Is American Democracy Strong Enough for Trump?

February 28, 2017

Is American Democracy Strong Enough for Trump?

The case against panic.

As an American citizen, I have been rather appalled, like many others, at the rise of Donald Trump. I find it hard to imagine a personality less suited by temperament and background to be the leader of the world’s foremost democracy.

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“The End of History” (Liberal Demorcacy) under Threat

On the other hand, as a political scientist, I am looking ahead to his presidency with great interest, since it will be a fascinating test of how strong American institutions are. Americans believe deeply in the legitimacy of their constitutional system, in large measure because its checks and balances were designed to provide safeguards against tyranny and the excessive concentration of executive power. But that system in many ways has never been challenged by a leader who sets out to undermine its existing norms and rules. So we are embarked in a great natural experiment that will show whether the United States is a nation of laws or a nation of men.

President Trump differs from almost every single one of his 43 predecessors in a variety of important ways. His business career has shown a single-minded determination to maximize his own self-interest and to get around inconvenient rules whenever they stood in his way, for example by forcing contractors to sue him in order to be paid. He was elected on the basis of a classic populist campaign, mobilizing a passionate core of largely working-class voters who believe—often quite rightly—that the system has not been working for them. He has attacked the entire elite in Washington, including his own party, as being part of a corrupt cabal that he hopes to unseat. He has already violated countless informal norms concerning presidential decorum, including overt and egregious lying, and has sought to undermine the legitimacy of any number of established institutions, from the intelligence community (which he compared to Nazis) to the Federal Reserve (which he accused of trying to elect Hillary Clinton) to the American system of electoral administration (which he said was rigged, until he won).

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Dr. Daron Acemoglu–Nations can fail and why?

Daron Acemoglu, an economist who studies failing states, has argued that American checks and balances are not as strong as Americans typically believe: Congress is controlled by Trump’s party and will do his bidding; the judiciary can be shifted by new appointments to the Supreme Court and the federal judiciary; and the executive branch bureaucracy’s 4,000 political appointees will bend their agencies to the president’s will. The elites who opposed him are coming around to accepting him as normal president. He could also have argued that the mainstream media, which thinks of itself as a fourth branch holding the president accountable, is under relentless attack from Trump and his followers as politicized purveyors of “fake news.” Acemoglu argues that the main source of resistance now is civil society, that is, mobilization of millions of ordinary citizens to protest Trump’s policies and excesses, like the marches that took place in Washington and cities around the country the day after the inauguration.

Acemoglu is right that civil society is a critical check on presidential power, and that it is necessary for the progressive left to come out of its election funk and mobilize to support policies they favor. I suspect, however, that America’s institutional system is stronger than portrayed. I argue in my most recent book that the American political system in fact has too many checks and balances, and should be streamlined to permit more decisive government action. Although Trump’s arrival in the White House creates huge worries about potential abuses of power, I still believe that my earlier position is correct, and that the rise of an American strongman is actually a response to the earlier paralysis of the political system. More paralysis is not the answer, despite the widespread calls for “resistance” on the left.

Many institutional checks on power will continue to operate in a Trump presidency. While Republicans are celebrating their control of both houses of Congress and the presidency, there are huge ideological divisions within their coalition. Trump is a populist nationalist who seems to believe in strong government, not a small-government conservative, and this fracture will emerge as the new administration deals with issues from ending Obamacare to funding infrastructure projects. Trump can indeed change the judiciary, or more troubling, simply ignore court decisions and try to delegitimize those judges standing in his way. But shifting the balance in the courts is a very slow process whose effects will not be fully felt for a number of years. More overt attacks on the judiciary will produce great blowback, as happened when he attacked Federal District Judge Gonzalo Curiel during the campaign.

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The Republican TrioU.S. President-elect Donald Trump (centre), U.S. Senate Majority Leader Mitch McConnell and the Destruction of American Democracy

Trump will have enormous difficulties controlling the executive branch, as anyone who has worked in it would understand. Many of Trump’s Cabinet appointees, like James Mattis, Rex Tillerson and Nikki Haley, have already expressed views clearly at odds with his. Even if they are loyal, it takes a huge amount of skill and experience to master America’s enormous bureaucracy. It is true that the U.S. has a far higher number of political appointees than other democracies. But Trump does not come into office with a huge cadre of loyal supporters that he can insert into the bureaucracy. He has never run anything bigger than a large family business, and does not have 4,000 children or in-laws available to staff the U.S. government. Many of the new assistant and deputy secretaries will be Republican careerists with no particular personal ties to El Jefe.

Finally, there is American federalism. Washington does not control the agenda on a host of issues. Undermining Obamacare on a federal level will shift a huge burden onto the states, including those run by Republican governors who will have to balance budgets on the backs of the default from Washington. California, where I live, is virtually a different country from Trumpland and will make its own environmental rules regardless of what the President says or does.

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Image result for Nikki Haley and Rex TillersonGen. James Mattis, Secretary of State Rex Tillerson and US Ambassador to the UN Nikki Haley–The Counter Trump Trio in the 45th Administration?

