A.H.ROSLAN HARAHAP

The Malaysian Resource Curse - William Leong Jee Keen

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 22 Nov 2009 05:02:00 +0000

Source:

http://steadyaku-steadyaku-husseinhamid.blogspot.com/2009/11/malaysian-resource-curse-william-leong.html

The Malaysian Resource Curse

Pump priming : Wrong Diagnosis

Prime Minister Najib Tun Razak announced that the government will prime the economy with an additional RM1 billion monthly till the end of 2010 in a bid to bolster the country’s economy. Unfortunately, allocating RM200 billion under the 2010 budget or pump priming the economy will not return Malaysia to economic competitiveness. Malaysia’s economy was ill long before the sub-prime implosion and the consequent global financial crisis. Najib Tun Razak will not be able to redress Malaysia’s economic woes unless and until he and the Barisan Nasional Government has the honesty and courage to deal with the Malaysian Resource Curse and have the political will to carry out the necessary fundamental structural reforms.

The Dutch Disease

Malaysia has exhibited the classical symptoms of the “Dutch Disease” or “the Resource Curse”. The term “Dutch Disease” was coined in 1977 by the Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959, culminating in the world’s biggest public-private partnership, N.V. Nederlandse Gasunie between Esso (now ExxonMobil) Shell and the Dutch government in 1963 only to see the rest of its economy shrinking. It refers to the paradox that countries with an abundance of natural resources specifically resources like minerals and fuels, tend to have less economic growth and worse development than countries with fewer natural resources. The Dutch Resource Curse is an economic concept to explain the relationship between the exploitation of natural resources and a decline in the manufacturing sector combined with moral fallout. The concept explains that an increase in revenues from natural resources will de-industrialize a nation’s economy by raising the exchange rate, which makes the manufacturing sector less competitive. It also leads to the public administrators getting entangled with business interests.

Political Corruption

One of the negative effects of the Dutch Disease is that it is often easier for a natural resource rich government to maintain authority through allocating resources to favoured constituents than through growth-oriented economic policies and a level, well regulated playing field. Huge flows of money from natural resources fuel this political corruption. The government has less need to build up the institutional infrastructure to regulate and tax a productive economy so the economy remains undeveloped.

Rent Seeking Behavior

Another negative effect is the creation of rent seeking behavior. “Rent seeking” in this sense does not mean the usual payment of a lease but stems from Adam Smith’s division of income into profit, wage and rent. Rent seeking behavior is distinguished from profit seeking behavior in that in profit seeking behavior, entities seek to extract value by engaging in mutually beneficial transaction. On the other hand, in rent seeking behavior, entities seek to extract uncompensated value from others without making any contribution to productivity through manipulation and exploitation such as by gaining control of land and other pre-existing natural resource or by imposing burdensome regulations or other governmental decisions that may affect consumers or businesses.

Loss of Entrepreneurial Skills

The rationale for identifying rent seeking as the problem in economies suffering from the Dutch Resource Curse is that resource revenues constitutes vast wealth and when individuals or groups of individuals attempt to take control over it, they become less entrepreneurial. Rent seeking activity involves several detrimental aspects. First the attempts themselves are time consuming and draw valuable labour hours from productive, innovative activities. Talent is wasted in the pursuit of existing wealth instead of being employed at producing new growth. Second when the activities are successful, the wealth may be disposed of in ways that are not conductive to growth. If the wealth is spent for personal consumption abroad for the successful rent seeker and it is not invested in domestic technological progress and human capital, growth suffers. Few individuals acquire wealth to act for the common good. The country’s resource rent is converted to luxury items, not research and development. So growth stagnates. Rent seeking degenerates into corruption which discourages investment and limits growth.

Rich become Richer

Think of Ghana and Zambia, countries abundantly endowed with minerals or oil and gas has swung from booms to busts and back again. Their politics are hopelessly corrupt. The central government, far from being an effective regulator, serves as the handmaiden to a group of powerful oligarchs, making it easier for the rich to become richer while the poor become poorer. Now think of Malaysia.

The Malaysian Resource Curse

Malaysia’s economic growth is a three legged growth model based on:-
Manufacturing trade
Commodity trade
Public sector economy

Petroleum and natural resources provides 40% of the Malaysian government’s revenues. This in turn supports the largest public sector economy in Asia with 27% of the GDP. Malaysian manufacturing exports are under structural pressures and are losing competitiveness. The real effective exchange rate (REER) appreciated 11% between 2005 and 2008. This has led to competitiveness erosion of the manufacturing sector. The natural resources sector provided the revenues to allow the Government to sustain economic growth through government spending. This has reduced the urgency to increase productivity and allowed marked inefficiencies to set in; the erosion of education standards, distortion and suppression of the labour market and sustaining unprofitable and ineffective affirmative action policy projects. The end result is the erosion of manufacturing exports and a fall in inward FDI that will undermine the economy.

Underperformance in Education Standards

The oil and gas revenue driven economic growth lulled UMNO and the Barisan Nasional Government to misconstrue the importance of maintaining excellence in our education system. This allowed misguided and mismanaged policies to turn our schools and universities into factories churning out unemployed and unemployable graduates. This has resulted in our nation suffering a severe underperformance of our education standards. Malaysia tertiary enrolment and completion ratio has lagged that of some of our Asian counterparts. At 28.6% and 15%, Malaysia’s gross tertiary enroll ratio and completion ratio are 7% and 6% lower than the average expected of economies with similar level of GDP per capital. This means Malaysia is having a tertiary skills shortage. This point to Malaysia lacking the necessary skills and knowledge human capital essential to move the Malaysian economy up the value added chain.

Skills Mismatch

With the labour force growing, unemployment rate has stayed range bound at around 3% and with the skills shortage, graduates surprisingly continues to make up an increasing proportion of the unemployed group from 15.2% in 2000 to 25.1% in 2007. The Government in answer to a question I posed in Parliament gave the following breakdown of unemployed graduates:-
· In 2004, there were 4,594 unemployed graduates of which 163 were Chinese, 207 were Indians and 4,060 were Malays;
· In 2005, there were 2,413 unemployed graduates of which 31 were Chinese, 70 were Indians and 2,186 were Malays;
· In 2006, there were 56,750 unemployed graduates of which 1,110 were Chinese, 1,346 were Indians and 50,594 were Malays.
· In 2007, there were 56,322 unemployed graduates of which 1,348 were Chinese, 1,401 were Indians and 49,075 were Malays.
· In 2008 (as of June) there were 47,910 unemployed graduates of which 1,403 Chinese, 1,569 Indians and 49,075 were Malays.

This suggests that we have a problem of graduate skills mismatch.

Singapore in comparison has its universities design their curriculum in collaboration with the industry players. The majority of the students are offered jobs before they graduate and 82% are employed within 3 months of their graduation.

Labour force a key business constrain

The education gaps have led to skills shortage and skills mismatch. 42% of Malaysian businesses rate the unavailability of a skilled labour force as the most severe business constraint compared to 37% in East Asia and 35% globally. The shortage of skilled labour is compounded by shortsighted and misconceived immigration policies. These policies instead of attracting the talented and the best and the brightest, discourages and prevents them from working in the country. The rejection of Vijay Singh’s citizenship application and the resulting loss to the nation of a world golf champion is one example. The thousands of tertiary graduate and professional foreign spouses of Malaysians being consigned by these immigration policies to become housewives is another. These same policies are the causes for the severe brain drain suffered by our nation. Due to the skills shortage, we will be unable to move the economy up the value added chain.

Falling FDI

The net inward FDI in Malaysia has been in decline. As net FDI in the region (China, India, Singapore and Thailand) continues to climb, Malaysia has experienced a downward trend from the peak in the early 1990s and is now in negative territory. The net FDI stood at -3.8% of GDP in June 2009 from +2.4% of GDP in June 2004. Malaysia has fallen from 67th in the Inward FDI Index in 2006 to 71st in 2008. The outward FDI has exceeded the inward FDI for the past 3 years and this trend is expected to continue and increase in the future.

Loss of Manufacturing Trade Surplus

Malaysia manufacturing trade surplus of machinery and transport equipment fell from USD 10.5 Billion in 2000 (11.2% of GDP) to USD 9 Billion in 2008 (4.1% of GDP). In comparison China had a trade surplus for the same period from USD 9.3 Billion to USD 231.3 Billion, Korea USD41.2 Billion to USD 119.1 Billion, Taiwan USD 19 Billion to USD 45.1 Billion and Singapore from US 11.2 Billion to US 22.9 Billion.

Suffering in Silence

We are in the throes of the Malaysian Resource Curse. The rent seekers have privatized and created monopolies of every conceivable resource and amenity in the country from roads, to bridges, water, electricity, disposal of rubbish and sewerage. Petronas revenues have been used to pay for mega personal enhancing projects such as the Petronas Twin Towers where US 1.6 Billion (RM5.6 Billion) was spent to enjoy the brief moment of fame in owning the tallest building in the world. Petronas money was again used through 40% equity in Putrajaya Holdings to pay the total costs of building the new Federal administrative capital of Putrajaya amounting to RM11.831 Billion. There many more of such project in the past decade. The public have been suffering in silence as the Malaysian Resource Curse takes its toll.

Prescription

Malaysia no doubt is affected by the global financial crisis but its problems have a deeper underlying cause. It is this underlying cause that has to be addressed. The Malaysia Resource Curse must be exorcised. There are many resource rich countries that have escaped and avoided the disease.

The key is governance. Well governed countries find ways to insulate their economies from the down side of commodities and natural resources trade. Resource rich countries such as Norway has shown that this can be done by adopting straight forward economic fundamentals, sound monetary policies, and having open trading and investment regimes. The enforcement of laws against corruption is a basic requirement. The strengthening of political and economic institutions by giving effect to the democratic institutions and constitutional guaranteed fundamental liberties is another. Investing in education and infrastructure will increase competitiveness of the manufacturing sector. Sadly these have been ignored by the Prime Minister in his push for pump priming.

A global investor said that if Najib and Barisan Nasional do not recognize the Malaysian Resource Curse and do not have the political will to address it, neither he nor any other investor is going to put money into Malaysia. Without the structural reforms, pouring RM 1 billion a month into the rent seeking economy is just pouring good money down the drain. How long can the Malaysian public continue to suffer in silence?

William Leong Jee Keen
Member of Parliament Selayang
7th October 2009

Daron Acemoglu - What Makes a Nation Rich?

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sat, 21 Nov 2009 03:22:00 +0000

Source: http://www.esquire.com/features/best-and-brightest-2009/world-poverty-map-1209

What Makes a Nation Rich? One Economist's Big Answer

Say you're a world leader and you want your country's economy to prosper. According to this Clark Medal winner from MIT, there's a simple solution: start with free elections.

By Daron Acemoglu

We are the rich, the haves, the developed. And most of the rest — in Africa, South Asia, and South America, the Somalias and Bolivias and Bangladeshes of the world — are the nots. It's always been this way, a globe divided by wealth and poverty, health and sickness, food and famine, though the extent of inequality across nations today is unprecedented: The average citizen of the United States is ten times as prosperous as the average Guatemalan, more than twenty times as prosperous as the average North Korean, and more than forty times as prosperous as those living in Mali, Ethiopia, Congo, or Sierra Leone.

The question social scientists have unsuccessfully wrestled with for centuries is, Why? But the question they should have been asking is, How? Because inequality is not predetermined. Nations are not like children — they are not born rich or poor. Their governments make them that way.

You can chart the search for a theory of inequality to the French political philosopher Montesquieu, who in the mid-eighteenth century came up with a very simple explanation: People in hot places are inherently lazy. Other no less sweeping explanations soon followed: Could it be that Max Weber's Protestant work ethic is the true driver of economic success? Or perhaps the richest countries are those that were former British colonies? Or maybe it's as simple as tracing which nations have the largest populations of European descent? The problem with all of these theories is that while they superficially fit some specific cases, others radically disprove them.

It's the same with the theories put forth today. Economist Jeffrey Sachs, director of Columbia University's Earth Institute, attributes the relative success of nations to geography and weather: In the poorest parts of the world, he argues, nutrient-starved tropical soil makes agriculture a challenge, and tropical climates foment disease, particularly malaria. Perhaps if we were to fix these problems, teach the citizens of these nations better farming techniques, eliminate malaria, or at the very least equip them with artemisinin to fight this deadly disease, we could eliminate poverty. Or better yet, perhaps we just move these people and abandon their inhospitable land altogether.

