Is WFP Redundant?

I attended the World Food Programme (WFP) talk last week to understand more about its mission and vision. WFP is one of the largest NGO that provides food aid to people all around the world, particularly Africa. Despite its high profile, it is ironic to find that many countries are not willing to support its cause. One of the main reasons, I am guessing, is that WFP’s mission is analogous to giving fishes to poor and able people rather than teaching them how to fish. In other words, its mission does not make its targeted population self-sufficient/ self-sustainable in the long run. Worse, it may make turn them into a bunch of lazy people who are heavily reliant on external help for survival.

I personally share the views of these countries. And I think we should be contented to find that there’s another UN agency, Food and Agriculture Organization that looks into teaching these people to be self-supporting. However, does this mean that there’s no longer any role for WFP in this world? Well, not really.

We have to understand that it takes time for the measures put in place by Food and Agriculture Organization to yield some results. During the period between implementation and outcome, we still need to provide food to these people and no other agencies can do the job better than WFP.

In addition, we have to consider situations such as natural disasters, wars, etc where the only viable option is to provide direct food aid to the victims.

A Quote on Balance

"There are as many nights as days, and the one is just as long as the other in the year's course. Even a happy life cannot be without a measure of darkness, and the word 'happy' would lose its meaning if it were not balanced by sadness." - Carl Jung

Carl Jung was an influential thinker and the founder of analytical psychology called Jungian psychology. As shown by the above quote, he liked to emphasize the importance of balance and harmony.

Wagamama and Green Teas

I had lunch with a friend at Wagamama last Saturday. We were amused to find that Wagamama charges for water but gives green tea for free. Given that one just need to turn the tap to obtain drinking water but need to add green tea powder to hot water to obtain green tea, we believe that Wagamama should do the exact opposite (i.e. charges for green tea but gives water for free). We tried to come up with several theories to explain the reason behind Wagamama’s practices. Here’s 2 of them:

1)The demand for water is way much higher than that for green tea in London. It thus makes perfect sense to charge for something that has high demand and provide something with low demand for free.

2)All Wagamama staffs probably drink green tea to quench their thirst while working. Since Wagamama has to provide green tea to its staff, it might as well extend it to the customers for free. Afterall, what is the problem of producing slightly more green tea?

If any of you have more plausible reasons, do share them here.

China's Role in Fighting Piracy

Due to its business model, piracy is like an infectious disease that can never be eradicated. Whenever companies implement new mechanisms to prevent piracy, it will not be long before someone comes up with a way to overcome them. Governments from around the world have also been doing their part in fighting piracy but to no avail. Does this mean we have no other options but to give up our fight?

Well, not really. Although the pirates are always able to stay one step ahead of us, this does not that the fight is over. There are still many things that we can explore to reduce if not stop piracy. And when it comes to government action, I believe no government can have a greater impact on the pirates than the Chinese government.

There are several reasons for me to make this statement. Firstly, the sheer size of China’s population means that the firm actions taken by the Chinese government on piracy can effectively starve the pirates of 1.2 billion customers. Skeptics may say that a large percentage of China’s population is still living below the poverty line and therefore should not be considered as potential customers. I don’t agree with this argument because here, we are talking about goods whose prices are so cheap that it is affordable even to the poorest segment of the Chinese society.

Secondly, piracy in China has evolved to such an extent that it gives the downloader of music/movies the impression that what he/she is doing is perfectly legal. By this, I mean that you can easily find and download music/movies from well-known websites. The excellent interface even allows one to sample the music first before downloading, to look for lyrics and even create a playlist of their favorite songs. Frankly speaking, I do not think there are many legal music/movies providers with such impressive and user-friendly interface.

Thirdly, China’s rising political and economic clout means that the number of people learning Chinese language is increasing rapidly. Consequently, the number of people that are capable of finding and accessing those pirated contents will also rise.

It is ironic and probably beyond the dreams of many artists, actors, actresses and directors that they have to depend on the Chinese for their very survival one day.

My Take on Obama's Copenhagen Trip

There has been a big hoo-ha on Obama’s trip to Copenhagen to do his bit for Chicago. Personally, I think that he should not have made the trip because of 2 main reasons:

1) It is a well-known fact that the Games have never been staged in South America and since Brazil is one of the participating countries for the 2016 Games bid, it is highly likely that Brazil would win the bid. Since that’s the case, the President’s trip to Copenhagen would not only be futile but would also waste taxpayers’ money (not to mention the contribution of the flight to the carbon output which he has been fighting to reduce all these while.)

2) There are many things in Washington that needs his attention. The healthcare issue is obviously one of them. Going to Copenhagen at such a crucial time would only give his opponents more ammunition to be used against him. As expected, many of them have started to say that this is indeed the behaviour of a President who doesn’t know how to prioritize.

Decisive Actions According to André Gide

"The most decisive actions of our life ... are most often unconsidered actions." - André Gide.

André Gide was a French Author who won a Nobel Prize in Literature in 1947.

Volunteer for the Sake of It

I attended the volunteering fair organized by my school 2 days ago. I have to say the large number of students who are eager to provide their service to all these organizations amazed me. However, I felt a tinge of sadness as I strolled pass each stand. Questions such as how many months do I have to volunteer and can I end my voluntary work early were repeatedly asked by these students.

Clearly, the students had been drawn to this fair because of the prospect of improving their CVs and were not really keen to render their service because if they were, they would not have asked such thoughtless and insensitive questions. For a moment, I felt like telling these people off but I also know that it is human nature to be selfish.

For all readers, I just would like to say that volunteering is a lifelong activity and requires commitment. If you are unable to do so and are interested in only short-term goals, please refrain from volunteering yourself. Failure to do so will only end up hurting the beneficiaries of your work.

The Right Proposal on Prison Terms

In a recent article posted in BBC, I read about a certain group that is proposing that the relevant authorities scrap short prison terms such as 1 year and replace them with community punishments because they have no effect in reforming the criminals. The group further justifies their proposal by saying that it will reduce the overcapacity that many prisons are facing.

I am very worried of this proposal because it is simply wrong to allow criminals to go back to the community where they committed their crime without them bearing any significant consequences of their actions. It is akin to allowing one’s child to continue playing even after he obtains poor grades for his study.

I am surprised that such proposal is deemed to be worth mentioning. If short prison terms don’t work, increase them, not scrap them. If there’s insufficient capacity, increase them, not free prisoners earlier.

Insightful Statement by George Bernard Shaw

"Do not do unto others as you would that they would do unto you. Their tastes may not be the same."

George Bernard Shaw was an Irish playwright who had written more than 60 plays. Until now, he is the only person who has been awarded a Nobel Prize and an Oscar.

The tale of Working Hours and Shadow Economy

It is interesting to note that one of the policies ever considered to reduce the size of the shadow economy was reduction of working hours. At that time, policy-makers thought that the main reason people didn’t want to work in the official economy was the long working hours. By reducing the working hours, they believed they would be able to encourage people to move from the shadow economy to the official economy.

What they didn’t realize was that by reducing the working hours, it caused more people to seek additional jobs and most often, they found those jobs in the shadow economy, resulting in its further expansion. It was only a while later that somebody proposed the implementation of flexible working hours, something which we now thought as common sense but apparently, was not so in the past.

Benefit and Cost of Hotels Using White Bed Sheets

Have you ever wondered why hotels use the same white bed sheets as hospitals? Well, I have. I always find it strange that despite the big difference in the nature of their businesses, they have similar taste for bed sheets. For a hospital, it’s fine to say that they are using the same type of bed sheets as this/that hotel. As a matter of fact, it may even boost their popularity because people always want the best for their sick family members. But for a hotel, it definitely can’t say that it is using the same bed sheets as this/that hospital because hospital has a certain negative connotation when used.

It appears that the objective for using white bed sheets is to show customers that the hotel/ hospital is very confident of its level of cleanliness because one can easily spot a speck of dirt on white sheets. As to why hotels do not use other colours that are more aesthetically-pleasing and at the same time, avoid being compared to hospitals, I believe many hotels tried to do that before. However, the benefits of using white bed sheets far outweigh the cost of using them.

In addition, they are other methods to make a bed looks more pleasing other than the color of its bed sheet. An example is to use a bed cover with a different color. Nowadays, some hotels also put long cloth with nicely embroidered design on top of beds that can be removed when one wants to make practical use of the bed.

Interesting Comment by an Anonymous Individual

I saw this on an introductory statistics textbook and was amused by it:

"If you bet on a horse, that's gambling. If you bet you can make three spades, that's entertainment. If you bet cotton will go up three points, that's business. See the difference?"

Meaningful Quote by Artemus Ward

"It ain't so much the things we don't know that get us in trouble. It's the things we know that ain't so."

Can China Accept the Effects of Increasing Usage of RMB Globally?

I read an article in the Economist today which says that the Chinese government has a desire to increase use of its currency for international trade and finance. I must say I am really amazed by this desire because it simply means that the government must loosen its monetary policies, particularly those with regard to foreign exchange. For a long, long time, the government has kept a tight control on its monetary policies to promote export and for fear that foreign agents might manipulate the value of RMB. It isn’t easy to bring a large amount of RMB out of China and until a few years ago, it wasn’t even possible to exchange RMB to another currency freely in China.

