Spoil Market!

Title says it all, doesn’t it? Surely in one’s working life, one has heard the phrase, “Don’t spoil market, lah”. According to the lexicologists at a satirical Singapore website, this refers to the actions of “someone who does his work so well, he makes his colleagues look bad.” However, that is surely only one way to interpret it, and so let’s bring some intellectual rigour to this diaphanous, oft-used phrase.

Market “spoiling” on 2 fronts
The most obvious way the phrase can be alternatively used is when you buy something and are deemed by others to have overpaid for it. This often happens for services since there can be more ambiguity in how services are priced. (“I went to Ah Yap yesterday for a massage. It was sooooo good I tipped her RM10.” “What? You really spoil market lah!”). We can call this demand-side market spoiling.

The implication seems to be that you are spoiling the market for others who are less willing to pay the price that you paid, and that the supplier of the service may increase price and seek out other high-paying customers like yourself while ignoring low-paying customers like them completely.

Similarly, in the labour market, an employer can also be deemed to spoil the market when he overpays or provides extraneous benefits to pampered employees. (e.g. overheard at HR offices around town: “Did you see those pictures of Digi’s corporate office? It’s like the Google campus! Got waterfalls and free food! Really spoil market!”)

The second type is supply-side market spoiling. Like the example of the overeager worker above, companies can also do the same when they supply their goods and services. No one can ignore the market spoiling power of such brands as Wal-Mart, Air Asia and Dell when they first brought their low-cost wares to market.

“Spoiling” their day
When people say “you spoil market”, it is often passed off as a joke, but also as a scolding. In this sense, it is important to be clear on the reason for your “spoilage”.

Dumping is often the suspected motive behind supply-side market spoiling. Companies that are overstocked or want to aggressively gain market share often muscle in by offering ultra-low prices. This grouse is probably legitimate, but it should be noted that there is a very fine line between this category of firms and those who are actually able to sell their wares at a cheaper price and book a decent profit, such as the low cost leaders mentioned above.

Poor information is often an accusation for demand-side market spoiling – you overpay because you don’t know better. But what if you do? Are the kinds of benefits purportedly lavished on Digi employees a result of corporate vanity or because, at half the headcount of rivals Celcom and Maxis, Digi staff are simply more productive and therefore can be treated better? Would one say other companies with exemplary service records like Shangri-La, Direct Access and Singapore Airlines are “overpaying” their staff?

The ugly side
As a marketer, beholden to your bosses/shareholders, your justifications for “market spoiling” are your own and usually subject to financial inspection – your bottom line will be your conscience. However, I have a personal observation on why the phrase “spoil market” persists to this day in popular usage. It actually reveals 2 ugly sides to our behaviour.

Demand side accusations of “spoil market” are really a reflection of our unwillingness to reward good services rendered. For instance, there is a poor tipping culture here in Malaysia, since most people assume it is covered by the standard service charge of 10%. However, in more developed countries, where services form a larger part of the economy, service charges are usually unstandardised and tipping is wholly discretionary, ranging from 10% to 25% or more depending on how pleased the customer is.

On a larger scale, corporate clients often balk at firms who price their services accurately and deliver on-time and on-budget, thinking they will be guilty of “market-spoiling”. Instead, they prefer to go for less responsible firms who throw attractive lowball prices but who hide behind “unforeseen” future overruns which end up costing the same or more. Sound familiar?

Supply side accusations of “spoil market” are a reflection of our tendency to collude. It is no secret that Malaysian companies in similar industries, even “fierce” competitors, like to gather together for regular meetings to catch up, share news on the market, shop talk. I’m not saying that anything bad goes on at these meetings (picture eyes rolling here), but let’s just say that in many developed countries, such regular interaction between competitors would inevitably lead to a visit from investigators in the domestic trade ministry.

For marketers, this poses a two-pronged challenge: first, should you focus on what your rivals are doing or on what your customers want from you?; and second, especially for those in service industries wanting to climb up the quality ladder, it can be supremely difficult searching out customers who are able to recognise and reward quality when they purchase it, instead of those customers on the endless look-out for the chimera known as the “cheap and good”.

Which way should your firm go? Now, telling you would really be spoiling the market!

(reprinted from The Sun, December 5th 2007. e-paper link here.)

To G1 or to G2, that is the question.

I’ve just become a father. It’s usually one of the biggest steps in a person’s life, becoming a parent, but lately, what has been troubling me (other than preparing the checklist of things you need to buy) is whether I should raise my daughter as a G1 or G2.

Oops. Maybe I need to backtrack a little.

About a month ago, an opinion piece in The Star from members of INSAP, the MCA’s think-tank, introduced the concept of 2 distinct groups of Malaysian Chinese, the G1 and G2. According to the article, the G1 are Chinese-speaking, Chinese-schooled and comprise about 85% of the Chinese population, while the G2 are English-speaking, English-schooled and comprise 15% of the same. The G1 subscribe to the notion of the three pillars of Chinese society – namely Chinese schools, Chinese associations and Chinese media, whereas the G2, well, they are the Christians, peranakans and “part of the Lions and Rotary Club set”.

The article was unusual in its candour, doubtless expressing a widespread stereotype latent amongst many Malaysian Chinese. From a demographic standpoint, it is interesting that one’s preferred language is being endorsed by the MCA as a form of social delineation.

G1, G2 or G1½?

Talk to Malaysian Chinese and you’ll often find that they are comfortable with BM and their dialect, but they then lean heavily towards either English or Mandarin/ Cantonese/ Hokkien. G1’s do read Chinese papers and want the government to leave them alone, while G2’s do read English papers and tend to vote Gerakan (their words, not mine!). This was the basis of INSAP’s argument for the delineation.

