Taxing Criminals

Stamp Duty
Want to commit a crime? Pay taxes first...

The Economist ran an interesting story about “a government-issued stamp that is expected to remain unpurchased, but which users of illegal goods must, by law, affix to substances they are not allowed to possess”. Essentially, the government is creating another layer of crime above a crime. It’s as good as saying you should not be stealing people’s money, but if you do really steal, then you’ve to pay taxes on your loot. If you avoid the taxes, you’re committing tax evasion plus theft.

Authorities seem to believe that the tax helps to further punish people who are arrested for a crime (since the inability to discover the original crime would make the taxes lame anyways) and thus serve a higher level of deterrence to the crime. I wonder if criminals would bother to discover that they would be penalized twice for a single crime.

The Marijuana Tax Act of 1937 was cited as an early conception of taxing illegal drugs. It is interesting that old bureaucracies sometimes like to make an act inconvenient rather than ban it outright. Maybe it just happens to drugs; Singapore could actually try applying extremely steep taxes on Chewing Gums rather than ban it outright.

A Request

Scherzo
The Joke

Hello everyone, my name is Peng Sing and I will be writing under the screen name, Scherzo (pronounced ‘S’care-Zoh’) which stands for “Joke” in Italian. You’ll find out more about me in the times to come… if I am able to sustain my interest in contributing regularly.

This post is actually a request; something that has been bothering me lately. It is a timely request, because more and more young people are becoming interested in politics/political commentary. But too many fall prey to euphemism, dishonesty and witch-hunting (personal attacks).

I came across a speech by Loh Kah Seng, given during the launch of “Men in White” at a library, which got me thinking a bit. The main excerpt which caught my attention was how he aptly describes a social phenomenon among our youth in the recent years:

“There is a tendency for young Singaporeans to read our past for inspiration and vilification. This is not surprising and is part of the enduring appeal of history. Inspiration because the past provides positive precedents, or heroes, of an earlier generation of Singaporeans (also young and idealistic then) struggling to make Singapore a better, fairer and more open society. Vilification because history also provides what appears to be proof of what some present day young Singaporeans want to believe – that the government is repressive, manipulative and narrowly neo-liberal. In short, we read Singapore history for Lim Chin Siong and Operation Coldstore.”

There’s a whole load of anti-establishment/anti-PAP angst that show up frequently on the Temasek Review and many other Internet portals that discuss Local Affairs. It is there where you can find these Singapore’s Neo-political-liberalists. My impression of them is that they love to go about scrutinizing every single piece of pro-government literature that comes out in mainstream media with “critical thinking skills” they picked up from god-knows-where. Very often these are senseless personal attacks at various political figures, or simply emotionally charged posts that appeal to the reader. They always seem to make sense at first, but upon full of logical fallacies that are either misleading or isolated cases that are exaggerated.

Be wary of:

Appeals to popularity – just because something is popular/unpopular, does not mean it is correct. Eg. “Majority of Singaporeans are disappointed with budget 2010. Singapore is going down.” Because everyone is upset about something, does not mean that it is harmful. Note that the use of ‘Majority’ as well: Majority of Singaporeans? Anti-government activists are also Singaporeans! And where did he get his numbers from?

False-dichotomies – Something that is not good, does not mean that it is bad. Be alert for people that present you with only 2 options, do not let them fool you into thinking there is no room for alternatives or to remain neutral.

Red Herrings – Used as a distraction. Eg. The PAP is not putting enough emphasis on keeping a tighter leash on PRs, what’s worse, incentives for childbirth have been stagnant for the past few years Clearly, immigration and childbirth incentives have little in common, but is roped into the argument to make the PAP look bad when in actual fact the argument at hand is about immigration policies!

I Forgot What This Fallacy is Called – But it is still a fallacy. When considering reading peoples’ interpretations of social/political trends, always take note of how his ideas are presented. Was the trend drawn from data/reliable observations? Or was it the other way round? There is likelihood that many poor/dishonest political commentators base their conclusions from their opinions/emotions first, then find ways to support their conclusion, often leaving out on purpose vital pieces of information that actually prove them wrong.

Finally, remember to address all the other political parties that isn’t PAP as ‘non-ruling parties’ and not ‘opposition parties’. It brings about a very negative connotation and is subconsciously perpetuated to those growing up; ‘opposition’ appears to be rather disruptive as compared to non-ruling.

It is unfair, if not difficult, to instantly label various political parties that don’t begin with ‘P’ and end with ‘AP’ to harbour malicious intents. They may ‘oppose’ the PAP sometimes, but where Singaporeans are concerned, they are addressing the concerns of a group of Singapore Citizens. As much as they like to find fault in our government/PAP and have peculiar ways of doing things, we must bear in mind that most of their intentions are good.

