Black Swan Moments–Najib Razak’s Options


April 19, 2017

Black Swan Moments – Najib Razak’s Options

by Liew Chin Tong, MP

http://www.malaysiakini.com

In the first half of my article (Expect more black swans to appear in Malaysian politics), I explained why Prime Minister Najib Abdul Razak was in a precarious position. What then are Najib’s strategies for survival? It is not that Najib doesn’t understand the precarious position he is in. He does know that Umno will not be able to win an outright mandate in the coming election.

Hence, Najib has been trying to break up the opposition as soon as the 2013 General Election was concluded.

There were even attempts by Indonesian Vice-President Yusof Kala, between June and August 2013, to broker deals between Najib and Anwar Ibrahim, which Anwar rejected.

And, since then, Najib’s strategies have included:

  • Putting Anwar Ibrahim behind bars, hence depriving the Opposition of its prime ministerial candidate and unifying figure;
  • Luring PAS into a de facto alliance with UMNO on the pretext of promoting hudud legislations; and
  • Portraying the Opposition as a DAP/Chinese-dominated alliance.

However, in his grand scheme to win by default, Najib did not anticipate:

  • The Opposition surviving despite Anwar’s imprisonment;
  • A sizable number of ousted PAS leaders forming Parti Amanah Negara in September 2015 to continue the struggle, and many in PAS still disagreeing with their top leaders’ collusion with UMNO; and
  • UMNO splitting in 2016, and Parti Pribumi Bersatu Malaysia being formed and joining Pakatan Harapan.

Broadly, even without Najib at the helm, UMNO is weaker than in the 2013 General Election for the following reasons:

First, since independence till the 2004 general election, UMNO had ruled through an extended coalition of Alliance/Barisan Nasional, and governed with substantial support from the non-Malays.

But the comfort of buffers formed by BN component parties in the Peninsula eclipsed after UMNO made a right turn – becoming more visible in its claim of Malay supremacy – in July 2005 with Hishammuddin Hussein waving the kris at the UMNO General Assembly, which led to massive defeats for its allies, the MCA, MIC and Gerakan, in both the 2008 and 2013 general elections.

UMNO dug in deeper since 2008 to push racial politics in the hope of expanding Malay support, but has achieved surprisingly little.

Second, since UMNO was incapable of expanding its support base since 2013, collaborating with PAS became an attractive option. ithopes that by colluding with PAS to polarise society into a struggle between Muslims/Malays and non-Muslims, the UMNIO-PAS de facto alliance will win enough seats between them to form the next government.

However, as an unintended consequence, such a move further alienates non-Malay voters in the Peninsula, as well as a majority of voters in Sabah and Sarawak.

Third, while Najib the man managed to command more support among Malay voters compared with UMNO the party in the 2013 election, such is no longer the case. Najib is now a burden to UMNO due to the 1MDB mega scandal, and unpopular economic policies such as the implementation of the goods and services tax (GST), fuel hikes and cuts to subsidies for basic amenities like health and education.

Frustrated UMNO leaders and members led by former Prime Minister Tun Dr. Mahathir bin Mohamad formed Bersatu and this new Malay party is making rapid inroads in areas previously inaccessible to the Opposition.

In short, UMNO under Najib is on a narrowing path that now relies on a much smaller base than ever. If Najib is still perceived as strong, it is because the Opposition is seen as weak and disunited.

What lies ahead?

The knowns are that Najib is not popular, and there is serious discontent among the Malays. But there are certainly challenges for the Opposition to overcome in order to precipitate change.

First, the Opposition needs to stand for something inspiring and visionary, and not depend solely on the anger against Najib as its forward strategy. The Opposition must stand for more than just removing Najib. The economy and the well-being of the people should be its number one priority.

Second, the coming together of Bersatu and the Pakatan Harapan parties, namely Parti Keadilan Rakyat, Parti Amanah Negara and Democratic Action Party is a reconciliation of former foes.

