No time to be patient

Can we, Malaysians, not see the changes we so long for in our lifetime?

NELSON Mandela is dying. The world waits sombrely and respectfully for what seems to be inevitable. He has lived to a good age – he turns 95 on July 18 – and it is time to let him go. What’s more, this great man’s place in history is assured.

He is in the same league as Mahatma Gandhi and Abraham Lincoln, for what he did for his country.

Yet, I wonder: Mandela was in his Robben Island prison cell for 27 years. During that time, did he ever think he would not live to see the end of apartheid in his beloved South Africa. Perhaps he thought, “Not in my lifetime.”

“Not in my lifetime”, that’s what we say to denote the unlikelihood of something momentous or significant happening or coming to fruition within our life span.

I guess NIML (as those four words have been abbreviated in this Internet age) would have crossed the minds of cynics concerning the fight to end slavery or suffrage for women in centuries past.

“Freedom for slaves? Never, not in my lifetime?” “Vote for women? Balderdash! Surely not in my lifetime.”

In our more recent past, so many amazing things have changed or taken place that were thought quite impossible, at least NIML: The creation of the Pill that sparked the sexual revolution, men walking on the moon and the birth of the first test-tube baby.

I remember when “Made in Japan” was a byword for shoddily made products that didn’t last and China was an uptight communist state where its repressed people dressed in monochrome colours and were deprived of life’s little luxuries.

Today, Japanese-made products are synonymous with quality; Russia and China are practically unrecognisable from the USSR and China of, say, 1985.

So too South Korea, now east Asia’s poster nation. But it wasn’t too long ago it was under a repressive military dictatorship and it was only in May 1980 that the Gwangju Uprising began that nation’s transformation to liberal democracy.

Who would have thought back in the 1980s, that many Chinese nationals and Russians would become obscenely rich citizens living freely in various parts of the world; or that South Korea would rule with “soft” power through its pop culture.

Ironically, I found Korean music grating and unpleasant during the opening ceremony of the 1988 Seoul Olympic Games. Twenty-five years on, I can hum Arirang, Korea’s popular folk song, and have k-pop songs on my handphone, a Samsung Galaxy, of course.

All that in my lifetime. And I am not that old. Really.

Change is a constant throughout the ages but the current speed of it is what takes our breath away. We accept and even demand it when it involves technology, our devices and machines.

Japanese scientists are ready to send a talking robot called Kirobo into space that can communicate directly with astronauts on board the International Space Station.

Better still, researchers just announced that people with severe spinal cord injuries can walk again with ground-breaking stem cell therapy that regrows nerve fibres.

Dr Wise Young, chief executive officer of the China Spinal Cord Injury Network, was quoted as saying: “It’s the first time in human history that we can see the regeneration of the spinal cord.”

He further declared: “This will convince the doctors of the world that they do not need to tell patients ‘you will never walk again’.”

It is a pity quadriplegic Christopher Reeve, who will always be Superman to his fans, did not live to see it happen in his lifetime.

Yet, strangely enough, when it comes to change to create a better and safer society, change to weeding out corruption, change to needs-based policies, change to save our education system, change to end institutionalised racism, we seem willing to apply brakes and decelerate.

We tell ourselves, “slowly lah”, or “some things take time” and yes, even “not in our lifetime” because we believe the things we want changed are too entrenched or too rotten.

I refuse to accept that because, as I have repeatedly lamented, we don’t have the time to slow such things down. We need to change urgently and effectively or we will fall further behind other nations. What I think we need for effective change to happen is great statesmanship and selflessness from our leaders.

While Mandela is rightly honoured and revered, he could not have succeeded in ending apartheid without the support and courage of F.W. de Klerk, the now largely forgotten last white president of South Africa who freed Mandela.

Similarly, it was Mikhail Gorbachev, the last general secretary of the Soviet Union who brought political, social and economic reforms that ended both the USSR and the Cold War.

It is men in power like them who had the political will, the vision and steely courage to dismantle their untenable systems of government and set their nations on the path of a new future.

Do we have a de Klerk or Gorbachev among our leaders who will demolish race-based politics and policies, free our education system from politics and truly fight corruption and crime? A leader who will move our nation onto a new path of greatness by quickly harnessing all the talents that a multiracial Malaysia has to offer without fear or bias?

Can it happen in my lifetime? Since I have seen what was deemed impossible, NIML, the first black man elected US President, I want to believe the answer is yes, we can.

So Aunty, So What? By JUNE H.L. WONG

> The aunty likes this quote: Patience is good only when it is the shortest way to a good end; otherwise, impatience is better. Feedback: junewong@thestar.com.my or tweet @JuneHL­Wong

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New economic thinking

LAST weekend, over 400 top economists, thought leaders, three Nobel Laureates and participants gathered in Hong Kong for the fourth Annual Institute for New Economic Thinking (INET) conference, co-hosted by the Fung Global Institute, entitled “Changing of the Guard?”



