In this day and age...

I made a commitment to myself a long time ago that I would never insult a person directly or consciously. I often do, though, out of personal weakness.

A word that hurts is stupid. I don't call people stupid often because it hurts, and I don't like to be called stupid either. However, when I call people stupid outside of moments of momentary weakness, I do not mean the traditional definition which includes personifying idiotic, retarded, dumb, etc. behaviour. What I mean when I call someone stupid is that they are, to me, misinformed, or have misinterpreted information.

So, when I say that people who fight for protectionism and who are against free trade are STUPID, please don't feel bad. Although I should add the words unbelievably, dumb-founding and wow-that-is-amazingly before the s-word.

Here's a quick lesson.

1. Proton is protected. If it wasn't we wouldn't have a mat rempit problem, as people would be able to afford cars, we would have half as many road deaths as people would have safer cars, and we probably would have had a 5% higher GDP had we not pumped money into this rubbish carmaker. You could draw parallels with Chrysler and GM.
   
   
2. MAS is protected. If it wasn't we would have been flying to Singapore for RM100 anytime we wanted to, or anywhere else for that matter. We wouldn't have pregnant air-stewardesses being fired. We wouldn't have a government crony being given a RM 1 billion bail-out. We would not hear anything against a competitor building an airport, as facilities would have been built and managed privately long before the government could even issue a passport.
   
   
3. A student's entire schooling needs for a whole year can be bought at any hypermarket for less than RM 100 all in the same place. Before these existed, we had to go to Mydin to buy sub-standard school uniforms which would tear within three months, go to a stationery shop to buy exercise books at RM1 each, together with RM1 pencils and RM5 pens. We'd have to go to Bata to buy white shoes together with the shoe-white.
   That's just the schooling needs. A conservative guess on the savings received by the average consumer who buys from a hypermarket, compared with one who buys from the neighbourhood provision shop, would be 30%. Workers at hypermarkets have the opportunity of vertical mobility, compared with the provision shop owner who hires one person for thirty years to do all the labour.
   
   
4. What if the West had protected its products and opposed trade? We wouldn't have the Internet, the car, the computer, the refridgerator, this is a redundant list.
   
   
5. We want to protect out rice farmers against imports of American rice. But Thai rice, Indian rice, Vietnamese rice is OK. And what are we protecting our rice farmers from? Even more misery. Our rice farmers suffer because the monopoly that is Bernas flushes its money straight to Syed Al-Bukhary, the philanthropic mosque-building billionaire, and is more concerned with feeding its rent-seeking crony than feeding rice farmers. If we had a competitive market for local rice, our rice farmers would be a lot better off.
   
   
6. Compare life in communist China, the former Soviet Union, Cuba (where mobile phones will celebrate their one-year anniversary in March), National Socialist Germany with Hong Kong, Belgium, Singapore (although this is a place where life isn't really worth living), the new China, the new Russia, the new Germany.
   
   
7. The current economic crisis has not been caused by greed or capitalism. It has been caused by too much interference by the US government into financial markets. Alan Greenspan as head of the Treasury for 28 years was responsible for keeping interest rates artificially low even during boom times, which he subsequently labeled "irrational exuberance". He coupled this with allowing unregulated financial engineering creating complex derivatives which even experts don't understand and can't appraise. When the banks were going bust, the government stepped in to help the ones with connections i.e. Goldman Sachs, where Henry Paulson was head of investment banking. They disallowed interested parties from buying up bad debt and the US$ 700 billion TARP fund received 10 times worse terms than Warren Buffett did with his US$5 billion investment. There is no clearer picture against protectionism than the actions which have led to the worst financial meltdown ever.
   

Which is why you have to be STUPID to oppose free trade and support protectionism.

A Really Large Number

US$ 700 billion.

"It's not based on any particular data point. We just wanted to choose a really large number."
Treasury spokeswoman,
23rd September 2008
Forbes.com

Confessions of a teenage communist

When I was a child (i.e. a couple of years ago), I decided I was going to go into economics, after seeing the work done by Jeffrey Sachs (who wrote The End Of Poverty, a high profile book endorsed by Bono, among others), Joseph Stiglitz (who wrote Globalization and Its Discontents, besides being a Nobel economics laureate, and widely credited with Clinton's now-revered economic policies) and Suze Orman (who does a personal finance talkshow, helping ordinary people with their financial problems, a modern-day financial Mother Teresa, in my books).

A couple of years ago, I was against free trade, globalization and capitalism ;and for redistribution, protectionism, socialism, and maybe a little bit of Marxism.

A couple of basic economics lectures later, I dropped all my principles and ideals, and now am a dyed in the black supporter of economic freedom.

Anyone who hasn't done Econs 101, would be excused to be in the state of mind I was in a couple of years ago. I remember the worldwide protests against globalization in the early part of this decade and wishing I was there, fuelled with Rage Against the Machine angst and Michael Moore delinquence.

Now, I'm nearing the end of my degree, which should put me in good stead to answer the economic conundrums we face. Should, right? But no, I still can't understand much of what goes on in the world. There are too many players, too many different ways of understanding civil, political, social, cultural and economic rights.

The only thing to do is to learn, read, read, and read some more, learn from the people who know what they're doing.

Last year, I found myself seated across from Malaysia's pre-eminent social scientist, a Fulbright scholar, a pioneer in Islamic finance and a few scholars in their own right, listening in open-mouthed awe, to Joseph Stiglitz delivering his ideas on the way forward in growth and development. I had just read his book on how the IMF is pure evil, and how everyone else in the world's institutions could do things better.

I just read another perspective, which serves as a lesson in how diverse economic thoughts are, thoughts I will not be able to get a grasp on at least for another few years.

An Open Letter to Joseph Stiglitz
by Kenneth Rogoff,
Economic Counsellor and Director of Research,
International Monetary Fund