Stereotyping, however, is a blunt instrument, in the sense that it often hides as much as it reveals. A respondent to the commentary took issue with the G1/G2 profiling, claiming he had written 2 Chinese books, married a Chinese-speaking wife but was English-educated and spoke English at home, and therefore called himself a ‘G1½’.

Life in a G1½ household

I’m probably G1½ myself. I think and write in English. However, Mandarin is my ‘primal’ language since I was brought up speaking it in my home and I often slip into it unconsciously when speaking. In our ‘rojak’ society, it is almost impossible to be monolingual during the course of the day, anyway.

I also married a G1½. My wife speaks better Mandarin than I, and has a more natural aptitude given her family is Mandarin-speaking. Still, she studied the humanities in school and talking to her, you would not think she aced English Literature and History during her ‘A’ levels

Our household consumption is a hodge-podge of Eastern and Western brands. Chinese herbs sit beside our stash of Nurofen. Birds’ Nest from Eu Yan Sang. Illy Coffee. ‘Shin’ Korean noodles. The TV we tune in to runs the entire gamut of English and Chinese offerings available on Astro from Wah Lai Toi to the History Channel to Channel ‘E’.

Defying Stereotyping

Concentrating so much on the G1/G2 divide may lead one to miss the trends affecting our society, which is that there are more and more G1½’s every day. The younger generation is largely more clued in to what is needed to succeed in today’s world, and you will find effective trilingualism, or even quadrilingualism, amongst the best and brightest of the young. For instance, a foreign visitor that I entertained recently observed that the average Chinese executive speaks 4 languages during the day: a) BM to Malay colleagues; b) Mandarin to Chinese colleagues; c) English to the boss; and finally d) dialect (Hokkien/Cantonese etc.) at home with the family.

The smartest are able to weather this cacophony of languages in their head with ease. Usually, these are children of far-sighted parents who are compensating for an in-built bias – either they deliberately stressed Chinese education because they spoke English at home, or vice versa. INSAP’s dismissal of G2 parents sending children to Chinese schools simply because of a perceived higher quality of education misses this point, and misses also the increasing number of G1 parents sending their children to ‘international’ schools. Parents like these want to make sure that the best possible choices are available for their children when they grow up, and that means an inclusive, broad-minded and multilingual education. When it comes to marketing in Malaysia, there is no such divide: you’re either multilingual or you’re not in marketing.

I confess I would want my daughter to be like that. But then again, I’d also want her to critique Plato and Confucius with equanimity, to know how to spot a fake Louis Vuitton from 30 metres, and to know how to steam a ‘soon hock’ for her father when she grows up. All very reasonable, I think.

(reprinted from The Sun, 14th November 2007. e-Paper link here.)

*Update. INSAP's reply here. More on INSAP here.

Marketing in the Facebook Age

To paraphrase a book review of Lord of the Rings, the English-speaking world is now divided into two – those who are part of Facebook and those who will be. If you’ve been wondering what the fuss is all about, Facebook is essentially social networking done right. The developers have cleverly isolated the key elements that people want from such a website – re-connecting with old friends, keeping in touch and interaction – and pioneered a unique approach to satisfying those needs in such a way that surpasses previous attempts from Friendster, LinkedIn or Myspace.

One may sniff at such an incremental improvement, but one should remember that Google “only” improved upon Yahoo’s search capabilities and look where it is today. Facebook’s global membership has grown exponentially since opening its doors and has reached a roster of 43 million active users after 3 years of operation. Locally, the statistics are also impressive: from virtually zero in the 1st half of the year, the ‘Malaysia’ network of Facebook has grown to 70,000-odd members, and is growing at the rate of roughly 30% every week.

Why Facebook is better

Virtually every Facebook joiner has the same experience – you are bugged by friends to register, you do so, you find a few friends, but soon you are inundated by other friends who have somehow found you and then you spend copious amounts of time “catching up” by reading other people’s profiles. Such is the genius of their profile layouts that a friend you have on Friendster suddenly seems more interesting when he’s on Facebook!

Secondly, Facebook is an uncluttered environment which emphasises what its membership base most wants to do – stay in touch. It consistently strikes a satisfying balance between privacy for oneself and curiosity about others. In Facebook, a member’s home page is a veritable news feed of all the important things happening to his community, and similarly every significant action or comment you make on Facebook is reported to your community. Are you getting engaged? Got a new job? Having a tough day? Or just simply going some place tonight? One brief update and *click* all of your friends will know.

Thirdly, Facebook structures interaction through the sharing of hobbies, games and interests. It has cleverly outsourced this to 3rd party developers who create applications on the Facebook platform that integrate well into the user’s profile page.. Whether its music, games, hobbies, religion or others, all have applications which automatically seek out those friends with the same interests. The combination of such applications, on top of Facebook’s already potent user-generated content, creates a compellingly “sticky” environment where half of all registered users log on daily or more just to see what is going on in their world of friends.

Marketing Implications

But what does this mean for marketers? Google rewrote the book on web advertising with its AdSense application and its promise of targeted advertising leveraging on its ubiquitous search engine. What about Facebook?

In its current embryonic stage, Facebook may best be understood as word-of-mouth writ large. Any campaign with a viral marketing component has to consider Facebook for efficiency reasons. Case in point: an expatriate’s leaving do was recently held at a Mexican restaurant on Jln Semantan. I know this because I was notified in my community news feed that a friend of mine attended it. The point is, its not just the invitees, but all the friends of the invitees that now know there’s a Mexican restaurant on Jln Semantan. Do they serve grilled fish tacos there? I don’t know, but I’m certainly going to find out.

Furthermore, Facebook aspires to bring some demographic order to web advertising. Although as a user it is possible to have a blank profile up, half the fun is actually sharing what your interests are and what you do. That translates on a massive scale to a potentially powerful meta-database for larger advertisers. Facebook is holding out the promise of targeted Internet advertising that does not rely on search for the targeting but rather location and demographics – a long-held dream for advertisers who want a more active campaign rather than a passive keyword-based one such as Google’s.

