Have the Malaysian voters thumbed their collective nose at the practice of buying votes with cash?

Greece needs more money. It has been bailed out by the IMF, but long term the Eurozone is running out of easy options to deal with Greece’s debt crisis. Whatever happens, some tax payers, investors and central banks stand to lose tens of billions of dollars.

Also, Japan Incorporated: After the nuclear disaster in March we take a look at where the slow road to recovery might end up.
And in Malaysia: As building gets underway on a new rare-earths plant, what is all the fuss about?

We also look at the big tech tie-up between Microsoft and Skype, and what effect that might have on both companies

Have the people of Tamil Nadu thumbed their collective nose at the practice of buying votes with cash? Yes, they indeed appear to have done precisely that. None reportedly excelled Alagiri in the art of converting cash into votes and yet in most constituencies personally supervised by this son of DMK patriarch M Karunanidhi, Jayalalithaa’s AIADMK won.
The scale of cash seized by the Election Commission while en route to disbursal has been unprecedented this year. This only shows that more money was spent this time, not that the money was prevented from reaching its intended destination. Yet, the voters chose to vote against the money givers. Voters, it would appear, resented the notion that the ruling DMK felt that its first family could indulge in the most brazen forms of self-aggrandisement and yet insulate themselves from popular anger using thick wads of currency notes. It hurt their self-respect. It didn’t help that the Tamil middle class saw the national media speculate that Tamils’ votes could simply be bought.
Add self-respect to the colour TVs in the category of things that the DMK has given Tamil voters only to see them work against the party. It may be recalled that the DMK’s political lineage goes back to Periyar’s self-respect movement. The colour TVs only served to let people see theirleaders’ true colours as multiple scams unfolded at breathless pace under media glare all of last year.
It is possible that the DMK’s and the ruling UPA’s seeming indifference to the plight of the Tamil minority in Sri Lanka also played a role in the DMKCongress alliance’s rout. Nobody really believed Jayalalithaa’s sincerity when she started talking about the Sri Lankan Tamils’ plight during the Lok Sabha elections of 2009. But when vaunted Dravida leaders briskly walk up to garland Sri Lankan president Rajapaksa, suddenly Jayalalithaa acquires layers of sincerity she had lacked earlier.
But is Jayalalithaa really the alternative to a corrupt DMK? If the DMK is Tweedledee, isn’t its challenger Tweedledamma? In the current context, if the people have to punish the DMK for transforming a socio-political movement into a family business, the only way is to vote in the AIADMK. Thank the Congress for it.
It has been crystal clear for some time that Tamil Nadu needs an alternative to the two Munnetra Kazhagams, which have comprehensively betrayed their founding missions and ideologies. And the Congress has a better chance than anyone else of moving into the vacuum. But not as a jumble of self-seeking, quarrelsome leaders in search of followers, of course.
What now for Tamil Nadu? It would be wrong to conclude that any party or the voters in their collective wisdom have a clear choice. The caginess displayed by Tamil voters that prevented any exit or opinion pollster from divining the landslide against the DMK-Congress alliance speaks of nervousness, not bold conviction. This is an open field, waiting for bold action on the part of someone with conviction, commitment and a decent programme of political renewal.
Jayalalithaa has acquired a reputation for being autocratic, whimsical, feudal in her conduct and vengeful. For a leader with national ambitions and speaks Hindi fluently, living down this reputation is itself a gainful occupation.
The DMK is now ever more dependent on whatever access to power it has at the Centre to protect it from a vengeful Jayalalithaa. This gives the UPA government one extra degree of freedom to function. It is now up to the leadership of the UPA to break out of its inertia and start delivering on its governance agenda.

Pakatan Rakyat (PR) lawmakers have blamed Barisan Nasional (BN) for failing to address the country’s addiction to subsidies with alternatives, rebuking Datuk Seri Najib Razak for transferring the “opium’ to cronies.

They said escalating cost of living and stagnant wages have made Malaysians dependent on subsidies, warning that any sudden removal would bankrupt people instead of encouraging competition and wiping out market distortions.
The PR lawmakers suggested the Najib administration take a more holistic approach to cut its burgeoning subsidy bill through a total restructuring of the system by reducing subsidies to corporate giants instead of to the poor, implementing a minimum wage council to boost salaries, and providing better public transportation system to reduce dependency on vehicle ownership and fuel consumption.
“What they are essentially doing shows that they are not serious in their intent to restructure subsidies in the country,” said DAP publicity chief Tony Pua who agreed with Najib subsidies were like “opium” to the Malaysian economy but he blamed the government for failing to provide a proper alternative to consumers before reducing their access to the subsidy “opium”.