Jared Diamond, the famous ecologist and best-selling author, has a different theory: The origin of world inequality stems from the historical endowment of plant and animal species and the advancement of technology. In Diamond's telling, the cultures that first learned to plant crops were the first to learn how to use a plow, and thus were first to adopt other technologies, the engine of every successful economy. Perhaps then the solution to world inequality rests in technology — wiring the developing world with Internet and cell phones.

And yet while Sachs and Diamond offer good insight into certain aspects of poverty, they share something in common with Montesquieu and others who followed: They ignore incentives. People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money. And the key to ensuring those incentives is sound institutions — the rule of law and security and a governing system that offers opportunities to achieve and innovate. That's what determines the haves from the have-nots — not geography or weather or technology or disease or ethnicity.

Put simply: Fix incentives and you will fix poverty. And if you wish to fix institutions, you have to fix governments.

How do we know that institutions are so central to the wealth and poverty of nations? Start in Nogales, a city cut in half by the Mexican-American border fence. There is no difference in geography between the two halves of Nogales. The weather is the same. The winds are the same, as are the soils. The types of diseases prevalent in the area given its geography and climate are the same, as is the ethnic, cultural, and linguistic background of the residents. By logic, both sides of the city should be identical economically.

And yet they are far from the same.

On one side of the border fence, in Santa Cruz County, Arizona, the median household income is $30,000. A few feet away, it's $10,000. On one side, most of the teenagers are in public high school, and the majority of the adults are high school graduates. On the other side, few of the residents have gone to high school, let alone college. Those in Arizona enjoy relatively good health and Medicare for those over sixty-five, not to mention an efficient road network, electricity, telephone service, and a dependable sewage and public-health system. None of those things are a given across the border. There, the roads are bad, the infant-mortality rate high, electricity and phone service expensive and spotty.

The key difference is that those on the north side of the border enjoy law and order and dependable government services — they can go about their daily activities and jobs without fear for their life or safety or property rights. On the other side, the inhabitants have institutions that perpetuate crime, graft, and insecurity.

Nogales may be the most obvious example, but it's far from the only one. Take Singapore, a once-impoverished tropical island that became the richest nation in Asia after British colonialists enshrined property rights and encouraged trade. Or China, where decades of stagnation and famine were reversed only after Deng Xiaoping began introducing private-property rights in agriculture, and later in industry. Or Botswana, whose economy has flourished over the past forty years while the rest of Africa has withered, thanks to strong tribal institutions and farsighted nation building by its early elected leaders.

Now look at the economic and political failures. You can begin in Sierra Leone, where a lack of functioning institutions and an overabundance of diamonds have fueled decades of civil war and strife and corruption that continue unchecked today. Or take communist North Korea, a geographical, ethnic, and cultural mirror of its capitalist neighbor to the south, yet ten times poorer. Or Egypt, cradle of one of the world's great civilizations yet stagnant economically ever since its colonization by the Ottomans and then the Europeans, only made worse by its post-independence governments, which have restricted all economic activities and markets. In fact, the theory can be used to shed light on the patterns of inequality for much of the world.

If we know why nations are poor, the resulting question is what can we do to help them. Our ability to impose institutions from the outside is limited, as the recent U. S. experiences in Afghanistan and Iraq demonstrate. But we are not helpless, and in many instances, there is a lot to be done. Even the most repressed citizens of the world will stand up to tyrants when given the opportunity. We saw this recently in Iran and a few years ago in Ukraine during the Orange Revolution.

The U. S. must not take a passive role in encouraging these types of movements. Our foreign policy should encourage them by punishing repressive regimes through trade embargoes and diplomacy. The days of supporting dictators because they bolster America's short-term foreign-policy goals, like our implicit support of Muhammad Zia-ul-Haq in Pakistan starting in the 1970s, and our illicit deals with Mobutu's kleptocratic regime in the Congo from 1965 to 1997, must end. Because the long-term consequences — entire nations of impoverished citizens, malnourished and hungry children, restive, discontented youngsters ripe to be drawn toward terrorism — are too costly. Today that means pushing countries such as Pakistan, Georgia, Saudi Arabia, Nigeria, and countless others in Africa toward greater transparency, more openness, and greater democracy, regardless of whether they are our short-term allies in the war on terror.

At the microlevel, we can help foreign citizens by educating them and arming them with the modern tools of activism, most notably the Internet, and perhaps even encryption technology and cell-phone platforms that can evade firewalls and censorship put in place by repressive governments, such as those in China or Iran, that fear the power of information.

There's no doubt that erasing global inequality, which has been with us for millennia and has expanded to unprecedented levels over the past century and a half, won't be easy. But by accepting the role of failed governments and institutions in causing poverty, we have a fighting chance of reversing it.

Acemoglu is currently writing a book about his theory of inequality with James Robinson, a Harvard government professor, from which this essay was adapted.

Talk: Jacqueline Novogratz on escaping poverty

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 15 Nov 2009 18:23:00 +0000

Jacqueline Novogratz tells a moving story of an encounter in a Nairobi slum with Jane, a former prostitute, whose dreams of escaping poverty, of becoming a doctor and of getting married were fulfilled in an unexpected way.

About Jacqueline Novogratz

Jacqueline Novogratz founded and leads Acumen Fund, a nonprofit that takes a businesslike approach to improving the lives of the poor.

Watch the talk here:

http://www.ted.com/talks/jacqueline_novogratz_on_an_escape_from_poverty.html

and here:

http://www.ted.com/talks/jacqueline_novogratz_invests_in_ending_poverty.html

Talk: Iqbal Quadir says mobiles fight poverty

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 15 Nov 2009 17:38:00 +0000

Iqbal Quadir tells how his experiences as a kid in poor Bangladesh, and later as a banker in New York, led him to start a mobile phone operator connecting 80 million rural Bangladeshi -- and to become a champion of bottom-up development.

About Iqbal Quadir

Iqbal Quadir is an advocate of business as a humanitarian tool. With GrameenPhone, he brought the first commercial telecom services to poor areas of Bangladesh.

The talk could be viewed here:
http://www.ted.com/talks/iqbal_quadir_says_mobiles_fight_poverty.html

Lecture: The power of time off - Stefan Sagmeister

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 15 Nov 2009 17:23:00 +0000

Every seven years, designer Stefan Sagmeister closes his New York studio for a yearlong sabbatical to rejuvenate and refresh their creative outlook. He explains the often overlooked value of time off and shows the innovative projects inspired by his time in Bali.

The video could be viewed here: http://www.ted.com/talks/stefan_sagmeister_the_power_of_time_off.html

DR. ASRI - Agama Bukan Candu Untuk Mengkhayalkan Orang Miskin

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Wed, 11 Nov 2009 05:29:00 +0000

Sumber: http://drmaza.com/home/?p=808

Disiarkan pada Nov 11, 2009 dalam kategori Isu Semasa
(Antara artikel lepas (Jun 2008) yang menyebabkan Dr. Asri tidak disenangi oleh sesetengah pihak agama dan politik)

“Dan berikanlah kepada kaum keluargamu, dan orang miskin serta orang musafir akan haknya masing-masing; dan janganlah engkau membazir dengan pembaziran yang melampau. Sesungguhnya orang-orang yang membazir itu adalah saudara-saudara syaitan, sedang syaitan itu pula sangat kufur kepada Tuhannya”. (Surah al-Isra: 26-27).

Saya tertarik apabila membaca membaca kisah al-Imam al-Nawawi (631-676H) yang diminta oleh Raja pada zamannya al-Malik al-Zahir untuk memberikan fatwa bagi mengharuskan Raja mengambil harta rakyat untuk digunakan memerangi musuh yang mengancam negara iaitu tentera Tatar. Tujuan itu pada zahirnya baik kerana mempertahankan negara dari ancaman musuh. Harta itu pun hendak digunakan untuk keperluan jihad.

Namun ramai ulama yang telah dibunuh ketika itu kerana enggan mengeluarkan fatwa berkenaan. Al-Nawawi juga enggan menulis surat sokongan terhadap tindakan Raja Zahir itu sekalipun beliau tahu pengambilan harta itu untuk kepentingan negara juga.

Apabila Raja bertanya kepada beliau mengapa beliau enggan menyokong? Beliau menjawab: Setahu saya engkau dahulunya seorang hamba, tidak mempunyai harta. Kemudian Allah memberikan kurniaan kepadamu lalu diangkat engkau menjadi seorang raja. Aku dengar engkau memiliki seribu hamba lelaki yang setiap mereka memiliki talipinggang daripada emas. Engkau juga ada memiliki dua ratus hamba perempuan, dan setiap mereka memiliki sebekas perhiasan. Jika engkau belanjakan itu semua, sehingga hamba-hamba lelakimu hanya memakai tali pinggang kain, dan hamba-hamha perempuanmu hanya memakai baju tanpa perhiasan, juga baitul mal sudah tiada simpanan wang, harta dan tanah lagi, maka aku akan fatwakan untukmu keharusan mengambil harta rakyat itu. Sesungguhnya yang menolong jihad dan selainnya ialah penyerahan diri kepada Allah dan mengikut jalan nabiNya s.a.w. (lihat: ‘Abd al-Ghani al-Daqar, al-Imam al-Nawawi, 144-145, Damsyik: Dar al-Qalam).

Saya suka dengan jawapan al-Imam al-Nawawi ini. Saya tahu, selepas ini banyak forum-forum perdana, ceramah-ceramah di radio dan televesyen akan memperkatakan tentang kewajipan berjimat cermat. Maka ustaz, ustazah dan penceramah pun –atas pemintaan penaja yang membayar harga ceramah- akan bersungguh-sungguh menyuruh orang-orang bawahan untuk berjimat cermat.

Dalil-dalil pun akan dibaca. Mungkin akan ada ustazah yang mencari cerita-cerita ajaib yang baru untuk dikaitkan dengan bab jimat cermat dan jangan membazir. Mungkin akan ada penceramah yang cuba menangis-menangis –seperti seorang pelakon berjaya yang menerima anugerah- bercerita kepada mak cik-makcik yang kusyuk menonton tentang azab seorang yang membazir ‘nasi lemaknya’.

Datanglah orang-orang kampung mendengar forum perdana dengan basikal atau motosikal sebagai menyahut seruan agar tidak membazir petrol. Adapun penceramah, datuk-datuk pengajur, YB-YB hanya menggunakan kenderaan mewah yang berkapasiti atas daripada 2000cc. Tujuannya untuk mengelakkan pembaziran wang kerajaan yang terpaksa dibayar kepada empunya kenderaan 2000cc ke bawah, lebih tinggi daripada 2000 ke atas.

Maka insaflah mak cik dan pak cik yang barangkali teringatkan tulang ikan yang pernah dibuangnya padahal masih ada sedikit sisa isinya yang melekat. Itulah membazir namanya. Maka, atas keinsafan dan taubat itu, mungkin ada yang akan mula mengurangkan makan nasi lemak daripada sebungkus seorang kepada sebungkus yang dikongsi bersama. Air kopinya yang memang sudah ‘ceroi’ akan ditukar kepada yang warna hitamnya antara kelihatan dan tidak. Maka selamat negara kita ini, disebabkan pakcik dan makcik, pak long dan mak long, pak lang dan mak lang di kampung sudah mengubah gaya hidup mereka.

Jika saya hadir ke forum yang seperti itu, saya ingin bertanya soalan, tapi soalan yang belum ‘dijakimkan’, “apakah agama ini dihantar oleh Allah untuk menghukum manusia bawahan dan menghalalkan yang lain tidur dalam kekenyangan dan kemewahan?”. Sebelum harga minyak naik, telah sekian mereka yang berada di teratak usang itu menjimat makan dan pakai. Saban hari mereka mengira belanja untuk memboleh mereka terus hidup di kala negara dunia belum menghadapi krisis harga minyak.