Finally, Facebook is being seen as a poster boy for Web 2.0 with its infrastructure for shared web applications, and is in fact being spoken in the same breath as Yahoo or Google when it comes to that coveted ‘portal’ status. With the 6th most trafficked website currently in the USA, it is no wonder, then, that the shareholders were offered US$1.6 billion for the company by Yahoo and still had the gall to turn it down. Its early days yet but the future of web advertising may again be turned on its head by the Internet’s newest kid on the block.

(reprinted from The Sun, 10th October 2007. e-Paper link here.)

Dealing with Fear and Greed in Marketing

A very senior sales professional once wrote to me, when I was a wee trainee fresh out of school, “Fear and greed motivates almost all buying behaviour. No, wait, that’s wrong. Take away that word ‘almost’.”

Many of you must have heard one variation or another of that old saw before. Fear and greed are indeed two of the most powerful human emotions, motivators of our actions since caveman days to avoid risk and acquire what looks rewarding. The literature on these two emotional drivers in decision-making is quite lengthy, but it is commonly discussed in the world of investments, less so in marketing and consumer buying behaviour.

Is it true?

Do we truly buy things only out of greed or fear? Throw all kinds of products up in the air and you do find that they fit… if you stretch the concepts of fear and greed a little (ok, a lot). Rice, bread, cooking oil, milk and other necessities? Yes, we buy such necessities out of fear of running out of them. Computers, handphones and laptops? Sure, we buy them out of ‘greed’ for the latest gadgets and what they can do for us. Luxury cars, yachts and planes? Classic greed. Insurance, home alarms and vitamin supplements? Classic fear. The list goes on and on. Try it with the product or product category your company operates in, and you will find fear and/or ‘greed’ is around the corner in some guise or another as a simplification of the buyer motive. (perhaps ‘acquisitiveness’ would be more euphemistic instead of ‘greed’?)

New perspectives on Fear and Greed

If you accept that these two primal emotions play a huge part in consumer buying behaviour, a new book taking a neuroscientific look at fear and greed and their effects on investing may have some valuable lessons for marketers. Jason Zweig’s “Your Money and Your Brain” (Simon and Schuster 2007) highlights several important facets of our brains’ reaction to fear and greed, but for the purposes of this column, I’ll mention two.

First, anticipating a reward is much more powerful than actually getting one. This is the ‘thrill of the chase’ which we are all so familiar with, and this thrill is actually much more powerful than the pleasure received when the quarry is ‘caught’. Functional magnetic resonance imaging (fMRI) scans of experimental subjects show that neuron signals fire more significantly during expectations of payouts than they do when the payouts are actually received. This partly explains why lottery ticket sales increase dramatically when the jackpot rolls over week after week – millions of people become excited at the prospect of winning hundreds of millions (as opposed to mere millions) and the lottery ticket sales skyrocket.

Secondly, another insight with regards to fear is our brain’s inability to measure risk in proportion to probability. Instead, explains psychologist Daniel Kahneman, "we tend to judge the probability of an event by the ease with which we can call it to mind." Hence, people tend to fear nuclear reactors much more than sunlight, even though the worst nuclear accident in history, Chernobyl, killed fewer than 100 people, whereas 8,000 people a year die of sun-related skin cancer.

Local lessons

Brain scans and new books are one thing, but experienced business practitioners probably know these things intuitively through experience. What are some examples of local marketing which address these 2 issues of anticipated reward and fear of the improbable?

A recent buka puasa trip to a well-known local restaurant at Mid Valley Megamall was an interesting experience. Mounted around the restaurant were LCD TV’s displaying mouth-watering videos of the preparation and garnishing of the restaurant’s signature dishes, which no doubt helped customers to decide what to order but also definitely whetted their appetites as they waited for their food. Overall, this provided a much more enhanced dining experience.

As for fear of the improbable, you may notice around KL billboards which advertise the services of a cord blood bank. A cord blood bank stores the cord blood of a newborn baby, as it is rich in stem-cells and can be used for life-saving transfusions in the future in case of diseases such as leukaemia and other blood or autoimmune disorders.

The advertisement features a butterfly on the nose of a cute baby boy, with the words: “Don’t let it fly away, mom!” This single picture succinctly draws attention to the ultimate beneficiary of the service (the baby), the fear of letting something potentially precious and life-saving slip away, and, allegorically, the comparative low cost of making sure that precious thing is saved (just catch that butterfly…).

The approaches of both these companies also illustrate that appealing to the emotions of fear and ‘greed’ is not straightforward, and requires subtlety and creativity in today’s consumer market. For instance, in the case of the cord blood bank, the fear of letting something precious slip away was highlighted, which is something everyone can relate to, instead of the fear of the diseases which might strike our children, which would be much too negative in a nationwide advertising campaign.

Interesting? Effective? A final disclosure: I’m both a customer of that cord blood bank and a regular at that local restaurant, so the strategies must have worked on me!

(reprinted from The Sun, 19th September 2007. e-Paper link here.)

Bill and Warren's Donations

Here's an interesting 1+1=2.

Warren Buffett recently donated US$37 billion to Bill Gates' charitable foundation. This is on top of the US$31 billion that Bill (yeah, we go way back) already gave before, making a total of US$68 billion.

Warren (I knew him through Bill) has already given most of his fortune (his estimated net worth is US$44 billion). Bill has another estimated US$50 billion to go.

So let's assume Bill will give most of that too and add another US$40 billion of that to the total, and so we have about US$108 billion.

Here's an interesting comparison.

The number of people the World Bank classifies as living in poverty just dipped below 1 billion this year, down by over 250 million since 1990. How do they arrive at the classification? Those that live on less than US$1 a day.

