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Books & printed materials Economics Society

[3014] Michael Sandel’s What Money Can’t Buy and the limits of the market

There is a feeling that traffic offenses in Malaysia are generally not taken seriously by road users or the authorities, unless somebody dies or gets hurt. The fines are low and if you wait long enough, it will get discounted generously. It also gets discounted heavily if you pay it quickly. There are threats of court action or towing in cases of illegal parking of course but this almost always never happens due to the hassle it involves. For the authorities, offering discounts to offenders is far simpler and cheaper. But there is a terrible cost to this approach. That cost comes in the form of changing expectations and the cementing of the wrong behavior.

These traffic fines are meant to discourage behaviors that affect the public space negatively (for instance, parking at the junction is illegal because it may cause collision between other road users). But today, these effective fines are too low that instead of functioning as deterrent, they are now an enabler of bad behavior. The fines become fees.

What this means is that instead of a person paying fines to make amends, now that person pays fees to allow him to commit wrongdoing. So, people now are paying fees for the permission to break the law.

Fine as fee is among the subjects of Michael Joseph Sandel’s What Money Can’t Buy. The subtitle is more descriptive: The Moral Limits of Markets. Sandel is a political philosopher who is perhaps best known for his Justice lecture series.

Fine as fee is only a specific example of a general set of cases where incentives designed to discourage certain behavior end up encouraging it instead. More precisely, (some) market-based incentives have the capacity of corrupting individual behavior by making previously frown-upon actions acceptable, which in the end makes the experience of public space sharing less desirable. There is a hint of the tragedy of the commons here.

There is one real world example I would like to cite from the book. It revolved around child-care centers in Israel that had difficulties with parents who were always late in picking up their kids. To discourage late pickups, the centers introduced a fine. In theory, this should encourage parents to pick up their children on time. But it became a perverse incentive, a concept undergraduates learned in their introductory microeconomics classes. Instead, it changed parents’ behavior for the worse, who now see the fine as a payment for late pick-up service. Incidence of late pick-ups rose afterward, as parents were more than happy to pay for the convenience. The lesson here is that that fine (a market-based solution) changed the expectations about late pickups: from something that reflects irresponsibility to just another non-judgmental service.

But this example and more are not a Freakonomics kind of entertaining read that opens up the world of economics to lay readers. Sandel attempts to convince us that market-based incentives change norms, unlike the typical economics assumption that these incentives itself are valueless and only reflects preexisting preferences.

Sandel’s ultimate thesis is that we have evolved from having a market economy to becoming a market society, where market mechanism has pervaded throughout all aspects of our life. He is worried that such proliferation is crowding out non-market norms and that the outcome is for the worse. Some of these norms are the egalitarianism (for example, lining up as opposed to express lanes where you pay to get ahead), the sacredness of human life (as opposed to paying for human organs or babies), honesty (as opposed to paying for friendship or dates), empathy (as opposed to auctioning immigration rights to refugees), civic mindedness (as opposed to paying to pollute or simply be a litterbug) or in general, the inculcating of the public spirit or civic duties which the market more often erode.

What Money Can’t Buy can be seen as an anti-market work but I think that is an unhelpful way of looking at it. Instead, it should be seen as a warning that not all realms of life should be opened to market mechanism or solutions. We should not bribe our kids with cash so that they eat their greens or clean their rooms or get an A at school. Sometimes should be encouraged through non-market means. There are social and moral limits to markets and there is wisdom in acknowledging those limits, even if one is—especially if one is—as I am, generally a pro-market person.

This brings back to our Malaysian case of traffic offences and fines as fees where people pay to commit offences. The possible solutions (apart from the market ones that involve more severe non-discountable punitive pecuniary penalties) appear to be a non-market one: towing, driving license suspension, lengthy court cases and even jailing.

Yet, most of these non-market solutions require government enforcement and enforcement requires funding, i.e. tax revenue. This goes back to the contributory factor behind the proliferation of market mechanism in our life: shortage of public funding means a retreat of public service, and that empty space gets filled up by private enterprises.

And yet, non-market norms where it exists can be cheaper than market norms. As Sandel writes, and I agree with this:

“[f]rom an economic point of view, social norms such as civic virtues and public-spiritedness are great bargains. They motive social useful behavior that would otherwise cost a lot to buy. If you had to rely on financial incentives to get communities to accept nuclear waste, you’d have to pay a lot more than if you could rely instead of the residents’ sense of civic obligation. If you had hire schoolchildren to collect charitable donations, you’d have to pay more than a 10 percent commission to get the same result that public spirit produces for free.”[1]

[1] — The mentions of nuclear waste and donation refer to an earlier real world examples in the book.

On nuclear waste: Switzerland needed a site to store nuclear waste. In a survey, when residents of a village were asked whether their would accept the government constructing a nuclear waste site at their location, 51% said yes out of sense of civic duty and the common good. But when the same question was asked with cash compensation added in, the result changed. Now, only 25% would agree, with the rest felling offended that they were being bribed.