In the end, Trump’s ability to break through institutional constraints will ultimately come down to politics, and in particular to the support he gets from other Republicans. His strategy right now is clear: He wants to use his “movement” to intimidate anyone who gets in the way of his policy agenda. And he hopes to intimidate the mainstream media by discrediting them and undermining their ability to hold him accountable. He is trying to do this, however, using a core base that is no more than a quarter to a third of the American electorate. There are already enough Republican senators who might break with the administration on issues like Russia or Obamacare to deny their party a majority in that body. And Trump has not done a great job since Election Day in alleviating the skepticism of anyone outside of his core group of supporters, as his steadily sagging poll numbers indicate. Demonizing the media on the second day of your administration does not bode well for your ability to use it as a megaphone to get the word out and persuade those not already on your side.

While I hope that all of these checks will operate to constrain Trump, I continue to believe that we need to change the rules to make government more effective by reducing certain checks that have paralyzed government. Democrats should not imitate the behavior of Republicans under President Barack Obama and oppose every single initiative or appointee coming out of the White House. It is absurd that any one of 100 senators can veto any mid-level executive branch appointee they want. In some respects, unified government will alleviate some of our recent dysfunctions, which Trump’s opponents need to recognize.

The last time Congress passed all of its spending bills under “regular order” was two decades ago. The U.S. desperately needs to spend more money on its military to meet challenges from countries like China and Russia; it has not been able to do so because the Defense Department was operating under the 2013 sequester that was in turn the product of congressional gridlock.

Or take infrastructure, which is the one part of the Trump agenda that I (and many Democrats) would support. The country has been gridlocked here as well, with the biggest source of opposition being the Tea Party wing of Trump’s own party, who would have stymied Hillary Clinton’s own initiative had she been elected instead. Trump has the opportunity now to break with the Freedom Caucus in the House and push for major new spending on infrastructure, which he could do with help from Nancy Pelosi’s Democrats.

Even so, such an initiative will face enormous obstacles due to the layers of regulation at federal and state levels. It is these small checks that make new infrastructure projects so costly and protracted. Anyone serious about the substance of this policy should see this an opportunity to streamline this process.

It is important to remember that one of the reasons for Trump’s rise is the accurate perception that the American political system was in many respects broken—captured by special interests and paralyzed by its inability to make or implement basic decisions. This, not a sudden affinity for Russia, is why the idea of a Putin-like strongman has suddenly gained appeal in America. The way democratic accountability is supposed to work is for the dominant party to be allowed to govern, and then be held accountable in two or four years time for the results it has produced.

Continued stalemate and paralysis will only convince people that the system is so fundamentally broken that it needs to be saved by a leader who can break all rules—if not Trump, then a successor

So I’m willing to let Trump govern without trying to obstruct every single initiative that comes from him. I don’t think his policies will work, and I believe the American people will see this very soon. However, the single most dangerous abuses of power are ones affecting the system’s future accountability.

What the new generation of populist-nationalists like Putin, Chávez in Venezuela, Erdogan in Turkey, and Orbán in Hungary have done is to tilt the playing field to make sure they can never be removed from power in the future. That process has already been underway for some time in America, through Republican gerrymandering of congressional districts and the use of voter ID laws to disenfranchise potential Democratic voters. The moment that the field is so tilted that accountability becomes impossible is when the system shifts from being a real liberal democracy to being an electoral authoritarian one.

Trump and New World Order

February 28, 2017

Trump and New World Order

Brought to you by Lee Kuan Yew School of Public Policy featuring Dr. Amitav Acharya

Published on Feb 27, 2017

The election of Donald J. Trump as the US President has caused much anxiety about its damage to the liberal international order. But Trump is the consequence, rather than the cause, of the crisis and decline of the existing order. That decline, as foretold in Acharya’s 2014 book, The End of American World Order, has to do with the liberal order’s own internal limitations – aggravated by a long-power shift in world politics – that a complacent liberal establishment in the West had glossed over earlier. Recognizing the broader and multifaceted nature of those challenges is key to any hopes for building world order 2.0: a decentered and pluralistic Multiplex World, with its own challenges and opportunities.

Amitav Acharya is the Boeing Company Chair in International Relations at the Schwarzman Scholars Program, Tsinghua University, Beijing, and Distinguished Professor of International Relations and the UNESCO Chair in Transnational Challenges and Governance at the School of International Service, American University, Washington, DC.

This talk is moderated by Prof Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy, NUS.

Wisma Putra and the North Korean Murder Snafu

February 28, 2017

Wisma Putra and the North Korean Murder Snafu–A Message to Foreign Minister Anifah Aman

by Dato Dennis Ignatius

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The heinous assassination at KLIA of Kim Jong-nam, half-brother of North Korea dictator Kim Jong-un, by North Korean agents grabbed headlines around the world. It was another reminder of the depravity, recklessness and ruthlessness of the regime in Pyongyang.

The assassination, however, also put the spotlight on Malaysia once again with the international media converging on Kuala Lumpur to cover the story. As is usual in such situations, our policies, personalities and processes come under scrutiny as well.

Wisma Putra’s role

Although the case is still ongoing, one thing is already clear: we would benefit from a more coherent and coordinated response particularly when dealing with a fast developing issue in the full glare of the world.