I think you kinda see where I'm going.

So let's say we take Bill and Warren's money and put it in a mix of T-bills, equity, loans and deposits. We take a blended return of about 7.5% and we arrive at returns of US$8.1 billion a year.

Divide that by 365 days and you have approximately 22 million.

So, basically, the charitable donations of 2 people are enough to double the daily income of 22 million people, without even affecting the value of those donations.

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I dunno, I just thought that was interesting.

Singapore the Corporation (Part 2)

What is Corporativism, in a Singaporean sense? Search around on Google for "Corporatism" or "Corporativism" and you’ll find a few definitions. For brevity's sake, here’s Wikipedia’s:

“an authoritarian state, through the process of licensing and regulating officially-incorporated social, religious, economic, or popular organizations, effectively co-opts their leadership or circumscribes their ability to challenge state authority by establishing the state as the source of their legitimacy.”

As you can see, most people look at corporativism negatively. Marxists (all 18 of you out there in the world) compare it to Fascism because of the idea of class co-operation vs. class struggle - eg. all workers registered under one "trade union congress" which effectively kowtows to government dictates. On the other hand, liberals scream at the absence of individual rights in such a regime, the lack of transparency of the operations of the state, and the stifling of free enterprise.

But thankfully, Singaporeans are neither marxists nor liberals. They are simply pragmatists, and so, this blog entry will be an exercise in political framing, in a language all pragmatic Singaporeans can understand. Yes, Singapore is one big corporation, and therefore, you are all shareholders of that one big corporation. You figuratively and literally have a stake in the accumulated income of Singapore Inc., and should press your rights in such a fashion.

Certainly Singaporeans must get the message by now that the government prefers this arrangement. Two rounds of disbursements have occurred – the New Singapore Shares (NSS) in 2001 and the Economic Restructuring Shares (ERS) in 2003. A brief check at the combined NSS-ERS website shows this year’s dividend rate at 10.9%, a good return in any given year in terms of equity and a stellar one in terms of safer asset classes (presumably a claim on a country’s income is a safer asset class?)

However, from what I understand, the quantum of shares out there are miniscule and hardly worth a sneeze at. If I were a Singaporean, I’d smell an opportunity and use this avenue to pressure the government for more, as well as a higher dividend policy. Currently its 3% + the real GDP growth rate of the previous year. I’d say go for 5% and increase the entitlement. The question is, what level of ownership (i.e. the quantum of shares) is enough to create that sense of ownership in the average Singaporean, set at an optimum level which would not impede the cashflows of the state for crucial re-investment? (presumbly the Singapore government knows this and is not talking)

If the people of Singapore understand their country as a corporation and themselves as shareholders, then many things would become clear. Minister wages make sense. Rents and tolls make sense. The COE and the ERP make sense. Even taking care of expatriates, giving foreign customers better service, and $500 fines for spitting and littering all make sense. And then, Singaporeans would be able to press for reforms that the administrative elites of Singapore would also understand, because reforms would be along the lines of corporate governance and shareholder rebellions, not democracy (corporate governance as a rallying cry has the whiff of Enron; democracy, unfortunately, has the stigma of Tiananmen).

Among other things Singaporeans should ask for:

1. Increased dividend policy as stated above

2. Natural monopolies should have break-even targets (after accounting for necessary re-investment), not profitability targets (ie. like the United States Postal Service)

3. A clear immigration policy should be spelled out, with immigration to those who have added fundamental value to the Singapore economy over years preferred above all else.

4. Public KPIs for ministers and heads of statutory boards for accountability purposes. If they're paid like the private sector, they should be liable for punishment like the private sector – susceptible to demotions, firings, retrenchments and pay reductions.

The grumblings I hear in Singapore are reminiscent of employees in big multinationals bitching about their bosses and their directors getting fat paychecks. It’s time that Singaporeans understood that while they are employees in Singapore Inc., they are also shareholders, and should act as such. It would serve them better than grousing about it on blogs.

Conversely, the state-owned media (i.e. SPH) needs to collectively internalise this political regime and start to work as shareholder advocates, rather than simply management mouthpieces (i.e. move away from being the in-house company newsletter to being the research analyst covering the company). This would give the media greater credibility than it has now, while balancing the state's desire for some control over content.

To me, that would be an interesting development in political science. A new, viable political entity for the 21st century. How's that for putting Singapore on the map?

Singapore the Corporation (Part 1)

I recently passed through Singapore on the way to the United States for a product exhibition. Most acquaintances and friends I met were surprisingly vitriolic of the recent government ministers’ pay raise, and had stories to counter-point, such as the growing income disparity there.

Most were of the opinion that the PAP would face a substantial backlash in the next election and lose more seats. One was quick to point out that in the last few elections, the PAP had won as few as 51% of the total electoral vote, and that if anything, the PAP might implode in internal fissures and factionalism similar to the fates of other former one-party states (the KMT in Taiwan, the GNP in South Korea). Only in this way would democracy come to Singapore.

I think I have to disagree. Not only do I support the PAP unreservedly, I think Singaporeans should abandon the language of western liberal democracy and embark on a new political journey, embracing the Corporativist regime they have created and pull the study of political science out of history and into uncharted waters.

Everyone knows that Singapore is structurally now more a corporation than a country. The GLCs have a major if not total share of the commanding heights of the local economy. Capable and well-run, the GLCs operate in those industries which favour natural monopolies (roads, airports, ports, mass transit) or compete against each other in those that don’t (power, retail banking, telecommunications, media). The PAP is a profit maximising regime in the “New Institutional Economic” sense – it seeks to maximise profits in the form of tax revenue, returns on state investment, and rents from ownership of local infrastructure.

