and absorbed into the police, and that additional resources be channeled to improve the salary, welfare, training, equipments, and professionalism of the police instead.

What else can we do about Burmese refugees? We can encourage the media to report more on refugee camps and developments. State governments, probably not empowered to manage refugee camps, can nevertheless offer land to expand refugee camps. The state governments can also use whatever power they have to monitor the performance of the police and camp officers, and to help the media do its job.

I have personally known the kindness and protection of a Burmese family who escaped Burma on foot 40 years ago. The parents brought the eldest son and trekked across malaria-infested swamps and tropical jungle, and had to initially leave behind two infant children in Rangoon. They shined shoes in Hong Kong to make ends meet, then settled and rose to commercial prominence in Bangkok over 20 years, building factories and trading houses that have employed thousands of Thai people.

Burmese people look, eat, live, and dress in a style very much like an undeveloped Malaysia did, more so than Thais do. Perhaps some of the street names in Penang will remind us of our historical ties, as well as the economic glory that Burma once enjoyed and could have enjoyed. In the Pulau Tikus area of Penang, for example, there are Burmese temples and at least eight sets of street names that commemorate Burmese cities and rivers, such as: Burmah Road, Moulmein Road, Thaton Lane, Tavoy Road, Rangoon Road, Salween Road, Irawadi Road and Mandalay Road. You can find the origins of all these names on the Net. .

These almost-forgotten street names also remind us of the consequences of giving up our liberty bit by bit to a central government that is built on socialist policies (not unlike our NEP), that will have to depend on strong men, that will inevitably turn authoritarian and fascist. Myanmar and Malaysia were both well endowed with similarly-rich natural resources and broadly similar governing structure half-a-century ago. But we took the path that gave us more liberty to conduct our own lives, to trade, and to be more open to the world.

That made the whole difference. We must not give up our liberty now, even if bit by bit. The best way to protect our liberty is to protect the basic rights of refugees, who are on the fringe of our society. The moment we give up protecting the refugees is the moment we give up protecting the outer fringe of our rights. Then the erosion begins.

This article was originally published on May 23, 2008, in MalaysiaKini.com as a letter to the editor.

Inflation figures: what's behind them?

2008-05-14T22:48:00.000-07:00

I refer to the letter Economic downturn: pray for soft landing.

I would like to raise a question for the experts: Has Malaysian GDP growth been over-estimated because of an under-estimation of inflation over a long period of time?

I am posing this as a question because I really don't have the answer, and don't expect this question to be settled for years. Although I have some economic training, I am no specialist in measuring inflation, and have no access to a price level database. Real-price GDP (gross domestic product) growth is the 4% to 6% figure s(in recent years) and this is widely discussed with government budget forecasts and economic growth reports.

My understanding is that real-price GDP is calculated after taking out the GDP Deflator - a measure of inflation that is a cousin of our familiar CPI (Consumer Price Index). The GDP Deflator is more comprehensive and updated than the CPI, so it is supposed to accurately measure the general inflation of the whole economy (an ambitious task!).

Still, the GDP Deflator must be subject to some subjective judgment. And if the CPI can apparently be under-estimated by a lot, perhaps our GDP Deflator is also under-estimated, though to a lesser extent. And if the GDP Deflator is under-estimated, say by 1% per year, then our real GDP (which is calculated by division by the GDP Deflator) is regularly biased on the optimistic side.

That would explain why we seem to feel a long-term loss of competitiveness (unregistered inflation of living costs) and sluggish economy, even as official figures look so rosy. That would also explain why over three decades, our cousin currency Singapore dollars, which split from the ringgit, has more than doubled its value relative to the ringgit, even though Malaysia has large oil export revenues.

However, there are opposite views, as in the US and the UK: that inflation figures tend to be over-estimated, because the figures do not account for the improved quality of goods and services, such as better quality rice, cleaner meat, sweeter fruits, softer toilet paper, better cars, nicer haircuts, etc. Of course, the US officials insist that they have fully adjusted for such qualitative issues, and that their inflation figures are not biased one way or another.

Then there are confirming views in developing, highly-politicised, and high-inflation economies, such as in Sri Langka, that inflation is under-estimated to give the economy a better shine.

