About Nick: i am an economist based in malaysia. I write about development economics, while sneaking in a pop culture reference or two.

Politics and Economics

Published in The Edge Malaysia, 12 May – 18 May 2014.

I am all for peaceful demonstrations. If a group of people want to get together to express their disappointment or opposition to a given policy, say the Goods and Services Tax, I believe it is their right to do so. Peaceful demonstrations are part and parcel of a healthy democracy and go hand-in-hand with the right to free speech. Furthermore, demonstrations can spark social change and ignite truly historic moments, such as the March on Washington in 1963, where Martin Luther King Jr. delivered his famous “I Have a Dream” speech.

In the past few years in Malaysia, political demonstrations have been occurring with higher frequency. While they are certainly disruptive – though that is, I think, the point of demonstrations – I think that, as long as they are meant to be peaceful, we should take these demonstrations as a sign of growing political maturity among Malaysian civil society. Proponents of these demonstrations tend to argue that one of the key reasons they take to the streets or that they hold assemblies is that this manner of civil participation is the only way in which they can get the government to listen to them. I am not so certain that this is true.

I believe there is another way that is largely untried in civil society in Malaysia. It is not a direct form of engagement – say, national debates, elections, parliamentary sessions and so on – but I think, in the long run, it will be the most successful. That other way is the engagement of ideas and information, not with politicians, but with the rakyat on the ground.

The first lesson in Economics is that people respond to incentives. Similarly, politicians in democracies respond to incentives that will win them votes. Whenever a politician, on either side of the divide, say something a little strange – putting it kindly – it does not do us any good to immediately conclude that the politician is stupid. I genuinely believe that a sound baseline assumption is that politicians are not stupid. It is not easy to be a politician especially one that manages to achieve very powerful positions. It requires a great deal of strategizing and networking that no simpleton can achieve. Admittedly, there are always exceptions, but I do think that it serves no use and is intellectually lazy to conclude that a given politician is stupid based on remarks they make.

Perhaps I am biased. Economists do not like explanations that simply go, “That person is dumb.” Rather, what I argue is a more reasonable way of thinking about strange comments is to ask, “Why is that person saying the things he or she is saying?” If we pair that with the belief that a politician’s objective is to win votes, especially in a country where there are no term limits at the federal level, then a reasonable answer to that question is, “…because the thing the person is saying will win him or her votes from his or her constituency.” For instance, it would be difficult to imagine a politician advocating cutting transfers to the poor (say the Bantuan Rakyat 1 Malaysia or BR1M) if that politicians was a Member of Parliament for a thoroughly impoverished constituency.

Therefore, if a politician is saying something which we may disagree with, it is likely because that politician believes that that particular stance will win him or her votes in his or her constituency. In short, it is because the rakyat in that politician’s constituency have those preferences. The corollary of this is that if we want the politician to change his or her mind, or even to listen to an opposing point of view, perhaps the best way to do this is via the rakyat in that politician’s constituency.

In essence, this is changing the incentives to which a given politician responds. What this requires is a serious effort to educate and advocate. It is to educate when there is a lack of any information at all about a given policy, and it is to advocate when there is too much one-sided information about a given policy. Ideally, education and advocacy should be politically neutral; people should be given all sides of any story upon which they would then decide for themselves what they support and what they do not. They may end up not changing their minds about, say, the GST, but at least they have the information and the arguments for the opposing sides. Of course, assuming political neutrality may be a bit too naïve, but the upshot of at least one side of the political divide providing education and advocacy will induce the other to also do the same; otherwise, the side that fails to educate and advocate will have a higher probability of losing voters. This is a Nash Equilibrium in the game theoretic sense.

The point of education and advocacy, therefore, is to have an informed electorate. By any definition, an informed electorate is always and necessarily a good thing. It makes me wonder why political parties, particularly on the opposition end, do not focus as much on education and advocacy at the grassroots level beyond ceramahs and debates which are, in general, not the most effective means of education and advocacy because the crowds who attend those ceramahs and debates are likely self-selecting, meaning that they are already supporters who want to show their support. Reaching out to a wider population, particularly those who choose not to attend those sessions, seems to me to provide the higher return on investment.

While peaceful demonstrations do have value in and of themselves, I tend to believe that, like most things in life, they have diminishing marginal returns. There is only so much more value that demonstrations can extract before they become saturated. The key is not simply to reaffirm the support of supporters – which demonstrations tend to do – but to engage with those who are not supporters. By changing the political incentives on the ground at the rakyat level, we can then change the political debate and engagement at the politician level.

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