A new model for Egypt?

Yang Razali Kassim wrote an article in the ST yesterday on Indonesia as a possible role model for the new Egypt. The assumption is that there is real change with the fall of Mubarak. Some are wondering whether there is any change at all and whether everything is as before with power in the hands of the old guards, and the Emperor still in control. But this is another issue that will become clearer when the dust settles. Yang Razali has pondered whether Indonesia is a good alternative political system for Egypt and the Middle East. The thought of Indonesia as a model for an ancient civilisation which is the pride of the Arab world is a refreshing change. It shows a shift in the mindset of what can be good for the Islamic world. And now, Indonesia and even Malaysia, could stand out as good alternatives to the Middle Eastern political system. They have not been doing well and not exemplary on any count. Nothing to crow about. At least Indonesia and Malaysia are truly independent countries and not controlled by foreign powers, and are models of economic growth and development. The rest of the Islamic world outside the Middle East have always looked towards this centre for everything, education, culture, social and lifestyle, and of course religion. The question is whether the Middle East lives up to its reputation or perceived greatness for the rest of the Islamic world to emulate. Looking at Indonesia and Malaysia, it is apparent that these two countries are more successful in their social and economic development. Should it then be the Middle East looking to Southeast Asia, particularly Indonesia and Malaysia, as the role model for the future? Should Indonesia and Malaysia look West to the Middle East and give up their rich cultural heritage to be more like Arabs or vice versa? What the Middle East can offer so far is religion and an ancient culture that is not going anywhere except towards the medieval age. In contrast, Indonesia and Malaysia are moving forward to science and technology, with religion as one of the pillars of their social political framework. The Middle East is all about religion and religion and the times of Muhammed. There is a contention between modernity, science and technology versus religiosity, tradition and ancient conservatism. Which shall be the light of the Islamic World? America was the new world of Europe. Can Southeast Asia be the new model for the Middle East?

Budget – Why so little?

$6.6b with $3.2b angpows for the people were announced by Tharman in his budget speech yesterday. My immediate reaction is why so little? The Americans printed US$600b or nearly S$800b. This is roughly $2,600 per American. We are giving out about $1,000 per citizen. And we are so much richer than the Americans. They are in debt and we have a huge reserve and surpluses every year. We could do much more to help the people in a time when inflation is eating up the income of the people. In 2009, during the financial crisis, the Resilience Budget was $20b. This year we have a bumper harvest and only a $6.6b giveaway. Definitely not good enough. The few thousand dollars are spread too thinly and will disappear in no time. The most crucial issue is how to curb high inflation. Actually no lah, inflation only 3 to 4% according to the latest official reports, where got high. Why are the people complaining about such miniscule inflation? I am also scratching my head. The monthly inflation seemed to vary from 3 to 5% and the whole year inflation is only 3 to 4%. If one simply compound a 3% monthly inflation over 12 months, I am sure is it more than 4%. If really the annual inflation is 3 to 4%, and with income rising above 5%, there is real income growth for the individuals. In that case, the budget is actually a big bonus. There is no real need for an angpow budget and nothing to worry about. What is real? The cost of everything is still rising and unstoppable. This is the frightening part and no amount of angpows and handouts can do much if the outflow is faster and more than the income, angpows and handouts included.