In that sense, one understands why foreign investment is and always has been fundamentally a favoured policy. When a company sets up shop in Singapore bringing in expatriate workers, it bolsters local tax revenue through corporate, income and consumption taxes, and also provides rent revenue to the local monopolies and employment of the local workforce. FDI-driven export revenue in electronics, petrochemicals and pharmaceuticals remains a mainstay of the economy.

Besides revenue, Singapore's education system is geared towards identifying talented, driven individuals and streaming them at an early age depending on aptitude. Properly administered, it identifies the best and brightest to serve in the civil service, the aforementioned GLCs or statutory boards.

The success of this carefully implemented model of export promotion, FDI inflows and human capital management is undeniable. From 1966 to 2006, the economy grew over 20-fold from a GDP of S$9.7bn to $209.6bn. Growth in 2007 is estimated to be above 5% and based on current extrapolations, the economy of the island of Singapore (pop. 4.5m) might actually overtake its hinterland Malaysia (pop. 25m) within the next 10 years.

Which brings us to the issue of Minister wages. The uproar over this issue betrays a mental disjunct between the angry populace and the administrators of this economy, a disjunct partially created because the language of political science has not caught up with the economic reality of the way Singapore is governed – simply put, minister wages in Singapore should be aligned to private sector wages simply because Singapore now functions as a corporation. However, Singaporeans seem unable to accept this reality, as it has not been properly framed for them by the literate elite.

And that’s where bloggers come in. To be continued.

My first poll.

Vital important question.

One Eva to rule them all. Which one?
	Mendes.
	Longoria.
	Gabor.
Free polls from Pollhost.com

9/11, Baudrillard and the Theory of Comparative Advantage

In an essay titled "The Spirit of Terrorism," published in Le Monde two months after 9/11, Jean Baudrillard wrote that the World Trade Center attacks were the consequence of a "terrorist imagination" bred by an "insufferable superpower," the United States of America. "In the end," he concluded, "it was they who did it, but we who wished it."

I will be using Ricardo's Theory of Comparative Advantage to illustrate what the hell he's talking about.

Let's say there are 2 countries, USA and Qaeda-land. And let's say this world of 2 countries only produces 2 items, Robots and Camel Milk.

If the countries were on their own without trade, this is what they would be able to produce if they dedicated all their resources to making either robots or camel milk:

Qaeda-land can make 100 robots or 100 tonnes of Camel Milk
USA can make 200 robots or 100 tonnes of Camel Milk

Now, it seems that the USA is better than Qaeda-land, and has an absolute advantage over it. The USA can make at least as much or more than Qaeda-land in both products. You would therefore think it has nothing to gain from trade with Qaeda-land.

But Ricardo's Theory says look at the opportunity costs of production: USA's opportunity cost of making robots is higher than Qaeda-land's. There is room for both to benefit from trade, if they choose to specialise.

If both countries did not trade and chose to split their resources equally between making robots and camel milk, then this is what would happen:

	Robots	Camel Milk
Qaeda-Land	50	50
USA	100	50

However, if they specialised in producing in the item which they had a comparative advantage in producing, then this is what they would produce.

	Robots	Camel Milk
Qaeda-Land	0	100
USA	200	0

Wow, it looks like given the proper exchange rate (to be precise, the proper terms of trade), both USA and Qaeda-land could benefit from increases in production!! Notice the exclamation marks?! This is the part where economists normally wet themselves with excitement at how surprising and non-intuitive the results of specialisation can be!!

To illustrate this, the examples of Ricardo's Theory typically use a "nice" exchange rate, for instance, 75 robots to 50 tonnes of camel milk, which yields the following consumption:

	Robots	Camel Milk
Qaeda-Land	75	50
USA	125	50

Why is it "nice"? Well, because the absolute gains from trade - 50 robots - are split evenly between the 2 countries, Qaeda-land and USA, resulting in both countries having 25 more robots than they would have had without trade and specialisation.

But what if we had a "not so nice" exchange rate, for instance, of 55 robots for 50 tonnes of camel milk:

	Robots	Camel Milk
Qaeda-Land	55	50
USA	145	50

One could argue that Qaeda-land is still better off than it would have been if it didn't trade - it got 5 more robots than it would have had if it made things by itself. Economists are content to end there. Everyone benefits from specialising under the theory of comparative advantage.

But you and I know that's not the end of the story. Because the people of Qaeda-land would be living in a world where the people of USA now had 145 robots, compared to their own measly 55 robots. They might even think that they were being suckers, having specialised in making camel milk so that the people of USA could enjoy the foot-rubbing, foie gras-making and general lawnmowing services of those additional 45 robots.

And if you believe that people measure happiness in relative rather than absolute terms, you'll see that there are people out there who prefer a world without those extra 50 robots and how to divide them up fairly. They'd prefer you not to build 100-storey skyscrapers when they can only afford 20 storey-skyscrapers (never mind that that couldn't afford a tent before trade occured). They would prefer not to be "suckers". They would prefer to take you down in a race, rather than run and lose.

And that is how - as I see it - Ricardo's theory, which is the theoretical foundation of modern international free trade (and therefore globalisation and the WTO), provides some nuance to what Baudrillard meant. "[It] was they who did it, but we who wished it." Who wished it? Anyone who felt a vague sense of dizzy wonderment at seeing those 2 buildings collapse on September 11th.

You know who you are.

How to save Proton

So, our Prime Minister is intervening personally in order to to save Proton, but he still can't get a meeting with the Volkswagen chairman.

Well, I've got your saving Proton right here. (Warning: this is not going to be pretty.)

Easy-peasy steps (not).

1. You got the wrong partner. Choose Ford, which owns, among other brands, Volvo.

2. Co-operate on building the Tandem, the most revolutionary new car design of the past 20 years that nobody has heard of. Tell them you'll build it for them at Tanjung Malim and buy the 1st 100,000 off the line. Just as long as Volvo shows Proton how to build it. And the vendors too.