While the Police rightly took the lead in investigating the crime, Wisma Putra, which should have stepped in to cover the diplomatic and international dimensions of the case, was largely aloof, at least in the days immediately following the incident.

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Indeed, sources within the international media lamented privately that no one in Wisma Putra was willing to speak to them on or off record or answer questions relating to the case.

It was only after the North Korean Ambassador launched his unfounded and outrageous broadside against the government’s handling of the case that Wisma Putra finally found its voice and even then only to rebut the Ambassador.

Perhaps that was what Minister in the Prime Minister’s Department, Rahman Dahlan, was hinting at when he said, following last Wednesday’s cabinet meeting, that Cabinet wanted Wisma Putra to be more proactive on the matter.

Diplomatic immunity

Wisma Putra’s lack of intervention has also contributed to the ongoing confusion regarding the status of diplomatic personnel caught up in such cases. As late as yesterday, senior Police officers were still insisting that a North Korean diplomat either cooperate with the Police or face arrest.

The Vienna Convention (1961), of which both Malaysia and North Korea are signatories, is very clear on this – under no circumstances can a duly accredited diplomat be detained or interrogated unless his own country formally revokes his immunity. The only recourse that is available in such cases is to declare the offending official ‘persona non grata’ and insist that he leave within 24 hours.

This is basic diplomatic practice which no country would want to ignore, no matter how justified the circumstances, because it puts its own diplomats everywhere at risk. Certainly, Malaysia would not want to violate such a sacrosanct principle of inter-state relations.

Need to get our act together

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Wisma Putra needs to be professional and proactive

The fault, however, has as much to do with Wisma Putra’s failure to provide clarification in a timely fashion as with the way government agencies operate in times of crisis and the manner in which inter-agency cooperation is managed; there are simply no clear-cut rules for determining who takes the lead in such cases.

Clearly, we have learned little from previous experiences like the MH370 saga about the critical importance of putting in place a well-defined crisis response team together with a central spokesperson, someone who is trained, professional, knowledgeable and fluent in English to handle the press, serve as the main conduit for information and speak on behalf of the government as the situation develops.

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Malaysia’s Prime Minister Najib Razak is always in La Laland, instead of getting down to the serious business of government

This is pretty standard operating procedure in other countries; there is no reason why it can’t be done here as well.

A muddled Foreign Policy

The assassination also brought home the incoherence of Malaysia’s current policy towards North Korea.

That North Korea is a rogue nation, a serious threat to international peace and stability and a horrifically abusive regime is no secret. The real question is why Putrajaya has allowed North Korea to turn Malaysia into one of its most important bases of operation in the region from which to carry out clandestine activities, circumvent UN sanctions and engage in all sorts of illicit enterprises to earn hard currency for the regime.

A recent UN report noted, for example, that North Korea has flouted UN sanctions by relying on middlemen and front companies in Malaysia [and China]. It cited specifically the case of a Malaysia-based front company controlled by North Korea’s Reconnaissance General Bureau which is tasked with overseas operations and weapons procurement.

North Korea also uses cities like Kuala Lumpur to access the international banking system in violation of UN sanctions.

Because of the relatively lackadaisical attitude towards North Korea, Pyongyang has gradually expanded its operations in Malaysia to the point where there are now about 1000 North Koreans operating in Malaysia, one of the largest North Korean expatriate communities in the region.

Given that North Korea is a highly regulated Stalinist-like state with no free enterprise and absolutely zero individual freedoms, it would be naïve to believe that North Koreans living in Malaysia are merely private businessmen, entrepreneurs or simple students. They are all agents of the state sent here on one sort of mission or another.

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The lack of proper oversight and surveillance of North Koreans in Malaysia also makes it doubtful whether any one actually knows what all these North Koreans are really up to. It was reported, for example, that one of the North Koreans implicated in the assassination came in on a work permit two years ago but never worked at the designated company.

Even before the assassination, Malaysia, with its generous visa-free regulations and lax visitor controls, had already garnered a reputation as an international haven for all kinds of shady people and activities. As was widely reported at the time, al-Qaeda, for example, held an important meeting in Kuala Lumpur prior to the 9/11 attacks.

The North Koreans are now exploiting this vulnerability for their own purposes.

Naïve and gullible

There is also obviously a certain amount of naivety, even gullibility, on the part of our officials when it comes to dealing with countries like North Korea. During the 13th Malaysia International Branding Showcase event last year, one of our senior trade officials gushed that “North Korea is now looking at using Malaysia as a gateway to Southeast Asia markets as it finds the country business friendly with pro-business policies.”

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Kang Choi, North Korean Ambassador to Malaysia

North Korea, which has hardly any exports worth talking about, was certainly looking at using Malaysia as a gateway but not for the kind of activities that our trade officials had in mind.

BERNAMA (the national news agency), meanwhile had discussions with North Korea to enhance cooperation in information-related areas while one private Malaysian university–HELP University–even awarded Kim Jong-un an honorary doctorate in economics, apparently for his “untiring efforts for the education of the country and the well-being of its people.”

One has to wonder what motivates such patently misguided and fatuous decisions.

Stung by the North Korean Ambassador’s undiplomatic and unwarranted criticism of Malaysia’s handling of the case, many of our ministers have now joined the chorus of condemnation against North Korea.

