Sunday, 30 December 2007

Tall Order

"Too little attention in economics to second order and even higher order effects. This defect is quite understandable, because the consequences have consequences, and the consequences of the consequences have consequences, and so on. It gets very complicated. When I was a meteorologist I found this stuff very irritating. And economics makes meteorology look like a tea party."

- Charles Munger,
Vice-Chairman of Berkshire Hathaway Corporation

Thursday, 27 December 2007

Dynamics of Fanatism

Imagine that you were in a cult. You believe that the world was going to end in 2007, and the only salvation was to believe that the mighty mothership of the Pink Invisible Unicorn would whisk you away on New Year eve, as was pre-ordained in an ancient holy text passed down by the Holy Unicorn herself.

New Year eve came. And there was no mothership. What would you do?

Rationally, you would think that is wise to reexamine your life and reassess your belief. But it is well-known that when a cult suffers from counter-evidence, it comes back stronger than ever. When cult members get setback as such, they become more fanatical.

The common explanation is cognitive dissonance: when you have given all you have to believe, you cannot possibly admit that you have made the wrong decision. You become more fanatical, more entrenched in your belief.

There is another explanation.

Imagine the same cult again. Now there are 20 members in the cult, of varying level of fanatism in belief. When the mothership fails to appear, who would be first to leave? Those who are least fanatical. Thus, the 'average fanatism' of the cult increase not because everyone suddenly became more fanatical, but because the least one left. And this increased fanaticism attracts more fanatics. And so on.

Now, for some real life applications.

University Rankings:

Consider a university that is unconcerned about quality of education and research. One that is more concerned about pleasing political masters in which reward and promotion of staff are based on connections rather than merit.

Who would be first to leave? The best lecturers. Who would remain? Those who would perpetuate the system. Quality would deteriorate. More good lecturers leave. Quality becomes worse. And so on.

Brain Drain:

Similarly, consider a country with misguided discriminatory policies that are obsessed with dividing wealth, ignoring real issues of competiveness and socio-economic inequality; without regards for merits and performance. This translates to huge incentive for the best minds and best companies to leave the country first. Situation deteriorates further, and more leave. Sounds familiar?

Racist Parties and Racial Politics:

This is the motivating example for me to write this post; the reason why the system perpetuates and becomes worse.

For now, what do you think?


(Inspired by Eliezer Yudkowsky: Evaporative Cooling of Group Beliefs)

Wednesday, 26 December 2007

Ouch! (Ad hominem ad infinitum)

It started from here, in Nat's blog: "NST/Gov’t takes low blow at Tony Pua" where he opined on an NST article which basically says that Tony's ability to be an economic adviser is dubious because his previous company wasn't really well-run. And that the piece from NST quoted Jed Yoong's blog on the issue.

Tony went to Oxford for PPE; it would be ridiculously fun to mock his ability in economics. But that would be provincial. So I thought I would give a more objective comment on this matter on both Nat's and Jed's blogs:

Hi Jed,

Having been trained in Cambridge, and currently going through the sad post-graduate life in Cambridge still as an economics student, I find it odd to be standing on the side of Tony Pua (an Oxonian..) on this matter.

Your ‘critical comment’ on Tony is ad hominem in nature, akin to saying that a fat Chef can never cook healthy food, or a deaf Musician can never play good music (ehem, Eve Glennie).

To judge Tony’s credibility as an Economic Adviser, I find it best to go through his work as one, ie, read through his Budget (Nat provided a link) and compare it with the most obvious alternative, the real Budget. Tell me if you could find it severely misguided, and terribly lacking in economics insight relative to the actual Budget.

Tell me if you could … because I can’t.

And yes, Merry Christmas.


Nat approved my comment, Jed didn't. And on Jed's blog today, there is this entry:

Filed under: macam2ada, stoopid

Commentators who repeat arguments that have been addressed will be ignored. Especially those from “protected spoilt brats” who have never worked in their lives and are caught in their student life bubbles. You are not adding any value to this adult forum.

If you can’t assimilate and digest information to come up with an intelligent, mature response, your comment will be deleted.

Life is too short.


Now, it would be extremely presumptuous to believe that this was directed to me. I am sure Jed received a lot of annoying comments on her blog due to this matter, and I can see how she could be irritated and hence the general 'notice'.


But let's say it is - purely for fun. How would I respond? Rationally, I shouldn't (note the title of this post). But that won't be fun. Let's see:

1) "protected spoilt brats" -

Okay, I can be a brat sometimes. I admit. The consequence of being the youngest in the family.

2) "never worked in their lives" -

Actually, I did. For three years, in economics research and policy-making related area. Unlike the rest of my friends, I eschewed jobs that would actually pay a decent wage to do something I believe in. Yes, I am that naïve... and stupid. Sigh.