With the about turn, it seems that the Chinese government has changed its mindset because increasing usage of a currency globally will without doubt mean that the particular currency must be revalued (something that the Chinese government has been dragging all the while because of its negative impact on export) and will be more susceptible to external manipulation (essentially losing absolute control of its currency). The Chinese government must be very confident that its huge reserves will be able to counteract any ill intent towards the RMB.

The Need for Trade-Off: What I Like About Policy Formulation

“If our contribution to health care reform exceeds $80 billion, you reach a point where you risk sacrificing someone’s job for someone else’s health insurance,” Mr. Ken Johnson, SVP of the Pharmaceutical Research and Manufacturers of America said about the Nelson amendment to the Health care bill.

British Airways: No Longer Safety First?

Several posts ago, I mentioned about the different ways airlines allocate emergency seats. I pointed out that British Airways seems to put more emphasis on safety as compared to some airlines who view those seats as business opportunities instead. I am disappointed to find out that BA has also started to charge for those so called 'premium' seats. I hope they will change their mind but looking at the fact that most airlines are trying to boost its balance sheet, it is unlikely that they will reverse their decision

Should the Current System of Charging Taxi Rentals be Changed?

While reading Economic Naturalist by Robert Frank, I came across a section that talked about why few taxis can be seen roaming the streets during rainy days. The reason seems simple. Taxi rentals are charged daily and during rainy days, drivers are able to meet their daily targets earlier and therefore, can pack up and go home earlier.

Since this is the case, wouldn’t it be better for taxi rentals to be charged weekly or even monthly if taxi companies want to have more taxis on the roads in rainy days and hence receive fewer complaints from the public. At first sight, this appears to be a very good idea but when we look deeper into the possibility of implementing it, it isn’t as good as we thought because this idea, just like the current system has its own weakness as well.

While the weakness of the current system is that few taxis can be seen roaming the streets during rainy days, the weakness of charging taxi rentals weekly or monthly is that after raking in fortunes on the few rainy days of the month, drivers may decide to just rest at home for the rest of the week or month. This will result in fewer taxis roaming the streets even during non-rainy days.

With the current system, drivers will be forced to work everyday because rentals will be collected at the end of each day. Then again, more intelligent drivers who decide to work extremely hard on rainy days can still overcome the system. But such drivers are probably not many since according to the article, results of a survey showed that drivers would pack up once they reached their daily targets

After Healthcare, it is now the Financial Industry's Turn

A statement made by President Obama, clearly indicating that things are not going to be the same anymore for the financial industry:

“I want them to hear my words. We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”

Germany's Eccentric Electoral Rules

I came across an interesting article on Germany’s upcoming election in the Economist yesterday. It appears that state election in Germany is divided into 2 stages: the first one is to elect individual representatives while the second one is to elect parties to represent the state. The interesting part is that if a candidate loses in the first stage, he/she may still be able to enter Bundestag (Germany’s Parliament) if 1) his/her party win the second stage and 2) he/she is high enough in the party hierarchy at the state level.

With such kind of electoral rules, I am worried that candidates affliated to popular parties will not do their best to connect with voters in the first stage because in any case, they will still be elected in the second stage due to their party affliations. Consequently, this will result in representatives that do not really represent their constituents in the Bundestag because they are elected by virtue of their party affliations, but not by how well they can identify with the constituents’ issues.

Clearly, something must be done about these electoral rules. As a start, perhaps the relevant authorities can prevent the same candidate from taking part in both stages so as to remove the possibility of a first-stage loser from being elected in the second stage.

Leadership Pointers from Nelson Mandela

"It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership."

Alternative Way for Sen. Baucus to Protect Middle-Income People

In the current health care debate, opponents of the Baucus plan are saying that the Senator’s intention to tax Cadillac-insurance plans will end up hurting middle-income people due to the effect of inflation on insurance premium. To blunt the tax effect, Senator Baucus is expected to amend the existing bill so as to provide more subsidies to middle-income people.

Instead of doing it this way, why not increase the taxable level by the average inflation rate annually? This will ensure that the insurance premium of most middle-income people will always be below the taxable level. Administratively, this will be easier to manage as well. And for those who say that this is radical, I don’t think so because this is not the first time that governments, in particular US government, has worked with inflation issue. In fact, many governments are already issuing bonds that take into account inflation.

Where are the Alternative Routes?

In anticipation of the heavy traffic as people leave Jakarta for their hometown for the week-long Hari Raya holidays, the Indonesian police has identified several alternative routes that road-users can consider using. However without erecting the proper road signs, it becomes very difficult for road-users to find these alternative routes. In the end, they still prefer to use the main route which they know better.

Give, Not Take!

A Quote from Rainbow Troops The Movie:
"In your life, give as much as you can and not take as much as you want."

Why Healthcare Issue Must Be Resolved ASAP?

A quote by Senator Edward M. Kennedy to underscore the importance of health care issue to the nation as a whole:

"Health care was above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.”

Finding the Right Policy

When we formulate and implement a policy, there will certainly be 2 groups of people, those that support the policy and those that are against the policy. Each group will state their reasons and often supplement them with studies done by various institutions. It is then the duty of policy formulators to look into these, decide which path to take with regards to a particular policy and staunchly defend their choice.

Although it sounds simple, it is not in reality because the case brought forward by each group is usually very credible and convincing. When this happens, policy formulators really have to rely on their own knowledge of economics to decide on the right path.

A very good example is the policy that involves providing monetary support for people who are willing to further their studies. Supporters of this policy state that it will improve the literacy rate and hence increase the average wage rate of the country. Opponents state that it will only benefit certain segments of the society and left out people who are not academically inclined. They are afraid that it will widen the wage gap between those that are highly educated and those that are not.

At first sight, both views are rational but when a deeper analysis is done using Cobb-Douglas equation, it is discovered that the opponents’ worry is unfounded. The implementation of this policy will not at anytime widen the wage gap. Instead, it will serve to push up the average wage rate such that those that don’t benefit directly from the monetary support will also end up receiving higher wage.

Which Case is Correct?

In response to the financial crisis, the US government decides to give monetary support worth US$8,000 per family to encourage them to buy their own property. Supporters of the policy say that it will help the housing industry to recover while opponents say that it is a waste of government resources because those buyers will make their purchase even without government support.

Purpose of Stimulus: Simple and Clear

"The purpose of stimulus is, first and foremost, to mitigate unemployment. The fact that the economy may be technically in recovery is irrelevant." - Paul Krugman

Why Cheap Steaks are not Served in Comfortable Environment?

I went to eat cheap steaks with my brother yesterday night. As I tucked into my well-done steak, I wondered why the owner doesn’t bother to install air-cons in the premise because besides providing better dining experience for the existing customers, it might attract new customers. The answer turns out to be quite simple. For its business model of providing steaks at affordable price to succeed, 2 requirements must be met: 1) the stall must have a large customer base and 2) the customer turnover must be very high.

Making the premises more comfortable will encourage customers to stay longer and this means fewer seats available for the newly arriving customers. Faced with the hassle of queuing, they will soon decide not to patronize the stall anymore and in dong so, reduce the customer turnover. To compensate for the loss of revenues, the stall will need to charge more for each steak it sells and this will subsequently result in even more customers deciding to move elsewhere for cheap steaks. When that happens, the fate of the stall will be in a limbo.

Revision of Weekend-Car Scheme in Singapore

Singapore revised its weekend-car scheme recently with the intention of encouraging more car users to switch from the normal to the weekend-car scheme. The relevant authority believes that the new scheme can reduce traffic if implemented successfully. My question is if the new weekend-car scheme appeals so much to people, wouldn’t it also encourage non-owners to consider owning private cars? Under such situation, wouldn’t the scheme result in more crowded roads instead?

Alternative Ways to Encourage Public Transport Drivers to Change Their Behavior

While analyzing the traffic problem in Jakarta, the behavior of public transport drivers is never far from my mind, in fact from every Jakartan’s mind. Whenever there is a traffic jam, people unconsciously blame it on the public buses and minivans that are notorious for stopping anywhere as and when they want to. Consequently, I always believe that a stronger enforcement system will act as a deterrent to prevent these drivers from continuing with their irresponsible actions. However will the implementation of this policy really make situation better. Well, I used to think so but an experience last week made me doubt that.

When taking public bus from my house to the wet market, I found out that the bus fare is only 2000 rupiah (US$0.20) regardless of distance. With cost of living on the rise and yet bus fare remains unchanged, it is not a wonder that drivers are willing to break the law in order to get more passengers. This tendency is further amplified by the fact that the earning of each driver is solely dependent on the number of passengers he picks up along the route.

With all these reasons, drivers will just continue breaking the law even if the relevant authority decides to mete out more severe penalties. To improve the situation, besides putting in place stronger enforcement system, drivers’ compensation package must also be revised. 2 potential ways can be explored: 1) increase the bus fare to a level that drivers will find it not worthwhile to break the law and 2) give each driver a fixed monthly income, i.e removing the link between driver’s income and the number of passengers he picks up.

President Obama and Healthcare

President Obama showing his resolve in solving the healthcare issue once and for all:

"I am not the first president to take up this cause but I am determined to be the last."

Something worth reflecting: The link between Hari Raya and Pawnshops.

A phenomenon that can only be seen in places where many people are still living below the average poverty level. As Hari Raya approaches, pawnshops in Jakarta seems to be stocking up on electronic goods, particularly mobile phones because many people who will be celebrating do not have enough money and need to pawn their assets to obtain some hard cash to purchase Hari Raya goods. When they come back from their weeklong celebration and start working again, hopefully their future earnings will be enough to buy back the goods they pawn.