Our Minister of Tourism, Nazri Aziz, for instance, warned Malaysians not to travel to North Korea noting that with North Korea one could never predict what would happen. “They do all sorts of unimaginable things,” he cautioned.

He is, of course, quite right but then North Korea has always been unpredictable and unsafe. What the minister should be explaining is why North Korea was even allowed to open a tourism office in Kuala Lumpur and why Air Koryo was allowed to fly into KLIA until 2014 when the service was suspended due to UN sanctions.

For all the wrong reasons

The decision in 2003 to establish a resident diplomatic mission in Pyongyang was also baffling. Bilateral trade is almost non-existent and there are no pressing bilateral matters that require sustained engagement with North Korea.

How establishing a resident mission could ever be justified under such circumstances is a mystery.

It does suggest perhaps that we seem to establish diplomatic and consular missions too hastily and for all the wrong reasons. Instead of concentrating our limited manpower and financial resources to where it can make the most difference, we spread ourselves out across the globe – 111 diplomatic and consular posts in 85 countries – in the mistaken belief that diplomatic missions automatically translate into greater influence, respect and international standing. Singapore, by comparison, has no more than 45.

Reviewing relations with North Korea

For all these reasons, the Cabinet’s recent decision to review relations with North Korea is long overdue.

It’s time that Malaysia ally itself with all those, including China, South Korea and Japan, who are deeply concerned with North Korea’s egregious behaviour and the threat it poses to peace and security in the region.

Once the investigations into the assassination are completed, Malaysia should, therefore, move to downgrade relations with North Korea. Among the actions that can be considered is closing our diplomatic mission in Pyongyang, expelling the North Korean Ambassador (for his undiplomatic behaviour) and all other North Korean diplomats implicated in the assassination, revoking the visas of North Koreans working in Malaysia, ensuring strict compliance with all UN sanctions against North Korea and suspending all bilateral cooperation agreements.

While Malaysia is too far removed to be directly engaged in dealing with the North Korean problem, we can play a small and meaningful part in making UN sanctions against North Korea more effective, depriving it of an important base of operations in the region and helping further isolate the rogue regime in Pyongyang. And Malaysians would certainly be the safer for it too.

Populism is on the rise but the Center can hold in Europe

February 28, 2017

Populism is on the rise but the Center can hold in  Europe

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The Next French President Emmanuel Macron–The charismatic Emmanuel Macron

by Dr. Fareed

By now it is settled wisdom that we are witnessing the rise of radical forces on the left and right around the globe. Populists of both varieties, who share a disdain for globalization, are energized, certain that the future is going their way. But the center is rising again, even in the heart of the old world.

Consider Emmanuel Macron, the 39-year-old former Rothschild banker who is the odds-on favorite to become France’s next President. Polls indicate that the far-right candidate, Marine Le Pen, is leading the field in the first round with about 25 percent of the vote. But in the second round, which pits only the two front-runners against one another, Macron is projected to beat her handily. Keep in mind that Macron is emphatically in favor of free markets, globalization, the European Union and the transatlantic alliance — and yet he is surging in a country often defined by its strong labor unions, skepticism of capitalism and distrust of the United States.

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Far right Marine Le Pen– A nightmare for France and Europe

Why? Because Macron is, above all, an outsider, a reformer and a charismatic politician, and these qualities appear to be far more important than an ideological checklist. Social science studies have shown persuasively that people connect to candidates on a gut level and then rationalize that connection by agreeing with their policy proposals. There was little difference between the ideologies of Bill and Hillary Clinton. But voters in Middle America felt, at an emotional level, that Bill “got them,” and never felt that way about Hillary.

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Europeans and Americans sense a stagnation in the economics and politics of the West. They are frustrated with business as usual and see the established order as corrupt, paralyzed and out of touch. Macron’s campaign is working because it is brimming with energy. His new party is called On the Move! ; his campaign book is titled “Revolution.”

“Macron is, in some sense, the handsome brother of Marine Le Pen,” says Columbia University scholar Mark Lilla. “Both fill a vacuum created by the collapse of the major parties. All over Europe, the main political parties represent old cleavages between the church and secularism, capital and labor. Macron and his movement are new. He represents start-ups, the young, tolerance, flexibility and, above all, hope.”

We are living through a sea change in politics and watching an outbreak of populism. But this doesn’t mean that there are no other forces and sentiments at work. The world is increasingly connected, diverse and tolerant, and hundreds of millions of people in the West, especially young people, celebrate that reality. Macron champions these ideals, even as he appeals to others who are more nervous about the changing world.

Macron is not an isolated phenomenon. Consider Germany, where much has been made of Angela Merkel’s sagging poll numbers. But Merkel has been in power for more than a decade, at which point almost no Western leader has been able to maintain enthusiastic support. Margaret Thatcher, Tony Blair and Helmut Kohl all watched their approval ratings spiral down around the 10-year mark. And Merkel’s greatest competition comes from Martin Schulz, a left-of-center former bookseller who is even more pro-European, cosmopolitan and globalist.

