On Knowledge and statecraft

January 24, 2017

On Knowledge and statecraft

by Muhammad Husni Mohd Amin


Image result for Najib, Zahid Hamidi and Hishamuddin HusseinThe 3 UMNO Goons–Dr. Zahid Hamidi, Hishamuddin Hussein and Najib Razak. They do not qualify as Philisopber-Kings. They are Malaysia’s penyamun tarbus.


IN Plato’s Republic, the philosopher-king is a leader who loves and embodies the cardinal virtues of wisdom, temperance, courage and justice. Therefore, the community that produced him would dispense with the mechanisms of democracy meant to curtail misuse of power by corrupt politicians who preyed upon the masses because of their ignorance.

Former British Prime Minister Winston Churchill once said, “It has been said that democracy is the worst form of government, except all those others that have been tried.” This may only refer to the inadequacies of the present set-up in producing leaders who do not require constant oversight.

The leader reflects the people. The Prophet said, “As you are, so shall your leader be.” He also said, “Each of you is a shepherd (ra‘in) and each of you is responsible for his flock (ra‘iyyah)”.

The Arabic word ra‘iyyah, from which the Malay word rakyat originated, has its root in ra‘in, which also means guide, guardian or caretaker. In the worldview of Islam, both the leader and the people form a unity; they are like a single body.

The Prophet also prophesied the emergence of leaders (umara) who “will be corrupt but God may put much right through them”. Therefore, the people are obliged to be thankful when leaders do good and patient when the leaders commit evil.

Image result for al-ghazali


The Proof of Islam, Imam al-Ghazali, in his Ihya’ ‘Ulum al-Din (Revival of the Religious Sciences), stated that religion is established through the sultan, who is not to be belittled.

We should not justify a wrongdoing when it is proven, but our limited senses may often lead us to believe that no good may come out of the things we perceive as evil because we think evil is the absence of good.

While weed follows the cultivation of rice and there seems to be no good in growing weed, it does not stop us from planting and harvesting the rice.

A well-known Sufi figure, Fudayl ibn ‘Iyad, said, “If I had one supplication that was going to be answered, I would make it for the sultan, for the sultan’s well-being and righteousness means well-being for the land and its people.”

Another Sufi figure, Sahl al-Tustari, was once asked, “Who is the best among men?” He replied that it was the ruler, which surprised his inquirers because it was thought that rulers were the worst.

Sahl continued, “Don’t be hasty! God Most High has two glances every day: one is for the safety of the Muslims’ possessions and another for their bodies. Then, God looks into the Register of Deeds and forgives him all his sins (for his protection of both).”

But the precondition for forgiveness is that the ruler must protect both.The establishment and statecraft of our centuries-old Malay sultanates mirrored those in Islam’s civilisational epicentre, which in turn were modelled after the Prophet’s Medina.

While colonial rule modernised our country’s administration, it did not abolish the sultanates but merely interrupted them. However, colonisation also displaced the ulama’s traditional role in advising the Rulers.

It also severely impaired the ability to follow the Prophetic practice called shura in consulting scholars and learned men as well as the ability to recognise and acknowledge them properly. This is the reason for today’s greater need for checks and balances.

Even so, we are lucky to be blessed with a unique system that combines constitutional monarchy and parliamentary democracy. This is the time when rulers work closely with the ruled towards the common good.

While our Rulers do not interfere in politics, adherence to royal protocols should not conceal the fact that the Rulers are in the best position to decree the people so that they would choose the best stewards for the nation.

Image result for UMNO members

UMNO is full of learned members –the dedaks led by Big Momma

The counsel of learned people is important in guiding a ruler’s politics because statecraft is like a knife in the kitchen – a housewife could wield the knife as a utensil or a burglar as a weapon.

Muhammad Husni Mohd Amin is senior research officer at Ikim’s Centre for Science and Environ­ment Studies. The views expressed here are entirely the writer’s own.