Who could have imagined Tun Dr. Mahathir Mohamad and Anwar Ibrahim forming an alliance nearly 20 years after their very bitter fallout in 1998? But the coming together of the once political father-and-son can unleash huge energy, if handled properly. After all, both Mahathir and Anwar are positive leadership figures compared to Najib, and they each appeal to certain segments of the Malay electorate.

Third, to present a common agenda that appeals to both Mahathir’s audience and to DAP’s supporters is a big challenge. If Mahathir and Bersatu go on a racial campaign, it will depress the support of non-Malay voters and create a lose-lose situation for the entire Pakatan Harapan coalition.

Likewise, the regime’s argument against Mahathir and Bersatu is that they are associating with the DAP. The presence of the DAP can also depress the support for Bersatu and other Malay-based parties like PKR and Amanah if the opposition is unable to break out of Umno’s racial playbook, and articulate a new narrative that can rally all groups in a larger vision.

In short, Pakatan Harapan needs to ‘reset’ the national conversation to one that centres around ‘Bangsa Malaysia’ and ideas of common destiny for the nation.

Fourth, PAS, as UMNO’s ‘new friend’ as Zahid calls the party, is a reality, and the sooner a deep line is drawn between the genuine/official Opposition, Pakatan Harapan, and the pseudo ‘third force’ PAS, the clearer the situation becomes for voters. This will weaken PAS’ usefulness as an UMNO-directed spoiler in the coming election.

Fifth, the ultimate challenge for the newly re-aligned Pakatan Harapan that now  includes Bersatu will come if Najib suddenly exits the scene and takes out the raison  d’être for the opposition and dissipates much of the anger in the Malay community.

 

If this is to happen, can the opposition in its present format survive this unlikely, but not impossible, Black Swan?


This perspective is based on a public seminar given by LIEW CHIN TONG at the Institute of South-East Asian Studies (ISEAS)-Yusof Ishak Institute on April 13, 2017. Liew was formerly a Visiting Fellow at  the Institute. He is the Member of Parliament for Kluang, and a member of the central executive committee of the Democratic Action Party (DAP).

15 thoughts on “Black Swan Moments–Najib Razak’s Options

  1. What are the Black Swan moments for the Opposition? Sheer bravado on the part of my friend Liew Chin Tong. He underestimates the advantages of incumbency which UMNO-BN and Najib enjoy. Brave is a man who dares to anticipate the demise of UMNO after GE-14. I have heard that before in 2008 and 2013. Now I am hearing it again in 2017.

    While it is not inconceivable that Najib may lose power in UMNO if the party performs dismally. But to suggest, or insinuate or hint that UMNO has outlived its purpose of standing up for Malay rights and welfare is a little far fetched in my view. Any comments?–Din Merican

    • Agree with you. Somehow , politicians from the Peninsula still don’t get politics in Sabah and Sarawak. BN as a whole is extremely powerful here. Also the number of members in BN parties are many times more. Chin Tong is right in that UMNO is relatively weaker but so is PH and PAS is basically in the wilderness.

  2. This MP is a flake. Strange acquaintances you have, Din – cuz he certainly has no idea that flakes exists. And he is DAP’s chief strategist? Haha..

    I’ll take his ‘black swan moment’ as to mean ‘flaky’ – and not to mean whatever he means metaphorically i.e, Those surprising moments or turn of events, which catches everyone with their pants down.

    The Oppo is definitely Flaky, much more than UMNOb – cuz the kleptocrats have dedak to sustain them. Oppo, as it is – simply show they are crumbly, brittle, friable and short on ideas. They can’t come up with a coherent vision for Malusia. All they seem to be after are spoils of the campaign. They just don’t get the big picture, and all the dreams they indulge in will fall into the Abyss with the rest of us!

    We don’t need metaphors – we need Metamorphoses. Comprendo?

    While i see the UMNOb-BN governance as ‘wet rubbish’ – which stinks to high heaven within 24 hrs, the Oppo is ‘dry rubbish’ – which requires much recycling to be useful. For a pragmatic voter, neither are ‘palatable’.