Indonesia's MPs: Elected by the people for the people?

While browsing the newspaper, I came across an article about Indonesian MPs that kind of intrigued me. As many of you probably know, Indonesia had recently completed the legislative as well as Presidential election. The days of the current Parliament are numbered and will soon be replaced by the newly elected and re-elected MPs.

Regardless of whether one is re-elected or not, I think it’s a moral obligation to do one’s job until the end, i.e until one completes his/her tour of duty. This is particularly so considering that one is a representative elected by the people for the people. I thus find it outrageous that some of these MPs have started to “take leave” and disappear altogether from the Parliament, practicing what Gandhi called politics without principle in his 7 deadly sins. As a result of their irresponsible actions, the Parliament does not meet its quorum and has to call off the sessions. This effectively turns the Parliament into nothing but a lame-duck institution, incapable of carrying out its duties, some of which requires its immediate attention.

What surprises me further is that those absentees include re-elected MPs. I can’t figure out their reasons for doing this but one thing is sure to me: they are people who shouldn’t run for election, let alone be elected if they can’t even meet the fundamental requirement of an MP.

This brings me to another issue, which is how these MPs can get elected in the first place. Clearly, there’s something wrong with the election process and these include money politics and lack of time for people to really know their representatives. A major overhaul of the process is no longer a choice, but a necessity for Indonesia.

The Importance of Looking Beyond Mistakes

An excellent answer by Senator Edward M. Kennedy in his memoir on why we shouldn't sideline a person just because he has committed mistakes:

"Some people make mistakes and try to learn from them and do better. Our sins don’t define the whole picture of who we are."

How Far a Book Title Tells You About a Politician?

While browsing books at a local bookshop in Jakarta, I came across a book about Jusuf Kalla titled “Ambon is peaceful and Aceh is safe due to his magnanimity.” For those of you who don’t have any background information, here’s a summary. Jusuf Kalla is the current Vice-President of Indonesia. He took part in the recently concluded Presidential election as one of the Presidential candidates for the period 2010-2014 but lost the election to his current boss, SBY. Jusuf Kalla’s support base is outside Java, particularly the 2 regions mentioned in the title of this book.

Personally, I find the title of this book inappropriate because it seems to give the impression that he could have mobilized the masses in those regions and causes political turmoil in Indonesia if he wanted to. And Indonesians ought to be thankful that he didn’t do it. As a respected politician and current holder of the 2nd highest position in the land, being magnanimous is a fundamental requirement, not a choice and hence, there is really no need for one to promote that he has the trait. Actions speak louder than words.

If this title is indeed given the go-ahead by Jusuf Kalla before publication, then we should really ask if he is suitable to be a public-office holder because the title of this book is nothing less than a threat and a tool to self-promote his magnanimity. Any politician who truly cares for the people would not have agreed to the use of such title.

Slow Down, G20!

I am amazed that in the G20 meeting last week, leaders of some countries such as France and Germany were proposing that participants started to explore some exit strategies with regards to the stimulus package put in place in response to the financial crisis. Although France and Germany are officially out of recession and may have better use for the resources previously allocated as part of the stimulus package, I think they should slow down and review more indicators before making such bold proposal.

2 main reasons justify my view that such proposal is unwise. Firstly, although green shoots have started to appear in some economies, they are, as the name suggests, still “young”. Policies which are ambiguous in nature may cause these shoots to wither, resulting in another round of recession. Under such circumstances, recovery will most likely be W-shaped rather than V or U. Secondly, there are after-effects of recession such as unemployment which must be taken care of. Critics may say that as global economy recovers, all these will self-correct. I agree with this statement but I believe it is the responsibility of every government to make sure that this self-correcting period is as short and as painless as possible to the people. Without government intervention or more appropriately, government aid, the self-correcting period may be longer and more painful.

In view of these 2 reasons, I will advise leaders not to think about exit strategies at the moment. There are still many things to do before exit strategies should become a main discussion point. Currently, policies should remain expansionary and confidence-boosting. Any opposite moves will greatly blunt all the efforts that have been put into ending this crisis.

China's Miraculous Economy

I have always been wondering about the great accuracy of China’s prediction of its economic growth. While there are often differences between the predicted and actual economic growth made by various countries, China has always been spot-on. If the Chinese Government says that economic growth for the next quarter is predicted to be 10 % for example, it is guaranteed that the actual economic growth will be 10% if not more.

I find this phenomenon intriguing because numerous factors such as consumption, investment, government expenditure and net exports contribute to the measure of economic growth. No matter how capable a Government is, it is near impossible to control the actual numbers that reflect these factors because it is the behavior of the individuals that ultimately churn out those numbers. Unless we live in a machinistic society, it is highly costly and hence ineffective to monitor every single person to ensure that he/she fully abide by the rules that have been set by the Government.

I finally obtained my answer when I read an article in The Business Times titled “China’s growth – economic or accounting miracle?” In the article, the writer shared that Dr John Makin, a visiting scholar in the American Enterprise Institute had written in another article that China’s economic statistics are based on recorded production activity rather than expenditure growth which is made up of the factors I mentioned above. This means that things such as disbursal of funds and shipments to retailers rather than funds actually being used and actual sales by retailers to ultimate consumers respectively are recorded as GDP growth.

With such accounting methods, it is not a wonder or a miracle that China always achieves the target that it has set.

The Interesting Relationships between China, Taiwan and Dalai Lama

For as long as I can remember, China has always strike hard on countries or unclassified entities that appear to show support to those it labeled as enemies of the state. Actions taken by the Chinese Government range from those categorized as the norms in the diplomatic world to those branded as young kids throwing tantrums. Regardless of the actions chosen by the Chinese, we must say that they do strike sufficient fear on the would-be recipients that they usually back down from their initial stance. And such reactions are expected to become more pronounced considering China’s rising political and economic clout.

Occasionally though, there will be those who try to show that they are not under the Chinese thumbs. President Nikolas Sarkozy of France is one such man. He decided to proceed with his arranged dialogue session with Dalai Lama despite knowing full well the potential repercussions by the Chinese in response to his actions.

If you think of Sarkozy as a brave man, you will definitely agree with me that President Ma Yingjeou of Republic of China (the official name of Taiwan) is an even braver man. Unlike France, which is obviously not considered as a breakaway province by Communist China, Taiwan is and the successful visit by Dalai Lama to Taiwan could be clearly regarded as an embarrassment to the Chinese Government because it would send a signal that if the Chinese can’t even control what it regards as domestic affairs, how can it request to be given more say in international affairs.

One would expect a very strong response from the Chinese but so far, response has been surprisingly mild. Besides making some statements to show its displeasure to the visit, there have not been massive military exercises. There have not been clawback or annulment of agreements made by the 2 sides. The main reason, I am guessing, is China’s hesitance to take away the punch bowl in the midst of the party. Since his election, President Ma has made good his promise to build better relationships with Mainland China. A handful of agreements have been signed. Numerous more are in progress. Throwing tantrums will only mean falling into the trap set up by the opposition DPP, giving them the opportunity to badmouth the KMT and hence, prolonging the timeline for eventual reunification, a case of shooting its own legs.

In addition, the relevant parties have also been mature enough not to politicize the visit. President Ma and senior government officials have mentioned that they will not be meeting the Dalai Lama during his visit. The Dalai Lama himself has said clearly that his purpose for coming to Taiwan is to pray and give support to victims of Typhoon Morakot. He has also cancelled the press conference that he is supposed to participate in. It seems that the China-Taiwan relationship has indeed reached a higher level, thought impossible in not too distant past.

The Virtue of Farsightedness in Policy Formulation

When it comes to policy formulation, a recent article by New York Times has taught me an important virtue: farsightedness. In summary, the article talked about the existing state of Florida that is not very rosy. The State has always depended a lot on migration flows (a 1924 constitutional amendment banned a state income tax, relies heavily on sales and property taxes, which are more closely linked with population growth). With foreclosures and employment, things are now going the other way and have put the Sunshine State in a difficult position as it means that the State Government now has trouble collecting sufficient taxes to sustain State spending. Changing the policies now to start collecting income taxes will help to replenish State coffers but it will at the same time, induces even more people to migrate out of the State.

Here’s the morale of the story. Although it is true and imperative that policies reflect the current needs of the society of interest, policy makers should also place special attention on the possibility of the need to rectify/ remove existing policies and craft new policies in response to changing needs of the society over mid to long-term.

Policies that are out of sync will have negative impacts on various stakeholders of the society. For changes that are popular among the masses, effecting the changes when it is relatively late may not be so bad afterall because the fact that it is popular means it can blunt the negative impacts generated prior to the changes. An example of such policy change is a cut in income taxes. However, for changes that are likely to be unpopular among the masses, effecting the changes late may serve to augment the negative impacts that are already in motion. An obvious example is a rise in income taxes.

When changes are unpopular, it is better to enact it when negative impacts of existing policies have not set in because then, it will be like pricking one with a needle as compared to piercing one with an arrow/ a spear. And to do that, tools such as rigorous scenario analysis may be extremely useful. It involves modeling different potential scenarios based on various parameters and testing how policies can respond to the respective scenarios. I am not very sure if this has been taken into consideration but the timing policies are effected is an integral part that should not be put aside, less we have a repeat of Florida.