The Chinese was the worst affected in MTL

As a group, the Chinese was the worst affected group by the Mother Tongue Language policy. Other than the numerous dialects spoken at home, many homes were using Malay or English, or any other languages except Mandarin. Mandarin was a foreign language to the majority of Singaporean Chinese who were mostly southerners. The peranakans spoke a mixture of Hokien and Malay and English. When the policy was introduced, many Chinese children were caught in a very difficult position. The worst affected are the Babas and those who used mainly English at home. Many have opted for Hopson’s Choice and migrated, for the sake of their children’s education. For without a good pass in Mandarin, the door to tertiary education is closed. More importantly, the children would have to struggle with more tuition to try to make the grade. It was misery and a painful childhood to many Chinese children. If any, the Chinese should be the group that would be shouting discrimination and being put in a very disadvantageous position vis a vis the other races. The Malays should have lesser difficulty in MTL as Malay is their mother tongue and spoken at home. I think the Indians too have quite a comparable problem with the Chinese as many spoke different dialects as well as English at home. Some of them also ended up migrating. They too did not shout discrimination. They have accepted the MTL policy grudgingly for national integration. If the Chinese and Indians would have taken the MTL policy badly and protest strongly, the situation could become ugly. Thank god that the MTL issue has subsided and is now part and parcel of life here. There are still problems and are being sorted out. For the Chinese, dialects are disappearing with the passing of the grandpas and grandmas and the younger breed are now speaking English and Mandarin. The new citizens from China would only have to struggle with English. I am not too familiar with the situation among the Indians. Tamil is not the only dialect that is being used at home. Now with the influx of the Northern Indians, there may be contention for the recognition of other Indian languages other than Tamil. This could present another situation as more non Tamil speakers become citizens. The situation among the Malays should be fairly the same then and now.

Unrest in ME, China and Russia at risk?

This is the way western analysts are thinking and hoping everyday. Tomorrow if there is a health epidemic, a financial meltdown, and industrial or manufacturing mishap, it will be China and Russia or any other country except the US and Europe that will be next in line. These silly no hopers are praying and praying everyday to see the demise of Russia and China but forgetting that the next big collapse could be the US and Europe. The US is all ripe for a revolution with the income gap widening, the middle class becoming poor and beggars, and a national debt that they may not be able to repay short of turning the greenbacks into banana currency. They are still trying to keep the lid close and hoping for a miracle. The whole can of worm could splash out tomorrow and the US could be the beggar overnight. And Europe with several countries already in the critically ill list, and many more to go but not yet disclosed. As long as Russia and China can keep on feeding its people well and improving their standard of living, the West can keep on hoping and praying for their downfall. But before their prayers are answered, the West could have gone to the rubbish dump of history first. All Empires will have to call it a day. The West is no exception. The revolution in the ME is a revolution not only against dictators but a revolution against corruption and poverty, and against Western domination. When the West loses its grip on the ME and its oil, they will come tumbling down like a house of cards.

No growth better than growth

Yes, it sounds contradictory. Growth is the essence of our economy and the vital ingredient to the good life we are having. How can no growth be better than growth? The old mature economies are flowing along with lower growth rate but maintaining a high quality of life. We have experienced many years of high growth and the quality of our life has improved by leaps and bounds. The thing is that we are now witnessing diminishing returns from our growth. In fact, while the rich are getting richer and enjoying real growth, the middle income and lower are not getting better, and many are not enjoying any real growth or bettering their living condition, despite good economic growth. A simple illustration, if economy grows by 5% and income grows by the same amount, broadly speaking, the people should enjoy a 5% growth in their disposable income or spending power. Or at least they should be slightly easier in their pockets. But not everyone got a 5% increase if the economy goes up by 5%. Yes, some got 10% or more increases. That’s why some are doing very well and very happy. Another problem is that the inflation beast that we have today is eating away everything. If inflation is 5%, everyone is back at status quo. If inflation is double or more, though the economy looks good, though the income goes a bit higher, there is really a net contraction in the spending power. It is negative growth to those whose income does not keep pace with inflation. On the other extreme, low economic growth with low inflation could be better when inflation is lower than economic growth and income growth. How much of our growth has been translated to the wealth of our people in the middle and lower income bracket? Are they really better off, sharing the growing economic pie, or are they starting to feel the strains in their pockets? A $100k increase in property price means many will have to work 5 to 10 years for nothing, not improving their income at all. This goes to the prices of cars, of high medical bills and other big ticket items. The couple of hundred dollars of salary increases are easily eaten up by the high cost of living of everything, from basic necessities, transportation, food on the table, and consumer durables. We may be in a situation when no growth or low growth is better off than high growth if the standard and cost of living can be maintained. At the rate inflation is eating up everyone’s income and savings, we should think carefully of chasing high economic growth for its sake. It could be an effort in vain. What is important is real improvement in standard of living, cost of living, not fictitious dollar increases when the value is depreciating by the days.