3) "caught in their student life bubbles"

I am so naïve in fact, I decided to give myself more punishing by reading more economics back in Cambridge. My reason is so I could be better in what I do and contribute more when I go back home. Spending Christmas alone here, away from family and friends, mugging for an impending exams, makes me question my decision. Double sigh.

4) "adding any value to this adult forum"

It's like rain on my wedding day?

5) "intelligent, mature response"

It is because I used 'fat Chef', isn't it?

6) "Life is too short"

Triple sigh...


Tuesday, 25 December 2007

You May Say I'm a Dreamer

Merry Christmas and a Happy New Year.

Here is a little dedication for everyone, for hope of a better beginning next year.


Thursday, 6 December 2007

Path Dependency, Part Two

What would your first reaction be (as in what would you do first) when you encounter a tap that refuses to twist in a public toilet?

Thank you for the responses =)

As most of you would have already guessed, there is no real answer. I have encountered such scenario many times before, and my first response was to turn the tap harder, and harder... and harder. It never worked.

And then I found out, almost all the time, all I had to do was to turn the tap the other way round (Chewxy!). Some taps, although rare, are made to turn the other way round (for whatever reasons, silly or otherwise, but this will not be the topic of this post). Instead of trying to turn the tap the other way round, I would always turn it to shut it further. And I realised I was not alone in doing this, because in places where taps were turned on by turning clockwise, most of the taps would be faulty through excessive force by frustrated people trying to wash their hand.

And here is where my original post comes in: history matters. We all learned from young to turn on the tap by turning anti-clockwise, and conditioned to accept the notion that leftey is loosey, rightey is tightey. It is ingrained in us all, so much so that the possibility that a tap might be made differently is so bizarre that most of us would never even think of it.

This is like racism in Malaysia.

We are taught to divide people by races from young, and conditioned to accept that Malaysians, as people, are divided. Sadly so, racism became our dominant social belief system that informs our politics, ethics and economics. We have accepted that politics in Malaysia translates to bigotry and prejudice, and economics is synonymous with discrimination and marginalisation.

Like it or not, we are all racists. And if you say "it is not US, it is THEM!", say that a few more times and reflect on it.

And we believe that racism is so deeply ingrained in everything Malaysia, that it is an immutable truth. But it is only as immutable as our perception that a tap can't be turned on by turning it clockwise and as true as that the northern hemisphere can only be drawn on the upside of a map.

Most of the time, history creates conventions that are helpful. Occasionally, some will outlive their usefulness. The important thing is for us to appreciate that the conventions are made to exist by our collective past actions in the first place and we can choose to change if we want to. History informs our present decision, but it doesn't dictate it.

Suppose one day all taps are made the other way round. We are not doomed to destroy all the taps and never wash our hands ever again just because we used to turn taps the other way round. That would be silly.

Suppose now we know that racist politics and economic policies will lead us further away from building a great and prosperous nation. We are not doomed to let our country decline further and be powerless in rejecting that racism will always be part of everything Malaysia in the future just because it used to be so in the past. That would be silly.


Wednesday, 5 December 2007

Embrace Blogging

World Bank has another new blog out, this time on its Doing Business project. There is a short mention on Malaysia in one of the posts too.

An excellent addition to the World Bank Group existing blogs, which include:

Careful observers would have noticed that World Bank's sister organisation, the IMF, has also started blogging, including by its very Research Director, the famous MIT professor Simon Johnson:

On a slightly tangential note, private sector from all over the world has long embraced blogging as useful tool of communication, and currently the public sector is fast following suit.

This note from David Miliband, the Secretary of State of Foreign and Commonwealth Affairs of the UK Government, succinctly captures the pragmatism of embracing blogging:

Politics should be about dialogue and debate, and new technology makes this more possible than ever. But the gap between politicians and the public seems to be growing.

This is why in my last ministerial job I began writing a blog. I found it a great way to engage with people: to explain my work and my thinking in a more personal and less formal way than the usual Ministerial speeches; and to hear directly what people thought of what I was doing.

As Foreign Secretary I want to keep blogging. But it will need to be a conversation with people across the world, as well as with the people of Britain.

At the heart of this is the idea that diplomats need to reach out beyond governments to talk to people – at home and around the world. I want to explain to you the decisions we are making and what we are trying to achieve. And I want to hear from you what you think about what we're doing, what we could do better, and how we can solve problems which affect us all, such as conflict, climate change and poverty.

And in stark contrast, these are the learned opinions of our leaders back home, which quite accurately reflect the overall perception on blogging by our government:

"There are no laws in the cyberworld except for the law of the jungle. As such, action must be taken so that the "monkeys" behave."

"The public should be wise in identifying the websites of goblok (Indonesian slang for “stupid”) bloggers, who are willing to be tools of others to destroy the nation...

These writers do not have an Asian mentality but lean towards a Western thinking because they were educated overseas... Thus they assume that the Western style of democratic freedom is better. The goblok writers only have their own interests at heart and should be ignored"


PS: I am still waiting for comments on my previous post =)