On donation: two economists did an experiment involving high schoolchildren going door-to-door solicitating donations for certain cause. These children were divided into 3 groups. The first group was given a motivational speech about the worthiness of the cause, the second was given the same speech while getting to keep 1% of any donation collected and the third was also given the same speech while getting to getting to keep 10% of donation collected. The result? The first group collected 55% more donation than the second group. Meanwhile, the third group did better than the second, but worse than the first. Lesson: doing it for free out of civic duties leads to better results, but if you want to pay, it has be to a lot.

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Books & printed materials

[3013] A talk to celebrate the second anniversary of The End of the Nineteen-Nineties

All the way back in February this year, I gave a talk about The End of the Nineteen-Nineties at Ilham Gallery in Kuala Lumpur, in conjunction of the ‘Boom Boom Bang: Play & Parody in 1990s K.L.’ exhibition.

Since today’s the second anniversary of the book, I thought I should share the talk here.

In summary, I explained why 1990s was fundamental in shaping the Malaysia of today. The video has me talking for 60 minutes and the rest was me answering questions.

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Books & printed materials Society

[3012] The contemporary relevance of Syed Hussein Alatas’s Intellectuals in Developing Societies

While reading Syed Hussein Alatas’s Intellectuals in Developing Societies recently, there was one question that kept popping in my head. Is the book still relevant to contemporary Malaysia?

Some rights reserved. By Hafiz Noor Shams.

Published in 1977 but written earlier, Syed Hussein Alatas asserted that developing countries such as Malaysia (and more generally, throughout Asia) did not have an intellectual class. There were a few intellectuals but they were so few and far between that they were powerless and could never function as a class that could exert influence on the elites and the society as a whole.

He attributed the lack of the intellectual class in Malaysia (really, his focus was Malaya/Peninsular Malaysia but the claim is also relevant to the Borneo states) to the massive colonial immigration. In his own words, “the population of Malaya was composed of immigrant groups, devoid of intellectual interest, many of them from the lower economic class in their country of origin.” Meanwhile, the colonial education system was designed by the British purely for vocational reasons and avoided the nurturing of intellectual interest. In short, the whole population was more concerned with economic and other immediate practical factors instead of intellectual pursuits.

The economic focus with limited intellectual development continued beyond the colonial period. Here, Syed Hussein Alatas blamed the Alliance/Barisan Nasional government for failing to create the intellectual class. He reasoned the peaceful nature of the country (relative to the more turbulent revolutionary history such as in Indonesia, the Philippines and Vietnam) had made governing a routine business. Such routines gave way to the rise of the managerial politicians and technocratic class where they functioned to keep the social machine running, instead of manufacturing new machines that intellectuals would do. The lack of need to create new machines meant the lack of need for intellectuals. Only crisis would demand intellectuals and Malaya and Malaysia had little, or so that was the claim.

While that might be true, surely there is an intellectual class in Malaysia today. Syed Hussein Alatas himself had influenced a whole school of thought that is alive and well in Malaysia. And there are other intellectuals of different persuasion who are thriving in the country now. In fact by the 1970s, it does appear to me there was an identifiable intellectual class with Syed Hussein Alatas himself a giant. Furthermore, the events of 1969 were a crisis for Malaysia and to follow his own logic, the times demanded intellectuals, which the society then did provide.

This counterpoint of mine shifted my mental mode. Instead of reading the book as something of contemporary relevance, I began to view it as a material giving insight to the 1950s-1970s society. After all, the author was fully engaged in the 1960s-1970s political debates, with commentaries/examples on less-than-inspiring results from government policy and policy implementation in Malaysia then. He reserved some venom for the Cabinet under the leadership of Tunku Abdul Rahman, which Syed Hussein Alatas described as lacking rationality and filled with unsuitable happy-go-lucky personalities. (There are several chapters on fools and bebalisma but I have a feeling this segment of the book was steam-blowing ranting against the then-government disguised as an model—essentially it is about calling other people stupid without actually doing so. Syed Hussein Alatas had a political career in opposition to Tunku Abdul Rahman and Tun Razak’s leadership.)

Perhaps, something does not change after all.

And perhaps, the existence of an intellectual class does not entirely remove the relevance of Intellectuals in Developing Societies to contemporary Malaysia.

Here, the lack of need for intellectuals during the early days of Malaysia had led to the education system focusing on developing technical expertise without inculcating a ‘philosophic spirit’, an idea borrowed from Egyptian intellectual Muhammad Abduh and a long line of other intellectuals. This gave rise to what Syed Hussein Alatas called the dualistic man where outwardly the person accepts, enjoys and wants the conveniences of science and technology but inwardly, believes in the supernatural in direct contradiction to the sciences. The person wants to be the consumer of science but the science behind the product can be magic for all he or she cares. This can easily describe our post-modern reality that might get worse with the proliferation of mindless artificial intelligence usage within our society.

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Books & printed materials Conflict & disaster History & heritage

[3011] Mornings in Jenin and Palestinian narrative in literature

There is a short author’s note near the end of Susan Abulhawa’s novel Mornings in Jenin. In the last paragraph, the author recounted the time she met Edward Said and how that influenced her. Abulhawa is a Palestinian American, just like Said. In that page, she mentioned that Said lamented how “the Palestinian narrative was lacking in literature.” After that conversation, she “incorporated his disappointment into [her] resolve.”