Saya tidak mahu membicarakan tentang kenaikan harga minyak dari sudut perjalanan ekonomi antarabangsa. Telah banyak pakar-pakarnya bicarakan. Tapi saya ingin bincangkan tentang soal pembaziran dan jimat-cermat. Ya, memang Islam memusuhi pembaziran. Bahkan al-Quran tidak pernah mempersaudarakan antara mana-mana pembuat dosa dengan syaitan, melainkan mereka yang membazirkan.

Allah menyebut dalam al-Quran: (maksudnya): “Dan berikanlah kepada kaum keluargamu, dan orang miskin serta orang musafir akan haknya masing-masing; dan janganlah engkau membazir dengan pembaziran yang melampau. Sesungguhnya orang-orang yang membazir itu adalah saudara-saudara syaitan, sedang syaitan itu pula sangat kufur kepada Tuhannya”. (Surah al-Isra: 26-27).

Demikianlah Allah persaudarakan pembazir dengan syaitan. Kesan pembaziran sangat besar. Lihat negara kita yang kaya dengan berbagai hasil. Sepatutnya kita akan tetap kukuh dan setiap rakyat akan menikmati kekayaan ini dengan adilnya. Namun, disebabkan pembaziran, harta negara yang sepatutnya dapat dimakan puluhan tahun, tetapi surut mendadak dalam masa beberapa tahun.

Maka, yang patut mendapat bantuan dan hak, tidak cukup untuk sampai kepadanya. Barang keperluan pula bertukar menjadi mahal. Pembaziran memusnahkan kehidupan rakyat bawahan dan menghalang hak yang sepatutnya sampai kepada mereka. Maka betapa wajar untuk para pembazir itu dipersaudarakan dengan syaitan. Apatah lagi dalam banyak keadaan, pembaziran itu lahir dari keangkuhan dan kesombongan. Sifat-sifat itulah jua yang menjadi asas kepada kekufuran syaitan.

Soalannya, mengapakah apabila kita membicarakan tentang pembaziran, kita hanya terbayang orang-orang bawahan di kampung ataupun bandar. Jika kita ingin meminta supaya setiap warga negara ini berjimat dan jangan membazir, maka bermulalah daripada atas. Bukan sekadar untuk ‘mengenakan si miskin yang sekian lama telah berjimat dan sudah tidak tahu apa yang hendak dijimatkan lagi. Mengapa kita hanya terbayang rakyat yang berada dalam rumah persendirian dan berbelanja dengan wang poketnya yang sudah lelah?

Kita sepatutnya terlebih meneliti semula bagaimana perbelanjaan yang menggunakan harta negara dan rakyat yang sedang berjalan di istana-istana, kediaman-kediaman rasmi kerajaan di peringkat negara dan negeri?. Apakah wajar di kala ini keraian untuk orang-orang besar sama ada sultan atau menteri begitu mewah? Makanan yang dihidangkan untuk mereka, harga satu meja kadang-kala boleh dimakan oleh ratusan rakyat bawahan. Karpet yang dipijak oleh mereka harganya ribuan bungkusan nasi yang dimakan oleh ‘orang biasa’.

Apakah patut di saat yang sebegini, ada istana atau kediaman rasmi menteri yang hendak ditambahmewahkan? Apakah patut orang-orang besar ini diraikan dengan hiburan atau pertunjukan dan konsert yang menelan puluhan ribu ringgit sempena sesuatu kunjungan mereka. Wang itu, wang negara. Wang itu, wang rakyat.

Apakah dalam masa yang sebegini mereka masih mendapat peruntukan untuk bersantai, bermain golf dan ‘berhiburan’ dengan menggunakan wang rakyat bawahan yang disuruh menjimatkan nasi lemak dan air kopi mereka?. Pembaziran sebegini lebih rapat menjadi saudara syaitan dibanding wang persendirian yang dibelanjakan.

Meminjam falsafah al-Imam al-Nawawi yang saya sebutkan tadi, jika orang atasan telah benar-benar berjimat, maka wajarlah untuk dikurangkan subsidi rakyat. Al-Nawawi telah dibuang negeri kerana enggan bersekongkol dengan perkara yang seperti ini. Namun, jika itu tidak dilakukan, ulama bukan burung kakak tua.

Saya mengambil risiko menulis hal ini. Tanggungjawab di hadapan Allah lebih besar daripada segala-galanya. Para ulama dahulu jauh lebih mulia, tidak dibandingkan kedaifan saya ini. Pun mereka telah menunaikan tanggungjawab al-Amr bil Ma’ruf dan al-An-Nahy ‘an al-Munkar ini. Semoga Allah menimbang tinta para ulama dengan darah para syuhada.

Telah berlaku tahun kesusahan dan kelaparan yang amat sangat di Semenanjung Arab pada zaman Amirul Mukminin ‘Umar bin al-Khattab. Dikenali dengan ‘Am al-Ramadah kerana seakan bagaikan warna ramad atau abu disebabkan kekurangan hujan, warna tanah dan warna kulit manusia yang bertukar disebabkan kekeringan. Ini berlaku pada antara tahun 17H dan 18H selama sembilan bulan.

Amirul Mukminin telah berhempas pulas menguruskan harta negara ketika itu bagi mengatasi kesusahan rakyat. Di samping kecemerlangan pengurusan, yang ingin disebutkan di sini kecemerlangan pendirian dan sikap. Ibn Jarir al-Tabari meriwayatkan bahawa ‘Umar bin al-Khattab tidak memakan pada tahun berkenaan lemak haiwan, susu dan daging sehingga orang ramai dapat memakannya. Barangan makanan berkurangan di pasar.

Pada suatu hari pekerjanya dapat membeli untuknya lemak dan susu namun dengan harga yang agak tinggi. ‘Umar enggan makan bahkan berkata: “Engkau telah menyebabkan lemak dan susu menjadi mahal, sedekahkan keduanya, aku bencikan pembaziran. Bagaimana aku dapat memahami keadaan rakyat jika tidak mengenaiku apa yang mengenai mereka?”. (Al-Tabari, 2/358, Beirut: Dar al-Fikr).

Juga diriwayatkan bahawa suatu hari pada tahun berkenaan disembelih unta lalu dimasak dan dibahagikan kepada orang ramai. Lalu diceduk masakan itu untuk dihidangkan juga buat ‘Umar. Tiba-tiba yang diceduk itu bahagian belakang unta dan hatinya. Lalu ‘Umar bertanya: “Dari mana diperolehi ini?”. Daripada unta yang kita sembelih hari ini. Kata ‘Umar: “Oh! Alangkah buruknya aku ini sebagai pemimpin, jika aku memakan bahagiannya yang baik lalu aku berikan rakyat makan yang sisa” (Ibn Sa’d, al-Tabaqat al-Kubra, 3/312, Beirut: Dar Sadir).

Maka alangkah buruknya seorang presiden, atau sultan, atau raja, atau perdana menteri, atau menteri besar, atau menteri yang makan dengan mewah daripada peruntukan harta negara atau negeri sedangkan rakyatnya dalam kesusahan. Ketika rakyat membilang butiran beras, helaian ringgit untuk persekolahan anak, keperitan membayar sewa rumah, api dan air, sementara mereka yang berkuasa ini pula menghadiri jamuan negara dan negeri itu dan ini.

Bermewahan dengan pertunjukan dan hiburan dari peruntukan wang negara. Kemudian bercuti rehat, tanpa rakyat ketahui apakah kepenatannya untuk rakyat. Kos cuti itu pula ditanggung oleh negara tanpa sebarang pulangan keuntungan buat rakyat. Alangkah zalim! Alangkah keji sikap yang sedemikian rupa.

Saya kadang-kala begitu hairan apabila seseorang dianggap ‘berjiwa rakyat’, hanya kerana makan nasi yang dijamu oleh rakyat, atau masuk ke kampung mendukung anak rakyat untuk beberapa minit bagi membolehkan wartawan mengambil foto. Apakah itu dinamakan berjiwa rakyat?

Jika hendak diiktiraf sebagai berjiwa rakyat, rasailah apa yang rakyat rasai. Orang seperti ‘Umar bin al-Khattab lebih mulia daripada segala keturunan atau pangkat yang ada di kalangan manusia. Kemuliaannya telah diiktiraf oleh Allah dan RasulNya. Dia ahli syurga dengan jaminan Allah dan RasulNya sementara politiknya tidak ada saingan yang menggugatnya. Namun tetap amanah dan jujurnya terhadap rakyatnya. Merasai penderitaan rakyat. Beliau idola kepimpinan kita sepatutnya. Walaupun beliau tidak pernah menyuruh orang menyembah atau menjulangnya, namun beliau dipuja oleh sejarah dan diangkat oleh Allah.

Kenaikan harga minyak menaikkan harga barang. Orang berpendapatan rendah menjadi mangsa. Agama berperanan untuk menyedarkan semua pihak tentang tanggungjawab terhadap rakyat. Dalam keadaan begini, antara perkara pertama yang patut dibentang kepada rakyat adalah pengurusan kemasukan dan pengagihan zakat. Zakat yang mungkin sampai kepada peringkat bilion ringgit di seluruh negara mesti diagihkan secara telus dan bijaksana.

Mengapa masih ada fakir miskin yang bagaikan meminta sedekat kepada pihak yang menguruskan zakat? Mengapa program tv lebih menjumpai si miskin dibanding pihak yang menguruskan zakat? Mengapa zakat masih berbaki dengan begitu banyak setiap tahun sedangkan kemiskinan masih banyak? Mengapa pihak yang menguruskan zakat kelihatan bertambah mewah, sementara yang patut menerima hak kelihatannya bertambah letih dengan keadaan sekarang?

Di masa inilah peranan zakat bagi memastikan setiap yang memerlukan memperolehinya tanpa kerenah birokrasi yang bukan-bukan. Jangan sampai untuk mendapat RM150 si miskin berulang alik berkali-kali dengan tambang sendiri, sementara yang mendakwa amil zakat mengisi minyak kereta dengan wang zakat atas nama amil! Ramai kata kita berjaya menguruskan zakat sebab kutipan yang tinggi. Saya katakan, pengurusan yang berjaya itu bukan sahaja kutipan semata, tetapi juga pengagihan secara telus, bijaksana dan bertanggungjawab.

Dalam usaha kerajaan menangani kemelut ekonomi hari ini, perkara-perkara yang disebutkan ini mestilah dipandang serius. Kejayaan sesebuah kerajaan menghayati penderitaan rakyat akan menjadikan mereka lebih disayangi dan disokong. Jika orang atas mengubah cara hidup, kita akan berkempen untuk semua agar mengubah cara hidup. Jika orang agama disuruh berkempen orang bawahan agar mengubah cara hidup, sementara melupai yang di atas, mereka sebenarnya cuba menjadikan agama sebagai candu agar seseorang melupai masalah yang sebenar.

Lecture - The End of Poverty - J. Sachs

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sat, 24 Oct 2009 15:28:00 +0000

View it here:
http://www.columbia.edu/cu/news/media/05/349_the_end_of_poverty/

The End of Poverty: Economic Possibilities for Our Time

One billion people on the planet are struggling with extreme poverty according to Jeffrey D. Sachs, director of The Earth Institute at Columbia University. In this March 31 lecture, Sachs discusses his new book, The End of Poverty: Economic Possibilities for Our Time, which explores the challenge of global poverty. Sachs also shares accounts of his recent visits to Africa and offers practical solutions to the challenge of global poverty, which he contends can be eliminated by 2025.

Lecture on Institutions, Geography, and Growth - Roberto Rigobon

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Thu, 22 Oct 2009 13:27:00 +0000

Source: http://mitworld.mit.edu/video/212

About the Speaker

Roberto Rigobon PhD '97
Professor of Economics, MIT Sloan School of Management

Roberto Rigobon researches international economics, monetary economics, and development economics. He is a faculty research fellow of the National Bureau of Economic Research, and a visiting professor at IESA, Venezuela. He joined Sloan in 1997 and has twice won the "Teacher of the Year" award and the "Excellence in Teaching.” He received his Ph.D. in economics from MIT in 1997, an M.B.A. from IESA (Venezuela) in 1991, and his B.S. in Electrical Engineering from Universidad Simon Bolivar in Venezuela.

