Tuesday, June 26, 2012


Note from me:  Most times I don't agree with Dr M's views which I find to be too ultra-thinking and draconian but this particular article, I cannot disagree with him.  It is a lesson we must learn from the West, where too many benefits are given out to win votes but in the end, some nations are paying a big price for it.  You can find his article, titled 'Government' on his blog, http://chedet.cc/blog/?p=786 and it is my pleasure to copy it on mine.
1. We are seeing some strange things happening in Europe. This continent of rich developed countries is going through afinancial and economic crisis that resists attempts to turn it around and recover.
2. Several countries of Europe are actually going bankrupt. Greece is bankrupt. Now Spain is practically in recession. Reports indicate that Portugal and Italy are also in deep financial trouble. Even the UK and France are in trouble.
3. Where did they go wrong? It is important to know the reasons for their decline because we who are fond of copying the Europeans might be going the same way.
4. I am not an economist of course. Neither am I a financial expert. But as a layman I noticed certain things which may have a bearing on the decline of Western nations and the United States of America.
5. Simply put the decline is due largely to living beyond their means. In other words they are spending more money than they actually have or earn.

6. Younger people may not be aware of it but there was a time when all the white goods, machinery and motor vehicles that we bought were from Europe and America. Today you hardly see any of them. We now buy everything from Japan, Korea and China. The products of Europe and America are too expensive and often of poorer quality that we just don’t buy them.

7. Their high cost is due to their paying their workers wages many times higher than what they should be paid for the productivity level they achieve. They also reduce working hours per day, lesser number of working days per week. They give long holidays to their workers, high overtime allowance, generous pensions and medical care etc.

8. Even then their workers are not satisfied. They go on strike, which actually increases the cost of production. They may be given what they demanded even if their employers could not afford. The price of their products or services had to be raised again even though they were already too high and uncompetitive.

9. Rapidly they lost the market. Unemployment increased and unemployment benefits had to be paid out by the Government just when revenue decreased due to decreasing sales of their products.

10. Countries like Germany may be able to sustain the high cost of production while maintaining high living standards. This is because Germans work hard and are productive. But the poorer countries of Europe such as Greece, which tries to live like the rich, cannot. So they borrowed money.

11. We can borrow if we can invest for greater return in order to repay. When we borrow in order to just spend, we will never be able to repay. What can happen to individuals who borrow in order to spend can also happen to countries. They go bankrupt.

12. Is there a lesson in this for Malaysia? I think there is. We in Malaysia like to live well. If we cannot pay for it then we can ask the Government to pay. We believe the Government has unlimited amounts of money to pay for everything.

13. At the same time we want tax rates to be reduced. As for the tolls they should be abolished. We seem unaware that when we reduce or abolish tolls, the Government has to compensate the operators. What this means is that Government expenditure would increase just when revenue decreases. Abolishing toll does not mean we don’t pay. Through the Government we will be paying indirectly. The sad thing is that people who do not use the expressways will also pay. With tolls, only the users pay.

14. The opposition is promising increases from 5% to 20% of gross profit to be paid to the states where oil is produced. At 5% these states are already getting more than what other states get from the Federal revenue. Imagine the amount at 20%. The fact is that the oil is found in Malaysia and all Malaysians must benefit from it.

15. Then the opposition parties demand for higher education to be free for everyone. Do away with PTPTN. As far as I know only Germany, the richest country in Europe provides free tertiary education.

16. Taking all Ministries together, Malaysia spends almost 25% of its budget on education. No other country in the world developed and developing, allocate this much. Of this a very substantial portion has always been for scholarships.

17. But such is the demand for education in Malaysia that there are not enough scholarships for the deserving. Government had to launch a new scheme involving loans to cater for those who are qualified but cannot afford. The terms are very generous as the interest rate and repayment scheme permit repayment after they begin to earn an income. The loans are greatly subsidised by the Government.

18. The opposition can promise to remove all payments by the people, but all the expressways, education service and the amenities/infrastructure will have to be paid by someone. We think of the Government as some sugar daddy with unlimited funds. It is not. Government money is in fact our money acquired through taxes of all kinds. Reducing tax will mean the Government has less money, and forcing the Government to pay for all our needs will lead us to bankruptcy. That is what happens to Greece and the other European countries.

19. We are a democratic country whatever our detractors may say. The people have the power to choose their Government. Power corrupts and the right to choose who should govern the country is also a potent kind of power.

20. That power can be used to threaten the parties wishing to contest in elections. The incumbent Government is most exposed to this threat. Under threat it may forget prudence in the management of our finances. It can lead to the Grecian problem.

21. The opposition doesn’t care. For them winning the election is the only objective. Beside when they form the Government they can forget promises.

22. Remember how President Obama of the “greatest democracy in the world”, promised to close down Guantanamo detention camp two days after his installation as President. Well Guantanamo is still there.