These are habits of the mind, to be critical of others’ thoughts as well as your own.

Have fun poking fun at lousy political blogs/articles/comments on Temasek Review! 😀

Game Theory & Politics

Chess
Well, it's a game...

Christopher Beam on Slate.com framed the Senate (or any democratic deliberative body) as “the world’s greatest collective-action problem“. In a way, it is. Debating on issues and surfacing potential problems stakeholders might face and arguing on the different consequences on different parties is one thing about parliaments and national assemblies but then decision-making is another.

In democracies, debates and discussions are known to hold up decision-making and the same is reflected in bureaucratic bodies where power is shared across several individuals. This dispersion of power calls for coordination to get anything done and thus allow game theoretical analysis to dissect the dynamics involved in any of those coordination outcomes (ie the final decision).

In some sense, this is a trade-off; deliberation this way that involves the coordination game ensures that the outcome cannot be entirely fair though it might provide an illusion of it. In the first place, reality includes a spectrum or even several dimension of opinions and no system can be designed to capture and aggregate this complexity. The authors of Thinking Strategically mentions this in one of the chapters on elections. As a result, we are left with the political game that is manipulating the legislative structure although everyone hates to admit it. In some sense, Singapore’s structure might churn out better results in terms of efficiency and do ‘the right thing’. The idea then, is to move the game away from the ballot box in the first place, to somewhere further and higher.

Carving up the USA?

USA
Equal Frags

I stumbled upon this creative but mad article that proposes cutting up the United States of America into 50 states of equal population size. The aim of this exercise is to equalise “congressional overrepresentation” from small states and rural areas. This would be quite important today considering that Congress representation is such that each state, regardless of population size, gets the same number of votes, which makes the small, rural states wield extra power. This extra power can come in handy to block bills unfavourable to them, as witnessed in the process to pass the cap-and-trade bill where small rural states, expected to be severely disadvantaged due to their agricultural economy, have used their votes to block the passing of the bill or try squeeze some concessions and caveats in return for votes. Neil Freeman discusses some advantages and disadvantages on his website.

Erasing the current borders of the USA is not a new idea. From as early as 1975, people have proposed the notion of carving up the USA into 38 states based on cultural and physical aspects of the territory. Professor C Etzel Pearcy realigned the boundaries based on newer and evolved concepts such as population density, urban sprawl and transport routes. Not quite how one normally decides a boundary (usually based on physical relief: rivers or mountain ranges for example), but still worth considering for the better of jurisdiction and administration. But of course, such measures are really controversial: will the people in power today want to yield their power to someone else, or have their powers curtailed? I am quite sure not.

And I am reminded of closer to home, when electoral boundaries are redrawn every now and then to accomodate for changing population sizes, according to the government.

Some entertaining ideas for you to think about this Lunar New Year.

State & Markets

Bihar
Now for political enlightenment...

While reading about Bihar’s Recovery, it dawned on me the importance of basic government structures in an economy. This sort of realisation had come to me while I was reading about the Haiti crisis and I really think all students of Economics should remind ourselves of the government structures working in the background implied in what we call a ‘Free Market’.

As observed from the article on Bihar, which interestingly is where the Buddha gained enlightenment (according to historical records), the state’s investment in infrastructure, maintaining order, a culture that respect the rights of all citizens (that can only be created from top down) often influenced very much by the enforcement of laws, as well as giving people freedom to pursue the market activities.

When we argue about the importance of not having government interventions in markets, and that state presence should only emerge in the case of market failures, we often neglect the notion that a government is in place in the background to honour the legal tender and anarchy is not the ruling ideology of the day. Trust in the free market is also important and it is upheld by law and order, which once again, falls on the government. As we’ve seen from the earthquake in Haiti, more room for market and less state is not always a good thing. Yet after acknowledging the need for a state we want to combat its advancement into various aspects of society that are usually governed by culture or self-organizing.

Maybe working on the margins of that would help Bihar discover this balance of state and market spaces.

When Economics clashes with (Geo)politics

First published in The New York Times on Wednesday, Thomas Friedman writes about the low likelihood of a “benign 2010” given the economic and geopolitical conditions currently brewing. I read the reprinted article on mypaper on Thursday and was rather amused by his arguments.

He started off by saying that 2009 was a pleasant surprise for being a rather peaceful year for “the world’s biggest economies” to heal without any major wars or political / geopolitical disruptions, and then asserts that 2010 would probably not be as peaceful. I do not really agree with him about the “three major struggles” we face (the banks vs President Obama, China vs Google & Iran vs the world), but he has managed to make rather substantial arguments.