3. Tell them you'll make it work in Malaysia because you're a National Car Company and through a combination of taxes, duties, tolls and other incentives, you can make basically everyone in Malaysia buy this car in order to get it rolling and reaching production capacities sooner. If they don't believe you, fly them in to KL and have them sit at the PLUS highway toll stand at Sg. Besi counting the Sagas and Wiras that pass by. Then tell them all these model designs are 12-25 years old.

4. Export-wise, Ford and Volvo have to take over. Proton has a basically crappy reputation in Britain, but I hear they do better in the Middle East.

The facts.

Let's just state the obvious.

1. Proton is a national car company. State-owned. Let me repeat and highlight, STATE-OWNED.

2. It is declining in market share through a combination of poor quality products, safety issues and lack of models. After 20 years of operating, it still only produces sedans, completely misreading (or perhaps not even bothering to read) the market's reception of MPVs, SUVs and crossovers. (It also over-estimated the market's reception of freakmobiles.)

3. It has a knowledge gap in manufacturing to safety standards now prevalent in the world, and is in dire need of knowledge and technology transfer.

4. It has an alleged high cost base in the inefficiencies of its vendor network.

5. It owns Lotus, a sports car marque known for the exceptional handling of its models.

And so, to these facts: No. 2 and 3 and 4 are serious problems. No. 5 is an asset, but one that's not really paying off at the moment. No. 1, well, I don't see it as a problem. Plenty of state-owned corporations do well, given the proper management and incentives. (Petronas being a very clear example.)

The challenge therefore is to find a partner what can overcome points 2, 3 and 4, maximise point 5 and turn point 1 into an asset, an opportunity. To which we arrive.

You know what a state-owned company automatically has? Three important things:

Patience.

Access to a market.

And lastly, if the formula is right: Balls.

Now, to see why this plan would address the above points, one by one:

Turning "state-owned" from problem to benefit.

1. I've written elsewhere on why I'm a fan of the Tandem. However, I recognise that as a product that needs to be marketed by a business, it's got a very slim chance. The benefits of using the Tandem are only felt the more people use it - a positive externality problem you economists out there would be familiar with. And in this case, its not like the 1st fax machine where at the least, you and your branch office could communicate even if no one else had it. In this case, a seriously large amount of people need to use it before congestion starts to ease.

This means government intervention. Governments try to regulate externalities where possible and feasible - smoking zones to get the smokers away from the non-smokers, carbon taxes on your factory emissions. These are regulations for negative externalities, but incentives to promote positive externalities also exist - for instance, California provides tax rebates to you if you install solar panels on the roof of your home, in order to alleviate the burden on its over-stretched electricity grid. In a nice allegory, the Tandem would alleviate the burden of an over-stretched tranportation grid.

For the Tandem, a whole slew of incentives would need to be provided:

- Financial: reduced road taxes, tolls, excise duties and COEs (for those in Singapore) for Tandem ownership.

- Logistical: Dedicated Tandem/motorcyle lanes only.

So, basically with the Tandem, you've turned what normally is a liability - a state-owned enterprise, uncompetitive and bloated - into (potentially) an asset - a state-owned enterprise, with patient and far-sighted shareholders who can realise benefits more than individual private enterprises. This stands to reason: governments would save the most in construction and land acquisition costs for road construction, and they should justly foot the bill for widespread adoption of the Tandem.

Synergy

2 and 5. The two issues which will be of primary importance for a vehicle of this sort will be safety and handling. Safety, because you're dealing with a much more compact automotive frame while still needing to meet safety standards. Handling, because you're dealing with a narrow profile prone to cornering problems. Volvo and Lotus are marques which have world-renowned reputations for them respectively. Lotus, Proton already has. It would only need the expertise of Volvo to finish the job.

And let's be honest - the Tandem looks at this stage like a lab project (I could be wrong, but no news has come out since the first invitation to the press to view it.) Too much government lobbying needs to accompany its adoption, as discussed above. It's something which Volvo has in their portfolio, but all it could do in the end is provide influence to their ongoing 3CC concept car, and that's it. But if someone can come along and say to them, we'll take your on-the-shelf lab project and run with it, in exchange for you providing us some technology and knowledge transfer, I think they'll go for it. Not much to lose on their part. That's synergy to me, in terms of design capability and corporate win-win.

Leapfrogging

3 and 4. One of the primary reasons for partnering with a larger, foreign auto-maker is the access to technology and manufacturing know-how that they provide. That much is obvious. On these 2 points, I can't comment that Ford is a better partner that GM or Volkswagen, but I will say this: you need something to trade with, something that will make it worth their while to talk to you. And the Tandem, overlooked and under-estimated, is precisely that bargaining chip, a chip which also happens to serve Proton's national aspirations.

There's a unwritten rule in setting targets, for sales, for learning, or for anything - aim for something beyond what you actually want to achieve. Meaning to say, in order to catch up, you need to leapfrog. You can't just try to catch up, otherwise you'll never do so - you'll always be introducing a new feature 2 years after someone else has already done the same.

The Tandem represents an automotive challenge which if surmounted would elevate its manufacturer a step beyond its contemporaries, something others would have to catch up to. Such opportunities come rarely in business. Attempting to solve the real-world problems of implementing the Tandem - in a package that is safe, easy, and economical to own - would accelerate capabilities in automobile manufacturing far beyond than simple catching up, because the company would be solving problems no one is attempting to do so at the present time.

Betting the farm

You'll find examples of this sort of leap forward in history - the steamship. The 1st automobile. The 1st jet airline. The Boeing 747. The Tandem is a much more prosaic example, but its still different enough from current cars to warrant comparisons to those great icons of manufacturing. Such iconic products represent a great throw of the dice by the companies involved, an almost all-or-nothing, bet-the-farm strategy which vaulted them beyond what others were at the time.