This question has bugged me for a while. But there are few forums where this question can be raised, because there is a social and political pressure to conformist thinking. Economic officials may howl at this suggestion that GDP estimation is biased on the upside. But I think we should take a skeptical view regarding any official statistics.

As much as we talk about media openness and judiciary reform, Malaysia also needs to take an open, methodical, and principled attitude toward the distribution of government and economic information, and the underlying details.

Eventually, the federal government must also let go of its ownership, tight licensing control, indirect control over top appointments in financial institutions and influence over financial business contracts that it currently exercises through the GLCs, EPF, other funds, and the banks.

This in order to foster a free and critical environment to discuss economic matters and to help improve Malaysia's competitiveness for the long term.

This article was originally published on May 14, 2008, in MalaysiaKini.com as a letter to the editor.

Second bridge needs multi-dimensional solutions

2008-04-30T22:49:00.000-07:00

The new Penang government deserves a compliment for its efforts reported in your article Second bridge: 7-man body set up. It shows the new state government is more willing to stand up against the federal government, conduct its own "thinking" and analysis to avoid being led by the nose by the federal government, and yet deal with the federal government in a cordial and professional manner.

To increase the chance of a successful resolution on the second bridge issue, I suggest the committee should also look into these strategies and tactics.

First, the committee should go as far as proposing an alternative bridge structure, contracting arrangements, and a financial plan that are independent of the federal version. Why? This healthy competition of ideas will nudge the federal government to speed up and modify its current version to make it feasible sooner.

If so, Penang will benefit. Moreover, nothing focuses the mind and digs up as much information as a moneyed and detailed plan. The information generated will inform the state government and enable the civil society to probe into the federal version. If Pakatan Rakyat comes into power, this alternative plan can be developed into the new federal version, with less time wasted re-examining the contracts.

Second, the Penang government should take advantage of a media law loophole to disseminate these bridge findings. Robust coverage will ensure that, even if the state version is eventually pre-empted by a federal bridge, the people will be informed enough to monitor the federal bridge, and the PR state government will receive some credit.

Commentator Wong Chin Huat has been arguing that the State government can take advantage of a loophole in the Printing Presses and Publications Act to issue its own publishing license to groups of independent-minded journalists, such as here and here.

Such state-franchised, but privately funded and independently operated press has the potential to paralyse the PPPA, paving the way for the repeal or deep reform of PPPA.

The alternative bridge proposals and contracts should be made public. Taking advantage of this transparency, the federal cronies will likely attack the state proposals as inadequate here and there. Then civil society will have the media space to respond by asking the federal government to reveal details to support its contentions or shut up. Without announcing supporting details, any federal attack will look awkward and lack credibility.

Third, reduce the cost of the planned bridge by promising to conduct open tenders for all bridge contracts and also enact an Equal Employment Opportunity Act at the state level. Given the secrecy of the federal plan, I have no problem asserting that the real cost of the second bridge can be cut by more than 50% with an open tender. If the federal government disputes that, let them prove it -- by making all the planning documents and contract proposals public information.

To make the open tender politically feasible, and taking an opportunity to experiment with a progressive law to show the way for the federal government, the Penang government should enact an Equal Employment Opportunity Act at the state level (again, this is Wong Chin Huat's idea).

Create two ferry companies

This EEOA should require that contractors looking to bid for state government projects comply with the new state law to employ engineers, planners, contractor, and technical workers of all races, gender, age, physical capability, and backgrounds. It should be flexible enough that it does not become a rigid and counter-productive quota system, and should NOT be applied to non-government-contract contractors until the experiment is well tested and debated.

It can legislate an independent arbitration panel for employment disputes.The emphasis should be on honest and vigorous efforts to create opportunities and a diverse working and recruiting environment. One of the goals is that, as non-Malay-owned contractors win more contracts in an open tender system, there will be an increase of Malays in these firms, and vice versa.

It is not reasonable to decide that a Korean company in early 1980 could build the first Penang Bridge at a reasonable cost, but that Malaysian firms cannot build the second bridge today, also at a reasonable cost. It is also unreasonable to deny Chinese-Malaysian contractors building the second bridge, only to award the contract to a communist Chinese firm. How ironic is this? I am not fixated on getting contractors from any country or any race, only pointing out our seeming blind spots.