Struggle 1: The banks vs President Obama
I did not quite think that this was a significant issue, but that is probably because Singapore is / was pretty sheltered from the full force of the economic breakdown in the West. At least in Singapore, the banks appear to be in rather good shape. But Singapore still bore some brunt from the crisis, thanks to our open economy. I will not go into an argument about how globalized our economy should be (suffice to say that I am for globalization, but not the “free-for-all” some Republicans seem to want) but I must agree that banking regulations need to be stiffened. President Obama has a very tough job balancing giving free rein to the banks to operate and continually grow their wealth (and hence America’s economy too) and managing expectations that as president he should be concerned more about his people who are suffering as a result of the folly of these bankers (and hence should punish the bankers). Either way, this tough balancing act is going to take much more than just “change we can believe in” or “yes we can” as President Obama promised before becoming president. His actions will have direct or indirect impact on the WHOLE world.

Struggle 2: China vs Google
Again, I never thought of this as a huge issue too, but it must certainly be one of much concern to quite a few if columnists keep writing every day about the relations between China and America and whether the trough in relations they are going through marks a change in tact or just posturing. The G2 (Group of 2 – China & America) notion aside, the assault on Google was certainly daring and bellicose. I am more inclined to side with Google and America, but you must also take into consideration the views of millions (of Chinese netizens) that the Chinese government have to assuage and calm. Many of them see the China-bashing as unwarranted and colonial bullying that is behind the times given the ascendant status of China, so I do not foresee that China and America’s retaliatory actions are going to end at just sanctions. I sure hope they do things calmly though… recall the saying “when elephants fight, the grass gets trampled”.

Struggle 3: Iran vs the World
Now this is an issue that I think people do not believe is a sufficiently major problem. Iran’s nuclear proliferation will be very dangerous to America as well as the world, and it will derail all the economic efforts put in by the world’s major economies given the potential changes it will cause to the geopolitical arena. This I think would be the most difficult struggle to resolve, given the ramifications that could spillover into the economic and social spheres (e.g. war). Unfortunately, given all the other problems that America and the world is facing now, it is inevitable for the Iran issue to be placed on the back-burner. But there must be understanding that neglecting the Iran issue and letting it fester will not make it any easier to solve.

I echo Friedman’s wishes that “cooler heads prevail” this year. Or else, as he says, “fasten your seat belts”.

Eggs and Bacon

Eggs/Bacon
Breakfast Only...

I got this from a friend, who is passionate about Economics very much like me.

A hen and a pig are negotiating to solve the food shortage. The hen makes a suggestion: “I will supply the eggs if you will supply the bacon.” The pig ponders this for a moment and replies: “But yours is a contribution, mine is a total commitment.”

– Kofi Annan

The Polarity of the Internet

Magnets
Like Poles Agree...

In today’s The Straits Times, Rachel Chang comments about “the power of the Net to polarise”.

She cites the examples of how vocal people on Facebook and their blogs, who have publicised their political views or displayed their political affiliations, have been slammed and harasssed online to the point that one such blogger stopped writing. The empowering voice of the Internet appears to work like a double-edged sword, threatening to slit the throat of the person wielding it in the face of the majority or the powerful.

It scares me sometimes how polarised views on the Internet can get. There does not seem to be room for compromise or discourse, it is very much an “us against them” game in terms of opinion rather than the moderated views across the spectrum. Chang quotes Cass Sunstein of the White House Office of Information and Regulatory Affairs for his view that people who “interact with others who share the same views… tend to become more extreme”. Of course, “the opposite is also true”, but at least looking at some of the incidents Chang has had to cover for The Straits Times, it appears as if the former applies more than the latter.

I can very much feel for myself this polarity when I visit The Temasek Review. It is considered a source that is less influenced by the government (as opposed to The Straits Times, which some may deem to be a government propagandist body) but I am seeing quite a lot of critical anti-government writing. Ever since I started visiting this website, my rosy views about the govenrment have been somewhat tainted, not in a bad way. At very least, I feel as if I am considering other non-governmental viewpoints that might reallly be the voice of the people and not just what the government feeds to us via the press. It is scary, however, how netizens slam each other for their views, be it pro-PAP or anti-PAP. It is rather heartening that there is much debate about Singapore’s future, and by and large discussion there is rather measured. It can get disturbing when emotions are flared up, as I notice in this write-up. I dare not express my views on this website for fear of being flamed to death by both pro-PAP and anti-PAP netizens.

Democracy… certainly brings about a cacophony that needs to be understood and tolerated, for all in the society to benefit. Hopefully with all the debate online and offline, people will come to a better understanding of what they want for their society. And it must mean dangerous times if arguments on the Internet spill over into real life and disrupt society.