Malaysia’s Leading News Portal, Malaysiakini, lives on

January 23, 2018

Malaysia’s Leading News Portal, Malaysiakini, lives on

by Mariam Mokhtar



Image result for Premesh Chandran and Steven Gan

Thanks to the overwhelming support of generous Malaysians and others, the famous Malaysiakini duo, Premesh Chandran and Steven Gan , survive to fight again for freedom and justice.

On January. 12, a Malaysian appellate court overturned an earlier High Court ruling in favor of Malaysiakini, Malaysia’s leading independent news portal, in a defamation case initiated by a politically connected mining operation for remarks at a press conference by opponents of the mine.

Malaysiakini must now pay a crippling RM200,000 in damages and RM150,000 in legal costs, to the Raub Australian Gold Mine (RAGM), financially threatening the publication and raising concerns that the government of Prime Minister Najib Razak is behind the court’s reversal.

The subscription-based website has launched a public campaign seeking contributions to meet the court costs. “Our lawyers will be applying for a stay pending appeal. For that to happen, we need to have the money ready,” editor-in-chief Steven Gan said in a statement on the site. And should the stay be not granted, we will have to pay RM350,000 (US$89,000) in the coming weeks. Otherwise, RAGM can take winding-up proceedings against Malaysiakini.”

Neither Gan nor Premesh Chandran, the publisher, would speculate on whether the appellate decision was reversed at the request of the government. However, over the years, the relationship between Putrajaya, the seat of the Malaysian government and the alternative news outlet, the country’s most influential, has been fractious at best, and hostile at worst.

Image result for Premesh Chandran and Steven Gan

The dedicated men and women of http://www.malaysiakini.com bringing news and views to Malaysians and the international community.

The decision by the Appeal court to reverse the lower court ruling exonerating the news poral has set tongues wagging over whether Najib ordered Malaysia’s notoriously malleable courts to put Malaysiakini out of business prior to what political analyst say may be a tough election for the ruling Barisan Nasional, or national coalition.

Malaysiakini has, since its inception 18 years ago, been a particular thorn in the government’s side, attracting hostility from Najib and members of his cabinet. It has been the frequent target of police intimidation and rallies fomented by forces aligned with the United Malays National Organization, the country’s most powerful political party.

“It is totally unacceptable that journalists can be charged for covering a press conference,” said Daniel Bastard, head of the Asia-Pacific Desk of the press advocacy NGO Reporters Sans Frontières. “The right to information is a fundamental right, and Malaysian authorities must finally take it into account. It is listed as a fundamental right by the United Nations, ASEAN and the Commonwealth — Malaysia must consider lining up with international standards regarding this matter.”

Image result for Najib Razak
Prime Minister Najib Razak is feeling the heat from Malaysians who are increasingly critical of his incompetent and corrupt administration.

RSF, Bastard said, “demands the Malaysian government to give guarantees concerning the political independence of the court of appeal. It is very worrying to see this trend where first-instance justice decisions concerning press freedom are reversed by the Appeal Court. It gives the impression of a pro-government court whose decisions are politically motivated, and whose ultimate goal is to muzzle whistle-blowers and overly curious journalists.”

The case brought by RAGM has its roots in a press conference that Malaysiakini and another website, Free Malaysia Today, (FMT) were invited to cover in Raub, a small town in Pahang state north of Kuala Lumpur.

The use of sodium cyanide, a known toxic chemical, to extract gold from tailings, was alleged to have caused a variety of health problems among the villagers of Bukit Koman, a village near Raub. After Malaysiakini published three news reports and two video clips, on Sept. 5, 2012, RAGM sued the news portal for defamation.

The company said that it had taken all reasonable precautions to ensure the health and safety of the workers and residents, dismissing allegations that sodium cyanide was hazardous to Bukit Koman residents and arguing that “unsubstantiated and baseless allegations” had confused the villagers and protesters.

