Inflation? Wrong Diagnosis Leads to Adverse Impacts

Inflation? Wrong Diagnosis Leads to Adverse Impacts

There has been many comments and criticism about the new Economic Minister’s rationale to regulate rising prices. Rafizi Ramli suggested consumers to cut down on buying chicken in order to lower the prices. His comment was countered today by Centre for Market Education (CME) CEO, Carmelo Ferlito, that our current rise in inflation is actually caused by Malaysia’s expansive fiscal and monetary policies that was introduced to cushion the economic impact of the Covid-19 pandemic where RM305 billion (23% of GDP) in 2020 and RM225 billion (15% of GDP) in 2021 were allocated for that purpose.

Both diagnosis of the problem are common perspectives shared by bourgeois economists and policymakers where their conclusions fall into one of two camps. It’s either-(1) Inflation is caused by too much money in circulation (citing governments stimulus assistance to rakyat) or (2) Inflation is a result of excess demand in the economy when consumers continue to buy even when prices are high.

According to Rafizi, the price pendulum should have worked as Adam Smith envisioned, when demand increases, price of goods will rise, creating an attractive profit margin. That will inspire more producers to jump into the bandwagon and start producing (supplying) that particular good until its sale exceeds demand, then the price will begin to fall. Prices in an ideal market system are supposed to gravitate to a natural price but this rarely happens in a real market place filled with monopoly and hoarding activity.

We have to take note that inflation throughout 2022 has been a worldwide phenomenon, as we have seen in Europe and the United States. Thus, causes of inflation can’t be concluded in a simplistic manner but it requires inclusion of multiple factors.

The pandemic shock, caused significant increase in prices across the board, when cross border logistics were disrupted and global supply chains failed. The capitalist production system is not built to endure such shocks like the pandemic and climate change. Post lockdown, prices of food stuff increased sharply.

No doubt it was also caused by ‘pent up demand’ where purchases for services and goods that were put on hold during the lock down are being spent now, causing a rise in demand within a short period. As food loving Malaysians, many families started enjoying eating out after they were forced to remain indoors during two years of multiple lockdowns. Thus both increase in production input cost and the sudden increase in demand would have caused the current spike in food prices.

Reverting back to Rafizi’s and CME’s diagnosis, I argue that their simplistic conclusions, would lead to adverse impact on the rakyat. The rakyat, especially the B40, simply cannot change their diet overnight, as chicken offers a cheap source of protein compared to fish. With climate change and reducing fish stock, a fish meal is a luxury item for not only lower income, but also middle income families. It’s easy to advise people that they should look for alternative sources, but communities are to compelled to purchase the choices available to them at the nearest accessible markets or grocery shops. If the market offers no other choices, they will buy the easily available chicken meat in order to provide a balance diet for their children. With no increase in real wages, they are forced to tighten their belt further on other important expenses like healthcare or housing in order to put food on the table for their dependents. Haven’t we heard enough reports of the deplorable state of the working people’s financial affairs like lack of savings for emergencies and overburdening debt?

Carmelo Ferlito’s conclusion too will tend to suggest that in order to reduce money circulation in the market, the government needs to cut back on its cash hand-outs to needy families and maybe also put a brake on minimum wage increase. The simplistic view is that, when people have less money to spend, there will be less money chasing after goods and it will reduce aggregate demand and curb inflation. This too will be a disastrous move on low income families, pushing them further into poverty.

Thus it is important that the government looks at a holistic solution and not quick fixes. In order to ensure the rakyat are guaranteed a healthy diet, food products need to be affordable. We need to seriously enhance our local self-sufficiency and not rely on food imports vulnerable to price fluctuations during pandemic, war (Ukraine) and climate disasters. Wages need to be increased and not curtailed to spur local economy, as working people are consumers that spend on local economy unlike billionaires that invest on some financial speculative instruments for their own wealth accumulation.

Our workers share of the GDP (compensation) is only 34.8% of our nominal GDP for the year 2021, confirming that we are still underpaid for the value we create for the economy. Anwar’s cabinet has to work in coherence which each Ministry complementing each other to achieve their goals. Inflation management, price controls, food sovereignty and poverty eradication mission has to be synchronized towards to common program to uplift the rakyat’s well being ultimately.