    So i’ll take a break and go down to Oz to bring back a black swan (Cygnus atratus), for these useless DAP flakes to cook up a surprise. It won’t be pleasant for them.

    Third force and PAS is just that – extinct.

    • The politicians like Liew and his types in DAP and PKR are smart, but they are also completely out of touch wishful thinkers or syiok sendiri types. I agree with Jema Khan on Sabah and Sarawak. They will help UMNO-BN remain in power. The leaders, however,must know how to extract concessions from a grateful Najib after GE-14. –Din Merican

    • 2008, some call it tsunami.
      En Liew calls it BlackSwan.
      BN losing one third majority was never seen by my generation borned after 1969.
      It is still a Black swan event, in that Malaysians and the world have never seen a world where UMNO becomes irrelevant.
      Most of us reading this blog are not expecting to loose big since we know how our malapportionment works in Sabah and Sarawak.
      Elite Melayu who are reading this blog, wakeup lah

  3. Cik Liew, orang putih kata “wishful thinking”. You and your comrades in DAP are sooo out of touch with the rakyat jelata outside the bandars. It is sooo easy for UMNO and PAS to taruh you and DAP cukup2 labelling u anti-Islam and anti-Melayu. It is their winning formula. What can u do? Tarak lansung! Orang Melayu masih tak terima orang bukan Melayu jadi boss, macam di Jakarta.

  4. If Liew Chin Tong truly understands the theory of black swan, then he should actually argue the opposition will lose. Black swan moments are actually seemingly unimportant factors that become disproportionate , by default, takes time to build and hence does not happen frequently. If Liew Chin Tong says the opposition has been benefiting from black swan moments, then statistically, it’s the expected that is due to happen.

    The young talents in PH are running into stubborn realities of change. If it does not break you, it will break your heart.

    Ahok just lost the governor race in Jakarta, demonstrating the hypnotic power of religo and racial politics. Third rail politics do not get changed by determination. It almost always collapse under its own weight.

    • Bigjoe,

      Liew Chin Tong should have read this from wikipedia before using the term Black Swan at a Forum in ISEAS–Yusof Ishak Institute:

      The phrase “black swan” derives from a Latin expression; its oldest known occurrence is the poet Juvenal’s characterization of something being “rara avis in terris nigroque simillima cygno” (“a rare bird in the lands and very much like a black swan”).[3]:165 When the phrase was coined, the black swan was presumed not to exist. The importance of the metaphor lies in its analogy to the fragility of any system of thought. A set of conclusions is potentially undone once any of its fundamental postulates is disproved. In this case, the observation of a single black swan would be the undoing of the logic of any system of thought, as well as any reasoning that followed from that underlying logic.

      Juvenal’s phrase was a common expression in 16th century London as a statement of impossibility. The London expression derives from the Old World presumption that all swans must be white because all historical records of swans reported that they had white feathers.[4] In that context, a black swan was impossible or at least nonexistent.

      However, in 1697, Dutch explorers led by Willem de Vlamingh became the first Europeans to see black swans, in Western Australia.[5] The term subsequently metamorphosed to connote the idea that a perceived impossibility might later be disproven. Taleb notes that in the 19th century, John Stuart Mill used the black swan logical fallacy as a new term to identify falsification.[6]

      Black swan events were discussed by Nassim Nicholas Taleb in his 2001 book Fooled By Randomness, which concerned financial events. His 2007 book The Black Swan extended the metaphor to events outside of financial markets. Taleb regards almost all major scientific discoveries, historical events, and artistic accomplishments as “black swans”—undirected and unpredicted. He gives the rise of the Internet, the personal computer, World War I, dissolution of the Soviet Union, and the September 2001 attacks as examples of black swan events.[1]:prologue

      Taleb asserts:[7]

      What we call here a Black Swan (and capitalize it) is an event with the following three attributes.