Such boldness was what Dr. M had in mind, I think, when he started this project. If you ask me, there were lots of bumps along the way, and a lot of Malaysians have paid for Proton's foibles for the past 20 years. However, if we still want to do it, I think this is the plan that the vision would need to be attached to, and the only decent way that Proton can go beyond its current dead-end trajectory.

Told you it wouldn't be pretty.

Personal Rapid Transit

In a recent Technology Quarterly from "The Economist", a report was made on Personal Rapid Transit (PRT) systems. Unlike Mass Rapid Transit systems, these would be small, 1-4 person transport pods, travelling on fixed rails, but with lower running costs, more accessible stations and overall faster transit times.

Cute. But if you're talking about overhauling transportation, reducing wait times and congestion, I prefer another solution.



This is the Volvo Tandem, a concept car being developed by the Volvo Monitoring and Concept Centre (VMCC), Volvo's design studio in Southern California. This is the 1-seater version; here's a 2-seater:

The basic idea behind this car? The driver sits in a narrow, bobsled-like vehicle while the passenger (in the 2-seater version) sits in-line behind the driver (just like a bobsled). That's essentially it.

Small Idea, Big Impact

I had an epiphany once, while sitting in one of KL's interminable gridlocks. I was looking around at the cars around me on the 3-lane highway I was on. Most had only single occupants, like me. Everyone was bored and frustrated. Some were picking their noses.

In terms of square feet of road and lane space, the average 3-car-abreast space on the road held a grand total of.... 3 people. I looked at the empty seat next to me. I thought, wouldn't it be great if we had smaller cars, that could fit just one person, so you could squeeze 6 cars in 3 lanes instead? Just chop my Proton Waja in half and presto, you're done.

As if to complete the epiphany, a fleet of motorcycles then chose this time to whiz past, in the small crevice between my car and the car next to me.

(One week later, I saw the Volvo Tandem cars you see above in a weekly paper. Oh well.)

Just imagine: the amount of road space already built in your city would double. Instantly. No need to build any thing at all. Just imagine the city you're living in, effectively doubles the size of its roads overnight, with no loss of living space. Would that traffic jam you're sitting in still be there? I'd bet not.

Just as long as some teensy-weensy problems are overcome.

Costs and Benefits.

The idea is sound, if we can get past the following problems:

1. Safety. For instance, distance between the head of the driver/passenger and either side of the vehicle (Volvo says the Tandem provides more clearance than even some vehicles today). Also, side impact and collision protection. These would all need to be enhanced in a slimmer vehicle like this.

2. Real-world problems. Can we truly achieve a vehicle with half the width of conventional cars? Can it steer? Do we need to re-sit driving lessons? How does the possible need to change 6 lanes before turning off alter driving behaviour? (quick answer: none at all. Go visit L.A., check out the 101 or 405 freeways near Downtown or Hollywood)

3. Secondary vehicle. Even Volvo doesn't say that this will replace all cars. Just that we will use such vehicles for commuting, and perhaps keep another, larger one, for holidays, camping, bringing the family out to eat etc. That means you, Mr. and Ms. Consumer, will still need that SUV, and hence you may not want to expend the cash buying what essentially is a commuting vehicle.

4. Cost. So, could a car like the above be built economically for the masses, at the same cost levels as today's Kenaris, Kancils and Kelisas? I think so.

5. Lanes, ramps and turn-offs. That's a serious amount of additional road painting that would need to be done, y'all.

However, getting past those little niggling problems above could yield huge, huge benefits:

1. Savings in public transport infrastructure. Bus lanes. MRT. Car pool lanes. LRT. PRT. All these things cost money and eat into public funds. Even in vaunted Singapore, which has most of the above, congestion is creeping up. Then think about other urban metropoles that don't have Singapore's public infrastructure. KL, Bangkok, Jakarta and Manila? This is a way to increase the capacity of existing infrastructure without governments needing to spend a dime. We're talking savings of billions and billions of dollars.

2. Middle-class aspirations. It doesn't matter how much infrastructure is built. At the end of the day, governments in this region are committed to the growth and creation of a large middle-class, and one of the pillars of middle-classhood is car ownership, especially in sprawling cities where public transport is hampered by distance and suburban fragmentation. That means governments are fighting a losing battle on this if they want to encourage public transporation past a certain point.

3. More market friendly. Adopting this vehicle would be less dramatic than governments think. All existing market-oriented transport policies - congestion pricing, road tax, parking fees, tolls, COEs - can be easily amended to adapt to this new vehicle. In fact, they could be adapted precisely to encourage using this vehicle. Wanna pay half your season parking fee every month? Wanna pay half your road tax every year? Wannna pay half the COE you would normally pay for a new car? Half the toll? OK, OK, I exaggerate, maybe it won't be half, but it will definitely be less.

4. Green. Smaller cars, smaller mass, smaller loads... less carbon emissions, less oil, less everything. Its good for the planet.

One last thing to note: Volvo says that in their study, 90% of all commuting vehicles in today's roads are have only 1 person, the driver. 77% of ALL car trips (whether commuting or not) only have 1 or 2 people.

So, to recap, that's why I prefer this car over some PRT system bubble-pod which will cost more money, won't be as convenient, and still won't help me lugging my groceries home.

For more on the Volvo Tandem concept car: Motortrend review, Car Design Online

Finally, a Malaysian rapper worth a damn.

Ok, I didn't want to write about this but I couldn't resist. It was stimulated by this video.



(youtube text link)

So, I guess there'll be some out there who don't understand the 5 languages he's using so here's a rough translation. Bear in mind the 2 key things lost in translation - the puns and the rhymes - which made this rap pretty funny.