“The political order is messy right now,” Lilla says. “It will eventually sort itself out around the new cleavage — people comfortable with globalization and those opposed to it.” But for those of us at the center, who do see globalization as a positive force, we will need to understand the cultural dislocation caused by the large-scale immigration of recent decades.

The center can win. Europe is not inexorably heading down a path of right-wing nationalism that abandons the European Union, economic integration, the Atlantic alliance and Western values. But much depends on the United States, the country that created the strategic and ideological conception of the West. A senior European leader who attended the Munich Security Conference last week noted that, despite some reassuring words from senior American officials, “many of us are convinced that the White House is trying to elect Le Pen in France and defeat Merkel in Germany.” And there is heady talk by White House chief strategist Stephen K. Bannon about weakening the European Union and destroying the established order.

Image result for fareed zakariaFareed Zakaria with the Enfant Terrible of US Foreign Policy Dr. Henry Kissinger

If the United States encourages the destruction of core Western institutions and ideals, then the West might well unravel. But this would not be one of those stories of civilizational decline in the face of external threats. It would be a self-inflicted wound — one that might be fatal.

To Donald J. Trump, Politicians and their lot around the world, please take Cornel West’s advice to heart or face rejection, humiliation and retribution. Enough is Enough. So lead with compassion and integrity.–Din Merican

“You can’t lead the people if you don’t love the people.
You can’t save the people if you don’t serve the people.”

Image result for Cornel WestCornel West,

American Philosopher, Political Activist, Social Critic


Right-Sizing the Malaysian Civil Service?

February 27, 2017

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Note: Yes, Tan Sri, to civil service reform or right sizing (as you call it) but it requires political will. First let us remove top civil servants who are only good at buttering up corrupt politicians. Both the Chief Secretary to the Government Ali Hamsa and Secretary-General to the Treasury Irwan Siregar, for example, should be asked to go on retirement followed by incompetent senior servants (the deadwood) who should be replaced by a new corp of civil  servants  chosen for their competency and courage to speak to power.

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Is this the face of a reformer? Look elsewhere, Tan Sri Mohd Sheriff.

Next, open up the civil service to all Malaysians, not just Malays and then stop recruiting Malay graduates who are not employable elsewhere and finally, disband Cuepecs since this union is an obstacle to any reform.

I bet you Najib Razak is not the man who is likely to take tough action against civil servants since they form the backbone of UMNO’s political support.

So let us not talk about right-sizing the civil service when we know the Prime Minister will not undertake civil service reform since his political survival is at stake. We are a failed state with a dysfunctional political system and a civil service which is performing sub-optimally.–Din Merican

Right-Sizing the Malaysian Civil Service?

by Mohd Sheriff Mohd Kassim

COMMENT: There have been a lot of emotional reactions from Cuepacs and Perkasa about my statement regarding the oversized civil service. Perhaps the sensitivity is due to the fact that the civil service is mainly Malay and Malay dependence on the civil service for employment is very high.

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The right-sizing of our civil service through a voluntary separation scheme is badly needed. There are ways of doing it in a humane and caring manner.

First, the government can start with retraining of redundant employees by giving them free courses on skills development: computers, English, basic accounting, corporate law, etc – all the skills needed to make them employable in the private sector.

I am sure once the employees get these skills, many would like to leave as soon as they reach optional retirement age. The government employees will self-separate.

It should be noted that there are thousands of civil servants, where both husband and wife are in the government service. In many cases among the lower level categories, one of them is doing part-time business like selling kain, tudung, kuih, religious books, etc, to earn more money. They probably have business ambitions but cannot afford to leave the government, because they have no capital.

Imagine if an offer is made for a voluntary separation package of RM40,000 for 20 years of service. The chances are one of them will take the package, while the other one will continue to work in the government until retirement to enjoy the medical benefits for the whole family. Thus, the government is helping the Malay wife or husband to become an entrepreneur, a genuine one because they have a track record.

Voluntary separation schemes, like those in the private sector, cannot be forced upon because it is illegal to terminate a worker who has not done anything wrong and has been a loyal employee.

Automation can replace human labour

The scheme should affect those whose functions are no longer needed because automation can replace human labour and because, with technology, there is no more need for sending letters or face-to-face service – ie the human-intensive work is no longer relevant in 21st Century Malaysia.

In the banking sector, there is no need to go to the branch for transactions. That is why banks are closing down their branches and terminating their employees.

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Malaysian Civil Servants pledging to serve the corrupt UMNO regime led by Malaysian Official No. 1.

I believe the government can also look at closing down completely, or partially, certain offices and branches without affecting the quality of service. The redundant civil servants should then be deployed to other functions or retrained to prepare them for the separation scheme.

While the government right-sizes redundant civil servants, it will have to continue to recruit those that are needed for specialized expertise in the fields of finance, economics, research, medicine, education, science, environment, law, etc. This should be encouraged as the civil service must continually upgrade the quality of its staff.

The government should be focusing more on quality, rather than quantity, because this is the way to increase productivity and efficiency in the civil service.

We should have a much smaller administrative service to support the functioning of government ministries and departments. This can be achieved by decentralizing and empowering of authority to reduce the multi-layer approval process.

A lot of progress has been made in recent years to improve the counter delivery services in several departments, with the use of technology and the simplification of procedures. Logically, there should be less need for manpower and the redundant staff can be offered voluntary retirement with an attractive compensation package.