RAGM’s beneficial owner is said to be Peninsular Gold, whose chairman and main shareholder is a politically well-connected Malaysian capitalist, Andrew Kam Tai Yeow. Kam was secretary-general of the Malaysian Chinese Association, the ethnic Chinese political party in the Barisan Nasional or ruling national coalition in the 1960s. Furthermore, RAGM enjoyed preferential tax status. It has since ceased operations and started liquidation proceedings.

In 2016, the High Court dismissed RAGM’s suit and said it had failed to prove malice. Eight months later, the appellate court overturned the High Court ruling and said that Malaysiakini’s defense of its reportage didn’t hold up.

“The settlement offered by RAGM’s lawyer, Cecil Abraham, and the gold mine, to FMT required only an apology, but when it came to Malaysiakini, they wanted an apology and money,” said a source who declined to be named. “During the court hearing, [Abraham]s and the gold mine used FMT’s apology against Malaysiakini. They claimed that FMT had apologized, but not Malaysiakini, and therefore Malaysiakini was being indolent and irresponsible.

“RAGM’s lawyers failed to mention that they had demanded both an apology and a huge sum in damages from Malaysiakini. Clearly, the action by Cecil and the gold mine was to bleed the paper.”

A year after the protest march, three individuals who had led the rally and were also members of the Ban Cyanide Action Group (BCAC) were sued for defamation, by RAGM.

They were the chairman, Wong Kim Hoong, vice-chairman, Hue Shieh Lee, and secretary, Hue Fui How. RAGM claimed that the three had defamed them through their statements in two news articles, which both Malaysiakini and FMT had published.

When Wong and Hue Fui How apologized to RAGM in open court, the company withdrew its suit. Hue Shieh Lee elected to continue her legal battle, and in 2016, the High Court ruled that RAGM had failed to prove that her statement against the gold mine, was a malicious falsehood.

“It is difficult for RSF to accuse the Court of Appeal of issuing a judgment to prevent the villagers from demanding compensation for their damaged health,” said RSF’s representative Bastard. “However, the facts are clear: villagers will think twice before asking for compensation. This is a crude example of how violations of press freedom can affect every aspect of every society. This is why RSF firmly condemns the judgment by the Court of Appeal and shows its full support to Malaysiakini reporters, who were just trying to do their work – as the High Court recognized in the first instance.”

Villagers, he said, “can let independent local and foreign journalists investigate on their damaged health, so that awareness can be raised around their case.”

There are three strands to this story. The harassment of Malaysiakini is not just an attack on press freedom. Its punishment is also a warning to other newspapers to tread warily, when reporting on Najib and UMNO.

The Appeal court verdict is also a means of intimidating the general public. Those who dare to protest an injustice, or the effects of pollution in their locality, or corruption, or become a whistle-blower, will find themselves subject to a lawsuit, with substantial costs, in addition to incarceration.

As Malaysians go to the polls this year, they know that a free press, which can report without fear or favor, is a fundamental requirement for democracy; but this is the least of Najib’s concerns.

Image result for Clare Rewcastle-Brown

Sarawak Report’s editor, Clare Rewcastle-Brown, in an article titled, “Without A Free Media Malaysia Will Slide Backwards Fast,”, said “The difference between being a modern, progressive country and a tin-pot regime, where potential investors fear they cannot rely on the rule of law, can be quantified by the extent to which there is a free media and a government that can tolerate criticism.

“If Malaysia starts to use the courts to close down media that is doing its job, and airing the grievances and concerns of the people, then the world will start to recognize it as a wild country which is only suitable for risk takers and resource-grabbers who are willing to risk losing their investment. The rest will steer clear.  That would be a tragedy for a country which has made so much progress and could have a great future”.

RSF’s Bastard said, “Intimidation of journalists, humiliation, harassment and denial of access to information are common practices amongst government officials around the world who want to muzzle fearless journalists.

“Malaysiakini is recognized as an independent news outlet which doesn’t let its editorial line to be dictated by the government. This is precisely what is press freedom.