Fourth, the state government should consider financing the bridge with a private, corporate bond to be repaid from the toll fee. When the bond is paid off, either eliminate the toll or reduce it to finance the third bridge.

The cost reduction from competitive tenders will make this possible. The state government should avoid guaranteeing any principal amount of the debt, perhaps only committing to guarantee up to a limited amount of the interest payment after a safe delay, and let the physical bridge itself be mortgaged. So what if some foreigners take over the bridge in case of failure? They can't move it to Sumatra. The government can allow part of the nearby land leases to be taken over by the creditors in case of failure, but not the permanent title of the land.

What entity will bear the main risk then? Incorporate a bridge-owner company that can be later listed on the stock exchange, and legislate to allow a equity return rate range, of say 10%-15% (this rate is higher than borrowing rate because owning stock equity is riskier than owning debt).

The formula can allow the eventual reduction of toll fees when bridge traffic reaches a large volume, because it can be designed to put a cap on maximum return, without guaranteeing a minimal return, except for the best effort by the state government to adjust bus and ferry access.

The precise rates and formulas can be decided upon financial advice - which may be eagerly offered by local and foreign merchant banks who want to build their reputation in this area. The Penang government can promise in a contract to adjust its ferry services for so many years, to help ensure but not guarantee that the bridge's traffic volume reaches a minimum level. Which brings us to the next point: the ferry service.

Fifth, the Penang state government should take over the money-losing ferry service, conduct open tenders to invite new owners, and create two ferry companies for indirect and strategic competition.

Similar to public transports such as bus networks that have to bear some money-losing routes, we should not be looking for the two ferry companies to compete directly, but should look to create independent benchmarks to compare operating efficiencies. (‘Compared to the other company, how much is your repair cost, fuel consumption, manpower cost, etc, per ferry, per trip, per km, per year, per employee, broken down by route, by time of day, per pessenger, per car, etc?’)

Complexity of problems

Then, establish new ferry routes. The first route expansion should be the Batu Maung-Batu Kawan ferry route, to ‘pre-link’ the second bridge. The ferry terminals (and connecting bus terminals) should be 2km to 5km away from the future bridge landing points, to avoid direct duplication of routes when the bridge is completed.

It will benefit the second bridge to pre-establish a commuting pattern even before the bridge is completed, so that the second bridge can ‘hit the ground running’ having an immediately sizable commuter demand upon completion.

By establishing the ferry service a few years before the bridge, families living on the island will start buying houses in Batu Kawan while families from Serang Prai Selatan can start taking up employment in Bayan Baru, for example.

These developments will ensure Batu Maung and Batu Kawan will have vibrant job and family connections early on. Such early ‘ramp up’ of commuting demand will further assure the financing success of the second bridge, reducing the borrowing costs. With the volume brought by the ferry, bus routes - which also require years to build ridership - can start spanning out from the Batu Maung and Batu Kawan terminals more quickly.

As soon as the second bridge opens, the Batu Maung-Batu Kawan ferries should be reduced to mostly passenger, non-car, services. The remaining ferries should be diverted to open new routes around Penang, such as Weld Quay-Batu Maung, Batu Maung-Gertak Sanggol, Weld Quay-Teluk Bahang, and Tanjong Tokong-Kuala Muda.

This will divert most of the car traffic to the second bridge. It will be within the power of the Penang government to promise in a contract to reduce car-carrying ferries along the Batu Maung-Batu Kawan route to ensure the financial feasibility of the second bridge, until a certain volume is reached a few years later.

In the end, I feel such boldness and creativity in development planning and the accompanying demands illustrated above -- to solve the multi-dimensional problems that will arise from the media, employment, contract, transport, planning, financial, development, environmental issues -- will best be balanced and solved through an intensification of the local democratic process.

That is why some of us continue to demand direct local election so impatiently. I understand the short-term difficulties, see some improvements in the new local council appointments, and see responsiveness to try to explain the appointment shortcomings.

But, the complexity of the problems are way beyond what any one of us, or teams of us, can take responsibility for. So do push the calendar for direct local elections please.