So what was new?

In the opening session, Dr Victor Fung, founding chairman of Fung Global Institute, quoted Henry Kissinger as saying, “Americans think that for every problem, there is an ideal solution. The Chinese, and Indians and other Asians think there may be multiple solutions that open up multiple options.”

That quote summed up the difference between mainstream economic theory being taught in most universities and the need to build up a new curriculum that teaches the student to realise that there is no flawless equilibrium in an imperfect world and that there is no “first-best solution”.

Instead, what is important is to teach the aspiring economist to ask the right questions, and to question what it is that we are missing in our analysis. It is important to remember that theory is not reality, it is only a conceptualisation of reality.

Nobel Laureate Friedrich Hayek, one of the leading thinkers on open societies and free markets, explained why the practice of mainstream economics is flawed. In 1977, he said, “A whole generation of economists have been teaching that government has the power in the short run by increasing the quantity of money rapidly to relieve all kinds of economic evils, especially to reduce unemployment.

Unfortunately this is true so far as the short run is concerned. The fact is that such expansions of the quantity of money, which seems to have a short-run beneficial effect, become in the long run the cause of a much greater unemployment. But what politician can possibly care about long-run effects if in the short run he buys support?”

Sounds familiar on present day quantitative easing?

In his 1974 Nobel Laureate Lecture entitled “The Pretense of Knowledge”, Hayek showed healthy scepticism: “This failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences an attempt which in our field may lead to outright error.”

Hayek understood what is today recognised as quantitative model myopia. What cannot be easily measured quantitatively can be ignored. Then it is a small step to assume that what can be ignored does not exist. But it is precisely what cannot be measured and cannot be seen the “Black Swan” effect that can kill you.

In other words, economists must deal with the real world of asymmetry information, that there exists Knightian uncertainty, named after University of Chicago economist Frank Knight, what we call today unknown unknowns.

Unknown unknowns arise not just from accidents of Mother Nature, but from the unpredictability of human behaviour, such as market disorder, which is clearly complex and ever-changing.

If unknown unknowns are common in real life, then a lot of the economic models that appear to give us precise answers may be wrong. In other words, for every question, there is no unique answer and the solutions are “indeterminate”.

George Soros, who helped found INET, explained his theory of reflexivity based on the complex interaction between what he called the cognitive function (human conception of reality) and the manipulative function (the attempt by man to change reality).

His theory of reflexivity in markets differs from mainstream general equilibrium theory in one fundamental aspect. General equilibrium models assume that market systems are self-equilibrating, going back to stable state. Borrowing from engineering systems theory, we now know that this is a situation of negative feedback a system that gets disturbed fluctuates smaller and smaller till it returns to stable state.

The trouble with nature and markets is that positive feedback can also happen. The fluctuations get larger and larger until the system breaks down. Nineteenth century Scottish scientist James Maxwell discovered that steam engines can explode if there is no governor (or automatic valve) to control the steam building up.

At about the same time, English bankers learnt that banks can go into panic regularly without the creation of a central bank to regulate the system. Markets therefore need a third party the state to be the system “governor”. Free market believers think that the market will take care of itself. John Maynard Keynes was the first to recognise that when free markets get into a liquidity trap, the state must step in to stimulate expenditure and get the economy out of its collective depression.

In the 21st century, we have evolved beyond Keynes and free market ideology. Belief in unfettered markets has created a world awash with liquidity and leverage, but the capacity of advanced country governments to intervene Keynesian style has been constrained by their huge debt burden.

Larry Summers has pointed out that Keynes invented not a General Theory, but a Special Theory for governments to intervene to get out of the liquidity trap. The fact that we are still struggling with the liquidity trap means that economists are searching for new solutions, such as borrowing from psychology to explain economic behaviour.

The INET conference introduced the thinking of French literary philosopher, Rene Girard, and his theory of memetic desire, to explain how social behaviour more often than not get into unsustainable positive feedback situations, either excessive optimism or pessimism. How do you get out of such situations? Girard introduced the concept of sacrifice. We will have to wait for the next conference to explore this new angle.

Intuitively, all life is a contradiction. The sum of all private greed is not a public good. It does not add up. Someone has to sacrifice, either the public or a leader.

Schumpeter's great insight about capitalism is that there is creative destruction. He only restated the old Asian philosophy that change is both creative and destructive. But out of change comes new life.

In sum, contradictions are creative. What is new is often old, but what is old can be new.

 
Tan Sri Andrew Sheng is president of Fung Global Institute.