Pua accused BN of diverting subsidy funds to large corporations. — file pic

He also complained that the administration was going about its subsidy removal plan in the wrong way by cutting from the “poor man on the street” and yet at the same time, still providing massive subsidies to big corporate giants.

“What Najib is doing instead is making this opium exclusive to Barisan Nasional (BN) cronies,” the Petaling Jaya Utara MP told The Malaysian Insider.
He said in order to ease the people’s addiction to the subsidy “opium”, better alternatives should be made available like a good public transportation system.
“At this point in time, Malaysians consume a large amount of fuel, not just because we pay lower-than-market rates but because we have no other alternative but to own cars due to the lack of transportation infrastructure,” Pua added.
He also suggested the government consider cutting back on its subsidies to corporate giants like the independent power producers (IPPs) and toll concessionaires instead of depriving the poor of financial aid.
Klang MP Charles Santiago agreed with Pua and added that one of the main reasons why Malaysians in general are so “addicted” to subsidies is because of their stagnating wages. He pointed out that 34 per cent of Malaysian workers earn monthly salaries of below the poverty line at RM700.
“Between 2000 and 2010, wages increased by only 2.6 per cent, meaning that in the last ten years, there has been a stagnation and our wages cannot match the rising cost of living.
“Also, the country’s household debt to the GDP is 78 per cent, and in the next two years, it will rise to 80 per cent. This shows that Malaysians are borrowing to survive… the average Malaysian family is highly indebted and highly dependent on subsidies for survival,” he said.
Charles, a trained economist, suggested that the government table a bill in the next Parliament sitting in June to propose the formation of a minimum wage council that will set minimum wages at between RM1,500 and RM2,000.
Additionally, he said, a cash assistance programme should also be implemented to complement the council, targeting groups like the poor and those earning below RM1,000 monthly.
“Finally, there should be major effort by the government to cut back on corruption which costs the country a lot of money, cut back on big expenditures like subsidies to corporate giants and regulate the outflow of illicit capital,” he said.

Dzulkefly said Najib’s labelling of Malaysians as subsidy addicts was unfair. — file pic

He pointed out that if the government wanted to reduce market distortions and encourage competition, it should employ the same measures on corporate giants like IPPs and toll concessionaire holders.

“Let them fight in the global economy. They should be competitive too… if they cannot make it, then too bad,” he said.
He pointed out that the “culprit” that was sustaining market distortions was the government itself in its provision of massive subsidies and financial grants to corporate giants and cronies.
“And on the other hand, they are reprimanding and humiliating the rakyat by saying we are addicted to this subsidy opium, which pales in comparison to what they are giving to their cronies,” he said.
Dzulkefly urged the government to consider policies outlined by PR in its Buku Jingga, in which an overall restructuring of the subsidy system is suggested.
“We in PR understand that the approach is not going to be simply dismantling subsidies… we call for a holistic restructuring of the system. Theirs (BN) is just a piecemeal, short-term method which, if they proceed with it, will force the poor to be subjected to the vulgarities of the global economics,” he said.
The Kuala Selangor MP added that a total subsidy withdrawal would trigger inequitable costs to the more sensitive groups like the lower income earners.
“This is like a neo-conservative policy of enriching cronies and the more privileged group while victimising the poor.
“Ask Najib, through this way, will it not exacerbate the inequality of distribution of wealth and equity?” he said.
Dzulkefly also reprimanded the administration for constantly bragging that its policies placed the people’s interests above all else.
“It is Umno cronies that benefit, who are addicted to this opium. You brag about it as though it is a crime that we enjoy subsidies. We are taxpayers, too.
“In fact, we should be given our daily essentials and quality services like good healthcare, education, transportation, water and so on but here you are talking about prioritising withdrawing subsidies,” he said.

Malaysians were forced towards private vehicles by poor public transport, said the PR MPs. — Reuters pic

PKR communications director Nik Nazmi Nik Ahmad said the government should not punish the public for its inability to balance the country’s budget, by removing subsidies to those in need of it.