About the Lecture

Three billion people on earth live on less than two dollars a day. A relative handful of us fare astronomically better. How do economists account for global “haves” and “have-nots”? Roberto Rigobon attributes a vast income inequality across countries to four connecting factors: luck, geography, quality of institutions, and quality of policies. If a country lies close to the 50th parallel, its citizens’ average income is six times greater than that of an equatorial country. Heat takes a toll on nation-building. Take Caribbean and Latin American countries, which experienced a wave of malaria in the 1500’s. Spanish colonists preferred to extract resources and send them home, rather than risk death by staying. Those nations developed impoverished economies and institutions that continue today. Colonists moved to cooler climes settled down, invested in the new world, and created enduring social structures. Rigobon can’t recommend a single, economic, or political doctrine to help a struggling nation achieve prosperity. “The set of rules depends on a country’s culture, history and religion…. In the end the only sustainable regime is democracy, freedom of speech, and the rule of law, but how we get there isn’t irrelevant.” Rigobon encourages developing nations to embrace social and political conflict as “an opportunity to improve.”

Lecture on Ending Global Poverty - Muhammad Yunus

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Thu, 22 Oct 2009 13:11:00 +0000

Source: http://mitworld.mit.edu/video/289

About the Speaker

Muhammad Yunus
Founder and Managing Director, Grameen Bank2006 Nobel Peace Prize Laureate Ambassador for the Joint United Nations Program on HIV/AIDS
Muhammad Yunus made his first loan of $27 to a group of 42 Bangladeshi village women, to help free them from debt to moneylenders and allow them to build their furniture business. He established the Grameen Bank in 1983 to help millions of Bangladeshis escape from poverty. The bank now has branches in more than 36 thousand Bangladeshi villages and in other countries. Yunus, a Fulbright Scholar, earned a Ph.D. from Vanderbilt University in 1969. Yunus has received the Ramon Magsaysay Award (1984) from Manila; the Aga Khan Award for Architecture (1989) from Geneva; the Mohamed Shabdeen Award for Science (1993) from Sri Lanka; and the World Food Prize by World Food Prize Foundation (1994) from the US. His autobiography, Banker to the Poor, was published in 1998.

About the Lecture

Imagine a bank that loans money based on a borrower’s desperate circumstances -- where, as Muhammad Yunus says, “the less you have, the higher priority you have.” Turning banking convention on its head has accomplished a world of good for millions of impoverished Bangladeshis, as the pioneering economist Yunus has demonstrated in the last three decades. What began as a modest academic experiment has become a personal crusade to end poverty. Yunus reminds us that for two-thirds of the world’s population, “financial institutions do not exist.” Yet, “we’ve created a world which goes around with money. If you don’t have the first dollar, you can’t catch the next dollar.” It was Yunus’ notion, in the face of harsh skepticism, to give the poorest of the poor their first dollar so they could become self-supporting. “We’re not talking about people who don’t know what to do with their lives….They’re as good, enterprising, as smart as anybody else.” His Grameen Bank spread from village to village as a lender of tiny amounts of money (microcredit), primarily to women. Yunus heard that “all women can do is raise chickens, or cows or make baskets. I said, ‘Don’t underestimate the talent of human beings.’ ” No collateral is required, nor paperwork—just an effort to make good and pay back the loan. Now the bank boasts 5 million borrowers, receiving half a billion dollars a year. It has branched out into student loans, health care coverage, and into other countries. Grameen has even created a mobile phone company to bring cell phones to Bangladeshi villages. Yunus envisions microcredit building a society where even poor people can open “the gift they have inside of them.”

Friedman - Responsibility to the Poor

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Thu, 22 Oct 2009 12:41:00 +0000

Source: http://www.youtube.com/watch?v=Rls8H6MktrA

Lecture by Esther Duflo - Fighting Poverty: What Works?

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Thu, 22 Oct 2009 04:56:00 +0000

Source: http://mitworld.mit.edu/video/375

About the Speaker

Esther Duflo PhD '99
Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics;Director, Abdul Latif Jameel Poverty Action Lab

Esther Duflo specializes in development economics. She obtained her Masters in Economics from DELTA and Ecole Normale Superieure in Paris in 1995, and completed her Ph.D. in Economics at MIT in 1999. Most recently, she was the recipient of the John D. and Catherine T. MacArthur Foundation Fellowship, the John M. Olin Faculty Fellowship, the Alfred P. Sloan Research Fellowship, and the Elaine Bennett Prize for Research.Duflo's work focuses on the evaluation in developing countries of the efficacy of policies and initiatives put forth by governments and non-governmental organizations involving education reform, political participation, within-family patterns of resource allocation, and health care delivery. She is also interested in the political economy of public goods provision and gender issues and the economics of the family. She co-founded the Poverty Action Lab, a research center at MIT focusing on randomized evaluation of anti-poverty programs.

About the Lecture

Esther Duflo hopes to take the measure of a wide range of anti-poverty programs. Applying scientific methodology, her colleagues and students at the MIT Poverty Action Lab are approaching the projects of well-intended governments and NGO’s (non-government organizations) with a fresh eye. “We have a spotty and scattered idea of the most effective ways to deliver social impact,” says Duflo, so evaluating what works is important. She describes the U.N. goal of ensuring that all children worldwide attend school. Many programs aimed at achieving this goal simply don’t deliver the results intended. Some approaches that gained credibility and support involve giving away school uniforms and providing free meals. But, says Duflo, “Sometimes ideas that become conventional wisdom are erroneous and need to be rethought,” especially since the “budget for fighting poverty is extremely limited and will remain limited.” Researchers compared a program that aimed to improve children’s school attendance through a program of deworming, with a program that paid kids to go to school. Testing these projects “the way we do drugs, with treatment and control groups chosen randomly,” Duflo found that the $3 per year deworming program resulted in a dramatically higher increase in school years attended than did the $6,000 per year program paying kids to attend school.Duflo insists on “being pragmatic about what works and what doesn’t,” and attempts to evaluate not just the effectiveness of programs but the auditing of corruption often found in social programs in the developing world. If the groups implementing a program partner early with Duflo, and embrace a rigorous evaluation of their work, they can often abort ineffective approaches and expand successful ones, maximizing their anti-poverty investment, says Duflo. “The best quality research must form the basis of good policy,” she concludes.

Esther Duflo receives MacArthur Fellowship for transformative work on economic development

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Thu, 22 Oct 2009 04:40:00 +0000

Source: http://web.mit.edu/newsoffice/2009/duflo-genius.html

MIT economist Esther Duflo, whose research has helped change the way governments and aid organizations address global poverty, was named today as a recipient of a 2009 MacArthur Fellowship — the prominent "genius" grant for innovative work.Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at MIT, and director of the Abdul Latif Jameel Poverty Action Lab (J-PAL), was one of 24 recipients named this year for their "exceptional originality in and dedication to their creative pursuits." MacArthur Fellowships are given to honorees in a wide range of endeavors. They carry a $500,000 purse, which recipients may use as they see fit. Duflo, 36, learned about the award last week in a phone call from the John D. and Catherine T. MacArthur Foundation. "It was definitely out of the blue," she says.As she sees it, the MacArthur Fellowship is likely to help elevate awareness of all her colleagues who work to alleviate poverty. "That's the best thing about it," says Duflo. "I'm a little bit humbled, because this is not only about me, but the entire J-PAL lab. It is a collective enterprise."Duflo, who received her PhD from MIT's Department of Economics in 1999, has seen her research become highly influential in a relatively short time. In frequent collaboration with colleagues, including Abhijit Banerjee, Ford International Professor of Economics at MIT, she has pursued economic studies that emphasize controlled field experiments as a way of determining what types of foreign aid and investment are most effective. Such studies address the long-running, difficult questions of how aid money can to be used efficiently, and what kinds of programs can have long-term positive effects in the developing world.A global economics laboratoryDuflo's studies often replicate the effects of randomized medical trials, by applying a local aid program to one set of people, and comparing the results to a control group that did not participate in the program. For instance, a study in India by Duflo (and economists Rema Hanna of Harvard and Stephen Ryan of MIT) showed that schoolteachers were much more likely to show up for work when they participated in a monitoring system that offered them financial incentives; the system also led to better student achievement. However, this kind of research often shows that people do not always act to maximize their financial gains, contrary to what some economists have theorized, and suggests that aid programs should be tailored to local cultures and economic practices. Recent work by Duflo (and economists Michael Kremer of Harvard and Jonathan Robinson of The University of California, Santa Cruz) has shown that the most successful way of getting farmers in Kenya to use optimum amounts of fertilizer involves giving them modest incentives — free fertilizer delivery — soon after a harvest. Duflo has also sought to help colleagues use similar experimental methods. Along with Banerjee and Sendhil Mullainathan (now at Harvard), Duflo founded J-PAL in 2003 as a center within MIT's Department of Economics. It has since grown into a research network linking professors at 21 universities; researchers affiliated with J-PAL are currently running over 100 studies in 30 countries. Beyond its MIT headquarters, J-PAL also has regional offices — in Paris, France, and Chennai, India, and a new one opening later this year in Santiago, Chile — that support fieldwork and disseminate the results to regional policy-makers. The World Bank, among other institutions, has begun funding experimental, randomized studies as part of its own efforts to fight poverty. As far-flung as J-PAL and its influence has become, however, Duflo sees both her own work and J-PAL very much as a product of the distinctive research culture at MIT. "My advisers [Banerjee and Joshua Angrist] were critical in shaping my thesis," says Duflo. "And when we wanted to start J-PAL, we got a lot of support and trust from the faculty, department chair, dean and provost. MIT saw the value of putting science into action, and taking research into the world." The MacArthur Fellowship adds to a series of honors Duflo has obtained recently. Earlier in 2009, she was the first recipient of the Calvó Armengol International Prize from the Barcelona Graduate School of Economics; became a Fellow of the American Academy of Arts and Sciences; and delivered a lecture series at the prestigious College de France in Paris, having been named that institution's first holder of its "Knowledge Against Poverty" chair. J-PAL as a whole claimed a major new international prize in January, the BBVA Foundation Frontiers of Knowledge Award in the category of Development Cooperation. Three MIT alumni were also named as 2009 MacArthur Fellows. Peter Huybers PhD ’04, an assistant professor of earth and planetary sciences at Harvard, received the award for research that helps explain changes in the earth's climate over the past 1.8 million years.John A. Rogers PhD ’95, a professor of engineering at the University of Illinois, was named a MacArthur Fellow for his work in materials science. Rogers is developing flexible semiconductors, based either on silicon or carbon nanotubes, which can give a signal-processing capability to a wide range of devices, in areas from medicine and clean energy to consumer goods.Daniel Sigman PhD ’97, a biogeochemist at Princeton, was given the award for research illuminating the effects oceanic biomass has had on the earth's climate over the past two million years.