“Denouncing powerful people when it is necessary and legitimate in a report should not lead to reprisals. This is also totally unacceptable. And this is all the truer in an electoral context.”

Najib has learned from the previous general-election that he must tie-up many loose ends, before the country’s 14th General Election (GE-14), which must be called by August. Gagging Malaysiakini is perhaps one of those “loose ends.”


Who should Malaysians turn to next?

January  23, 2018

Who should Malaysians turn to next?

Opinion: Daughter of Former Prime Minster Mahathir Mohamad asks whether the big promises of Malaysia’s ruling party will be enough to gain back the public’s trust and win them power yet again.

by Marina Mahathir

This article was published in the January edition of Southeast Asia Globe magazine. For full access, subscribe here


Related image

With Malaysia’s general election due to take place by August of this year, the ruling party has already begun making big promises and dragging the opposition through the mud. But at a time of unparalleled distrust of those in charge of the country, it might not be enough to win them power yet again.

Malaysians are caught between a perpetual rock and a hard place when it comes to the politics of their country.

On the one hand, they are saddled with a government led by a man who has been accused by the US Department of Justice of running the “biggest kleptocracy in history”. On the other, they are sceptical about the alternative, the coalition known as Pakatan Harapan – the Hope Coalition – which until recently seemed unable to pull together a coherent and cohesive platform.

They have, however, now named my father, former Prime Minister Mahathir Mohamad, as their candidate for Prime Minister and Wan Azizah Wan Ismail, the wife of jailed opposition leader Anwar Ibrahim, as deputy prime minister – choices that make strategic sense but are likely a disappointment to young people who were hoping for fresh faces.

On the one hand, few can abide the most unpopular Prime Minister in Malaysian history and his wife. On the other, should the governing Barisan Nasional (BN) win again but then get rid of Prime Minister Najib Razak, his successor is most likely Ahmad Zahid Hamidi, the Deputy Prime Minister. Perhaps this is why Malaysians have taken an inordinate interest in the goings-on in Zimbabwe, where the long-time president, Robert Mugabe, resigned only to be replaced by his former vice-president, a man who goes by the nickname of ‘Crocodile’. Given Ahmad Zahid’s track record as Home Minister, we may well get our own predatory reptile.

Speculation is rife that these are the actions of a government that does not have the imagination to reverse its unpopularity

The 14th general election is to be held by August this year, but they may be called any time between now and then, leaving Malaysians in coffee shops, boardrooms and home kitchens speculating as to when it is more likely to be called. Some were certain that it would be after the budget in October and before the end of last year. Others predict it will be in the first quarter of 2018, around March or even April. Still others think that Najib will repeat what he did in 2013 when he waited almost until the last minute to dissolve parliament.

Not that this has stopped him from campaigning. While election campaigning officially starts on the day elections are called, and last for only two weeks, it is clear that the BN election machinery has already started to grind. This takes two forms.

The first is the doling out of goodies, or at least the promise of them. The recently announced budget promised, for instance, to build thousands of low-cost houses for the poorest sectors, including 600 units to be built in ‘indigenous areas’ and unashamedly named ‘My Beautiful New Home’ or ‘MyBNHome’. A reduction in individual income tax rates by 2% has also been promised, although this has not been accompanied by a reduction in the very unpopular 6% Goods and Services Tax.

The second approach is by denigrating the opposition through the mainstream and online media. Opposition leaders such as Mahathir Mohamad have been attacked. He was called “an Indian masquerading as a Malay”. Chief Minister Lim Guan Eng of Penang is being dragged through the courts for alleged corruption, and Shafie Apdal, who is leading the opposition charge in the Borneo state of Sabah, has been charged with misappropriation of state funds.

Image result for najib razak i am not a crook

Mainstream newspapers think nothing of putting photos of the children and grandchildren of opposition politicians on the front pages for supposedly leading a jet set life while ignoring the far more serious case of the PM’s stepson being named by the US Department of Justice in its kleptocracy case.