      First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme ‘impact’. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

      I stop and summarize the triplet: rarity, extreme ‘impact’, and retrospective (though not prospective) predictability. A small number of Black Swans explains almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.

      Identifying

      Based on the author’s criteria:

      The event is a surprise (to the observer).
      The event has a major effect.
      After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals.

      Coping with

      The practical aim of Taleb’s book is not to attempt to predict events which are unpredictable, but to build robustness against negative events while still exploiting positive events. Taleb contends that banks and trading firms are very vulnerable to hazardous black swan events and are exposed to unpredictable losses. On the subject of business, and quantitative finance in particular, Taleb critiques the widespread use of the normal distribution model employed in financial engineering, calling it a Great Intellectual Fraud. Taleb elaborates the robustness concept as a central topic of his later book, Antifragile: Things That Gain From Disorder.

      In the second edition of The Black Swan, Taleb provides “Ten Principles for a Black-Swan-Robust Society”.[1]:374–78[8]

      Taleb states that a black swan event depends on the observer. For example, what may be a black swan surprise for a turkey is not a black swan surprise to its butcher; hence the objective should be to “avoid being the turkey” by identifying areas of vulnerability in order to “turn the Black Swans white”.[9]
      Epistemological approach

      Taleb’s black swan is different from the earlier philosophical versions of the problem, specifically in epistemology, as it concerns a phenomenon with specific empirical and statistical properties which he calls, “the fourth quadrant”.[10]

      Taleb’s problem is about epistemic limitations in some parts of the areas covered in decision making. These limitations are twofold: philosophical (mathematical) and empirical (human known epistemic biases). The philosophical problem is about the decrease in knowledge when it comes to rare events as these are not visible in past samples and therefore require a strong a priori, or an extrapolating theory; accordingly predictions of events depend more and more on theories when their probability is small. In the fourth quadrant, knowledge is uncertain and consequences are large, requiring more robustness.[citation needed]

      According to Taleb,[11] thinkers who came before him who dealt with the notion of the improbable, such as Hume, Mill, and Popper focused on the problem of induction in logic, specifically, that of drawing general conclusions from specific observations. The central and unique attribute of Taleb’s black swan event is its high-profile. His claim is that almost all consequential events in history come from the unexpected — yet humans later convince themselves that these events are explainable in hindsight.

      One problem, labeled the ludic fallacy by Taleb, is the belief that the unstructured randomness found in life resembles the structured randomness found in games. This stems from the assumption that the unexpected may be predicted by extrapolating from variations in statistics based on past observations, especially when these statistics are presumed to represent samples from a normal distribution. These concerns often are highly relevant in financial markets, where major players sometimes assume normal distributions when using value at risk models, although market returns typically have fat tail distributions.[12]

      Taleb said “I don’t particularly care about the usual. If you want to get an idea of a friend’s temperament, ethics, and personal elegance, you need to look at him under the tests of severe circumstances, not under the regular rosy glow of daily life. Can you assess the danger a criminal poses by examining only what he does on an ordinary day? Can we understand health without considering wild diseases and epidemics? Indeed the normal is often irrelevant. Almost everything in social life is produced by rare but consequential shocks and jumps; all the while almost everything studied about social life focuses on the ‘normal,’ particularly with ‘bell curve’ methods of inference that tell you close to nothing. Why? Because the bell curve ignores large deviations, cannot handle them, yet makes us confident that we have tamed uncertainty. Its nickname in this book is GIF, Great Intellectual Fraud.”

      More generally, decision theory, which is based on a fixed universe or a model of possible outcomes, ignores and minimizes the effect of events that are “outside the model”. For instance, a simple model of daily stock market returns may include extreme moves such as Black Monday (1987), but might not model the breakdown of markets following the 9/11 attacks. A fixed model considers the “known unknowns”, but ignores the “unknown unknowns”, made famous by a statement of Donald Rumsfeld.[13] The term “unknown unknowns” appeared in a 1982 New Yorker article on the aerospace industry, which cites the example of metal fatigue, the cause of crashes in Comet airliners in the 1950s.[14]

      Taleb notes that other distributions are not usable with precision, but often are more descriptive, such as the fractal, power law, or scalable distributions and that awareness of these might help to temper expectations.[15]

      Beyond this, he emphasizes that many events simply are without precedent, undercutting the basis of this type of reasoning altogether.