Sivarajan A
Parti Sosialis Malaysia Secretary General

Police new conditions hinders democracy and freedom during elections

Police new conditions hinders democracy and freedom during elections

PSM Deputy Chairperson S Arutchelvan at PSM’s election announcement, 2nd November 2022.

PSM would like to condemn police unnecessary new conditions which is making our basic campaigning difficult. Initially during the briefing, we were told that only permits for political parties for ceramahs and the police will approve within a few hours without any delays.

Our experience dealing with the Seremban 2 IPD is that the permits cannot be processed immediately even if we apply for the permits a few days before the date of the of the event. Even on the day of the event, the police told us 2 days ago that permits can only be possessed in afternoon daily to be collected at 5pm daily.

Today we were shocked when Rembau Police says that we need permits even for candidate walkabouts! This is unprecedented! Is this a police state? Walkabout is the most basic of campaign done by parties during election and even this is restricted. We have always told the police to monitor us online as we are very transparent as all our activities are put there but they want to continue to shadow us.

With just 8 days to election, please let the parties to exercise their democratic rights and campaign without harassment and hindrance. It makes a mockery to democracy when even the most basic activities need police permits.

Election Director

No seat for PSM – electoral pact with PH is off

No seat for PSM – electoral pact with PH is off

We were informed through an official letter from Pakatan Harapan dated 30th October 2022 that PSM’s minimum request for an electoral pact with PH has been totally rejected. Without a single seat given, we understand that PH does not desire an electoral pact with PSM. Our regret being the matter has been informed to us so late, in spite of a statement by Rafizi on Friday that certain seats were allocated for PSM and MUDA.

PSM requested an electoral pact with PH because it was the desire of our members, supporters as well as civil society members that PSM should not stand alone but join a coalition. PSM members after evaluating all the existing coalitions – BN, PN, PH, decided then to start a process of electoral pact with PH which is seen as the most multiracial and progressive coalition among the three.

PH then through official channels agreed that a process on the electoral pact with PSM will be initiated. In the 2 meetings held between us and PH, PSM put forward a very minimal request. We requested that our Chairperson Dr Jeyakumar be allowed to stand as he is the best and most winnable candidate for Sungai Siput. We also gave two other alternate requests of non-incumbent Parliament seats held by BN if the Sungai Siput seat were to be denied . We also requested 3 non-incumbent state seats held by BN. We nevertheless indicated that we would be happy with any Parliament seat and any two state seats. The PH negotiation team of YB Nik Nazmi and YB Steven Sim said that our issues could only be resolved by the Presidential Council which finally informed us today – 6 days before nomination day! – of this outcome.

We are disappointed that there was no serious effort made by PH to hasten this process or find a way despite numerous efforts on our part. We are also aware that many people hoping for us to work together with PH will be disappointed; as well as those who kept telling us, “Didn’t I tell you” will feel vindicated. We would just like to tell our members and supporters that we have tried. The pact is over but not the struggle.

PSM looks at the GE15 15 days away as a momentous election and a difficult election for PH due to the existing conditions and based on the recent state election results. Hence, we wanted to mobilise our machinery and grassroots communities towards this task.

With the latest development, PSM will be holding an emergency Central Committee meeting today as well as National Committee Meeting (our second highest decision-making body) tomorrow to decide if we would be contesting or sitting out of GE15.

S. Arutchelvan
PSM Elections Director &
PSM Deputy Chairperson

CPTPPA ratification – Azmin Ali’s latest betrayal ?!

CPTPPA ratification – Azmin Ali’s latest betrayal ?!

PSM condemns the underhanded tactic by the ex-Minister of International Trade and Industry, (MITI) Azmin Ali to have quietly sneaked out a letter to New Zealand, the CPTPPA Depositary, as an instrument for Malaysia to officially ratify the CPTPPA.  

These trade agreements, since the US-Malaysia Free Trade Agreement attempt by the Bush administration and later President Obama’s infamous Trans Pacific Partnership Agreement TPPA have been vehemently protested by the rakyat. There were massive protests against TPPA since 2010 when MITI started negotiations. 

Even though the TPPA agreement was signed by the Najib administration in February 2016, but it remained unenforceable when the US, under Donald Trump, pulled out of the agreement in 2017. The USA move crushed MITI’s hopes that Malaysia would be able to increase its exports to the USA.  But even the TPPA would have led to more imports than exports.