If it takes some years for the government to recover the heavy expenditure of the separation scheme, then it is worth it. We can hope that with smaller government, the economy as a whole will become more efficient and with dynamism and growth in private sector activities, the government will collect more taxes to recover the cost of the separation scheme.

I believe the government should start planning a right-sizing program of the civil service now, so that it can be done in a proper manner, rather than wait until there is a financial crisis, at which time government employees will be retrenched without justice for all their years of loyal service. This has happened in Greece, as I mentioned previously.

Tan Sri MOHD SHERIFF MOHD KASSIM, a former Secretary-General of the Treasurer, is a member of the G25 Group of Eminent Malays.

Recommended READ by Tan Sri Mohd Sheriff Mohd Kassim:

The Anatomy of Populist Economics

February 27, 2017

The Anatomy of Populist Economics

by Economist Brigitte Granville*

Today’s populist movements are all following a similar economic prescription, and governments in Hungary, Poland, and the US are giving the world an early dose of what the future may hold. Will voters swallow the medicine, or will they soon start seeking a second opinion

For at least the past year, populism has been wreaking havoc on Western democracies. Populist forces – parties, leaders, and ideas – underpinned the “Leave” campaign’s victory in the United Kingdom’s Brexit referendum and Donald Trump’s election as President of the United States. Now, populism lurks ominously in the background of the Netherlands’ general election in March and the French presidential election in April and May.

But, despite populism’s seeming ubiquity, it is a hard concept to pin down. Populists are often intolerant of outsiders and those who are different; and yet Geert Wilders, the far-right Dutch populist leader, is a firm believer in gay rights. In the US, Trump’s presidential campaign was described as an anti-elite movement; and yet his administration is already practically a subsidiary of Goldman Sachs.

While today’s populist resurgence comes from the nationalist right, some of the leading populist exponents in recent decades – such as Venezuela’s late president, Hugo Chávez – were firmly on the left. What they share is a zero-sum view of the world, which necessitates the creation of scapegoats who can be blamed for all problems. Moreover, because populist leaders claim to embody the uniform will of a mythical “people,” they consider democracy to be a means to power, rather than a desirable end in itself.

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But populists have more in common than an obsession with cultural boundaries and political borders. They also share a recipe for economic governance, one that Project Syndicate commentators have been tracking since long before today’s brand of populism began dominating the world’s headlines. Guided by their insights, we can begin to understand the origins of today’s populist resurgence, and what is in store for Western countries where its avatars come to power.

Diagnosing the Problem

Given populism’s many faces, is it really possible to identify a root cause? For Warwick University’s Robert Skidelsky, it is no coincidence that the two major political upheavals of 2016 – the Brexiteers’ success in last June’s referendum and Trump’s election victory – occurred in “the two countries that most fervently embraced neoliberal economics.” The US and the UK’s economic model over the past few decades, Skidelsky observes, has allowed for “obscenely lavish rewards for a few, high levels of unemployment and underemployment, and curtailment of the state’s role in welfare provision.” And this widening inequality, he writes, “strips away the democratic veil that hides from the majority of citizens the true workings of power.”

But Gavekal Dragonomics Chief Economist Anatole Kaletsky sees another dynamic at work, and offers “several reasons to question the link between populist politics and economic distress.” For starters, he points out that “most populist voters are neither poor nor unemployed; they are not victims of globalization, immigration, and free trade.” Having analyzed Brexit exit polls and voter-survey responses, Kaletsky concludes that “cultural and ethnic attitudes, not direct economic motivations, are the real distinguishing features of anti-globalization voting.”

At first blush, these arguments may seem incompatible; but their disagreement is really only between ultimate and proximate causes. For Skidelsky, “It is when the rewards of economic progress accrue mainly to the already wealthy that the disjunction between minority and majority cultural values becomes seriously destabilizing.” Likewise, for Kaletsky, “The main relevance of economics is that the 2008 financial crisis created conditions for a political backlash by older, more conservative voters, who have been losing the cultural battles over race, gender, and social identity.”

Harvard political philosopher Michael Sandel warns against focusing exclusively on “the bigotry in populist protest” or viewing it “only in economic terms.” The fundamental issue, he argues, is “that the upheavals of 2016 stemmed from the establishment’s inability to address – or even adequately recognize – genuine grievances.” And, because these grievances “are about social esteem, not only about wages and jobs,” they are difficult to disentangle “from the intolerant aspects of populist protest” – namely, anti-immigrant sentiments.

Nobel laureate economist Edmund Phelps also links populist voters’ anger to their loss of dignity in the larger political economy. As the share of US employment in manufacturing has steadily declined, blue-collar workers, Phelps notes. “have lost the opportunity to do meaningful work, and to feel a sense of agency.” In other words, “losing their ‘good jobs’” meant losing “the central source of meaning in their lives.” And while many of the lost manufacturing jobs were replaced with new jobs in new sectors, as Oxford University historian Margaret MacMillan cautions, nuanced economic arguments “cannot counter the unhappiness of people who feel marginalized, undervalued, and scorned.”