      Taleb also argues for the use of counterfactual reasoning when considering risk.[7]:p. xvii[16]
      See also

      Bad beat
      Butterfly effect
      Deus ex machina
      Elephant in the room
      Extreme risk
      Hindsight bias
      Holy grail distribution
      Kurtosis risk
      List of cognitive biases
      Miracle
      Normal accidents
      Normalcy bias
      Outside Context Problem
      Global catastrophic risks
      Quasi-empiricism in mathematics
      Randomness
      Rare events
      Taleb distribution
      There are known knowns
      The Long Tail
      Uncertainty
      Technological singularity
      Wild card (foresight)
      Popper’s solution to the black swan problem in science

      References

      Taleb, Nassim Nicholas (2010) [2007]. The Black Swan: the impact of the highly improbable (2nd ed.). London: Penguin. ISBN 978-0-14103459-1. Retrieved 23 May 2012.
      Taleb, Nassim Nicholas (2015), Doing Statistics Under Fat Tails: The Program, retrieved 20 January 2016
      Puhvel, Jaan (Summer 1984). “The Origin of Etruscan tusna (“Swan”)”. The American Journal of Philology. Johns Hopkins University Press. 105 (2): 209–212. doi:10.2307/294875. JSTOR 294875.
      Taleb, Nassim Nicholas. “Opacity”. Fooled by randomness. Retrieved 20 January 2016.
      “Black Swan Unique to Western Australia”, Parliament, AU: Curriculum, archived from the original on 2009-09-13.
      Hammond, Peter (October 2009), “Adapting to the entirely unpredictable: black swans, fat tails, aberrant events, and hubristic models”, WERI Bulletin, UK: Warwick (1), retrieved 20 January 2016
      Taleb, Nassim Nicholas (22 April 2007). “The Black Swan: Chapter 1: The Impact of the Highly Improbable”. The New York Times. Retrieved 20 January 2016.
      Taleb, Nassim Nicholas (7 April 2009), Ten Principles for a Black Swan Robust World (PDF), Fooled by randomness, retrieved 20 January 2016
      Webb, Allen (December 2008). “Taking improbable events seriously: An interview with the author of The Black Swan (Corporate Finance)” (Interview; PDF). McKinsey Quarterly. McKinsey. p. 3. Retrieved 23 May 2012. “Taleb: In fact, I tried in The Black Swan to turn a lot of black swans white! That’s why I kept going on and on against financial theories, financial-risk managers, and people who do quantitative finance.”
      Taleb, Nassim Nicholas (September 2008), The Fourth Quadrant: A Map of the Limits of Statistics, Third Culture, The Edge Foundation, retrieved 23 May 2012
      Taleb, Nassim Nicholas (April 2007). The Black Swan: The Impact of the Highly Improbable (1st ed.). London: Penguin. p. 400. ISBN 1-84614045-5. Retrieved 23 May 2012.
      Trevir Nath, “Fat Tail Risk: What It Means and Why You Should Be Aware Of It”, NASDAQ, 2015
      DoD News Briefing – Secretary Rumsfeld and Gen. Myer, February 12, 2002 11:30 AM EDT Archived 3 September 2014 at the Wayback Machine.
      Newhouse, J. (14 June 1982), “A reporter at large: a sporty game: i-betting the company”, The New Yorker, pp. 48–105
      Gelman, Andrew (April 2007). “Nassim Taleb’s “The Black Swan””. Statistical Modeling, Causal Inference, and Social Science. Columbia University. Retrieved 23 May 2012.

      Gangahar, Anuj (16 April 2008). “Market Risk: Mispriced risk tests market faith in a prized formula”. The Financial Times. New York. Archived from the original on 20 April 2008. Retrieved 23 May 2012.