7 Deadly Social Sins

Something simple and yet, closely linked to people's daily life in general.
Written by Mahatma Gandhi in Young India on 22 Aug 1925.
Read and discover how full of meanings these sentences are:

1) Politics without Principle
2) Wealth without Work
3) Commerce without Morality
4) Pleasure without Conscience
5) Education without Character
6) Science without Humanity
7) Worship without Sacrifice

To be Outspoken or Not?

Time flies. It seems that I just arrived in London but in reality, I have been here for more than a month. I have adapted well although I haven’t found the time to really explore the area yet. Well, at least I am confident enough to continuously find the shortest way to school, provide directions to places that I am familiar with and engage in conversations with everyone (in the beginning, I couldn’t really catch their slang and to prevent embarrassment, I decided not to converse). I have slowly learnt the behavior of the people here as well.

One particular character which I think is ubiquitous everywhere is their outspoken nature. Unlike classes in Singapore where the only person talking is the lecturer, classes here are very lively. Hands are put up after almost every slide to the extent of distraction. And when the lecturer asks questions, people will be fighting to answer them.

Although I am impressed with this character of theirs as it builds up your self-confidence, I also find it rather annoying at times. Occasionally, people will put up their hands during lectures to make unnecessary comments without realizing. Once someone actually put up his hand to ask why the school has decided to name its online networking programme “moodle” before adding that he found it inappropriate.

I find that by being too outspoken, you end up making people think that you are arrogant and that will definitely change their impression about you which I do not think is good for building long-term relationships. I have several classmates who boasted that they had tried all the problems and found them simple. The same people also said that the mid-term exam questions were too easy in front of the entire class and shared that they were considering not attending the final exam since their result in mid-term exam should be more than enough to get them a pass in the course.

I personally feel that being outspoken is good in general but there are certain things that you should just keep to yourself. Sharing your knowledge with others is a good thing but boasting about their performance is not. This is because not everyone could solve all the assigned problems and similarly, not everyone found the exam questions easy. These people would be hurt if they heard such comments.

If I am them, I would have think twice, thrice or even more before making such hurtful comments. Readers may say that this is London and people here are not so easily hurt. Well, that may be true but regardless, I prefer to stick to my Asian mentality.

Never Act on Unconfirmed Information

I almost committed a grievous mistake a couple of days ago. It began when I came back from school last Friday. On the way to my room, I met my flatmate who asked me if I intend to stay in the current accommodation for the next one year. When I gave a firm positive answer, she told me to think twice, sharing with me about the supposedly unsafe neighborhood that this accommodation is in.

Without checking with other people, I stormed to the accommodation office on Monday, requesting for a change of accommodation (giving inconvenience as an excuse). The staff at the counter told me that the school accommodations are currently over-booked and if I want to change to another school-run accommodation, I have to join the waiting list but in order to do that, I have to cancel the 1-year contract which I have with the current accommodation. He advised me to think through it because only 10% of the applicants in the waiting list will usually be successful in getting a room. At that point in time, I almost told him to cancel my existing contract and put me in the waiting list. But for some reasons, I didn’t do it.

As I walked back to class, I suddenly realized that I had been running around like a mad dog because of a single comment made by a flatmate which I didn’t even bother to confirm its credibility. I wasn’t impressed with myself. Having committed so many mistakes throughout my life, I should have learnt from them and yet I almost committed a naive mistake.

As soon as I talked to several people, I found out that the neighborhood of my current accommodation is not that bad afterall. The worst comment I obtained is that there had been several cases of small robbery on the street for the past one year which I personally think is perfectly normal considering that London is a city of 23 million people, each with different background. As long as I take the necessary precautions such as not wandering outside late at night and not carrying excessive valuables, I believe I would be fine.

If I had cancelled my existing contract, I would probably be homeless very soon. Even if I manage to find another external accommodation, it will definitely be more expensive considering that the school does not run it.

To remind myself not to commit the same mistake again, I have put a very big note on my noticeboard: Never act on any information until its credibility is confirmed.

London = Polite Society?

While I was preparing to come to London, family and friends told me that I would be going to a place well known for its polite society. Images of people greeting each other, asking and wishing each other always appeared in my mind. But what I have experienced so far is rather different, to the extent of being the opposite. And I experienced it the minute I boarded the plane to London.

The behaviors of the air stewardesses were unlike what I have seen while traveling around Asia. They were impolite, rude and inefficient. I saw a passenger who was reprimanded for repeatedly asking for a newspaper that I didn’t think ever appear until the plane landed. I myself was scolded for crossing the kitchen area to go to the toilet located at the opposite aisle. I thought to myself if these people, who were hired to serve customers, could behave this way, what about the pedestrians walking down the street.

While clearing immigration at Heathrow Airport, I was treated like some kind of virus carrier. I was told I needed to go for a chest x-ray at the airport medical facility before I could clear immigration. Luckily I wasn’t charged for the x-ray. Then while trying to contact my cab driver while sitting at the waiting area of the medical facility, I was told crudely to switch off my phone. Honestly, I still can’t figure out why people can’t use their phone while waiting. By now, I already had a rather bad impression of this place.

True enough, having been here for about 1 month, I have not experienced something that I thought is worth commending. Services in banks, restaurants, etc here are like heaven and earth if you are to compare the equivalent in Singapore. Having said that, I think it will be some time before we can have a fruitful debate on the politeness of the man walking down the street.

Salty Chinese Food

Since I came to London a month ago, I have had the opportunity to try out a couple of Chinese food. It’s interesting to note that I used to take Chinese food for granted, perhaps because Chinese food are everywhere in Indonesia and Singapore. At that time, I had so much Chinese food that it became the last thing I would suggest whenever I met up with friends for meals. Now, it has turned into a kind of luxury items for me as I only visit Chinese restaurants or even food stalls whenever I want to reward myself (For your information, I seldom reward myself). On normal days, meals are sandwiches, breads or spaghettis.

Frankly speaking, the Chinese food here are not that great, both in terms of variety and taste. But in a place where finding reasonably-priced Chinese food is challenging, I have always stick to the statement “better than nothing.” In other words, even if it doesn’t taste very good, it is still Chinese food. Look like the longer I stay here, the lower my standard of what Chinese food should be.

During my escapade to the various Chinese restaurants, I have noticed something quite peculiar. Chinese food in London are very salty. When I had Chinese food for the first time here, I thought I was just unlucky to pick a place serving salty Chinese food and I tried to convince myself that others won’t be like that.

The 2nd, 3rd, etc place I visited turned out to be the same. In fact, some of them even put an extra bottle of soya sauce on the table for you to add to the dishes if you think they aren’t salty enough. That kind of set me thinking for the reasons behind the salty food. Is it preference or is it a common practice passed down by cooks?

By preference, I mean that the people here like to eat salty food. But this doesn’t appear to be the case because when I had other foods, I don’t find it salty relative to the Chinese food that I had consumed so far. This leaves me with the second reason and it could well be the correct one. However, I still can’t figure out the rationale for cooks to pass down this practice. Is it just a mistake that got carried for generations or is there an educated reasoning behind it? Perhaps, I shouldn’t think too much and just enjoy the Chinese food. Afterall, some Chinese food is better than no Chinese food.

Balanced Measures, Please!

Many many weeks ago, while on a trip to Shenzhen (China), I experienced something I never thought I would in China. At that time, swine flu was in its early days of spreading and if I am not wrong, China had a few (<10) positive cases. Learning from its past experiences in handling SARS, the Chinese Government was very efficient in trying to contain swine flu.

The minute our plane landed at Shenzhen Baoan Airport, it was directed to an open parking space. We were then informed that in order to minimize the spread of swine flu, every passengers would have his/her temperature taken. No, not by air-stewardesses/ stewards, but by Chinese health authorities. Soon after, the cabin door opened and 3 men in masks and surgical gloves entered the plane. They began taking the temperature of each passenger. I must say I am very impressed with this method because detecting fever before people leave the plane allows the authorities to isolate potential carriers before they start to spread the virus to other people in the airport area. This can certainly reduce the transmission rate. In addition, when there’s a need to isolate people who have come into contact with the carriers, it is administratively simpler as authorities only need to quarantine the entire plane in the worst-case scenario without having to worry if some new and unknown carriers could have escaped the dragnet.

Unfortunately, my good impression ended there. Once we were cleared to leave the plane, we boarded the airport shuttle that was supposed to bring us to the main terminal building for immigration clearance. When we reached the terminal building, a security officer didn’t allow us to enter the building. Perhaps he was unconvinced that we were all free of swine flu. He told us to wait under the hot sun and admitted us one by one at a rate of 1 person for every 5 minutes. Meanwhile, we were given a health declaration form to fill up. I remembered clearly one section asked whether I had fever. My reaction was well, not now but maybe I would have one by the time I was allowed in because we were practically being barbecued under the afternoon sun.

Then, I started to recall that the Chinese Government had quarantined all Mexican passport-holders even though they didn’t exhibit any symptoms of swine flu. Were they just being paranoid? I understand that there’s a need to contain the virus but some measures were obviously too excessive and illogical. Instead of generating praises from around the world, it might end up doing the opposite. The Government should try to find a more balanced measures that would allow them to prevent the spread of swine flu and yet, did not make visitors feel unwelcome.