A Democratic Disease

Princeton University’s Jan-Werner Mueller, who published a highly regarded book about populism last year, has identified such “feelings of dispossession and disenfranchisement” as “fertile ground” in which populist politicians can sow seeds of resentment. And, in an earlier commentary that long predated the current news cycle, Mueller explained that, “Populism cannot be understood at the level of policies; rather, it is a particular way of imagining politics.” Above all, he observes, the populist imagination is inherently divisive: “It pits the innocent, always hard-working people against both a corrupt elite (who do not really work, other than to further their own interests) and those on the very bottom of society (who also do not work and live off others).”

In its more virulent forms, populism can be thought of as being akin to an autoimmune disease, whereby democracy gives rise to forces that attack it. Andrés Velasco, a former finance minister of Chile, laments that the nature of representative democracy can create an impression that politicians are “distant and untrustworthy.” The “rhetoric of modern democracy,” he writes, “emphasizes closeness to voters and their concerns.” But elected representatives cannot spend all of their time interacting with constituents when they have a duty to govern. When this dissonance between rhetoric and reality becomes “too glaring,” Velasco notes, “political leaders’ credibility suffers.”

This loss of trust leads disaffected citizens to put a premium on perceived authenticity. So, “although populist policies reduce overall economic welfare,” Velasco notes, “rational voters choose them because they are the price of distinguishing between different types of politicians.” In fact, such a willingness to suffer further economic pain in order to avenge elite betrayals and strike back at scapegoats may be a defining element of today’s populist resurgence.

Populist leaders in Hungary and Poland, who are currently advancing their own brand of “illiberal democracy,” seem to have staked their governments’ future on this presumption. As Central European University’s Maciej Kisilowski points out, it may not even matter that “the high economic costs of illiberal democracy are already apparent.” These countries’ electorates, Kisilowski surmises, “may regard economic stagnation as an acceptable price to pay for what they want most: a more familiar world where the state guarantees the dominant in-group’s sense of belonging and dignity, at the expense of ‘others.’”

Sławomir Sierakowski of the Institute for Advanced Study in Warsaw provides further support for this point. When Jarosław Kaczyński’s Law and Justice Party (PiS) returned to power in Poland a year ago, many assumed that it would quickly fail. Instead, it has succeeded, because Kaczyński mastered the politics of “two issues near and dear to voters: social transfers and immigration,” Sierakowski explains. “As long as he controls these two bastions of voter sentiment, he is safe.” Of course, given the PiS government’s politicization of the courts, the civil service, and the press, the same cannot be said for Poland’s democratic institutions.

A Populist Placebo

But how long can populist governments sustain generous transfers in the absence of strong economic growth? The answer will depend on how long their supporters remain convinced that they can have their cake and eat it – which is precisely what former Brexit leader and current British Foreign Minister Boris Johnson promised to Leave voters. Indeed, as Columbia University’s Jeffrey Sachs observed just after the Brexit vote, “Working-class ‘Leave’ voters reasoned that most or all of the income losses would in any event be borne by the rich, and especially the despised bankers of the City of London.”

Given the UK economy’s unexpected resilience last year, the populists probably feel vindicated. But, though most economists misjudged “the immediate impact that the United Kingdom’s [vote] would have on its economy,” writes Chatham House’s Paola Subacchi, “a gloomy long-term prognosis is probably correct,” given British leaders’ desire for a complete break from the European Union’s single market and customs union.

Such delayed effects can create an alibi for unsustainable policies, which, according to Velasco, is precisely “how economic populism works.” For example, the approach that Trump seems likely to take – tax cuts, growth-stimulating measures, and protectionism, with little thought given to inflation or public debt – is untenable, and will ultimately fail. But, as Velasco puts it, “‘Ultimately’ can be a very long time.” And that can give populist governments more staying power than many observers assume. “Populist policies are called that because they are popular,” he notes. “And they are popular because they work – at least for a while.”

In the meantime, populist leaders can pursue policies favored not only by their base, but also by many of their opponents. In the whirlwind of his first days in office, for example, Trump fulfilled his campaign promise to abandon the 12-country Trans-Pacific Partnership (TPP). This, Princeton University’s Ashoka Mody believes, was actually a welcome move, given that “international trade agreements, propped up by powerful interests, have become increasingly intrusive.” Similarly, before Trump’s election, Harvard University economist Dani Rodrik called for a rebalancing “between national autonomy and globalization.” In Rodrik’s view, it should go without saying that “the requirements of liberal democracy” must come before “those of international trade and investment.”

Trump’s promise of corporate tax reform has also wide appeal beyond his electoral base. For Harvard’s Martin Feldstein, who chaired President Ronald Reagan’s Council of Economic Advisers, current legislative proposals to overhaul the US’s outdated tax system could “have a highly favorable impact on business investment, raising productivity and overall economic growth.” Assuming that Trump, working with congressional Republicans, can strike the right policy balance, he will have bought himself some time with the business community.

Princeton University economic historian Harold James makes a related point, arguing that “the economics of US populism will not necessarily fail, at least not immediately,” owing to the US’s “uniquely resilient” position in the global economy. “Because [the US] has historically been the global safe haven in times of economic uncertainty,” James notes, “it may be less affected than other countries by political unpredictability.”