23. The opposition will certainly forget much more easily than Mr Obama.

Saturday, June 02, 2012

Advice for Chen Guangcheng, from a fellow passenger

Note from me: This writer, one Daniel C Chung who is an American and his late father, a migrant from China penned his personal views following deflection of the blind activist to the US recently.  After reading his article, I fully subscribe to it.  Read on.      

By Daniel C Chung, who is the chief executive and chief investment officer of Fred Alger Management, an investment management compay.

This article appeared in Straits Times on 24 May 2012

Last Saturday night, I returned home to New York from a business trip in China, on a flight made extraordinary by the presence of another traveller, who was leaving his country for mine; Mr Chen Guangcheng.

I saw in the row directly behind the family of Mr Chen, the blind human rights activist who had been admitted to the United States to study law at New York University, and their American handlers.

I wondered what I would say to Mr Chen if I had the opportunity.  (There was no such chance; I suspected that his handlers - who unlike Mr Chen's two well-behaved children bounced out of their seats with unusual frequency, alerting anyone nearby that something unusual was afoot - would have intercepted any attempt at conversation.)  I imagine other passengers wondered the same thing; as the Chen family left the plane, the cabin of United Airlines Flight 88 filled with spontaneous applaus.

The first thing I would tell Mr Chen would be to take his time before making any public observations on America and China.  In China, he was a leading human rights lawyer and dissident, and his insights will no doubt be of great interest and value to us all.  But in the US, he is perhaps not so different from my late father, Kai Lai Chung, who came here in 1944 on a scholarship and received a PhD in mathematics from Princeton - and who later in life became blind, as Mr Chen is.

Even with TV and the Internet, he is unlikely to understand or know American country and society very well at first.

Why such advice?  Because I am worried that Mr Chen and his family will be used as political fodder, by the Obama administration or by politicians of either party trying to advance the "how great we are versus how bad China is" theme we hear so often as the US works through its cooperation/competition with China on commercial, environmental, strategic and countless other issues.

Having travelled frequently to China for business and pleasure for over three decades, I have seen the remarkable transformation that has lifted hundreds of millions of Chinese out of poverty.  I have seen my own relatives move from rough village housing - cooking and heating by coal, no telephone and questionable running water - to modern (if simply, by American standards) apartments.

During my first visit, as a teenager in 1975, I saw my father lead some of the first mathematical discussions between Chinese and American scholars after then President Richard Nixon and Secretary of State Henry Kissinger began to normalise China-US relations.

In the 1980s, as my father's eyesight failed (but not his will to educate Chinese students), I accompanied him as he saw old friends who had survived the Cultural Revolution.  On my own, after a clerkship for the US Supreme Court, I visited  Tiananmen Square a few months before the crackdown on the democracy protests.

Despite smog, then urban blight, the persistent poverty of migrant workers and other challenges, my impression is that the Chinese seem happier overall.  They increasingly recognise, and sometimes regret, the social price of economic transformation, but feel that the benefits outweigh the costs.

When Mr Chen does speak out, I hope it will have great impact.  It is in his role as observer and critic, whether his stay in the US ends up being long or short, that Mr Chen can make the most of the spotlight that has been placed on him (a spotlight that will surely fade over time, as it has for other notable dissidents).

Mr Chen has articulated serious criticisms of China's politics and government.  But he might do well to think about, and perhaps educate Americans on the similar obstacles we face.  Americans have our own dynastic "princelings", whether in electoral politics or corporate boardrooms.

America's air may be less polluted, but Americans seem unable to do our part to pay for efforts to slow global warming.  Though independent, America's press, particularly the broadcast media, focuses on distractions like the John Edwards trial more than on the corrupting influence of money in campaign finance and the legislative process.

While the US system of government may be less subject to bribery and overt nepotism than China's, in many ways its capitalist economy and democratic politics are dominated by "too big to fall" corporations and public-sector bureaucracies - institutions far less monolithic than the Chinese Communist Party but similarly influential and unaccountable.

China's government is indeed authoritarian, but it has achieved much in a short time as a result of its ability to analyse, debate and then act to address problems ranging from poverty reduction to infrastructure creation.  All of this has been achieved without relying on debt.

America's diverse society is a source of greatness but the dyfunction of its politics - the vanishing of the political centre, the inability of elected representatives to find common ground on urgent problems, the triumph of bluster over reason - is a growing source of weakness.

Mr Chen's coming to America is a great thing.  His reflections on China could become a prism for Americans to better understand our own future.  It would be an odd but welcome triumph if an awkward diplomatic incident became a path to greater discussion and understanding.

The relationship between the US and China will be, for better or worse, the most important influence on world affairs for decades to come.  Much of America's strength in the past has come from the assimilation of immigrants into the country and our nation's openness to change.

Today, Americans need to summon that strength  and openness again to help the country assimilate in an increasingly multipolar world - perhaps with a little help from Mr Chen.