CHEAH KAH SENG is trained in investment and portfolio analysis, considers himself a student of the Austrian School of liberal economics. He is currently interested in how Web databases reflect individual freedom of choice and the aggregate learning process.

This article was originally published on Apr 30, 2008, in MalaysiaKini.com as an opinion piece.

Before history repeats, lift ban on Makkal Osai

2008-04-23T22:50:00.000-07:00

To Syed Hamid Albar, the Minister of Home Affairs,

Your banning of the Makkal Osai Tamil newspaper will send a message to the world that as the new Home Affairs Minister, you have been ‘turned over’ by the oppressiveness of Myanmar you had been working with when you were a diplomat.

This action completely discredits your past work as a diplomat, and will overshadow your future position as a minister of a civil society. Worse, it will damage the credibility of your boss, the PM, who says he wants to reform.

It also disheartens me, the people who are the boss of your boss (the PM).

The best thing for your credibility, the PM's credibility, and to please your boss's boss (me), is to reverse your ban on Makkal Osai, and release the Hindraf 5 and other ISA detainees.

The above action will do much to boost the credibility of your ministry, the PM, and the current federal government among the people of Malaysia, and will also boost Malaysia's reputation in the world. Aren't we taught since primary school to ‘mengharumkan nama’ of our country? Where's that spirit now?

Banning Makkal Osai will only ban its 52,000 circulation and probably put a block on its 200,000 readership. Many more than 52,000 will resort to SMS and the Internet because of this. People will not turn away from news simply because you ban it.

In addition, about 10 million readers of newspapers of all languages will be disgusted by this action. This is a bit like the Election Commission abandoning the use of indelible ink, causing a greater damage to the credibility of the EC and the government.

Remember how MCA's takeover of Nan Yang Siang Pau was ineffective, and worse, eventually led to complete disgust by Chinese readers and voters? So even from a political standpoint, the government has much more more to lose than to gain from the ban on Makkal Osai.

From an informational standpoint, the BN government and MCA lost touch with the ground without the criticism aired through the old Nan Yang, which also caused other Chinese newspapers to become tamer and less informative. Without competing opinion polls, you were flying blind between 2004 and 2008.

Do you want to repeat an unpleasant history for the BN government? It will be a win-win situation to reverse the ban on Makkal Osai. Please act now.

This article was originally published on Apr 23, 2008, in MalaysiaKini.com as a letter to the editor.

Permanent land titles good business sense

2008-04-07T22:51:00.000-07:00

I refer to the Malaysiakini report Selangor's excos to declare assets in which it is reported that Pakatan Rakyat's Perak MB Mohammad Nizar said that his government will be issuing permanent land titles to all new villages in Perak.

If this comes to pass, it will be a sort of poetic justice. Here's a Muslim MB from PAS, who was instinctively feared by many Chinese and Indians, is delivering long-deserved land titles for the villages in which the MCA bosses ‘grew up’ but where MCA could not deliver.

These are deserved land too, considering many Chinese families had been forcibly moved there and have lived there for generations. This will shatter for good MCA's empty racist promises and Umno's racist resistance to grant land to those who deserve them.

The Perak and other state governments should further consider granting land titles or long leases to fruit and other agricultural producers without regard to race, provided they abide by strict pesticide and herbicide laws, and take care of the land and water sources.

Many farmers can make use of the lime dust and water in Perak to produce high-quality fruits and vegetables. They will help reduce food prices, supply value-adding factories, create jobs, increase export earnings, and transform the local economy.

It's a wonder why the previous state government had not done it. Cronyism and racism were apparently higher priorities for them. In the past, not only were the farmers not granted land titles or long leases, they were chased out of their farms to make way for housing projects operated by well-connected politicians. Read this.

A key historical bottleneck has been the lack of long-term rights to land use. Unable to do long-term planning, the agricultural producers could not take the risks of investing in land improvement, permanent irrigation, more advanced on-site washing, sorting, packaging, cold- storage, water-treatment, and automation facilities.

They could not erect longer-lasting, climate controlled, plastic housing and net covering for higher-priced fruit and vegetables that will also allow them to cut back on expensive fertilisers and pesticides.

Without a clear standing, most farmers could not corporatise, form cooperatives, consolidate, transfer ownership to professionals, secure long-term finances, and hedge for cost fluctuations.