But speculation is also rife that these are the actions of a government that is feeling nervous and does not have the imagination to reverse its unpopularity by giving people what they really want, rather than what they imagine they should want. People want the sort of leadership that gives them a long-term and sustainable vision of their future, not short-term, stopgap, vote-buying measures. They would very likely still vote for the BN if they are presented with a vision they can believe in.

Unfortunately, unless the opposition coalition gets its act together soon, such hypocrisy is what we will be saddled with for a long while.

Also worrying is the rise of a strand of conservative Islam in Malaysia that increasingly mirrors the Saudi Wahhabi variety. Most recently the Deputy Minister for Religious Affairs declared that not believing in God is unconstitutional because while the federal constitution guarantees freedom of religion, it does not allow ‘freedom from religion’. It is this type of twisted interpretation of the constitution that has led to increasing divisiveness in Malaysian society, leading some to believe that Islamic law supersedes the guarantees inherent in the constitution. It hasn’t helped that Najib has played to this particular gallery wholeheartedly, refusing to criticise inflammatory comments by radical preachers until forced to do so.

Image result for najib razak i am not a crookNajib Razak and his UMNO kleptocrats


In this vacuum it has been left to an undemocratic institution, the hereditary rulers of nine of the 13 states, to take a firm stand against such conservatism. Stating that incidents such as the establishment of a Muslim-only launderette are abhorrent in multiracial Malaysia, the sultan of Johor ordered the launderette to open its business to all or close down. The Council of Rulers then issued a statement condemning such divisive actions and words, a move that was unusual but much welcomed by the public when there has only been silence from the political leadership.

Image result for najib razak and zakir naik

Najib Razak shaking hands with an Islamic extremist  Dr Zakir Naik from India

The failure of government leaders to condemn such extreme views while espousing ‘moderate Islam’ abroad only underscores the public perception of a hypocritical and corrupt administration. Unfortunately, unless the opposition coalition gets its act together soon, such hypocrisy is what we will be saddled with for a long while.


Image result for Marina Mahathir

Marina Mahathir is a socio-political activist and writer focusing on the intersection of gender, religion and politics. She has been a regular newspaper columnist for more than 20 years, led a HIV/Aids NGO for 12 years and is currently involved in advocacy for justice and equality for Muslim women.

This article was published in the January edition of Southeast Asia Globe magazine.

Who is afraid of Dr Mahathir Mohamad–Najib Razak, of course. Why? Read Mariam’s plea

January 22, 2018

Who is afraid of Dr Mahathir Mohamad–Najib Razak, of course. Why? Read Mariam’s plea

by Mariam Mokhtar


Image result for Najib Bullshit

He is turning to God for help, since most Malaysians turn against him

COMMENT | As Dr Mahathir Mohamad looks back on his successes and his achievements for the nation, his recollections are tinged with sadness.

The former Prime Minister is not blind. He sees a nation which is torn apart. The Malays are focused on life after death. The politicians whom he once mentored are greedy and put self above service to the nation.

Mahathir realizes that he has one last chance to make things right, for Malaysia. He needs to repair his tarnished reputation and he knows he cannot do it alone. The opposition parties cannot do it by themselves, nor can we act on our own; but together, we have a chance.

Mahathir’s resurgence/re-emergence into our lives and politics is one of many ironies. If most of the people he locked away under the ISA are prepared to work with him for a better Malaysia, why not you?

Many Malays live a hand-to-mouth existence, wondering how they will pay for their next meal.The rural Malays identify with Mahathir. They will listen to him, and the language he uses to weave his magic over them is simple and straightforward. 1MDB has very little traction with the Malays, but the GST has hit them hard.

Mahathir knows that they have no knowledge of money trails, offshore banks or money laundering. These are all alien concepts to them. Where the Opposition has been unable to enter the Malay rural heartlands, Mahathir can.

In Mahathir’s time, you rarely heard people in the entertainment world talking about the cost of living. Today, singers and actresses have been vocal about the many hardships of Malaysians.