A Turn for the Worse

But even if Trump can extend his honeymoon, James does not discount the possibility that “today’s contagious populism will create the conditions for its own destruction.” One way that could happen, argues Benjamin Cohen of the University of California, Santa Barbara, is if the US loses its “exorbitant privilege” as the issuer of the dominant international reserve currency. If Trump “pursues his protectionist promise to put ‘America first,’” Cohen writes, “investors and central banks could gradually be impelled to find alternative reserves for their spare billions.”

Trump’s version of economic populism could also face a reckoning if it results in a new boom-bust cycle – one that could end in a period of stagflation around the 2018 US congressional elections. Just before the election, Feldstein warned that “overpriced assets are fostering an increasingly risky environment.” Given that the US economy is already at full employment, with an inflation rate near 2%, Trump’s planned fiscal stimulus could push it into overdrive, and force the Federal Reserve to raise the federal funds rate.

Such a scenario would certainly worsen the plight of Trump’s constituency of white working-class voters in America’s former manufacturing heartland. But so, too, would his trade proposals, which could easily precipitate trade wars with China, Mexico, and other trading partners. Trump has told displaced blue-collar workers to blame trade deals and competition from imports for the loss of their jobs. But, “with productivity gains exceeding demand growth” worldwide, Nobel laureate economist Joseph Stiglitz points out, America “would have faced deindustrialization even without freer trade.”

Given this, Trump’s prescription of trade protectionism, Stiglitz says, will only “make all Americans poorer.” One reason, explains former World Bank Chief Economist Anne Krueger, is that imports create and sustain jobs, too. The irony of Trump’s proposed import tariffs is that they threaten American exporters. Many export-industry jobs, Krueger points out, exist because inexpensive imports enable American manufactures to compete domestically and abroad; and “exporting to the US gives foreigners more income with which to buy imports from the US and other countries.”

Simon Johnson of MIT also fears such a lose-lose scenario. If Trump starts taxing imports, Johnson argues, “the cost per job will be high: all imports will become more expensive, and this increase in the price level will filter through to the cost of everything Americans buy.”

Botching the Operation

Other Project Syndicate commentators have pinpointed a deeper flaw in populist economics, apart from any specific policy proposal: recklessness. Populists often overplay their hand by flouting legal, economic, or political conventions, or by exerting inappropriate influence in markets to try to funnel benefits to their supporters. In fact, according to a classic study of economic populism in Latin America by Sebastián Edwards of UCLA and the late Rüdiger Dornbusch of MIT, it is standard populist practice to show “no concern for the existence of fiscal and foreign exchange constraints” in the pursuit of faster growth and redistribution.

New York University’s Nouriel Roubini suspects that Trump may be similarly tempted to interfere inappropriately in currency markets. As his stimulus measures push up the value of the dollar, Roubini says, “Trump could unilaterally intervene to weaken the dollar, or impose capital controls to limit dollar-strengthening capital inflows.” But if Trump is too reckless with his “damage-control methods,” already-wary markets will succumb to “full-blown panic.”

Mody, for his part, sees serious risks in Trump’s interference in corporations’ practices and business decisions. By bullying companies over Twitter to keep jobs based in the US (or to punish them for dropping his daughter Ivanka’s clothing line), Trump has already begun to undermine “the norms and institutions that govern markets.” And in Phelps’s view, Trump’s Twitter interventions, combined with his deregulation agenda, risk entrenching corporatism at the expense of the innovation and competition necessary to sustain economic dynamism and income growth.

The Search for a Cure

With populist movements leaving political establishments reeling, could a positive counter-populist economic policy agenda soon emerge? The Nobel laureate economist Michael Spence sees an opportunity in disaffected voters’ rejection of an insufficiently inclusive economic-growth model. “With previous presumptions, biases, and taboos having been erased,” he writes, “it may be possible to create something better.” Likewise, for Stiglitz, Trumpism’s silver lining is that its opponents are experiencing “a new sense of solidarity over core values such as tolerance and equality, sustained by awareness of the bigotry and misogyny, whether hidden or open, that Trump and his team embody.”

An implicit argument running through many Project Syndicate commentaries is that the only prophylactic against economist populism is more aggressive redistribution. As Rodrik puts it, populism – and poor governance generally – emerges when elites prove unwilling to “make adjustments to ensure that everyone does indeed benefit” from the existing economic model.

Behind recent, large-scale rejections of the “system” is a widely shared sense among certain groups of voters that the “establishment” has subordinated citizens’ interests to cosmopolitan goals such as globalization, immigration, and cultural diversity. Most commentators agree that economic shocks such as the Great Recession or the eurozone sovereign-debt crisis are neither necessary nor sufficient to explain the rise of populism. Rather, populism is more a response to prolonged economic malaise, deteriorating living standards, declining trust in established institutions, and a common perception that incumbent leaders have feathered their nests at the people’s expense.

These are complex economic and political problems for which populism offers fancifully simple solutions. Efforts by the media to move the populist mind have proved counter-productive, and will likely continue to do so.Those opposed to the populist cure will have to come up with an equally powerful alternative, or look on helplessly as economic uncertainty and despair overwhelm the patient.