*Warning. You are reading at the risk of being offended. We are talking racial slurs here. Do NOT listen or read if you are racially sensitive. I believe this guys' heart is in the right place and he isn't malicious, so please don't "Ops Lalang" me or him. OK? He's from Muar. He knows what its like to live in different worlds, at the same time. He's a rapper. You know, like controversial? Saying things everybody feels but nobody wants to say?


MANDARIN:
Let me first say
I wrote this song
If you wanna hear it, don't be pissed off.

HAINANESE:
I'm a Hainanese kid
I speak 6 languages
You think Hainanese people
Only know how to cook chicken rice?
Drink one glass of Hainanese coffee
And even I will know how to sing

Now this song,
I am singing for all My Friends...
This song,
I am singing for all My Friends...
(whispering)
This song,
I am singing for all My Friends...

CANTONESE:
To my KL friends
Don't be too stuck up
The words I am saying here
Are all from the heart

The fact that I learn Cantonese
Doesn't mean I've surrendered
It's only for the sake of telling you
That I'm not retarded.

The Malaysian Chinese
Are mostly Hokkien buddies
But the funny thing is
Everything here is spoken in Cantonese!

I don't really give a shit
About this strange phenomenon
But on the radio and the TV
Why is Chinese not spoken?

There are many types of Chinese people
This ain't Hong Kong
Why is everything in 'Canton'?
You guys don't respect

But I'll slowly learn it all
This is called manners
And I'll slowly get used to it
'Cos I know what I'm doing.

Hey, if you really can't listen to this any more
I don't mind
Let me gift you some Teochew words instead...

TEOCHEW:
&%#^ your mom!

(chorus)

Na na na na
NA
Na na na na na

Na na na na
NA
Na na na na naaa...

(rpt chorus)


MANDARIN:
Singapore
Got independent in 1965
But after independence
A lot of shit happened

We speak the same
And we curse the same
But when the government gives an order
You don't dare do shit!

Actually I only have
One impression of Singapore
Because the buildings you build
ALL LOOK THE SAME

This kind of social order
Is basically Commmunism!
Lee Kwan Yew and Mao Tse-Tung
are basically Buddies!

Marxism is actually
Sitting heavily on you
Developing the country
Is better than developing your independent thought.

You're too scared of dying
You're too scared of losing
And the government paves a way
For your kids from young to old
Come over to Malaysia to play
And you think this place is backward
(Aiya even if we live in trees
we still take elevators to go up them - aii?)

You always take the big roads
Never dare to take the small roads
Should you dare to chew one stick of gum
You'll still spit it out here!

Little brother!
I suspect you don't actually even know how to cross a road
There may not be many zebra crossings here
But we know how to SURVIVE

rpt chorus

(Ok ah? Now the Malays' turn ah?)

MALAY:
"Talk some more lah!
You Chinese can go back to China!"
But if we all go back
This won't be Malaysia!
And I'm worried about where you're all gonna find work!

(But normally...
Malays don't like to work anyway... )

You all can go back to the jungle
Live like villagers
But if you want to play a guitar
There'll be no shops open for you
Want to become street racers?
There'll be no motorbikes for you
You'll have one less holiday
Because you won't have Chinese New Year

Don't cause a riot
Little boys open your minds
This country does not only have one race

"Chinese Pig!"

Don't say any more lah
(But to tell you the truth
Bak Kut Teh really does taste nice)

I know I speak Malay like shit
But what I say, I say with real feeling
We're already 50 years old
Everyday you're still sleeping
Look towards the future
See? It's 2020!

rpt chorus

ENGLISH:

We are friends
But we're making mistakes
Cause of (sic) I don't understand you
you don't understand me
We are friends
but we're making mistakes
If we solve the problems
Everything will be free

(machine gun fire)

End.

Highway Lane Markings in KL

(L.) OK, so I can't draw worth a damn, but I think you get the idea. These be lane markings.

Jeez, bringing this up actually makes me embarassed. For everyone, myself included. Sigh. *soldiering on*

So, as you can see, this is a typical road layout with lane markings for a left fork off a major road/highway in K.L. Examples of these? Well, a notorious example, is the branch left off the Federal Highway towards Cheras, in front of Mid Valley Megamall. Next picture.


(R.) So this is what happens every evening, when the traffic builds up along the Federal Highway. The arrows show typical car movement.


Notice the little starburst? That's cars in lane 3 cutting into lane 4 in order to make the turn off to Cheras. Which forces cars in lane 4 to cut left again into a newly created lane 5.

You might think nothing is wrong, but this irks me.

First of all, its become an unwritten rule of the road that this is tolerated. Lane cutting is tolerated; in fact, the lane markings practically encourage it.

While in a traffic jam, this is paradoxically safer, as most cars are travelling at a slow pace. However, when traffic lifts, cars proceeding along the way in lane 4, unaware of this rule, fall prey to the cars cutting in from lane 3 who are aware of this "unwritten rule", which often leads to sudden braking, swerves and accidents.

You know, I come from a school of thought that says: rules regulate behaviour, but good rules make regulated behaviour easier to achieve. These are the lane markings that should be used:




As you can see, with the lane markings so repainted, there is no more cutting. All you need additionally is a road divider, with a "fork" sign. Maybe a safety barrier for idiot speeders.

You know, people would learn to follow rules more, if the rules made sense and were there to save lives. We would have less stress. Less road rage. Less accidents and death. Not to mention that such lane markings are done very sensibly in other parts of the world, which was why I was embarassed to start with.

Poor roads make poor drivers. Its a small step, but I hope this can be fixed. Here's a list of forks with these offending lane markings.

1. Aforementioned Federal Highway towards KL, fork left towards Cheras.
2. Sprint Highway Kerinchi Link towards Federal Highway, fork left towards KL - one of the most deadly roads in the Klang Valley.
3. NPE towards Bangsar, fork left towards Subang.