Oxford Street Mayhem

I visited Oxford Street area last weekend to explore London’s premier shopping belt. I was quite impressed with the variety of shops there: branded and non-branded, small and big, etc. In essence, whatever you are looking for, you will highly likely be able to find it there. And those include exotic stuffs such as Korean and Chinese foodstuffs since Chinatown is located nearby.

Although I like the convenience of being able to get everything in one place, I am rather irritated about the small pedestrian walkways outside the shops. They are packed with people on weekends because most of the shops in other parts of London are closed and if you want to do some shopping, that’s one of the only few places to satisfy your need. Assuming that the entire London population does their shopping on weekends, you can guess how crowded that area will be.

I personally feel that it’s about time the relevant authorities consider widening the walkways or even closing some roads/streets to motor vehicles. Many cities around the world have done that. In Singapore, for example, the Orchard Road shopping belt has wide walkways. In China, almost every big cities have shopping belts whose streets are closed to motor vehicles 24 hours a day, 7 days a week.

2 main benefits can be obtained from such moves. Firstly, it provides a more pleasing experience to customers as they can take their time to slowly look at the goods displayed in the display windows without being pushed or feeling hurried by the pedestrians behind. One of my purposes for visiting the area is to de-stress but I came back feeling more stressful than before the visit. Secondly, it will definitely benefit the shops because when customers have the time to look at the displayed goods and have their line of sight unobstructed, they have a higher tendency to enter the shops and hence make a purchase.

Clearly, the relevant authorities should give some serious thoughts to these win-win moves. If they do it fast enough, they may even get a bonus outcome: reducing the spread of swine flu as the transmission rate greatly decreases with increasing distance between any two people.

Classical or Ricardian?

Many macroeconomists have always believed that a tax cut will boost consumption while a tax rise will reduce consumption. This widely accepted theory appears to be very close to the heart of our world leaders as well, as can be seen from the way they use fiscal policy to respond to the current downturn. Many countries, both developed and developing, have resorted to tax cuts in order to boost consumption and hence aggregate demand. Latest data has shown that those moves have indeed produced some positive results. Numerous sources have reported the emergence of green shoots in several economies. However, does it mean that we should forget altogether about another theory known as Ricardian Equivalence?

Ricardian Equivalence is named after a guy named Ricardo who ironically didn’t buy the theory that now bears his name. Broadly, it states that tax cuts have no impact on current spending/consumption and therefore aggregate demand because rational people know that a tax cut now would have to be compensated with a tax rise sometimes in the future, particularly so if government doesn’t make any effort to trim its existing expenditures. Hence, these people would save whatever additional money they obtain from the tax cut in order to pay for the future tax rise.

This theory makes perfect sense to me because throughout my life, I have seen a couple of people with such kind of thought. In fact, both my grandparents and my dad practice it. Whether there’s a tax cut or not, they just spend on basic necessities and save the rest for future generations or as they like to say, for rainy days. You may then ask: if that’s really the case, why is it that tax cuts still work?

Well, 3 good and valid reasons for that. Firstly, not everyone is as far-sighted as some people. They don’t think far. Even if they do, their response would be “let’s think about the solution when government really raise the tax.” Secondly, some people would like to spend beyond their means but in order to do so, they need to borrow. However, due to borrowing constraints, they aren’t able to do so. Tax cuts is one of those methods that will allow them to bypass the borrowing constraints put in place by banks or other institutions. Lastly, many believe that a tax rise sometime in the future will probably affect their children, grandchildren or even great-grandchildren and couldn’t care less about them. So which theory should we adhere to?

There is no right or wrong about the two theories. Each has its own strengths and weaknesses. But if I may, I would like to be somewhere in between because depending on how you argue it, each is valid. On the other hand, too much or too little of either one is not good as well. Too much of the classical theory would mean a selfish society who doesn’t really care about the well-being of the future generations. Too much of Ricardian would mean that the fiscal policy of many governments would effectively be useless in moderating the economy.

Good Job, Indonesians!

I am actually very glad with the outcome of the recent Indonesian Presidential Election, in addition to the fact that it was carried out without any meaningful disruption. After about 11 years of reformasi, Indonesians finally understand that democracy doesn’t have to go hand-in-hand with violence. Of course, I also have to pay tribute to the magnanimity of the losing candidates for accepting the result of the election, without which I am sure the situation in Indonesia will not be any much different from that in Iran.

Indonesians’ choice for the Presidency for the period 2009-2014 clearly tells the world that they are capable of making rational decisions despite the significant role played by money politics in this election. In this post, I am not going to talk about the excellent job that SBY had done for the past 5 years because I don’t see the need to do so. Indonesia’s stability during his term should be more than enough to tell you about his capability. If you read any news on Indonesia now, except for the recent bombing in Jakarta, you will not encounter anything significantly negative about the country. This is in contrast to the period before 2004 whereby Indonesia always appeared in the news for all the wrong reasons: political turmoil, separatist movements, terrorism, etc.

Rather I am going to share my views on why Indonesians made the right decision by not voting for another Presidential candidate: Megawati. I am not going to talk about Kalla because Megawati is deemed as the closest contender. Before I move on, I would like to mention that I have no intention to influence any eligible voters to switch their allegiance to any particular candidate. I am merely looking at the election objectively. That’s why I have decided to talk about this only after the election result has been finalized and deemed legal by all the relevant parties.

Indonesians have given Megawati a chance at the Presidency in the past but her performance then had been rather poor. She made a number of blunders, up to a point that Indonesians couldn’t understand what she was trying to achieve. That lost in confidence on her leadership can be felt up till now. If you ask anyone walking down the street what she had achieved during her term, I am sure no one can give you a firm and concise answer.

Her current choice for the Vice-Presidency, Prabowo, is also a wrong move because he is full of controversy, particularly during his term as Commander of the Special Forces during New Order era. As a matter of fact, he is barred from entering US until now.

But I guess the last nail in the coffin for Megawati is when she and Prabowo were reported having intense discussion, to the point of bickering, on who should be the President a few days before nomination. Apparently, both coveted the Presidential position so much and none were willing to give in. No doubt Megawati managed to get herself nominated for the Presidential position in the end but the damage had already been done. Indonesians are sure that if Megawati is elected, the country will face the next 5 years with yet another political turmoil driven by none other than the President and Vice President, two people who should be working closely together for the betterment of the country.

When Allocating Emergency Seats, What Should Be Airlines' Priority?

It has been really some time since I last posted. Two months have passed without me realizing. But those are really one of the most hectic two months I ever had. There were so many things to do and yet so little time. Been traveling to several countries but unfortunately not for leisure. Now that I have more or less settled down, I thought it is good to restart this blog. Hopefully from today onwards, I can blog regularly.

To kick-start this new beginning, let me talk about something I become very familiar about lately: air traveling. Having taken flights from different airlines, I have learnt that airlines have different priorities when it comes to allocating emergency seats to customers. As the name suggests, emergency seats are those front seats located beside the emergency exits. And since those seats are front seats, anyone sitting there will obviously have wider legroom.

For some airlines, those front seats are open to anyone on a first come, first serve basis as long as one feels comfortably strong enough to help the air-steward/ stewardess in times of emergency. It doesn’t matter whether you are young or old, man or woman, you can select those seats as long as you meet the criterion stated above.

On the other hand, there are some airlines that have decided to exploit the wider legroom provided by these seats by charging passengers who want to sit there an extra fee. Although this action shows that whoever that is running the airline company has good business acumen, I personally think it is inappropriate to do so because it clearly put the company in a bad light. People will say that this particular airline put more emphasis on business and less on safety. Morally, it is also wrong because you are charging a person who in times of need, maybe of great help to you. If you are busy with your work and a colleague offers to help you buy lunch, would you charge him a fee for helping you? Clearly, the opposite appears more rational.

Airlines may argue that with its excellent track record, probability of them encountering emergency situations are very small (close to zero) and hence, the purpose of those seats are more for providing comfort rather than for passengers capable of helping during emergency. However, with life so full of surprises, should we ignore such probability, no matter how negligible it is?

Recession and Traffic

3 ways recession can reduce traffic:
•Cause people who lose their jobs or get pay-cuts to sell their cars
•Encourage people to take public transport
•Encourage people to work from home to save on transport

The Reason Behind Spiritual Politics

In Indonesia, political books that touch on the realm of spirituality occupy substantial floor space in bookstores because there’s a high demand for such books. What’s the main contributor to the high demand? Well, it appears that the level of trust which the common people put on their current political leaders have deteriorated up to a point that they believe the only way to solve their problems is through the spiritual channel.

Setting a Good Example

As I drove along a traffic-heavy road today, I saw an entourage of official cars making use of the Busway lane which should not be used by any vehicles, except as the name suggests, Busway buses. If officials can't even obey rules and regulations, how can they expect the common people to obey them?

Solving Jakarta's Traffic Problem

Traffic jams are daily occurrences in Jakarta. And sadly, the actions taken by relevant authorities to solve this problem have always been nothing more than building more roads and highways. Recently, the authority announced yet another plan to build 6 more highways and its intended objective of easing congestion. Looking at the dire situation, such moves are definitely insufficient.

It is long overdue that the authorities explore various mechanisms to reduce private ownerships of vehicles. It is common to see a family of 5 owning 3-4 vehicles when it isn’t necessary for them to do so. Bidding of plate number, congestion charges and higher taxes are definitely worth implementing rather than superficial methods such as a requirement for 1 vehicle to have at least 3 passengers (which can be easily overcome by the vehicle owners).