Fighting Poverty Effectively - Esther Duflo

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Thu, 22 Oct 2009 04:21:00 +0000

Part 1
http://www.youtube.com/watch?v=xMB82RX02tE

Part 2
http://www.youtube.com/watch?v=ngswI2royY0

Part 3
http://www.youtube.com/watch?v=0DY-YagbXTA

Part 4
http://www.youtube.com/watch?v=qPQYmC-g1Ew

Part 5
http://www.youtube.com/watch?v=8orFvqLyrjg

Part 6
http://www.youtube.com/watch?v=ZjrmvmA9kSc

Part 7
http://www.youtube.com/watch?v=JFEIMSVzLt0

Part8
http://www.youtube.com/watch?v=GFHf5LMY3M4

Conference on Poverty and Development - Universite Montesquieu Bordeaux 2001

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Wed, 14 Oct 2009 15:57:00 +0000

Real-World Research Wins Nobel Prize in Economics

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Tue, 13 Oct 2009 04:55:00 +0000

By Neil IrwinWashington Post Staff Writer Tuesday, October 13, 2009

Source: http://www.washingtonpost.com/wp-dyn/content/article/2009/10/12/AR2009101201487.html?wprss=rss_business

The Nobel Prize in economics was awarded Monday to two scholars whose research shed new light on how groups of people cooperate, honoring work that is grounded in the real world over more abstract mathematical models. Elinor Ostrom, a political economist at Indiana University, and Oliver Williamson, an economist at the University of California at Berkeley, will split the $1.4 million prize, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Ostrom is the first woman to win the prize since it was created four decades ago.
With the selection, the prize committee passed over researchers whose work comes to bear on the current financial crisis and global recession. Instead of honoring scholars who had done theoretical work in finance or macroeconomics, it chose Ostrom, whose studies have deep practical implications for how to manage environmental constraints and help poor countries develop, and Williamson, whose explanations of how corporations work informs antitrust law.
Ostrom has studied the "tragedy of the commons," the notion that if a town has a common pasture on which everyone can graze sheep, the land will be overgrazed, making it less useful for everyone. Ostrom found that in a wide range of such settings -- such as shared fisheries, forests and water supplies -- people form voluntary arrangements to govern use and prevent overharvesting. That applies, she has found, even in the absence of a powerful centralized authority.
That has deep implications for how to help poor countries develop. If an aid agency were to build an irrigation system in a distant location that must be shared by different communities, it may need to establish whether those communities have a history of cooperating to share scarce resources, rather than expecting such restrictions to be enacted by fiat.
"She challenges the top-down approach, the centralized approach to development," said Paul Dragos Aligica, a former student of Ostrom's who is now a senior research fellow at the Mercatus Center at George Mason University.
Ostrom, who has collaborated frequently with her husband, Vincent, is in many ways a departure for the selection committee. She has done extensive fieldwork, analyzing situations all over the world, rather than building theoretical mathematical models. And her training was as a political scientist, not as an economist. She said at a news conference Monday that her work shows the importance of combining ideas from economics, political science, sociology and other fields.

"One of the most important factors is whether local people monitor each other," Ostrom said. "Not officials, locals. I'm not denigrating that officials can do something very positive. But what we have ignored is what citizens can do, and the importance of real involvement of the people involved as opposed to just having someone in Washington or at a far, far distance make a rule."
Williamson has studied why businesses organize the way they do. He has explored questions of when and why economic interactions are more efficient within a firm as opposed to between two companies, and when firms might have a long-term business relationship rather than engage in one-off transactions. He worked for the Justice Department on antitrust matters in the 1960s, and his work has made a deep imprint on that area of law.
"The most concrete and earliest problem he tackled is why do we see the organizational forms we do," said Scott Masten, an economist at the University of Michigan. Why, for example, do some firms buy supplies on the open market, others buy them through long-term contractual relationships, and still others have their suppliers of raw materials under the same corporate umbrella?
In 1967, the U.S. government accused the Schwinn bicycle company of anti-competitive behavior for refusing to sell to discount retailers and restricting its sales to independent franchisees that charged higher prices.
Williamson argued that contrary to the government's reasoning, there was an economic rationale to the behavior: Schwinn could ensure that those selling its products offered high-quality service, protecting the company's reputation. And that signing contracts with franchisees could be more efficient than operating stores itself.
"If potential customers are told, 'I bought a Schwinn bike and it was a lemon,' but are not advised that the bicycle was bought from a discount house and misassembled . . . customer confidence in Schwinn is easily impaired," Williamson wrote in his 1998 book "The Economic Institutions of Capitalism."
In time, antitrust authorities came to appreciate Williamson's logic, and a wide range of businesses now place restrictions on who can sell their products and how.
"One thing that's underappreciated is that he was one of the primary contributors to transforming antitrust law and competition policy in the United States," said Barak Richman, a Duke Law professor who studied under Williamson.

David K. Levine Open Letter to Paul Krugman

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Fri, 02 Oct 2009 13:26:00 +0000

An Open Letter to Paul Krugman

David K. Levine - John H. Biggs Distinguished Professor of Economics, Washington University in St. Louis

Source: http://www.huffingtonpost.com/david-k-levine/an-open-letter-to-paul-kr_b_289768.html

Dear Paul:

I was reading your article How Did Economists Get It So Wrong. Who are these economists who got it so wrong? Speak for yourself kemo sabe. And since you got it wrong - why should we believe your discredited theories?
It is a sad fact that whenever something bad happens people will claim that it means that they were right all along, and other people will listen to them. A professional prosecutor frustrated by the fact that you can't beat confessions out of suspects? Wait until September 11 and try again and this time call it the "Patriot Act." A progressive who would like to see higher taxes and more government programs? Wait until there is an economic crisis and call it a "fiscal stimulus bill." Here we are, the recession is over and we've spent 10% of the money...Not the 200% you thought we needed to end the recession.
It is a daunting task to bring you up to date on the developments in economics in the last quarter century. I know that John Cochrane has tried to educate you about what we've learned about fiscal stimulae in that period. But perhaps a I can highlight a few other developments? You seem under the impression that economists had resolved their internal disputes before the financial crisis. So that means you haven't followed the debate about the causes of depressions between Peter Temin on one side and Timothy Kehoe and Ed Prescott on the other? You say that we think that the "central problem of depression-prevention has been solved." Has it not? Are you forecasting that this recession will turn in to a depression? But of course "More important was the profession's blindness to the very possibility of catastrophic failures in a market economy." That would be the profession that hasn't been reading what the profession has written? Perhaps you should go look at that controversial book Kehoe and Prescott [2007], Great Depressions of the 20th Century. Or you might read Sargent, Williams and Zhao [September 2008], "Conquest of Latin American Inflation". Wouldn't it be nice if people had some idea of what was being written before criticizing it?
Let us talk more seriously about the supposed failure of the economics profession. You say "Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems." The predictive failure is not a problem of the field - it is a problem for those who are under the impression that we should be able to predict crises. Do you number yourself in this bunch? Do physicists get it wrong because their theory says that they cannot predict where a photon shot through a sufficiently narrow slit will land? Economic models are like models of photons going through slits. Just as those models predict only the statistical distribution of photons, so our models only predict the likelihood of downturns - they do not predict when any particular downturn will occur. Saying "most economists failed to predict the downturn" is exactly like saying most physicists failed to predict the impact of the twelfth photon passing through the slit.
More to the point: our models don't just fail to predict the timing of financial crises - they say that we cannot. Do you believe that it could be widely believed that the stock market will drop by 10% next week? If I believed that I'd sell like mad, and I expect that you would as well. Of course as we all sold and the price dropped, everyone else would ask around and when they started to believe the stock market will drop by 10% next week - why it would drop by 10% right now. This common sense is the heart of rational expectations models. So the correct conclusion is that our - and your - inability to predict the crisis confirms our theories. I feel a little like a physicist at the cocktail party being assured that everything is relative. That isn't what the theory of relativity says: it says that velocity is relative. Acceleration is most definitely not. So were you to come forward with the puzzling discovery that acceleration is not relative...
Of course some people did predict the crisis. Some might even have been smart enough to know that if they consistently predict the opposite of a consensus point forecast, eventually they will be right when everyone else is wrong. If I say every year: there will be war; there will be an asset market crash; there will be a recession; there will be famine; we will run out of oil - eventually I'll be right. These kind of predictions are only meaningful if more people than can be attributed to random good luck got it right at the right time or if whatever method they used to reach that conclusion is replicable. Or does the ability to replicate results fall under the category of "not very interesting because that would be an elegant theory?"
But let's turn to what you say are our deeper failures. We "turned a blind eye to the limitations of human rationality that often lead to bubbles and busts." It makes me feel physically ill that a distinguished economist could be so ignorant of his own profession. As a random example, how about my student Felipe Zurita's thesis on speculation written in 1998? There are endless papers written about bubbles and busts - some assuming rationality, some not. Some are experimental, some are theoretical, some are empirical. There are economists who have devoted their entire careers to studying bubbles. There is a fellow named Stephen Morris. He isn't what you would call a fringe member of the economics profession - he's the editor of Econometrica which, as you know, is one of the leading journals in economics. He has written extensively about bubbles. I take it you aren't familiar with his work. Perhaps you should walk down the hall and stick your head in his office and ask him about it? Each crisis - in Mexico, in South-east Asia, in Argentina - had generated hundreds of papers examining how and why the crisis took place.
Efficient markets? Where have you been for the last quarter century? The modern theory of how financial markets incorporate information is that they do so imperfectly. The technical device is that of noise traders originating in a 1985 paper of Admati. But I think you knew of the idea earlier. In 1980 when you were a visitor at MIT, you participated in a graduate student seminar...in which I presented a paper starring noise traders...
Do we really need some sort of behavioral model to understand why asset prices fall abruptly? If opinions about asset values change, prices must fall abruptly - it isn't irrational to run for the exits when the theater is on fire. In addition to a beautiful 1983 paper of Steve Salant there is a large literature on bank runs and contagion, not to speak of credit and collateral cycles. If there was some sort of irrationality involved in a panic, prices ought to bounce right back the next day when everyone wakes up and sheepishly realizes that they were wrong. In fact asset prices seem to be tracking news of fundamentals pretty well - gradually recovering as we get better news about fundamentals.
Has behavioral economics offered anything that would help to solve the market failures that characterized this crisis? Was it herd behavior or animal spirits? Or was it risks that were not being priced? Serious economists like Lasse Pedersen try to analyze how liquidity risks created systemic problems and think about how to incorporate them into our understanding of how to ameliorate future crises. They don't shake their heads and revert to discredited static theories of the 1930's.
Crises have been ubiquitous throughout history. While we can't forecast them we do know how to learn from them. And we certainly have a good idea what not to do in response: do what Chile did successfully - fail banks and recycle them, not do what Japan did unsuccessfully - keep the zombie banks limping feebly around. Like me you saw the bank bailout plan for what it was - not a necessary step to save the credit sector from collapse but a give-away of taxpayer money to investment bankers. But the stimulus plan? How can you be arguing for more? Since we are recovering before most of the stimulus money has entered the economy - isn't that evidence it isn't needed? How can you write as if you are proven right in supporting it?

Regards,

David

[Thanks to Tom Cooley for talking this through.]

Read more at: http://www.huffingtonpost.com/david-k-levine/an-open-letter-to-paul-kr_b_289768.html

How I Became a Keynesian - Richard Posner

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Fri, 02 Oct 2009 13:17:00 +0000

How I Became a Keynesian
Second Thoughts in the Middle of a Crisis
Richard Posner