When the current crop of ministers and senior politicians criticise these celebrities, they make matters worse and drive home the message that Prime Minister Najib Abdul Razak is out of touch with the ordinary Malaysians.

When Mahathir and Anwar introduced changes to the local Malaysian Islamic scene, it was to counter the rising popularity of PAS at the time. PAS felt energized by the Islamic revolution that had taken over Iran. Three-and-a-half decades later, Iran is seeing pockets of resistance against the rising conservatism, which has taken hold in Iran, while Malaysia appears to be trapped in a time warp.

Malaysians swell with pride when they see the Petronas Twin Towers, but Mahathir is aware that the soul of the country is as cold as the steel and concrete in its foundations, and lacks moral fiber.

The national car project, Proton, mobilized the rural folk and gave them a form of independence, but Najib has sold it to the People’s Republic of China. Under Mahathir, the national airline, MAS, connected Malaysia to six continents, but today, London is its only European destination.

UMNO-Baru has always told its Malay support base that it is the only party which can protect the Malays and defend Islam, lest the DAP-led opposition, which will undermine the position of the Malays.

What can Najib say or do with Mahathir at the helm of the opposition? Mahathir is neither Chinese, nor a DAP stooge. In fact, it is Najib who appears to have “sold” Malaysia to the mainland Chinese.

In recent days, UMNO-Baru said that it was Abdul Razak Hussein, Najib’s father, who rescued Mahathir from the political wilderness, after he was banished from the party by Tunku Abdul Rahman Putra. They failed to mention that Razak helped create FELDA, but that his son has destroyed FELDA.

Mahathir was involved in the constitutional crisis of 1987; he had his spat with the judiciary and subsequently created the new party, UMNO-Baru. He knows the party’s weaknesses and strengths. He is prepared to destroy UMNO-Baru because he can see that it has become a monster. He is the person who is best qualified to do the job.

Mahathir attracts record crowds in villages

Image result for Mahathir at Bersih
Image result for Mahathir at BersihCry Freedom for Malaysia


When Mahathir visits the villages, he attracts record crowds. He does not need much publicity, whereas when Najib goes on these village walkabouts, he has been known to have a bunting of his father, Razak, and leaflets, reminding people of his father’s greatness. How insecure is that?

We hear allegations that, in the past, Mahathir admonished, and threatened to sack, heads of departments who refused to kowtow to him. Today, Najib and his ministers openly threaten to sack teachers or civil servants who vote for, or support the opposition. Things must be desperate in today’s UMNO-Baru.

We are all a product of Mahathir’s policies. What is done, is done. We cannot cry over spilled milk, but we can at least ensure that we take precautions, to prevent a recurrence.

Today, we are on the cusp of a new beginning, but we have the moaners, complaining about Mahathir and the past, rather than focusing on the future.

What is there to lose, if we work together with Mahathir to rebuild Malaysia? He is not going to live forever. The opposition politicians are not so stupid that they will allow him to build a new Mahathir empire.

Image result for Malaysia--Cry Freedom

Their future depends on Malaysians to do the right thing, says Mariam Mokhtar

Lessons have been learned, but you need to have a modicum of trust. Would you prefer to live in the past and continue moaning, or spoil your votes, or boycott GE-14? Or are you ready to take this leap forward and change? It is not about you, or me, or Mahathir. It is about rebuilding Malaysia!

MARIAM MOKHTAR is a defender of the truth, the admiral-general of the Green Bean Army and president of the Perak Liberation Organisation (PLO). Blog, Twitter.

Read more at https://www.malaysiakini.com/columns/409495#g1Tl4CXPrAb5XL2k.99


Racism has to be opposed from the top down.

January 20, 2017

Racism has to be opposed from the top down.

by Azmi Sharom
Image result for racist najib razak

DEMOCRACY takes power away from the few, or the one, and places it in the hands of the many. Which is why we hear phrases like “people power” and “returning power to the people” bandied around when speaking about democratic reform.