The CPTPPA is actually a rebranded TPPA with some provisions suspended that the Najib administration also signed in March 2018.  

The recent Price Waterhouse Cooper Cost Benefit Analysis has gaps and many questionable claims of benefits.  Without a truly comprehensive Cost Benefit Analysis done by Putrajaya after the US exit from the trade agreement, Malaysia only stands to lose if it pursues to ratify and implement the trade agreement. The CPTPPA would mean that;

  • Our trade imports could increase to more than USD 2.billion a year compared to exports when import tariffs are brought down to zero percent. 
  • Job losses are expected when we are a flooded with imported products at more competitive prices compared to our local SME manufactured products. 
  • Increased imports of agricultural products will destroy the livelihood of our local agro food producers. 
  • CPTPPA requires that Malaysia signs up to the UPOV 1991 Convention that prohibits seed sharing amongst local farmers, making them beholden to large agro corporations to procure their seeds, fertilisers and pesticides. 
  • Wide power granted to foreign investors under CPTPPA that would tie the government hands to implement affirmative action to the rakyat. 
  • Corporations empowered to sue Malaysian government if we do not honor the rights given to their investment as per the CPTPPA. 

Thus PSM joins the civil society organizations and the rakyat to reject the ratification of the CPTPPA and demand that Putrajaya immediately withdraws from this regressive trade agreement. It was extremely irresponsible of Minister Azmin Ali and MITI to submit the instrument for ratification days before the dissolution of Parliament, placing the burden on the new government to undo this betrayal to the rakyat. 

We call on the all GE15 candidates to reject the CPTPPA and carry out all measures to leave the trade agreement once and for all. 

Sivarajan A.
Secretary General PSM
29 October 2022

PSM National Chairperson summoned by Bukit Aman

PSM National Chairperson summoned by Bukit Aman

PSM National Chairperson Dr Jeyakumar has been summoned by Bukit Aman to be investigated based on a police report lodged against former AG Tommy Thomas in relation to a forum “Dark Forces Towards GE15” held on 17 September. He has been called to give statement on the 20th of October 2022

The police action is yet another waste of public funds and reflects the reality of the term dark forces towards GE15.

PSM strongly believes that Tommy Thomas and other speakers are entitled to their opinion and the forum allows for people to pose question and even disagree with the speakers. That is how a mature democracy works. Summoning people who spoke in a public forum will go against the spirit of free speech and freedom of expression as enshrined in our constitution

The police should instead spend our tax money on other better things for the benefit of the people and not entangle itself in political vendetta of certain quarters.

Deputy Chairperson
Parti Sosialis Malaysia

PSM eyes to reclaim Sg Siput seat, amongst other seats identified for GE15

PSM eyes to reclaim Sg Siput seat, amongst other seats identified for GE15

The PSM Central Committee had an emergency meeting on the 10 October 2022. The following was discussed.

1. PSM is disappointed that the Parliament was dissolved less than 3 days after the budget. It is a mockery of our parliamentary democracy. Besides this election will only be held at Parliament level which means the rakyat’s money will be further plundered because of the political interest of UMNO leaders. A national election at this time will also be a huge distraction to efforts and resources needed to meet monsoon emergencies.

2. Many media have asked us which seats we will be contesting. This will be very much determined by if the electoral pact with PH works out. Since our last meeting with the PH committee on 30 September 2022, we have yet to hear of any outcome officially from the Committee who did say that they will report to the PH Presidential Council.

3. Nevertheless PSM has put forward a very reasonable and minimum request to PH. Besides agreeing to use a common logo, we have asked to contest in the Sg. Siput parliament seat for PSM Chairperson while the other seats requested were seats which are not incumbent seats of the current four PH component parties.

4. Meanwhile PSM will proceed to have its training workshop for its shortlisted candidates and campaign managers on the 15th of October 2022.

5. On the 17th of October 2022, on the International day to Eradicate Poverty, the Marhaen coalition and sectors will also put forward their grassroots election demands to all the political parties contesting.

Pengarah Biro Pilihanraya PSM.
Timbalan Pengerusi
10 Oktober 2022