Concurrently, the authority should look at overhauling the public transport system so as to encourage existing vehicle owners to switch to public transport. It can also entice potential vehicle buyers to dump altogether their plans.

I believe that exploring these will better solve the congestion than building even more roads and highways.

Pedestrians Walkways that are Wrongly Used in China

One peculiar thing which I noticed as I walked along the streets in China is that vehicles have a high interest in occupying any available openings or should I say gaps, regardless of whether such actions are against the law or not. It is common to see 4 lines of cars squeezing in what is supposed to be a 2-lane road. It is also common to see vehicles going against the traffic flow because the other side of the road is jammed or this particular road provides a more direct route lo your destination.

What really annoy me however is the loud horns of vehicles coming from behind me as I strolled along the pedestrians walkway. China’s pedestrians walkways are wide because they are made to ensure that large number of people can walk comfortably. Unfortunately, the wide walkways have also attracted those vehicles to make use of them. Besides the safety aspect, these vehicles are also health hazards. Imagine the sudden shock one experiences when these vehicles decide to sound their horns.

Some measures must be taken to prevent these vehicles from making use of the walkways. I understand that in certain areas, metallic barriers have been erected to prevent vehicles from entering but some persistent and innovative motorcyclists have been able to cross those barriers. One way to prevent that I believe is to re-design the barriers such that only people can pass through them. Strict rules must be put in place and at the same time enforced to ensure that violators are strongly penalized. Up to now, police officers seem to have turned a blind eye to these violations.

The Difference in Demand for Japanese Cuisine

Finally back after a week worth of break. I thought it would be great to start with something light and at the same time could stimulate your appetite: food. Well, if you live in Singapore, you will realize that almost all the shopping centres have at least 1 Japanese restaurant/café/etc. I like Japanese cuisine so it’s really great to be able to consume such food wherever you are in Singapore. Jakarta, on the other hand, is a stark contrast to Singapore. It’s not easy to stumble upon Japanese restaurants and even if you manage to find a couple from the yellow pages, you will find that most aren’t located in shopping centres (this consequently removes the convenience for consuming them). The scarcity of Japanese restaurants in Jakarta is perhaps due to the low demand for Japanese cuisine there as compared to Singapore.

There are probably 3 main reasons for the difference in demand. Firstly, it is the degree of exposure of the population to external culture. Being well traveled and all, Singaporeans has definitely tried Japanese cuisine at some point of their lives and consider Japanese diet as just one of the many varieties of food they can have for their daily consumption. Indonesians, however, are not as well traveled and thus have a high probability of not trying Japanese cuisine before. When they come across Japanese restaurants, they have a high tendency of walking past these restaurants and selecting others that are deemed as safe choices.

Secondly, it is the difference in preference among the population. Majority of Singaporeans are Chinese and hence find Japanese cuisine which is light palatable. Indonesians on the other hand prefer spicy food and find Japanese cuisine too bland for their tongues.

Thirdly, it is the income level of the population. In Singapore, the income of the working population would not in any way hinder their abilities to consume Japanese cuisine i.e. they are considered affordable by most of the working population. But for a considerable percentage of the working population in Indonesia, consuming Japanese foods is a luxury. For these people, if they forgo Japanese cuisine, they may be able to support their family for another week.

These 3 reasons effectively make the Japanese cuisine market in Indonesia a very niche market, in a sense that it is only sustained by a small number of people. And if the economy of scale remains at current level, I am afraid Japanese cuisine will only become more expensive and that essentially will result in even more people being unable to afford them. As for me, it seems that my dream of consuming authentic Japanese cuisine in Jakarta at affordable price will not turn into reality anytime soon.

Subsidy: a tool to blunt the short-term impact of FTAs

Prior to the current downturn which has prompted many countries to pursue a policy of protectionism, we used to see the word “FTA” all over the media. Each FTA (Free Trade Agreement) is usually signed by two or more countries that have agreed to eliminate tariffs, quotas and preferences on most, if not all goods and services traded between them. A successful FTA is expected to result in an increase in income and subsequently wealth and well-being for everyone in the participating countries due to specialization and division of labour. As an example, A and B each initially produce both milk and beef despite the fact that A is better than B in producing milk while B is better than A in producing beef. With FTA in place, A is expected to eventually produce only milk while B only beef.

Although simple and logical, some FTAs have not been moving in the right direction because of intense lobbying by people who are at risk of losing their jobs once FTAs are in full force. Despite knowing that job loss is nothing but just one of several short-term side effects of FTA implementation that will in time rectify itself, government has to show that it considers the sentiments of the common people and so, has resorted to providing subsidies to the affected industries with the intention of sustaining them. Too much subsidies however create the false impression that a particular industry is more competitive than its counterpart in another country when it should have been otherwise. It also allows the industry receiving subsidy to have the unfair advantage of quoting below the price of its counterparts receiving no subsidy, ultimately causing people who should not have lost their jobs to end up losing theirs.

This very implication of government subsidy has been the main contention point between countries that are engaged in talks to liberalize their market. Countries that are very confident of the ability of their industries to compete globally/regionally without any subsidy have boldly requested that subsidy elimination among participating countries be set as a pre-condition for further talks.

I personally think that fulfilling such a request is dangerous and lacking in foresight. If a country removes government subsidy for a particular industry and yet does not have proper plans in place to absorb the laid-off workers into the non-subsidized industries, it will end up increasing the unemployment rate and its related consequences such as social unrest.

One way a country in such a position could negotiate is to propose that it be allowed to continue subsidizing the industry in the spotlight but at a rate that is just right to sustain the industry and would not in any way affect the competitiveness of its counterpart in other countries. For example, if the cost of producing a liter of milk is $2 in country A and $3 in country B, country B should be allowed to give a subsidy of $1/liter to its milk industry until the industry is able to sustain itself by becoming as competitive as its counterparts if not more or until sound plans are in place to absorb the laid-off workers if the industry begins to cut jobs. Of particular concern is the potential exploitation of the subsidy system by the milk producers, i.e they will not put in any effort to boost its competitiveness and instead live off government subsidy for as long as possible. This can be easily overcome by setting a deadline where subsidy rate will drop to 0% regardless of whether the industry can fend for itself or not.

Biologics or Not?

A white paper on Pharmaceuticals industry by PricewaterhouseCoopers (PWC) mentioned that 55 of the 106 (~52%) blockbusters on the market in 2007 were for specialist treatments. The report further stated that the sales of all specialist therapies could reach US$295-300 billion by end of 2008, accounting for 44% of worldwide spending on prescription pharmaceuticals. With these data, it is clear the demand for specialist medicines is climbing up. And so the most important question in the mind of most pharma industry CEOs is definitely: Should we venture into the business of specialist treatments?

From the economic perspective, the answer is clearly yes as shown by the data above. However, in our complex world, decisions are not made solely from a single perspective. The work of an economist, for example, always involves a balancing act, requiring one to defend his beliefs but at the same time, being mindful of the views of the opposition. This often results in economist supporting a bipartisan policy between his intended policy and that of his rivals, achieving success for those he represented but dampening the impact on those he didn’t represent.

This brings me to the main objective for writing this article: To challenge decision-makers to think twice before giving his nod to venture into this business. Note that I have made the assumption that venturing into the business of specialist treatment means venturing into biologics since it is the preferred type of drugs. First, the cost of developing a biologic (as this protein-based compound is called) is approximately US$1.2 billion, close to US$400m more than the average for a small molecule. Each biologic, on the other hand, is only capable of providing treatment to a mere 3% of the population. This will certainly increase the price of each unit of drug as the development cost of the biologic now has to be distributed over a smaller number of units, in accordance with the much smaller population that it treats. Without subsidy, only a select few can afford it. Can the revenue obtained from the smaller population cover the cost of development, marketing and etc?

A subsidy, on the other hand, does not equate to no troubles. The higher price is sure to increase the level of scrutiny of approving authorities before the subsidy is disbursed to the patients or the company. Can the company sustain itself when this arises? Will it encounter cash-flow problems?

I have also simplified the decision-making process by not taking into consideration the hot issue of “pay for performance”, which essentially shift the price determination activity from the company to payers (government and patients). Without “pay for performance”, all it takes is a patient in need of treatment and a health professional prescribing a drug for the company to obtain the revenue which it has fixed. With “pay for performance”, another factor has to be taken into consideration: outcome of the treatment. If it is below expectations, the revenue obtained may be drastically reduced.

Second, unlike small molecules, each biologic appears to have a broader range of activity and has higher probability of generating immune response. Anyone marketing it must have considerable scientific knowledge, in particular those relating to the risk, so as to communicate it clearly to the relevant people.

In addition, as the price determination activity has effectively shifted from company to payers, marketing and sales people have to engage these people beyond the conventional task of promoting their drugs. They must be able to feed the views of the payers to the various functions within the company, particularly the R&D function so that they can be taken as one of the many considerations of the development process.

Last but not least, many biologics have to be ordered when needed instead of being stock-up, as they are expensive (you don’t want to lock your money in inventories) and have short lifespan. They also must be transported under special conditions because they are prone to degradation. The development of the necessary infrastructures as well as the training of manpower to support all these are sure to further bump up the cost of specialized treatment.

In conclusion, the decision to venture into specialist treatments is not driven by economic perspective alone. It is imperative that many factors such as those shared above be taken into considerations.