Source: http://www.tnr.com/article/how-i-became-keynesian?page=0,0

Until last September, when the banking industry came crashing down and depression loomed for the first time in my lifetime, I had never thought to read The General Theory of Employment, Interest, and Money, despite my interest in economics. I knew that John Maynard Keynes was widely considered the greatest economist of the twentieth century, and I knew of his book's extraordinary reputation. But it was a work of macroeconomics--the study of economy-wide phenomena such as inflation, the business cycle, and economic growth. Law, and hence the economics of law--my academic field--did not figure largely in the regulation of those phenomena. And I had heard that it was a very difficult book, which I assumed meant it was heavily mathematical; and that Keynes was an old-fashioned liberal, who believed in controlling business ups and downs through heavy-handed fiscal policy (taxing, borrowing, spending); and that the book had been refuted by Milton Friedman, though he admired Keynes's earlier work on monetarism. I would not have been surprised by, or inclined to challenge, the claim made in 1992 by Gregory Mankiw, a prominent macroeconomist at Harvard, that "after fifty years of additional progress in economic science, The General Theory is an outdated book. . . . We are in a much better position than Keynes was to figure out how the economy works."
We have learned since September that the present generation of economists has not figured out how the economy works. The vast majority of them were blindsided by the housing bubble and the ensuing banking crisis; and misjudged the gravity of the economic downturn that resulted; and were perplexed by the inability of orthodox monetary policy administered by the Federal Reserve to prevent such a steep downturn; and could not agree on what, if anything, the government should do to halt it and put the economy on the road to recovery. By now a majority of economists are in general agreement with the Obama administration's exceedingly Keynesian strategy for digging the economy out of its deep hole. Some say the government is not doing enough and is too cozy with the bankers, and others say that it is doing too much, heedless of long-term consequences. There is no professional consensus on the details of what should be done to arrest the downturn, speed recovery, and prevent (so far as possible) a recurrence. Not having believed that what has happened could happen, the profession had not thought carefully about what should be done if it did happen.
Baffled by the profession's disarray, I decided I had better read The General Theory. Having done so, I have concluded that, despite its antiquity, it is the best guide we have to the crisis. And I am not alone in this judgment. Robert Skidelsky, the author of a superb three-volume biography of Keynes, is coming out with a book titled Keynes: The Return of the Master, in which he explains how Keynes differed from his predecessors, the "classical economists," and his successors, the "new classical economists" and the "new Keynesians"--and points out that the new Keynesians jettisoned the most important parts of Keynes's theory because they do not lend themselves to the mathematization beloved of modern economists. Skidelsky's summary of what is distinctive in Keynes's theory is excellent.
Skidelsky's book is flawed by its insistence on asking what Keynes would say if he were alive today (to which the only sensible answer is that no one knows), and more seriously by its insistence that "deep down," Keynes "was not an economist at all"--that he "put on the mask of an economist to gain authority, just as he put on dark suits and homburgs for life in the City" (London's Wall Street). Keynes was the greatest economist of the twentieth century. To expel him from the profession is to confirm the worst prejudices of present-day economists by embracing their bobtailed conception of their field.
The General Theory is a hard slog, though not because it is mathematical. There is some math, but it is simple and, with the exception of the formula for the "multiplier" (of which more shortly), it is incidental to Keynes's arguments. A work of elegant prose, the book sparkles with aphorisms ("It is better that a man should tyrannize over his bank balance than over his fellow-citizens") and rhetorical flights (most famously that "madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back"). But it also bristles with unfamiliar terms, such as "unit-good" (an hour's employment of ordinary labor), and references to unfamiliar economic institutions, such as a "sinking fund" (a fund in which money is accumulated to pay off a debt). And it brims with digressions, afterthoughts, and stray observations, such as: "the two most delightful occupations open to those who do not have to earn their living [are] authorship and experimental farming." Two important chapters, dealing with the "trade cycle" (that is, the business cycle--booms and busts) and with mercantilism, usury, and thrift, are deferred to the last part of the book, which is misleadingly titled "Short Notes Suggested by the General Theory."
It is an especially difficult read for present-day academic economists, because it is based on a conception of economics remote from theirs. This is what made the book seem "outdated" to Mankiw--and has made it, indeed, a largely unread classic. (Another very distinguished macroeconomist, Robert Lucas, writing a few years after Mankiw, dismissed The General Theory as "an ideological event.") The dominant conception of economics today, and one that has guided my own academic work in the economics of law, is that economics is the study of rational choice. People are assumed to make rational decisions across the entire range of human choice, including but not limited to market transactions, by employing a form (usually truncated and informal) of cost-benefit analysis. The older view was that economics is the study of the economy, employing whatever assumptions seem realistic and whatever analytical methods come to hand. Keynes wanted to be realistic about decision-making rather than explore how far an economist could get by assuming that people really do base decisions on some approximation to cost-benefit analysis.
The General Theory is full of interesting psychological observations--the word "psychological" is ubiquitous--as when Keynes notes that "during a boom the popular estimation of [risk] is apt to become unusually and imprudently low," while during a bust the "animal spirits" of entrepreneurs droop. He uses such insights without trying to fit them into a model of rational decision-making.
An eclectic approach to economic behavior came naturally to Keynes, because he was not an academic economist in the modern sense. He had no degree in economics, and wrote extensively in other fields (such as probability theory--on which he wrote a treatise that does not mention economics). He combined a fellowship at Cambridge with extensive government service as an adviser and high-level civil servant, and was an active speculator, polemicist, and journalist. He lived in the company of writers and was an ardent balletomane.

Keynes's theory, and its application to our current economic plight, is best understood if one bears in mind one historical fact and three claims that he made in the book. The historical fact is that England, between 1919 and 1939, experienced persistent high unemployment--never less than 10 percent, and 15 percent in 1935, when Keynes was completing his book. Explaining the persistence of unemployment was the major task that Keynes set himself. Though he famously declared that "in the long run, we are dead," he tried to solve a problem that, already when he wrote, had had a pretty long run.
The three claims are, first, that consumption is the "sole end and object of all economic activity," because all productive activity is designed to satisfy consumer demand either in the present or in the future. "Consumption" is not in the title of the book, however, because the only thing that interested Keynes about it was how much of their income people allocated to it--the more the better, as we will see. The second claim is the importance (and the deleterious effect) of hoarding. People do not save just to be able to make a specific future expenditure; they may also be hedging against uncertainty. And the third claim, related to the second, is that uncertainty--in the sense of a risk that, unlike the risk of losing at roulette, cannot be calculated--is a pervasive feature of the economic environment, particularly with respect to projects intended to satisfy future consumption.
A nation's annual output, which is also the national income, is the market value of all the goods (and services, but to simplify the discussion I will ignore them here) produced in a year. These goods are either consumption goods, such as the food people buy, or investment goods, such as machine tools. What people do not spend on consumption goods they save: income minus consumption equals savings. Since income minus consumption also equals investment, savings must, Keynes insists, equal investment. But equating savings with investment is confusing. If you stuff money under your mattress, you are saving, but in what sense are you investing? If you buy common stocks, you are investing, but the contribution of your investment to the productive capital employed in building a factory is attenuated.
At the very least, we should (and Keynes implicitly does) distinguish between enabling productive investments and actually making them; or, equivalently, between passive investment and active investment. If you deposit some of your savings in a bank, the bank--not you--will decide whether to lend the money to a businessman to invest in his business (or to an individual to invest in buying a capital asset, such as a house). Still, the money is invested. Even the money you stuff under your mattress can be considered a form of investment, for in all likelihood it will be spent eventually (though perhaps not for generations), and thus, like all investment, it is an aid to future consumption. But as in this example, passive investment may take a long time to stimulate active investment.
The lag can retard economic growth. Income spent on consumption, in contrast to income that is saved, becomes income to the seller of the consumption good. When I buy a bottle of wine, the cost to me is income to the seller, and what he spends out of that income will be income to someone else, and so on. So the active investment that produced the income with which I bought the wine will have had a chain-reaction--what Keynes calls a "multiplier"--effect.
And here is the tricky part: the increase in income brought about by an investment is greater the higher the percentage of income that is spent rather than saved. Spending increases the incomes of the people who are on the receiving end of the spending. This derived or secondary effect of consumption is greater the higher the percentage of a person's income that he spends, and so it magnifies the income-generating effect of the original investment. If everyone spends 90 cents of an additional dollar that he receives, then a $1 increase in a person's income generates $9 of additional consumption ($.90 + $.81 [.9 x $.90] + $.729 [.9 x $.81], etc. = $9), all of which is income to the suppliers of consumer goods. If only 70 cents of an additional $1 in income is spent, so that the first recipient of the expenditure spends only 49 cents of the 70 cents that he received, the second 34.4 cents, and so on, the total increase in consumption as a result of the successive waves of spending is only $1.54, and so the investment that got the cycle going will have been much less productive. In the first example, the investment multiplier--the effect of investment on income--was 10. In the second example it is only 2.5. The difference is caused by the difference in the propensity to consume income rather than save it. (No one today, by the way, thinks that investment multipliers are that high.)
For Keynes, in other words, it is consumption, rather than thrift, that promotes economic growth. And here the second key claim of Keynes kicks in: that people often save with no particular aim of future spending--they hoard. Keynes mentions a host of reasons why people save that may not promote active investment (he also discusses the analogous motives of businesses), at least in the short run. Savers may want to "bequeath a fortune," "satisfy pure miserliness," "build up a reserve against unforeseen contingencies," "enjoy a sense of independence and the power to do things, though without a clear idea or definite intention of specific action," or, implicitly, obtain a reputation for being thrifty. (This latter motive is reminiscent of the "Protestant ethic" of which Max Weber wrote.) Since Keynes was centrally concerned with unemployment, he was suspicious of saving because, as we just saw, the greater the percentage of income that is consumed rather than saved, the greater the demand for goods, and therefore the greater output, and so the lower the unemployment rate.
But it is here that Keynes's equating saving with investing becomes particularly confusing. Isn't investing a good thing? It is what drives income. And if investment is a good thing, mustn't saving, being synonymous with investing (as Keynes has told us), be a good thing, too? Keynes's answer, though it is not stated as clearly as one would wish, is that investing increases output, and therefore employment, only when it finances the creation of productive capital. When it takes the form of hoarding, the link between saving and promoting economic activity is broken, or at least frayed.
The third claim that I am calling foundational for Keynes's theory--that the business environment is marked by uncertainty in the sense of risk that cannot be calculated--now enters the picture. Savers do not direct how their savings will be used by entrepreneurs; entrepreneurs do, guided by the hope of making profits. But when an investment project will take years to complete before it begins to generate a profit, its prospects for success will be shadowed by all sorts of unpredictable contingencies, having to do with costs, consumer preferences, actions by competitors, government policy, and economic conditions generally. Skidelsky puts this well in his new book: "An unmanaged capitalist economy is inherently unstable. Neither profit expectations nor the rate of interest are solidly anchored in the underlying forces of productivity and thrift. They are driven by uncertain and fluctuating expectations about the future." Only what Keynes called "animal spirits," or the "urge to action," will persuade businessmen to embark on such a sea of uncertainty. "If human nature felt no temptation to take a chance, no satisfaction (profit apart) in constructing a factory, a railway, a mine or a farm, there might not be much investment merely as a result of cold calculation."
But however high-spirited a businessman may be, often the uncertainty of the business environment will make him reluctant to invest. His reluctance will be all the greater if savers are hesitant to part with their money because of their own uncertainties about future interest rates, default risks, and possible emergency needs for cash to pay off debts or to meet unexpected expenses. The greater the propensity to hoard, the higher the interest rate that a businessman will have to pay for the capital that he requires for investment. And since interest expense is greater the longer a loan is outstanding, a high interest rate will have an especially dampening effect on projects that, being intended to meet consumption needs beyond the immediate future, take a long time to complete.
The "sinking funds" I mentioned illustrate institutional hoarding: money is accumulated to pay off a debt in the future rather than being spent, and its unavailability for investment causes interest rates to rise. High interest rates discourage active investment while making passive investment attractive, and thus deliver a one-two punch to consumption. True, high interest rates discourage the hoarding of cash by increasing the opportunity cost of such hoarding, but they also encourage forms of passive investment, such as purchasing government bonds, that may have only a remote effect in encouraging active investment.

