Friday, December 5, 2008

Cautious or ignorant?

If you've taken the trouble to read all my posts under the label Economy, you may have formed an idea that I have been rather impatient and increasingly concerned with the way in which Malaysia's economic managers have been handling things.

To avoid any doubt, whenever I use the phrase economic managers I am referring, in particular, to both Ministers of Finance, the Minister of International Trade and Industry, the Minister of Domestic Trade and Consumer Affairs and the Bank Negara governor.

For the economic managers to continuously publicise HISTORICAL ECONOMIC DATA, meaning data collated from three months ago or even further back suggests only 2 possible scenarios:
  • First, the theory of caution. In this theory, the economic managers are true believers in the normative side of economics, also called behavourial economics, where mass psychology may be seen as a relevant factor. The word confidence is de riguer in this respect. What the economic managers fail to see is that if the economic boat is tanking it really does not matter that the captain calls for all hands to remain at their stations, the in-rushing waters will sweep even the most loyal hands into the stormy sea.
  • Second, theory of ignorance. In this theory, the economic managers are being fed drivel by their economic advisers and data-gathering apparatus. The economic data being gathered may be suspect. The economic data gathered is misunderstood (this is unlikely). There is insufficient expertise to analyse and understand the economic data gathered. The upshot of this is that the blind leads the blind or, more accurately, the blind feed the blind.
In either case, the management of the Malaysian economy looks pretty bad.

It is bad enough that we don't know how and why the Malaysian economy is successful. It is even worse that we don't know how and why the Malaysian economy is going into distress.

The Economic Council which now appears to be a new moniker for the NEAC, is filled with personalities rather than hardcore economists.

With the greatest of respect, how can businessmen and corporate leaders have the skill sets to advice the Malaysian government on the economy? Even I would demur to a seat at the Economic Council (not that they're inviting me) because I do not believe I have the skill sets.

People like etheorist and Sakmongkol may have better claim to a seat at the Economic Council, though I wouldn't mind sitting behind them.

I, somehow, cannot accept that the economic managers are being cautious. More and more, I am inclined to believe that they are ignorant of the economic trends and they have no real advisers to guide them with real options. It is cold comfort for the economic managers to say, Well, even the US Treasury Secretary Hank Paulson is showing that he has no clue. No. That will not do at all.

9 comments:

walla said...

http://ifile.it/rdxghkm
http://ifile.it/dwkars2

Hasbullah Pit said...

"both Ministers of Finance, the Minister of International Trade and Industry, the Minister of Domestic Trade and Consumer Affairs and the Bank Negara governor"

if you notice, our goverment structurly wrong.

Dont you think, all minister related to economy should sit under one ministry?

de minimis said...

walla

Thanks for the links.

Hasbullah

I think the modern Malaysian economy is too complex for one person to hold the different portfolios. But they must work very closely together.

And, they must choose the best economics experts to advice them. That is the current problem.

Jarod said...

...and why the Malaysian economy is successful...

Successful? How to rate it to be successful when other country are facing downhill?

For goodness sake, the GOV is not stable and putting things right like how other are trying their best to save their own country.

satD said...

Hi Bro de minimis

The 1997 crisis level transactional data is "lost" as the industry is no longer required to keep it as per audit requirement of 10 year lookback..

if the authorities could just simple collect all of this data for people to study them to understand the root cause of the crisis...and find out similarities with the new one ....then only we can tackle the "structural problems" in our economy

There's a lot of data out there but the Govt is unable to release them due to "sensitivity" factors..many many interesting observations bro......

Anonymous said...

for satd:

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http://tinyurl.com/6rn48j
http://tinyurl.com/5cftfb
http://tinyurl.com/6at5od
http://tinyurl.com/6narh4
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satD said...

tks Walla

Have seen "most" the research material before....

say we wanna run models based on historical micro level data can u tell me where i can get them?

de minimis said...

bro satD

Now you have been introduced to bro walla's "reading lists" :D It's relevant. It's powerful. But it's a lot of reading!

walla's effect on us all is, to borrow bro sak's phrase, make us "mentally muscular".

Anonymous said...

satD,

What you're looking for may not be online. So one tries libraries next.

In Klang Valley itself, there are about 100 specialized libraries which each contains some or other relevant reports or data-sheets.

If memory serves me, the small ISIS library near Parliament in KL has a good collection of various papers but it may not have data-sheets to work models.

I guess if you want micro-data, that would be the EPU/ Bank Negara/MOF libraries.

What they have would generally not be available online.

However, the mother lode has to be that room which contains those proposals submitted on various economic and feasibility studies that sits in the EPU/ICU store.

ps: if you're interested in other things like a full study of how to set up a steel mill or other heavy-industries, pay a visit to the special room on the first floor of Wisma DRB in Glenmarie; or for a deeper study on ports, try the room next to the executive washroom of the PKlang Authority.

Just take heed this country has never been known for keeping good data.

;P