Image result for mahathir mohamad

A Born Again Democrat. The late Lee Kuan Yew called him an Ultra.

Theoretically, if there is a free press, fairly delineated constituencies, independent state agencies and a respect for human rights, then the government of the day will be a reflection of the will of the people.

We, the ordinary men and women, choose our leaders. We can also “fire” them by voting them out. Therefore, we have ultimate power. However, just because power ultimately lies with the people, this does not mean that leaders have to bend to the will of the people all the time.

Sure we can vote them out (theoretically), but while they are in authority, they have a degree of freedom to do what they may deem to be right, even though the people might not like it. This is known as leadership.

This is why unpopular but ultimately worthy policies and legislation come into place. It takes leadership to do this. A person who is scared of losing popularity, especially among his core supporters, to the point of supporting noxious views, does not have leadership qualities.

Which is why if a government believes in certain things, the leaders must speak up accordingly. Conversely, they must speak up against things they don’t believe in.

Image result for racist najib razak

You are known by the company you keep: Hadi Awang, Zakir Naik,  Rani Kulop, Jamal Ikan Bakar, et.al

Let me give you an example. If a group spouts obnoxious racism, a true leader would speak out against it, even if the group members are among his supporters. If he does not do so, what it means is that he is condoning such views. Even if he is keeping silent so as to not alienate his support base, he is acting in a cowardly fashion and is in effect legitimising racism.

Now, I am saddened by the fact that racism in Malaysia is alive and well. When writing and teaching, I have consistently argued for us to move away from such attitudes. I honestly thought that there were more and more Malaysians who are of the same view. Sadly this is not so.

Surveys have shown that most Malays will vote based on race.This is depressing to the extreme. Yet, this is also the reality.

One of the reasons Tun Dr Mahathir Mohamad is the chosen Prime Minister candidate for Pakatan Harapan is so that he can woo the Malay vote. I am presuming his Malay nationalist background will make him palatable to those who still think along those lines.

This is the political reality, and it is beyond sad. Now, Pakatan has always claimed to be non-racially motivated. Yet they have to pander to a racially motivated electorate. This is realpolitik and it is upsetting yet understandable.

The question is, if Pakatan wins, will it try to move the nation away from such repulsive racist thinking? Will it be able to show some true leadership?

  • Azmi Sharom (azmi.sharom@gmail.com) is a law teacher. The views expressed here are entirely the writer’s own.


How Economics Survived the Economic Crisis

January 19, 2018

How Economics Survived the Economic Crisis

by Robert (Lord) Skidelsky


Unlike the Great Depression of the 1930s, which produced Keynesian economics, and the stagflation of the 1970s, which gave rise to Milton Friedman’s monetarism, the Great Recession has elicited no such response from the economics profession. Why?

LONDON – The tenth anniversary of the start of the Great Recession was the occasion for an elegant essay by the Nobel laureate economist Paul Krugman, who noted how little the debate about the causes and consequences of the crisis have changed over the last decade. Whereas the Great Depression of the 1930s produced Keynesian economics, and the stagflation of the 1970s produced Milton Friedman’s monetarism, the Great Recession has produced no similar intellectual shift.

Image result for Paul Krugman

The Conscience of a Liberal–Keynesianism, Friedmanian Monetarism— Macroeconomics still needs to come up with a big new idea.

This is deeply depressing to young students of economics, who hoped for a suitably challenging response from the profession. Why has there been none?

Krugman’s answer is typically ingenious: the old macroeconomics was, as the saying goes, “good enough for government work.” It prevented another Great Depression. So students should lock up their dreams and learn their lessons.

A decade ago, two schools of macroeconomists contended for primacy: the New Classical – or the “freshwater” – School, descended from Milton Friedman and Robert Lucas and headquartered at the University of Chicago, and the New Keynesian, or “saltwater,” School, descended from John Maynard Keynes, and based at MIT and Harvard.