Keynes's analysis provides an explanation--though there is debate among economists whether it is the correct one--for England's persistent high unemployment in the interwar period, or more precisely for the component that represented involuntary unemployment, the plight of unemployed workers who would have preferred to work at a wage below the prevailing rate than to be on the dole. One might think that wages would have fallen to a level at which anyone who wanted a job could have found one. But Keynes pointed out that since workers are a high proportion of all consumers, a fall in the wage level will reduce incomes, and therefore reduce consumption and investment, unless prices fall proportionately. They would be likely to fall somewhat, because producers' labor costs will be lower.
But a general fall in the price level--deflation--imperils economic stability, and actually cutting workers' wages to make room for the unemployed is a surefire formula for industrial strife.
And workers are not fungible. A factory that employs 100 highly skilled workers may have a lower average cost of production than one that employs 120 less-skilled workers at a lower wage. Only if demand for goods is high may the market have room for a firm that, because it employs those less skilled workers, has higher costs of production than the existing firm.
Thus a high level of involuntary unemployment could be, as Keynes showed, an equilibrium, rather than a temporary result of the business cycle. His analysis casts a particularly bright light on the cyclical downturns that we call recessions, or in extreme cases depressions. For when the demand for goods and services falls, as in the present downturn, the economic environment becomes unsettled and even the near future becomes unpredictable. This dampens businessmen's animal spirits and causes consumers to hoard--and businessmen as well. For when the urge to action deserts them, they build up their cash balances, in lieu of active investment, in order to hedge against uncertainty. Owing to uncertainty, businessmen even in the best of times lack "strong roots of conviction" in their estimate of what the future holds, and so a sudden change in economic conditions can paralyze them. If so, a downward spiral will develop, as falling demand and falling investment reinforce each other, causing layoffs that reduce incomes and therefore consumption and production, and so induce more layoffs.
But the government may be able to arrest the decline--another of Keynes's central ideas, and one strongly resisted by the conservative economists of his time, as of today. It can reduce interest rates (by buying government bonds or other debt for cash, which increases the amount of money that banks are permitted to lend) in an effort to reduce the costs of active investment and thus encourage employment. Keynes urged this approach. But he also pointed out that it might not work well--as we have learned in the current downturn. The banks may lack confidence in "those who seek to borrow from them," so that "while the weakening of credit is sufficient to bring about a collapse, its strengthening, though a necessary condition of recovery, is not a sufficient condition." In fact, banks in America today are hoarding, rather than lending, most of the cash that they have received from the government's bailouts. The hoard may make the banks a little freer with lending, but the effect on economic activity, at least in the short run, may be tepid.
Fortunately, there is more that government can do to arrest a downward economic spiral besides pushing down interest rates. It can offset the decline in private consumption and investment in a recession or a depression by increasing public investment. When we say that the government builds highways, we mean it buys highways from private contractors. And the more it buys, the more that investment--and because of the multiplier effect, the more that income, output, and employment--are stimulated. And because private decisions to invest and to consume are influenced by confidence in the future, or the lack thereof, the government must do everything it can to convince businessmen and consumers that it is resolute and competent in working for economic recovery. An ambitious public-works program can be a confidence builder. It shows that government means (to help) business. "The return of confidence," Keynes explains, "is the aspect of the slump which bankers and businessmen have been right in emphasizing, and which the economists who have put their faith in a ‘purely monetary' remedy have underestimated." In a possible gesture toward Roosevelt's first inaugural ("we have nothing to fear but fear itself"), Keynes remarks upon "the uncontrollable and disobedient psychology of the business world."
But for a confidence-building public-works program to be effective in arresting an economic collapse, the government must be able to finance its increased spending by means that do not reduce private spending commensurately. If it finances the program by taxation, it will be draining cash from the economy at the same time that it is injecting cash into it. But if it borrows to finance the program (deficit spending), or finances it with new money created by the Federal Reserve, the costs may be deferred until the economy is well on the way to recovery and can afford to pay them without endangering economic stability. When investors passively save rather than actively invest, government can borrow their savings (as by selling them government bonds) and use the money for active investment. That is the essential Keynesian prescription for fighting depressions.
Keynes's emphasis on consumption as the driver of active investment and hence of economic growth may seem to give his theory a hedonistic flavor. He was indeed hostile to thrift, which is another name for hoarding. We have seen the damaging effects of thrift in the current downturn, in which rich people's forswearing luxury purchases in the name of thrift has reduced employment in the retail sector, thus deepening the downturn. This is an example of the "paradox of thrift." "Prodigality is a vice that is prejudicial to the Man, but not to trade," in the words of the seventeenth-century economist Nicholas Barbon, quoted by Keynes. (The full paradox of thrift is that, if incomes fall far enough because people are saving rather than consuming, savings will actually decline.)
Keynes commends FDR for having destroyed agricultural stocks during the Great Depression, since sales from existing inventories do not stimulate active investment, but are actually a form of disinvestment. He even discusses sympathetically, though ultimately he rejects, the curious proposal of "stamped money," whereby people would be required to have their currency stamped periodically at a government office in order to remain legal tender, because the bother of having to get one's money stamped would have the effect of a tax on hoarding.
All this may seem like an incitement to profligacy, consistent with Keynes's rather bohemian private life as a charter member of the Cambridge Apostles and the Bloomsbury group. But nothing in his theory limits consumption to the purchase of frivolous private goods, or indeed to private goods of any kind. I gave the example of a public highway; other examples are the purchase of military equipment for national defense and the public subvention of education and art. And while he famously (or notoriously) argued the value of unproductive projects--or so they would seem to us--such as the building of the Egyptian pyramids, on the ground that they provided employment, which increased consumption (the workers, even if they were slaves, had to be fed and clothed and housed), he preferred that governments undertake productive projects.
Correctly anticipating the rapid growth of living standards, moreover, Keynes predicted that within a century people's material wants would be satiated, and so per capita consumption would stop growing. People would work less, but only because their need for income, and more important their desire for it, was less. And then the challenge to society would be the management of unprecedented voluntary leisure. This was a popular 1930s theme--think of Huxley's Brave New World--but it underestimated the ability of business to create new wants, and new goods and services to fulfill them.
That was merely a mistake, an oddity in Keynes's belief in the possibility of perpetual boom. He has wise words, which Alan Greenspan and Ben Bernanke could with profit have heeded earlier in this decade, about the need to raise interest rates to prick an asset-price bubble before it gets too large. Yet just a few pages earlier he remarked that "the remedy for a boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last." (That may have been what Greenspan thought!) The statements can be reconciled by observing that as long as there is involuntary unemployment, low interest rates, by stimulating active investment and therefore production without raising labor costs, should not produce inflation. But we have just seen, in the United States of the 2000s, how even if labor costs are steady, low interest rates can produce an asset-price inflation (the housing and credit bubbles) that can precipitate an economic collapse. Keynes had earlier in his career written prophetically about the potentially disastrous effects of inflation. There is almost no mention of inflation in The General Theory, but he does say what many of his successors forgot--that when an economy no longer has any involuntary unemployment, further efforts to stimulate demand will merely cause inflation.
Perpetual-boom thinking illustrates the left-leaning utopian strain in The General Theory. This was what made Keynes a bête noire for conservatives, but it charms Skidelsky, who devotes the last chapters of his book to celebrating Keynes as a "green," a philosopher of limits to growth, of "the good life" lived simply, even of the end of economics. Recall Keynes's erroneous prediction that within a century people's material wants would be satiated. When that happened, the demand for capital (to finance consumption) would plummet and rentiers (people who live on income from passive investments, such as stocks or bonds, and thus are hoarders) would be wiped out--a prospect that delighted Keynes, who looked forward to "the euthanasia of the rentier," though fortunately he did not mean this literally. He questioned free trade--that holy of holies of conventional economists--by pointing out that a country whose people had a low propensity to consume could stimulate investment by depreciating its currency so that its exports were attractive, because that would encourage its industries to invest in producing for foreign consumption and therefore to employ more workers. The country would accumulate foreign currency that it could use to invest abroad--the policy that China has been following lately, with pretty good results. He even had kind words for usury laws, arguing that they had reduced interest rates and thus discouraged hoarding. He favored a heavy estate tax, reasoning that it would increase consumption by reducing accumulation for bequests. (The standard economic argument against the estate tax is identical--it encourages "wasteful" consumption!)
Although there are other heresies in The General Theory, along with puzzles, opacities, loose ends, confusions, errors, exaggerations, and anachronisms galore, they do not detract from the book's relevance to our present troubles. Economists may have forgotten The General Theory and moved on, but economics has not outgrown it, or the informal mode of argument that it exemplifies, which can illuminate nooks and crannies that are closed to mathematics. Keynes's masterpiece is many things, but "outdated" it is not. So I will let a contrite Gregory Mankiw, writing in November 2008 in The New York Times, amid a collapsing economy, have the last word: "If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics. His insights go a long way toward explaining the challenges we now confront. . . . Keynes wrote, ‘Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slave of some defunct economist.' In 2008, no defunct economist is more prominent than Keynes himself."

Richard A. Posner is a judge on the U.S. Court of Appeals for the Seventh Circuit and a senior lecturer at the University of Chicago Law School.

How Conventional Political Theories No Longer Work In Malaysia

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Mon, 28 Sep 2009 08:00:00 +0000

Irrational Politics Revisited: How Conventional Political Theories No Longer Work In Malaysia
By Farish A. Noor ~ September 28th, 2009
Source: http://www.othermalaysia.org/2009/09/28/irrational-politics-revisited-how-conventional-political-theories-no-longer-work-in-malaysia/

Its bad enough that academics and political theorists are badly paid and overworked; now it seems that we have to make sense out of a mode of politics that is, frankly, nonsensical and irrational in Malaysia.
Perhaps the cause of the dilemma that is faced by many academics today lies in the fact that we were trained in rational choice theory and the assumption that human being are, and can, work and live as rational agents who are capable of making rational choices in life. That was certainly the predominant ethos in the 1960s to 1970s, when it was assumed that nation-building was a rational process to be driven and determined by technocrats who at least attempted to plan and develop the country along rational lines. It was assumed, for instance, that with the accumulation and division of wealth then the comfort zones of all communities would slowly expand and that greater income and capital equality would lead to a more equitable society that was more tolerant and harmonious.
It was also assumed that with mass rural migration to the urban industrial zones the nature of social relations and social bonds would become more contractual and rationalised, and that primordial loyalties to birth-places, clans, essentialist notions of identity and feudal modes of politics etc would diminish with the passing of time.
These were the pipe-dreams of technocrats and social scientists who perhaps spent too much time in the laboratories of the developed world and failed to see the prevailing social realities of Malaysia in the face. Social scientists (and I include myself in this list of losers) failed to note that despite the superficial trappings of progress and development, Malaysian society and culture remained mired in the politics of communalism, feudalism, narrow ethnic and racial communitarianism and the like. We earnestly believed that science and technological advancement would open up new opportunity structures and introduce new social arrangements where identity politics could be reconfigured on perhaps a less essentialised basis.
But we failed to note the social realities on the ground: Despite the prattle about modernity and modernisation, Malaysian politicians - of all parties - practiced and perpetuated the mode of neo-feudal politics where loyalty to the leader was paramount and ideology was secondary. We failed to note that even the most seemingly secular-leftist parties in Malaysia could not transcend the parochial and primordial politics of race and ethnic solidarity. We failed to note that despite the rise in literacy levels the most popular reading material in the country remained the tabloid press and sleazy magazines that featured an incessant dose of bomoh and pontianak stories, rape stories, sex scandal stories and the like. We failed to note the level of superstition, anxiety and apprehension towards modernity in a country that boasted of having the tallest twin towers in the world, but where people believed that the 41st floor and the 3rd level basement of the same building was haunted. In short, we failed to note that Malaysia was a hybrid nation that was only superficially modern.
Today we are trying to make sense of Malaysian politics and it is painfully and embarrassingly obvious that the politics of the country is senseless. The instances of apparent public insanity among our politicians is plainly demonstrated for all to see: Leaders of the BN coalition talk about racial equality and respect while some of them openly unsheath weapons and talk of racial supremacy in public. Politicians talk of respect for communities yet do nothing when cows’ heads are cut off and paraded in public in a protest against Hindu temples. Opposition politicians talk about presenting themselves as the new alternative to national politics, but begin their gambit to power by banning alcohol, music concerts and generally upsetting every liberal minded Malaysian they can find. And now the new Makkal Sakti party is set to add yet another party to the already overcrowded landscape of Malaysian politics, after having first supported Anwar Ibrahim and the Pakatan Rakyat to the hilt, only to do a u-turn in public and to denounce the Pakatan and openly support the Barisan.
It would appear that two important developments have occured:
Firstly, the horizon of possibility of Malaysian politics has expanded to a hitherto unprecedented degree, and where anything - and literally anything - can happen tomorrow. The erratic behaviour of Malaysian politicians and Malaysian political parties means that it is now practically impossible to predict what the respective politicians and parties will do next. Political alliances are made and broken at a drop of a hat, and political loyalties seem more focused on personalities rather than ideologies than ever before.
Secondly, the erratic and unpredictable nature of Malaysian politics today signals the return to short-termist politics in the narrowest sense of the word, where long term national interests are no longer held to be important and all that matters is winning the next by-election (and not even general election). The lack of national focus and a view of Malaysia’s place in the world now and into the future was aptly demonstrated during the recent spat between Malaysia and Indonesia over cultural claims over batik and other forms of art and culture that is equally shared between the nations. Malaysia’s response was so lame and slow as to give the impression that the country’s foreign policy at present is aimless. Why? Because the political elite of the country at present have been engaged in a prolonged exercise of introverted navel-gazing and self-preservation instead.
In the midst of all this, analysts and scholars can no longer explain or understand Malaysian politics. How does one explain a party that claims to be the spokesman of a minority community which then decides to join forces with the very same groups that have been denigrating that minority in the first place?
Without sounding overly pessimistic or derisive, perhaps the time has come to abandon the old and outdated paradigms of rational choice theory when looking at the Malaysian political model; and to see if the time has come for a new paradigm altogether. Now more than ever there is the need to seriously analyse and understand the nature of Malaysian politics, but perhaps outside the sphere of the rational, objective and scientific.