      Bibliography

      Taleb, Nassim Nicholas (2010) [2007], The Black Swan: the impact of the highly improbable (2nd ed.), London: Penguin, ISBN 978-0-14103459-1, retrieved 26 February 2017.
      Taleb, Nassim Nicholas (September 2008), “The Fourth Quadrant: A Map of the Limits of Statistics”, Third Culture, The Edge Foundation, retrieved 23 May 2012.

      External links

      David, Dr. Gil, Black Swans in the Cyber Domain, Israel defense, archived from the original on 31 October 2012 No content .
      McGee, Suzanne (5 December 2012), Black Swan Stocks Could Make Your Portfolio a Turkey, Fiscal Times, CNBC, retrieved 20 January 2016.

  5. //First, the Opposition needs to stand for something inspiring and visionary, and not depend solely on the anger against Najib as its forward strategy. The Opposition must stand for more than just removing Najib. The economy and the well-being of the people should be its number one priority.

    I have tried to find something inspiring for the Malaysian story.
    What I found is that there ought to be a lot of fear. The most to fear are the average Melayu who grew up in NEP.
    Unlike the previous generation, like many Dato who gets to comment in this blog, Melayu in Malaysia would become like those Melayu in Southern Philippines. Chinese Malaysians are not there to rule, as they are victims of a system that they chose not to influent. The Elite Melayu are the cause of every issue the Melayu faces today and tomorrow.

    Melayu should fear the elite Melayu much more than any of those DAP MPs like Encik Liew. Literally, Malaysia has already been sold to CCP by the elite Melayu.
    It will happen even if the opposition wins, if the opposition would not bring forth drastic change. One change that I see sorely needed is to put the check-and-balance the colonial past provided to Malaysia. Tun M should fight to put things back to how things were, as the way he inherited it. Else, there is nothing inspiring in sight.

  6. Yeah, it’s wishful thinking – heaps of it.

    Jibby has everything figured out and with the Malay mass at its weakest and its over dependence on handouts, the chance of outflanking Umno is, tragically, difficult.

    Thus, my dream of a turnaround, in the twilight of my years, looks bleak. Notwithstanding this, I am just hoping for the best.

    Well, you can’t stop the optimists from dreaming.

    Malcolm Forbes said this and I quote, “When you cease to dream you cease to live”.
    _______________
    Tok Cik,

    When you are in a power game, you cannot afford to dream; otherwise you will be dreaming in perpetuity. I am afraid you are quoting Malcom Forbes out of context.–Din Merican

  7. Is it possible that Najib’s counter-intuitive general election strategy be that given the bad state of the economy with engineered inflation the people might actually out of desperation vote for a strong, stable BN with a clear mandate rather than a disparate, quarrelsome Opposition, to put things right again; blatant corruption and abuses of power notwithstanding?

    It’s counter-intuitive because which sitting incumbent PM wouldn’t want to go into a crucial general election with a strong vibrant economy and next to zero?

    If so, perhaps this strategy might slaughter the Black Swan?

  8. “First, the Opposition needs to stand for something inspiring and visionary, and not depend solely on the anger against Najib as its forward strategy.”

    But DAP sits on something regressive, not progressive: Social Democracy aka socialism. UMNO may be old and corrupt, but DAP’s ideas on socialism are recipe for catastrophe. Choosing between corruption and catastrophe is not that difficult for voters.

    A family cannot stand if kids don’t respect their parents. A nation will not function if sizable number of its citizens, such as DAP’s members, do not respect and embrace the founding fathers’ legacy in the form of Malaysia Constitution. Instead, we have DAP who treat socialism, an ideology created by non-Jewish Jew (i.e. a confused Jew), as its higher principle, as often uttered by Lim Kit Siang. Then, we have PAS whose Hadi is an Islamist trained by Al Azhar and is in cohort with Muslim Brotherhood, which proclaims Quran is their constitution for all sphere of human activities including governing of a state.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s