He pointed out that when the economy was doing well between 2003 and 2008, the government had failed to cut its spending and had instead embarked on massive infrastructure projects, resulting in a budget deficit for the past few years.
“No one disputes that subsidies distort the economy but the issue is that in Malaysia, massive corporate giants like the IPPs, the toll concessionaires, continue to enjoy generous subsidies worth billions of ringgit more than the smaller things like sugar, flour and rice.
“The fact that we are facing a deficit budget now should not be blamed on the people, it is the fault of the government and its failure implement strategies to encourage a dynamic growth in the economy.
“The people are suffering from high inflation, no minimum wage, the prices of properties ballooning… so why burden the public instead of the corporate sector,” he said.
In a speech to the Oxford University’s Centre for Islamic Studies on Monday, Najib described fuel subsidies as “opium” to the Malaysian economy, adding that it will have to be reduced gradually to bring the budget deficit under control.
He said his government had budgeted for fuel subsidies to cost the economy RM11 billion this year but that the estimate had soared to around RM18 billion because of high international crude oil prices.
America’s current unemployment crisis is predominately the result of a pronounced dip in the business cycle, according to a new paper by economists at the International Monetary Fund. But, structural factors, like shortages of highly-skilled laborers, is keeping the jobless rate high, too, the paper finds.
The authors of the IMF working paper, entitled “New Evidence on Cyclical and Structural Sources of Unemployment,” argue that roughly 75 percent of average unemployment is due to a lack of demand in the economy, 25 percent a result of workers not possessing desirable skills.
In other words, the wave of joblessness in America is mostly due to cyclical factors, not inherent structural weaknesses, the paper finds.
The causes of persistently high unemployment since the financial crisis are still a matter of debate. Paul Krugman wrote last September that “structural unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions.”
Since the financial crisis, a rising unemployment rate has transformed into an all-out unemployment crisis, reaching 10.1 percent in late 2009 from 4.4 percent just two and a half years earlier. By April 2011, it had dropped only somewhat, to 9.0 percent.
The report contends the Great Recession closely mirrors the recession of 1973-1975, another period when shocks to various industrial sectors also played a large role in the rising unemployment.
Long-term unemployment has become a critical problem in the U.S: the average length of unemployment between jobs now exceeds 30 weeks, the report says, which is 10 weeks higher than any other period dating back to the 1960s. The report also cites a 2011 study finding that 20 percent to 25 percent of the recent increase in unemployment can be attributed to “industrial and occupational mismatches” in the workforce, “rather than geographic mismatches.”
Over the course of the Great Recession, however, 40 percent of America’s country’s long-term unemployment crisis comes from a structural mismatches in worker skills, the study finds.
Compounding those structural issues is the foreclosure crisis. Bad housing conditions, the report contends, might “slow the exodus of jobless individuals from a depressed area,” making it difficult for people to get to the jobs. That combo — “skill mismatches and higher foreclosure rates” — has on its own raised the country’s unemployment rate by 1.5 percentage points since the beginning of the crisis, the report says.
And as the length of unemployment increases, the study continues, the already “substantial” effect of structural shocks becomes even “more important,” with the worker’s change of finding a job dwindling by the day.
Christina Romer, who formerly held a chair President Obama’s Council of Economic Advisers, made a similar point in a speech at Washington University in April.
“While I am confident that most of the current elevated unemployment is due to cyclical factors, I am not at all sure that structural unemployment will not become more important going forward,” Romer then said. “[S]tructural unemployment has risen somewhat nationwide, and could rise further if we don’t reduce cyclical unemployment quickly[.]”
Combatting that structural unemployment, Romer continued, requires investing in scientific research, better education and programs aimed at helping areas injured by trade. “Some will say that given our desperate long-run fiscal situation, we can’t possibly spend more on anything,” Romer said “I think this is deeply wrong.”
Still, so far, it is the low levels of output associated with cyclical unemployment that has been “clearly the dominant factor” in explaining the unemployment crisis, the report contends. That would indicate that so long as the economy grows, it will bring as least some of America’s struggling workforce up with it.
The IMF report stands in contrast to a March report by researchers at the San Francisco Federal Reserve Bank that argues the unemployment crisis to be predominately cyclical. They based their claim on the recent difficulties of young college graduates to find jobs, under the assumption that if the issue is structural, there would still be a demand for college graduates.

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