Pagi Raya 2009 di Bagas Na Gambir....

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 20 Sep 2009 13:07:00 +0000

SELAMAT HARI RAYA

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sat, 19 Sep 2009 20:12:00 +0000

SELAMAT HARI RAYA

MAAF ZAHIR DAN BATIN

Elak M'sia dapat imej 'kilang diploma'

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Wed, 16 Sep 2009 00:25:00 +0000

Elak M'sia dapat imej 'kilang diploma'

Sumber: http://www.malaysiakini.com/news/112978

Semua institusi pengajian tinggi (IPT) negara perlu terlebih dahulu menghalusi kualiti dan kelayakan pelajar, khususnya dari luar negara sebelum menerima permohonan mereka melanjutkan pelajaran di negara ini.Menteri Pengajian Tinggi Datuk Seri Mohamed Khaled Nordin berkata lambakan pelajar asing di IPT negara ini menyebabkan Malaysia digelar sebagai pembekal ijazah tidak berkualiti atau "kilang diploma" di beberapa forum antarabangsa.Katanya tohmahan seumpama itu harus dikekang kerana ia menjatuhkan imej dan martabat sektor pendidikan tinggi negara."Kementerian tidak mahu mana-mana IPT menerima pelajar tidak berkelayakan, terutama dari luar negara untuk mengikuti program yang ditawarkan."Malah mulai tahun depan demi untuk menjaga nama baik, imej dan reputasi, semua IPTS tidak boleh menawarkan sebarang program yang tidak memiliki akreditasi kepada para pelajar antarabangsa," katanya dalam sidang akhbar selepas mengadakan pertemuan dengan ketua pegawai eksekutif IPT-IPT swasta di Pusat Konvesyen Antarabangsa Putrajaya (PICC) hari ini.

Mengulas lanjut, Mohamed Khaled berkata Malaysia ditohmah sebagai "kilang diploma" di beberapa forum antarabangsa selepas didakwa mudah mengeluarkan ijazah kepada para pelajar asing walaupun mereka tidak berkelayakan."Kerana itu kita mahu, IPTS ini membaiki sistem pengurusan akademik mereka dan melalui proses penarafan. Dalam soal beri gelaran profesor, penerimaan pelajar dan penawaran kursus, Malaysia tidak seharusnya menjadi tempat lambakan untuk para pelajar yang tidak diterima di IPT lain."Hanya kerana ada duit, maka mereka diberi tempat di IPTS negara ini," katanya.Kelayakan minimum kemasukan pelajar di IPTA, jelas Mohammad Khaled ialah CGPA 2.0 dan beliau pasti semua IPTS akan mengenakan syarat seumpama itu dalam menerima kemasukan pelajar pada masa hadapan."Memang sekarang mereka (IPTS) tidak mengenakan syarat ini, tapi saya pasti apabila kita kemukakan perkara ini, mereka akan berbincang untuk menentukan kelayakan minimum dalam menerima kemasukan pelajar," katanya.

Terdahulu, beliau berkata kementerian memulakan langkah transformasi sistem pendidikan tinggi negara kerana transformasi kerajaan tidak akan lengkap jika ia tidak dituruti oleh industri pengajian tinggi.Transformasi sektor pendidikan, katanya diharap mampu meletakkan transformasi negara di landasan yang betul bagi membolehkan Malaysia berhadapan dengan soal kemajuan dan pembangunan, sekaligus berjaya menghadapi pelbagai saingan era globalisasi.Mohammad Khaled berkata proses transformasi itu dimulakan dengan penyediaan pelan strategik IPTA mencakupi pelaksanaan projek agenda kritikal sebelum fokus diberikan kepada sektor IPTA, termasuk pindaan terhadap Akta Insitusi Pendidikan Tinggi Swasta 1996 (Akta 555)."Pindaan ini menjadikan kementerian sebagai pemudah cara untuk memenuhi keperluan yang dikehendaki oleh IPTS dan kita berharap IPTS ini dapat memberi perhatian serta mematuhi peruntukan yang terkandung dalam Akta 555 ini," katanya. BERNAMA

MeNyUSuRi JaLAn KeNanGaN SRJK(I) Lenggong 1970-75

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 13 Sep 2009 16:58:00 +0000

Perjumpaan bekas pelajar SRJK(I) Lenggong 1970-75

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Sun, 13 Sep 2009 14:05:00 +0000

Pada 23 September 2009 nanti, insyaallah saya akan hadir ke Perjumpaan bekas pelajar SRJK(I) Lenggong, Perak (Lihat berita dalam Harian Metro dibawah). Sebahagian daripada kawan-kawan tu dah hampir 35 tahun tak jumpa.

Darjah 4A

Darjah 5A

Darjah 6A

Himpun bekas pelajar
Sumber: http://www.hmetro.com.my/Current_News/myMetro/Sunday/Setempat/20090913113455/Article/index_html

KUALA LUMPUR: Bekas murid Sekolah Rendah Jenis Kebangsaan (Inggeris) (SRJK (I)) Lenggong, Perak dari 1970 hingga 1975 (Coolbatch 70-75) akan menganjurkan majlis pertemuan semula pada 23 September ini.Majlis dijadualkan berlangsung di Dewan Merdeka Lenggong, dari jam 8 hingga 11 malam. Jurucakap Coolbatch 70-75 berkata, majlis itu bertujuan menghimpunkan bekas murid tahun satu hingga enam dan guru yang pernah menjadi warga SRJK (I) Lenggong dari 1970 hingga 1975.“Selain beramah mesra, majlis ini diharap mampu mengimbas semula kenangan indah alam persekolahan dan pada sama mengukuhkan permuafakatan serta mengeratkan hubungan silaturahim di kalangan bekas murid dan guru.

“Kami juga mahu mengambil peluang mengucapkan terima kasih dan memberi penghargaan kepada bekas guru yang memberi ilmu kepada kami,” katanya.

Menurut jurucakap itu, pelbagai aktiviti menarik dirancang pada majlis berkenaan dan walaupun 40 tahun berlalu diharap ia dapat mengumpul seramai mungkin bekas pelajar dan guru SRJK (I) Lenggong sepanjang tempoh berkenaan.Katanya, untuk keterangan lanjut hubungi Khairul Anuar di talian 017-5072188 atau Ahmad Lokman Saidin (019-2266401).

Couple set record after 80 years of marriage

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Fri, 11 Sep 2009 08:20:00 +0000

Couple set record after 80 years of marriage
By Richard Smith 10/09/2009
Source: http://www.mirror.co.uk/news/top-stories/2009/09/10/the-splice-of-life-115875-21661707/

When it comes to relationships, Walter and Beatrice Postings definitely know a thing or two.
The childhood sweethearts have been wed an extraordinary 80 years and are Britain's longest-living married couple.

Now both 100, their devotion has survived two world wars, five monarchs and 19 prime ministers.

The romantic couple are often spotted holding hands by care home staff. And they both admit to a daily cuddle. Explaining their relationship's amazing longevity, Beatrice said: "I just love him and that's it." Walter, known as Wally, added: "It's all about give and take."

The couple, of Burnham-on-Sea, Somerset, met aged 18 at a party. Strangely enough, she fell for him because he kept pulling her hair. Walter and Beatrice soon got hitched in 1929.

They have three children, four grandchildren, eight great-grandchildren and two great-great-grandchildren.

Care home boss Chris Arnold said: "They are often found holding hands in the lounge, which is lovely and testament to how close they are after 80 years."

The couple took over an antiques business in 1951 which they ran until retiring in 1975. They were crowned the longest married couple after the death in Plymouth last week of Frank Milford, who had been with Anita 81 years.

Jodoh terpanjang

Sumber:http://www.hmetro.com.my/Current_News/myMetro/Friday/Global/20090911091356/Article/index_html

LONDON: Jika hendak berbicara mengenai perhubungan, Walter dan Beatrice Postings pasti mengetahui satu atau dua perkara.Mereka yang bercinta sejak muda sudah berkahwin selama 80 tahun, sekali gus menjadi pasangan Britain paling lama hidup sebagai suami isteri.Kini, dengan kedua-duanya berusia 100 tahun, rumah tangga yang mereka dirikan telah melalui dua perang dunia, pemerintahan lima raja dan 19 perdana menteri.Kakitangan sebuah rumah penjagaan orang tua sering melihat pasangan romantik itu berpegang tangan.

Ketika menjelaskan bagaimana hubungan mereka dapat bertahan begitu lama, Beatrice berkata: “Saya hanya mencintainya. Itu saja.”Walter yang mesra dengan panggilan Wally pula berkata: “Semuanya berlaku kerana sikap tolak ansur.”Pasangan yang berasal dari Burnham-on-Sea, Somerset, berkenalan di satu majlis ketika berusia 18 tahun. Anehnya, Beatrice jatuh hati pada Wally kerana dia sering menarik rambutnya. Mereka berkahwin pada 1929.Hasil perkahwinan itu, mereka memperoleh tiga anak, empat cucu, lapan cicit dan dua piutPasangan itu menjalankan perniagaan barang antik pada 1951 sehingga bersara pada 1975. Mereka dinobatkan sebagai pasangan paling lama berkahwin selepas kematian Frank Milford dari Plymouth minggu lalu, yang hidup bersama isterinya, Anita, selama 81 tahun. - Agensi

Kehidupan ini....

ahroslan@gmail.com (A.H.ROSLAN HARAHAP) — Fri, 04 Sep 2009 04:35:00 +0000

Inilah rumahku, syurgaku
Oleh Riadz Radzi
riadz@hmetro.com.my

Sumber: http://www.hmetro.com.my/Friday/BeritaUtama/20090904061419/Article

JITRA: Amat memilukan melihat kehidupan seorang warga emas di Kampung Pida 5, Sematang Jawa, Air Hitam, dekat sini, tinggal di pondok buruk seperti reban ayam yang dibina di atas tanah orang selain terpaksa menggunakan air parit untuk kegunaan harian sejak lebih 10 tahun lalu.Murad Mat, 80, bukan saja terpaksa berteduh di pondok seluas tiga meter persegi, tetapi hidup sebatang kara selepas berpisah dengan isterinya beberapa tahun lalu.Anak tunggalnya tidak lagi tinggal bersama selepas mengikut suami ke Langkawi.Tinjauan Harian Metro semalam mendapati, pondok buruk itu hanya berdindingkan zink dan plastik selain kawasan sekitarnya dipenuhi sampah-sarap termasuk tong plastik dan tin buruk.

Malah, air parit digunakan Murad untuk mandi dan minum yang terletak kira-kira lima meter dari pondok bersebelahan sawah padi itu juga diragui kebersihannya.

Selain faktor usia termasuk sudah bongkok dan sering sakit sendi, Murad tidak mampu bekerja melainkan terpaksa mengharapkan ihsan jiran dan penduduk kampung.Tambah memilukan, pada Ramadan ini Murad hanya mampu berbuka dengan nasi kosong, ikan tamban kering dan air suam.“Jika ada duit lebih, saya akan meminta jiran belikan ikan di pasar, tapi jika tiada, saya makan apa saja yang ada. Hari ini (semalam) nak buka puasa pun saya tak tahu nak makan apa,” katanya ketika ditemui di pondoknya.Dalam keadaan uzur, Murad terpaksa menyediakan makanan seorang diri dan memasak dalam keadaan serba kekurangan.Malah, warga emas itu juga terpaksa menumbuk sambal dalam tempurung kelapa.Sejak lebih 10 tahun lalu, Murad terpaksa tinggal dalam keadaan serba kekurangan. Malah, sambutan Aidilfitri sudah tiada makna dalam hidupnya kerana keadaannya tetap sama saban tahun.“Walaupun hidup dalam keadaan daif, saya bersyukur kerana adik saya yang turut menetap di kampung ini sering memberi pertolongan dengan memberi makanan,” katanya.Murad berkata, sebelum ini dia tinggal di Sungai Mati, Langgar, dekat Alor Star, kira-kira 70 kilometer dari sini dan bekerja sebagai petani. Menurutnya, anak perempuannya yang tidak bekerja juga sudah lama tidak pulang menjenguknya sejak mengikut suami berpindah ke Langkawi.