So in essence… take heed online.

And just like Chang, I must add the disclaimer that I expect people to “shoot me nasty, unsigned email messages after reading this column”, if only just to pre-empt comments considering the nature of my writing.

Sanction no more?

Rolled Bills
No more trading!

In January 27’s The Straits Times, Susan Long writes in the Review column about why sanctions will not work in curbing Iran’s nuclear tendencies. Whether sanctions work or not has been a long debated issue, and simply googling the title of Long’s article “Why sanctions dont work now” will yield many articles that have been written on this subject, mostly arguing for the end of sanctions against “evil” countries like Iran and Cuba.

First, regarding Long’s write-up. She asserts that sanctions may not be as messy as outright fighting or war, but they harm the innocent civilians most and not the leaders and perpetrators. The poor suffer the most as they have limited access to food, medicine and daily necessities amongst other things, whereas the rich are not affected very much by economic sanctions since they already have the monetary ability to purchase high-end goods like “Swiss chocolate”. The elite will “thrive on the black market” while the poor suffer unnecessarily.

Sanctions can also backfire, such as when it unites a country against the perpetrators of the sanctions (often the United States of America together with the United Nations). Take the sanctions against Iran. Instead of isolating the Islamic regime led by Ayatollah Khamenei & President Ahmadinejad and causing displeasure towards the leaders by the populace, it could end up bringing together the forces that wanted to overthrow Khamenei & Ahmadinejad, led by the Green movement whose leader is Mir-Hossein Mousavi. This would make it even more difficult to “overthrow” the current Islamic regime should the incumbents unite with the opposition against the United States and the outside world.

Of course, sanctions are only sanctioned when the country that imposes the sanctions does not stand to lose much. And often countries that impose sanctions or threaten to do so end up revoking them out of other motivations, such as the United States’ threat to impose sanctions on Myanmar which in the end were not realised because such sanctions would have benefitted China and other rogue regimes that would increase their sphere of influence in the country.

Some other articles that disbelieve in sanctions can be found online as well. Nicholas Kristof of The New York Times has similar views to Long, published in the Global Policy Forum. David Henderson of Hoover Institution in Hoover Digest even goes as far as to propose that free trade with “rogue” nations would help to engineer collapses in these regimes when the people open their eyes to the world out there and what is on offer. Dursun Peksen in Foreign Policy names other plausible alternatives such as “engagement / dialogue” and even economic incentives like foreign aid.

In essence, the idea seems to be that should the stick fail, the carrot might be the only way out. In a globalized world such as ours, penalties like sanctions have a high chance of backfiring.

The Tsunami’s Application to Haiti

Haiti
All Gone Now...

An article in The Economist discusses the lessons learnt from the Indian Ocean tsunami in 2004 which can be applied to the recent devastating Haiti earthquake. Apparently, aid agencies concur that it is not the matter of the amount of aid being delivered to Haiti, but more of the local capabilities and responses to the earthquake that will make or break the relief efforts.

Post-tsunami, 9 months later, only 39% of money promised to be spent has been dispersed. It is not that more money is needed, but the types of aid being donated must correspond with the need. When “Viagra, ski jackets and Father Christmas costumes” can be donated to the tsunami victims, it does indicate that there is the lack of sensibilities in terms of what people donate and how they provide aid. We cant really fault the kind-hearted for wanting to do something, but to donate such unsensible and insensitive stuff to people who need more than those seems to smack of sheer stupidity. Or is it just a chance to clear one’s home of junk?

In addition, local administration has to be strong and in charge during a disaster. Malaysia’s response to the tsunami (Penang was affected) contrasts vastly with Aceh’s response. Malaysia’s effective governance made relief efforts useful while the political conflict in Aceh made it even more difficult for relief efforts, even if we ignore the fact that the epicentre of the disaster was in Aceh. Even the proliferation of too many NGOs can create headaches, as each NGO fights to distribute aid and contribute to relief efforts, which can make control and management very messy for the local administration. This was proven in Aceh with 180 NGOs operating there at one point, and may prove to be another problem in Haiti which had “more NGOs per capita than anywhere else in the Americas”.

Another article by the BBC on the differences between Haiti and Aceh points out other problems that Haiti faces that Aceh did not face, such as the lack of coordination and information on security forces operating in Haiti, which made Haiti appear to be like a “war zone” as portrayed on TV. And considering that Haiti at its best of times is already a nightmare, one can imagine how the earthquake would make things so much worse.

So the Haiti government as well as other governments and NGOs helping out in Haiti have to make sure they learn some lessons from the tsunami response efforts, or else even more will suffer.