Do Treasure Second Chances

We commit many mistakes in life. Though painful, they make us learn the hard way and emerge stronger. Once the predicaments are over and we get second chances to rectify those mistakes, we should treasure the opportunities because when you commit the same mistake twice, people’s perception of you will not be pleasant. Here’s one you should never done.

A couple of years ago, while I was still pursuing my undergraduate degree, I got to know a scholar (let’s call him Bill.) Bill was an exceptional student, having been offered the scholarship after many rounds of competitive selection process. For the first few months, Bill was perfectly fine, attending classes regularly just like the rest of the students. Soon after, he began to skip lessons and failed several subjects. By year two, Bill had lost his scholarship and needed to take up study loan to pay for his tuition fees as well as his daily expenditure.

Sometime in early year four, Bill realized his mistake and began to work hard. It was an amazing feat he managed to graduate in time but his results was so bad there was no way the school could give him a good Honours classification. Consequently, his job search was more difficult than most of his peers. However, Bill’s sheer persistence (including providing free labour for about three months) moved the supervisor and he was offered a job. Seeing his keenness to learn, his supervisor was even willing to argue with the school to allow him to pursue an MSc programme. Bill began paying off his study loan and within two years or so, he had cleared about 70% of his loan which was impressive.

But just a month ago, I heard that Bill had reverted to his old ways. He had been absence from work for sometime and could not be contacted. His work contract had been temporarily suspended and according to a close friend who had visited him, he had been playing online game for almost 24 hours a day since he began staying at home. When asked what his future plan was, Bill said he needed time to think through it.

I really can’t understand the logic behind his actions. Doesn’t he learn from his past mistakes? Doesn’t he know second chances are not easy to come by? There are many who have been waiting patiently for second chances, but for some reasons or another, they never come. For those that have second chances, grab and treasure them.

Pragmatic Friendship

In the past, I used to have very good impressions of my buddies, believing that I could always rely on them whenever I needed help. My experiences however have convinced me that those were just wishful thinking on my part.

Here's the first one: While working as a research officer about 2 years ago, I thought of switching to another job to widen my exposure. I told a good friend of my intention during a weekly dinner and he mentioned that his company was looking for people. He asked me to pass my CV to him and promised to forward it to the HR department. A month pass and when I enquired about it, he said that due to a policy change, the company was no longer interested in hiring people with my background. I trusted and thanked him for trying to help anyway.

Approximately 2 months ago, I discovered something unpleasant during another weekly dinner with him. Then, our conversation was about his ex-housemates. According to him, they had asked him if his company needed people. He said that although not keen to help, he tried to show his kindness and suggested that they passed him their CVs. He however did not pass their CVs to the HR department as he was afraid that if they managed to get employment offer, they would be a threat to him. Naturally, that kind of tell me what he did with my CV 2 years ago.

The second one happened more recently than the first one. Another good friend had asked me if I was interested to join his company and promised to get back to me only to conveniently and selectively forget that such an episode had occurred.

Having shared these 2 experiences with all of you, let me just say that it is not my intention to stop you from making friends because we are after all gregarious creatures and life will be more colourful if we have wide social circles. The objective of this post is to tell you that in this pragmatic world, true friends are extremely rare and therefore, let's not hope for too much from our friends (even those we classify as best of friends), especially if they deem those requests as threats. Usually, money (wealth) is one of the main reasons. In my case, it is employment.

Myanmar’s Military Junta: Preserving National Unity?

President SBY of Indonesia gave a public lecture in LSE on the sideline of G-20 meeting last March. When asked about his view on the policies of Myanmar’s ruling military junta, particularly those towards the oppositions, he mentioned that the military junta had no other options but to enforce its repressive policies because if it didn’t do so, Myanmar’s diverse ethnic groups would fight one another and cause the country to break apart. For a while, I thought it was a reasonable explanation but as I read more articles on Myanmar, I start to question its validity and strongly believe that SBY was just paying a lip service to a fellow member of ASEAN.

My basis for having such thinking is that most if not all of the junta’s actions appear to have no correlation to preserving national unity. When cyclone Nargis struck for example, one wonder how not mobilizing soldiers to rescue those in need as well as intentionally slowing down the entry visa applications by foreign aid workers would preserve national unity?

On the political front, the last few reasons given to extend opposition leader Aung San Suu Kyi’s house arrest were downright baseless. Its latest action of preventing her doctor to treat her illness was obviously extreme if carried out in the name of national unity.

To me, its actions look more like a desperate cling to power and preserving national unity is nothing more than a party line to legitimize the regime. If that’s true, then why is international pressure on the regime not as strong as that compared to other countries with human-rights violations? (Pretty sure the international community is not blind.) Well, the sad reality is the military junta poses no real threat to any major powers or its immediate neighbors at the moment. In addition, it has also reiterated its commitment to restore democracy in several international gatherings, albeit at a very slow pace. Unless it starts acquiring nuclear weapons or showing hostility like North Korea and Iran, it seems that Myanmarese have to live with this regime for a foreseeable future.

On Nurturing Your Subordinates

Last Friday, I had dinner with a good friend who shared that he just met his ex-colleagues the day before. From the gathering, he realized that many of them had left his ex-department. And as he expected, there were rumors of more impending talent outflows. Quite naturally, our conversation developed along the line of talent turnover.

In my view, talent turnover is a common occurrence in every organization as people move on for various reasons: greener pastures, change of environment, etc. Just like unemployment rate, it is never possible to keep the rates at 0%. What can be done is to minimize them. While talent turnover is normal and acceptable at certain value, talent turnover of 1 person/month in a department of 15 is abnormal and warrants more investigation.

From what my friend told me, I believe the high talent turnover in his ex-department is mainly due to the inability of the management, particularly the direct supervisor, in nurturing his/her subordinates. The department may be able to continuously hire talents with great potential but without the proper training, these people will not be able to realize his/her full potential. Worse still, they may end up psychologically weaker than they were when hired and my friend happened to be one of them.

He joined the company brimming with confidence, having just cleared 3 rounds of interview. It was one of the happiest moments in his life, very sure he had finally found a career with bright prospects. Then the nightmare begins. Management indecisiveness caused him to change each presentation 5-6 times only to end up with the original slides and flow. Large portions of his written work which he spent days working on (at times, sacrificing the precious time that he could have spent with his loved ones) were deleted or replaced without explanation. His position as a driver in the teleconferences or meetings were cast aside as his direct supervisor cut him off and started speaking as if she was the only representative.

As time passes, his confidence continued to erode. He began keeping quiet, choosing not to mention his ideas, lest they were put down. He started to stammer when he spoke to the management. In fact, close to 1 year after leaving, he still has the phobia of expressing his personal opinions. He repeatedly proof-read his writing and practice what he wants to say, looking for the non-existent mistakes that may result in misunderstanding on the receiver’s side.

I empathize him for having such a bad experience and to prevent the same from happening to others, I would like to urge managers to evaluate their current policy on nurturing as the impact of poor ones on their subordinates may be long-lasting.

Balancing Ambitions and Self-Contentedness

I have always been a very competitive person since young and I gave the credit to my late grandfather for instilling that nature in me. Thus far, it has served me well, particularly in my life as a student. It spurred me to work harder, to be the top, to be the crème de la crème. Competitiveness and ambitions go hand in hand and naturally, as my competitiveness grows, so does my ambitions. Thus, is it a good thing to be ambitious?

From the perspective of career-minded people, the answer is a definite ‘yes’. Ambitions allow one to set high goals and think of various ways or permutations to achieve them. Ambitions make one more efficient and more productive, 2 of the main criteria that employers look for in job applicants. Without ambitions, one tends to be contented with his current situation and thus unlikely to put in that extra effort. Is being contented then necessarily a bad thing?

If I had been asked this question just a year ago, I would probably have given you an ‘isn’t-it-obvious’ look before replying firmly: yes! However, experience has taught me to think twice or even more before giving a firm ‘yes’. Unlike words such as diligent and lazy, which when used, directly imply the inherent character of the person as good and bad respectively, the words ‘highly ambitious’ and ‘easily contented’ are not so easily categorized.

‘Highly ambitious’ could mean one is working hard to achieve his goals but at the same time, has sacrificed many things around him in pursuit of his goals: his family, his relationship or even his current job (if his goals have no links to the existing one). Can this ‘highly ambitious’ person be categorized as a good and hardworking person?

‘Easily contented’ could mean one is not putting any additional effort beyond that required but at the very least, he does not sacrifice other things which are dear to him. Can this ‘easily contented’ person be categorized as a bad and lazy person?

I am a very good real-life example of this ‘highly ambitious’ person and am not proud of it. In pursuit of my goals, I have sacrificed many things around me, things which are dear to me. I regret my actions and wish that I can turn back the clock.

If you don’t want to learn it the hard way like me, here’s an advice: A good balance between ambitions and contention is necessary. While pursuing your ambitions, do make sure that you do not sacrifice the existing things. If you begin to do so, then perhaps you should try to slow down such that you do not compromise the existing things. All in all, cherish what you have even as you are in pursuit of those greater goals.

