Every year, I try to read as much as I can. For the books I read, I keep a record of when I read them and my rating of them — on a scale of 1 to 5, with 5 being “all-timer, has really shaped my thinking or beliefs”. For those who may be interested, I have a list of the subset of books I have rated “5” on my website (www.nicholaskhaw.com). For the academic articles I read, I don’t give them a rating but I do record them for posterity (and also, given the unyielding onslaught of ageing, for memory).
The best part about reading stuff is learning new ideas and seeing how they might connect to other ideas or be applicable to certain situations or circumstances. So with that in mind, I thought I would just share four of the most interesting ideas I learnt in 2023, be it from books or articles. And in addition, a specific question arising out of that idea to think about for 2024.
The first idea comes from The Rise and Fall of the EAST: How Exams, Autocracy, Stability and Technology Brought China Success, and Why They Might Lead to Its Decline by Yasheng Huang, professor of global economics and management at the Massachusetts Institute of Technology (MIT). While the overall theme of the book is focused on the “Keju” (China’s historical civil service examinations) and its influence on China’s autocracy, stability and technology, the idea that I want to highlight here comes from an anecdote in the book on China’s agricultural reforms after the death of Mao Zedong.
In the book, Huang highlights that China’s agricultural reforms only took place at the end of 1978, while Mao died in September 1976. During those two years, Huang writes, it wasn’t as if the Chinese government learnt from the failures of Mao and immediately implemented more market-oriented reforms. Indeed, they tried their hand again at central planning and failed — with Huang writing, “In 1976, the Chinese leaders did not interpret the Cultural Revolution as a failure of central planning, but rather as a failure to properly implement central planning.” In other words, they still thought central planning was great, it just wasn’t implemented well enough.
The question I have here is for Malaysia. A common comment on our economic strategies and policies is that we have wonderful policies, it is just that we cannot execute those policies. This anecdote from Huang’s book makes me reconsider the thought a little bit — many of our strategies and policies are meant to be driven centrally, or federally. What if the reason they cannot be implemented is because many of today’s horribly complex issues require greater decentralisation and dissemination of authority? So, maybe instead of thinking we still need five-year plans and things like that (that is, the idea of central planning), we should instead think of how we might reprioritise issues based on what should be appropriately centralised, and what really shouldn’t.
The second idea comes from a working paper called Zero-Sum Thinking and the Roots of US Political Divides by Sahil Chinoy, Nathan Nunn, Sandra Sequeira and Stefanie Stantcheva. The paper explores the concept of “zero-sum thinking”, defined as the belief that gains for one individual or group tend to come at the cost of others, and its implications for policy preferences. From the abstract, the authors find that, “… a more zero-sum mindset is strongly associated with more support for government redistribution, race- and gender-based affirmative action, and more restrictive immigration policies. Furthermore, zero-sum thinking can be traced back to the experiences of both the individual and their ancestors…”
Essentially, individuals who grew up in situations where they are likely to believe in zero-sum thinking — consider, for example, a situation where there weren’t enough resources to go around — are likely to be more conservative. What is interesting is that, at least with respect to US politics, zero-sum thinkers fall on both the left (preference for redistribution and affirmative action) and the right (preference for more restrictive immigration policies). So the question I have for Malaysia is, what is the incidence of zero-sum thinking among our population, particularly in areas where economic development has been weak? If swathes of the population have grown up with zero-sum thinking, might that help explain some of the reasons why voting patterns or policy preferences are what they are?
The third idea comes from a working paper called Trust and Democracy: Political Stability in Times of Economic Crisis by Nathan Nunn, Nancy Qian and Jaya Wen. In it, the authors find that in countries with higher levels of generalised trust (trust in an individual you may not know), there is less leader turnover during economic crises, with these countries also experiencing more rapid recovery following recessions. The paper illustrated this idea with some newspaper reports from Brazil, the Philippines, Turkey and Sweden. In the first three countries, which are low-trust countries, citizens tended to blame leaders directly for economic problems. For instance, “The opposition believes the economic crisis requires an urgent solution, the immediate resignation of Mr Estrada”. In contrast, Sweden, a high-trust country, during a severe economic downturn in the early 1990s, there were few reports of political unrest or strong calls for political change, with media accounts describing a relatively sober environment.
Now, when we think of news articles in Malaysia, which ones are we more likely to see? Ones that give the government time and space to deal with problems, or ones that hold individuals in government (usually the prime minister) immediately to blame? Are we more likely to be like Brazil, the Philippines and Turkey, or more like Sweden? We all know the ringgit wasn’t great in 2023, but most of that was due to interest rate hikes by the US Federal Reserve, rather than blatant economic mismanagement by the present government. But how is that blame apportioned? In short, what we might need to do is to understand levels of generalised trust in Malaysia and the long and arduous task of rebuilding and increasing those levels.
The fourth idea confirms (and I’m aware I might be exposed to confirmation bias) an approach I use which is, “When in doubt on important personal decisions, go for what’s new”. The idea comes from a paper called Heads or Tails: The Impact of a Coin Toss on Major Life Decisions and Subsequent Happiness by Steven Levitt, author of Freakonomics. The paper reports that for important decisions (like quitting a job), individuals who were told by a randomiser (coin toss) to make a change are more satisfied with their decisions and happier six months later than those whose coin toss instructed them to maintain the status quo. So, if there’s an important decision you might be stewing over, there’s some academic research now that serves as a guide to making that decision. The question for all of us in 2024 is, can we be brave enough to embrace the new? It may mean a better chance at greater happiness and life satisfaction. Happy New Year to all readers.