The Pakatan Rakyat state governments should immediately hold talks with the associations of farmers, vegetables, live stock, and aqua-culture, to find ways to stimulate agricultural economy and employment, food production, and exports.

But I can already give them the general answer: the farmers basically need more freedom to do business, and less risk of losing the rights to use the land.

This article was originally published on Apr 7, 2008, in MalaysiaKini.com as a letter to the editor.

Ministers should re-declare assets at resignation

2008-03-21T22:52:00.000-07:00

I refer to the Malaysiakini report Ministers, deputies to declare assets.

I agree that ministers, their deputies, state executive council members, city council members, their spouses, and non-adult children must publicly declare assets and liabilities.

In the past, the ‘private’ declaration of assets to the prime minister was a joke. Declaring spouses' assets is also important, as illustrated by the Thai examples, where most ministers' wives turn out to be richer than their husbands by many folds.

In addition, the PM and menteri besar must require that the ministers and council members sign legally-binding agreements to declare their assets AGAIN at the end of their term or when they resign. This is to allow an evaluation of their asset acquisitions when they are in power.

When a minister starts with an enormous asset base, we must respect the sanctity of private property and cannot prosecute the person simply because he or she is fabulously rich. We can only prosecute a corrupted politician if there is (1) evidence of prior graft, (2) evidence of under-declaration of assets, and (3) an unexplained large increase of assets between the beginning and end of terms.

The politicians' non-adult children's assets should also be declared, as they are controlled by the parents.

However, I draw a line to include adult siblings' and parents' assets, because they are separate individuals with their own privacies to protect. To force government executives to declare the extended family's assets will discourage good people and reduce family supportfor them to enter public services.

Where do you end? Declare the assets of the siblings' spouses, their adult children, their in-laws, etc?

Further, if the siblings or parents lie or are negligent in their declaration, is the politician accountable for the adult siblings' mistakes? No. Public asset declarations should stop at spouse and non-adult children.

This article was originally published on Mar 21, 2008, in MalaysiaKini.com as a letter to the editor.

Beware last-minute election surprises

2008-01-25T22:52:00.000-08:00

I refer to the Malaysiakini report A Hindraf Valentine: 'Mr PM, take my roses'.

The report implies that some voters may abandon the BN if the Hindraf 5 continued to be detained under the ISA.

Well, if desperate enough, the BN might just release the Hindraf 5 from ISA detention - on the EVE of election day - without warning - to create a false sense of euphoria and sway borderline voters.

Another surprise tactic could be a last-minute promise to reopen the controversial Damansara Chinese-language primary school.

We need to anticipate and immunise voters against such last-minute manipulations that the BN is so good at.

Recent events have shown that this BN government understands resolute protests and has tried to trade votes for gratuities such as limited public holidays and minor school funding.

But what we need is a permanent recapitulation of BN racist policies for a newly-learned humbleness and cleanliness.

So, even if the BN releases the Hindraf 5 and reopens SRJK Damansara, we still need to deny its two-thirds parliamentary majority.

This article was originally published on Jan 25, 2008, in MalaysiaKini.com as a letter to the editor.

Donate RM1 to Hindraf to protest

2008-01-11T22:53:00.000-08:00

I refer to the Malaysiakini report Cops go after Hindraf donors.

By questioning Hindraf donors, the Malaysian government is obviously trying to intimidate its citizens. It is an outrageous and shameless manipulation intended to instill fear among supporters of NGOs that do not toe the official line.

From all I can see, the accusation of terrorism against Hindraf completely lacks credibility and was done in bad faith. Even if we don't agree with some of Hindraf's rhetoric, the Hindraf 5 under ISA detention deserve all the help they can get.

I propose each of us commit an act of protest, a sort of civil disobedience, by going against this state-sponsored intimidation, and donate RM1 into the Hindraf bank account. Each of us can donate a little and overwhelm the police with too many donor cases to investigate.

In addition, each of us can demand the bank to produce a copy of any court order that requires it to reveal our identity to the police, if we are called for questioning.

Please give me Hindraf’s bank account details so I can donate.

This article was originally published on Jan 11, 2008, in MalaysiaKini.com as a letter to the editor.