Economics Lesson from Mahmoud Ahmadinejad

Besides Mr Kim Jong Il of North Korea, another leader that has always amazed me is Iran’s Mahmoud Ahmadinejad. His habit of taking potshots at the Western countries, particularly US has never failed to get media attention, at times taking the entire cover page of established newspapers. His latest one during UN conference on racism sparked massive walkouts and shouts of shame by the participants to the extent that Mr Ban Ki Moon had to publicly comment that Mr Ahmadinejad had misused the UN conference to further his own agenda.

Just when the world has started to put the ugly episode behind, Mr Ahmadinejad made an interesting comment on economics. In brief, the content is he has no knowledge of economics and is quite proud of it. As if to provide compelling evidence, the media reminded the readers of his insistence for interest rates to be kept low to help the poor despite warnings that it may result in high inflation.

In view of the upcoming Iranian Presidential election, we know it is politically not a good comment. By giving this single comment, he had effectively portrayed himself as the cause of Iran’s deteriorating economy and that will inadvertently reduce rather than boost his chances of being re-elected.

From the viewpoint of an economics student however, the evidence given is a very good example of the consequence of not exercising balance when crafting economic policies. For a while, I have been trying to find a real but simple example to stress the importance of balance in policy-making. That search ended this morning when I read an Economist article on Mr Ahmadinejad.

Here, the two opposing forces are interest rate and inflation rate. A low interest rate means lower cost of borrowing but the increased spending is likely to increase inflation rate which is not a good thing because it will increase the price of goods. A high interest rate means higher cost of borrowing but the reduced spending is likely to decrease inflation rate which will keep price of goods in check. The trick is to find a particular interest rate that allows for healthy borrowing but at the same time, does not increase the price of goods drastically.

In Iran’s case, the insistence of Mr Ahmadinejad to keep interest rate low so that his supporters remain happy has resulted in high inflation and will ironically make it harder for his supporters to purchase their daily necessities and continue smiling.

I am sure Mr Ahmadinejad regrets making the comment and is probably trying to find out why none of his aides reminded him to watch his mouth. Regardless I thought the comment is timely, at least for the Iranian people whom I believe deserve more than another term of firebrand rhetoric.

Indonesia Votes: Military Men ≠ Able Administrators

I know all of you must be wondering why my blog posts have been on Indonesia everytime I touch on political issues lately. Well, there is really no particular reason. Somehow when I think of Indonesia, I just realize that there are so many political issues I can ramble about. By the way, if any of you think that I am campaigning for certain political parties due to the ongoing election, let me set things straight: I am not.

Many of you who have been following Indonesia’s political development would have probably noticed that despite the enactment of laws to limit the involvement of the military in the politics, men with military background remain popular with the masses. One look at the list of politicians and you will realize that many have served in the military at some point of their careers. In fact, for the upcoming presidential election, candidates are either ex-military officers themselves or have ex-military officers as their running mates.

For some plausible reasons or pure coincidence, Indonesia under ex-military officers has been rather stable and prosperous while Indonesia under civilians tends to move dangerously towards anarchy and political turbulence. The current administration of SBY, an ex-military officer, is the only administration expected to fully complete its 5-year mandate since the downfall of Suharto. The previous civilian administrations do not complete their mandate for one reason or another. This by itself is sufficient to give many Indonesians the strong belief that only people with military background are capable of leading them. But are people with military background necessarily able administrators?

The answer is no. Although it is true that military training can turn one into a firm and decisive person, and that these traits must be possessed by whoever that is leading the country, these alone are not enough to qualify one to lead a country. Besides being firm and decisive, an able administrator must also possess other traits such as charismatic and able to accept differences in views (which I don’t think military education emphasizes for obvious reasons).

There are many examples in Indonesia of people who are elected to public offices due to their military background but up till now, have not shown their ability to administer competently. Provinces and cities have continued to move down the charts with regards to hygiene, transportation infrastructures, etc since they elected ex-military officers as their governors and majors respectively. State-owned enterprises have lost its ability to compete with the private players since they are chaired by ex-military officers. The list of their misdeeds continues.

The message is clear: No doubt some ex-military officers like SBY are also able administrators, but this does not mean that military background and ability to administer properly always come together as a package. There are many ex-military officers who have excelled in the military but know zilch about administering. Electing them may not only slow down the pace of development in the country, it may end up causing stagnation or worse, a move in opposite direction.

The Up & Down of Life

I have always wanted to post on this issue, but many ongoing things in my mind makes me chuck it aside and before long, I have forgotten about it altogether until my conversation with another good friend of mine (Mr. C) about Mr. S.

Basically, we were talking about Mr. S’s impending departure for London as well as his marriage this coming December. Mr. C asked me whether Mr. S’s wife-to-be will be working once she joins Mr. S in London. I told him Mr. S hopes that she can work and contribute to the household income as well but mentioned that it is unlikely she will be able to find one since her degree is from Calcutta University which according to him, is not a “good” school. By making the statement, Mr. S has committed 2 crimes: 1) assuming that a person coming from not a “good” school (based on his definition of “good” school) will not be able to find a job in competitive environment such as London and 2) looking down on his wife-to-be.

Upon hearing this, Mr. C made this statement: It’s too early for Mr. S to say such words. For all you know, his wife-to-be will end up earning more money than him in the future. I couldn’t agree more with Mr. C. The life journey of a person is very long and unpredictable. Today you may be very successful but that does not mean that you will remain successful twenty years, ten years down the road, or even tomorrow. The reverse is also true. In fact, Mr. S himself experienced it. When he obtained a poorly written reference letter, he thought he could never find a good job. One month later, he landed a job with an international investment bank.

Don’t make negative comments on others just because you are up there at the moment. Life is full of ups and downs. While you may be up there now, it does not mean that you will always be up there. (Of course, if you are, then let me congratulate you.) Others that you look down on may end up being more successful than you.

Please focus, Mr Obama

Mr Obama, the US President, has been drawing flaks, both from his critics as well as his supporters lately. Among the more popular ones are comments such as he is not firm enough, he is taking a lot of time since his inauguration to unveil concrete plans to deliver his campaign promises and he seems to be everywhere (he is the first sitting President to appear in Jay Leno Show, he participates in town hall meetings over the internet and he tweets). Although all these comments seem unrelated at first sight, they are not if you spend some time poring through the articles. The root cause of these comments is none other than the lack of focus.

Lack of focus tends to divert one from the core problem and start pondering about issues that have little weights on the core problem. The result: solutions that do not pack a punch because of the inclusion of many compromises to make sure they do not hurt these groups, those groups and etc. When more information are received, more changes are made to ensure these information are taken into account. This, I guess, is the reason behind the comment on his firmness.

While it is good to come up with bipartisan (lack of focus) solutions, Mr Obama has to understand the greater amount of time needed to come up with such solutions as compared to that of the non-partisan ones as his officials have to engage more people. On the other hand, speed is the key element to solve the ongoing economic crisis. Under such circumstances, Mr Obama should cast aside, at least for a while, his bipartisan stand. However, it appears that he has not done so, evidence from the time he takes to unveil his administration’s concrete plans on ending the crisis. (Of course, that is in addition to the lack of manpower in the Treasury.)

Mr Obama’s eagerness to maintain his image as the People’s President also contributes greatly to his lack of focus. His intention, I believe, is to show the public he remains in touch with the common people. But he participated in so many events (some I don’t are suitable to be graced by a Standing President) his intention seems to have backfired: People start asking what exactly the focus of his administration is: Economy? Health? Or even music?

As an example, the middle-class tax cut he mentioned during his election campaign appears to be in limbo. He also talked about boosting the number of troops in Afghanistan; only to mention about the need of an exit strategy even before troops are sent in a couple of days ago.

I understand Mr Obama is not a veteran politician and thus has a steep learning curve after moving into the Oval Office, but surely staying focus is not an attribute that is exclusive to the White House. Even a child knows that too many cooks spoil the broth. The message to Mr Obama is clear: Stay focus or risk further drop in his popularity.

Loan or Full Payment

I believe many of you would agree with me if I say that we are currently living in “loan” economy. You can buy almost everything using loan nowadays: house, car, computers and even insurance. I am perfectly fine with taking a house loan or car loan because of the large amount of capital needed to buy them. But, a loan to buy computer or insurance, I find that too much.

I have never been a fan of loans because of 2 main reasons. Firstly, taking a loan to purchase a good or service means that you will not be using the money in your pockets or in your savings. And usually give the false impression that you still have a lot of cash to spare and hence more buying spree. For some people, it results in spending beyond their earnings. Secondly, I don’t like the feeling of owing others money. I don’t like the feeling of seeing a certain sum of money in my savings, knowing full well that a certain percentage of it does not really belong to me. When I buy something, I prefer paying in full although that will probably result in a certain proportion of my savings disappearing. I find comfort in knowing that even though I am poorer by a certain amount, the remaining is mine and not others.

Having shared my preference with others, I have to admit that some of them do have a point for taking a loan to purchase something instead of paying in full. Loan allows you to invest your cash and savings somewhere else to yield a return that is much higher than the interest rate of the loan itself. That way, you have earned yourselves a certain amount of money which you would not be able to if you have paid for the good in full. The advent of 0% interest rate loan has enticed more people to take loan because now they don’t even need to worry whether their investment somewhere will yield return above the interest rate of the loan or not (Any return above 0% is good enough.)

My advice: take a loan only if you are 1) highly disciplined (will not act on false impression that you still have lots of cash) and 2) okay with the feeling that a certain proportion of your cash actually doesn’t belong to you. If you don’t have both, in particular the first one, then join me.