Reflecting on that, I think in some instances literature and art in general can be more effective in promoting a cause than academic or non-fiction pieces of work.

Over the past two years or so in response to the killings in Gaza as well as the constant illegal Israeli settlers’ violence in the West Bank, I have attempted to educate myself further about the Palestinian experience. Wikipedia has been a constant companion because it is the easiest access to a generally good source of information. But reading Wikipedia might be dissatisfying and it is easy to drown in a sea of dry hyperlinks and articles that are too long for the screen.

Rashid Khalidi’s The Hundred Years’ War on Palestine has been helpful in guiding me through the narrative and make sense of all the information on Wikipedia. The book is the best non-fiction work on Palestine I have read yet.

But non-fiction makes you work for it. This might not work for many who read for entertainment purposes instead of learning. And non-fiction can be dry. I think the reason The Hundred Years’ War on Palestine reads great is because Khalidi merges his personal stories to make sense of the facts, which makes the grand historical narrative spanning for more than a lifetime more human.

Here is where Mornings in Jenin excels. First published in 2006 under the more controversial original title The Scar of David, the novel for me is the most emotional book I have read in a long time. The characters are fictional but they live through real events described in The Hundred Years’ War on Palestine. There were multiple segments of the novel where I was on the verge of tearing up. Reading it was an emotional rollercoaster that makes one sympathizes with the Palestinian people even more. It adds an extra dimension that is hard for most non-fiction to tap into.

As it turns out, Mornings in Jenin is the first English literature that explores the Palestinian experience and so, fulfilling Abulhawa’s promise to herself to incorporate Palestine into modern literature. That makes Mornings in Jenin an important novel to read in order to understand the Palestinian sufferings better.

And so, I feel Edward Said is right about the importance of literature to the Palestinian experience.

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Books & printed materials Economics Politics & government Society

[3010] Reviewing Abundance and thinking about the abundance agenda

One of the central themes of The End of the Nineteen-Nineties (by yours truly) is that a robust and widely shared economic growth is a prerequisite to Malaysia’s civic nationalism that comes in the form of Bangsa Malaysia. I argue that the loss of growth momentum caused by the late 1990s Asian Financial Crisis is the primary reason behind why civic nationalism is struggling to have itself centered in Malaysian politics. If you sympathize with the argument, then it is natural to buy into the overall abundance agenda.

Ezra Klein and Derek Thompson are two champions that have popularized the idea of abundance through their recent 2025 book Abundance.

However, Abundance is a US-centric work. Some parts of the book sound like a boosterism for the Biden agenda: build, build, build. The support for the CHIPS Act is apparent throughout the book.

If you are living and working in Asia, problems raised by Klein and Thompson such as reluctance to build more housing, slow renewable energy progress and the general weakness in infrastructure spending might sound like an alien concept. In this part of the world, infrastructure spending is something we have learned to take for granted. Oversupply and overcapacity are more the buzzwords than scarcity is.

Nothing highlights this more by the differing reactions to a recent clip of the US President convoy driving along a Malaysian highway during the recently concluded Asean Summit in Kuala Lumpur: some US audience were amazed by various aspects of the highway while the Malaysian reactions included pride (thank you for noticing!), indifference (what’s the so special about the stretch road?) and smugness (welcome to the first world…). And this is just Malaysia, not China with its ultramodern out-of-this-world infrastructure and industrial might that is just hitting the ball out of the park.

Yet, the implications of Abundance have relevance to this part of the world too.

For one, policy priorities do change but change does not come easy. In fact, policy momentum often come in the way of new challenges. The authors go some length to explain why it is hard to build in the US: there was a time during the 1960s-1980s when development went too far that other concerns such as pollution, health and road safety were ignored. Since then, public pressures and court cases have put in place various legislations and bureaucracies to address these issues. These restrictions were relevant then, but they are now in the way of addressing new challenges. Example includes laws that used to restrict pollutions and preserve the environment are now preventing progress towards clean energy deployment that is necessary to combat climate change.

This can be true for Malaysia too in multiple areas. One area I can think of is Malaysia’s set of incentives, which a majority of them are geared towards the industries of the 1990s but not of the 2020s. Many of these incentives are now irrelevant but continued to be given by the government for various reasons, which is now taking resources for emerging concerns. Another policy is simply the petrol subsidy: we would like to push the country towards greater electrification but the subsidy is clearly in the way.

Another important lesson is that scarcity, oftentimes, is a choice. Sure, the physical world can only serves us so much but policies in many cases are the cause behind scarcity. Bringing the idea closer to home in Malaysia, our collective reluctance to raise taxes is the reason behind capacity and quality challenges we face in the health and education sectors. We choose the scarcity, and then we fight among ourselves to win stupid prize in that stupid games we created.

The greatest lesson perhaps is this: growth is not the only thing that matters but do not take it for granted. In fact, to put it more strongly, degrowth is not the way. This should be obvious with the various social pressures caused by deindustrialization faced by not just the US, but especially Europe. In Malaysia, for those still holding on to the idea of Bangsa Malaysia, growth is a must.