Freshwater-types believed that budgets deficits were always bad, whereas the saltwater camp believed that deficits were beneficial in a slump. Krugman is a New Keynesian, and his essay was intended to show that the Great Recession vindicated standard New Keynesian models.

But there are serious problems with Krugman’s narrative. For starters, there is his answer to Queen Elizabeth II’s now-famous question: “Why did no one see it coming?” Krugman’s cheerful response is that the New Keynesians were looking the other way. Theirs was a failure not of theory, but of “data collection.” They had “overlooked” crucial institutional changes in the financial system. While this was regrettable, it raised no “deep conceptual issue” – that is, it didn’t demand that they reconsider their theory.

Faced with the crisis itself, the New Keynesians had risen to the challenge. They dusted off their old sticky-price models from the 1950s and 1960s, which told them three things. First, very large budget deficits would not drive up near-zero interest rates. Second, even large increases in the monetary base would not lead to high inflation, or even to corresponding increases in broader monetary aggregates. And, third, there would be a positive national income multiplier, almost surely greater than one, from changes in government spending and taxation.

These propositions made the case for budget deficits in the aftermath of the collapse of 2008. Policies based on them were implemented and worked “remarkably well.” The success of New Keynesian policy had the ironic effect of allowing “the more inflexible members of our profession [the New Classicals from Chicago] to ignore events in a way they couldn’t in past episodes.” So neither school – sect might be the better word – was challenged to re-think first principles.

Image result for Milton Friedman

This clever history of pre- and post-crash economics leaves key questions unanswered. First, if New Keynesian economics was “good enough,” why didn’t New Keynesian economists urge precautions against the collapse of 2007-2008? After all, they did not rule out the possibility of such a collapse a priori.

Krugman admits to a gap in “evidence collection.” But the choice of evidence is theory-driven. In my view, New Keynesian economists turned a blind eye to instabilities building up in the banking system, because their models told them that financial institutions could accurately price risk. So there was a “deep conceptual issue” involved in New Keynesian analysis: its failure to explain how banks might come to “underprice risk worldwide,” as Alan Greenspan put it.

Second, Krugman fails to explain why the Keynesian policies vindicated in 2008-2009 were so rapidly reversed and replaced by fiscal austerity. Why didn’t policymakers stick to their stodgy fixed-price models until they had done their work? Why abandon them in 2009, when Western economies were still 4-5% below their pre-crash levels?

The answer I would give is that when Keynes was briefly exhumed for six months in 2008-2009, it was for political, not intellectual, reasons. Because the New Keynesian models did not offer a sufficient basis for maintaining Keynesian policies once the economic emergency had been overcome, they were quickly abandoned.

Krugman comes close to acknowledging this: New Keynesians, he writes, “start with rational behavior and market equilibrium as a baseline, and try to get economic dysfunction by tweaking that baseline at the edges.” Such tweaks enable New Keynesian models to generate temporary real effects from nominal shocks, and thus justify quite radical intervention in times of emergency. But no tweaks can create a strong enough case to justify sustained interventionist policy.

Image result for Milton Friedman

The problem for New Keynesian macroeconomists is that they fail to acknowledge radical uncertainty in their models, leaving them without any theory of what to do in good times in order to avoid the bad times. Their focus on nominal wage and price rigidities implies that if these factors were absent, equilibrium would readily be achieved. They regard the financial sector as neutral, not as fundamental (capitalism’s “ephor,” as Joseph Schumpeter put it).

Image result for paul a samuelson
Image result for paul a samuelson

Paul Anthony Samuelson (1915-2009)

Without acknowledgement of uncertainty, saltwater economics is bound to collapse into its freshwater counterpart. New Keynesian “tweaking” will create limited political space for intervention, but not nearly enough to do a proper job. So Krugman’s argument, while provocative, is certainly not conclusive. Macroeconomics still needs to come up with a big new idea.

*Lord Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.


Next to Read: