Global Warming

I read with amusement when I came across Andy Ho’s article this morning in the Straits Times on why Singapore should be “cool” about global warming. The article made a lot of interesting points and claims which I wasn’t too comfortable with, and so I have decided to discuss them here.

The first point he made was that Singapore should not be under either Annex I or Annex II based on the weird premise that “a tiger economy is still part of the developing world”. To me, this is a really strong statement in asserting that Singapore should still be considered as part of the developing world. Well, I agree that there are just too many privileges that Singapore has to give up if we consider ourselves a developed country (and also, loads of burdens that we will incur), but there is actually no sensible argument in trying to claim that our economy is still part of the developing world. In what respects is Singapore’s economy similar to a developing country? In fact, based on our economy alone, Singapore is much more similar to a developed nation. But, I agree with the next line in which he quoted from MM Lee “that 'it's not possible to just treat (Singapore) like an ordinary country”. BUT, I will like to highlight that no country in this world considers itself as an “ordinary country”. Every country, in its own interests, will certainly claim that it is unique and different from others. In fact, I can clearly see why countries are over the world (and not just Singapore) will oppose Annex I and Annex II. I mean, being under the lists lead to really stringent constraints on the economy, and no country in this world is happy to see itself sacrificing for other countries, especially since they have other issues of their own which they will prefer to care more about. Now, I can easily digress into a lengthy discussion of whether the carbon emission caps are indeed set at an adequate level, and on whether it is feasible and morally acceptable for developed nations to ‘transfer wealth’ to developing countries (which is actually a very saddening thought if you were to recall the 700 billion that was spent by Obama in saving the financial sector), but I shall return to the rest of Andy’s arguments.

I was pretty disturbed by the line “Much of its carbon emissions comes from manufacturing things for use in other countries, not domestically”. Is he trying to justify the fact that because others are paying us emit carbon, we should not bother? I do wonder where the logic in that is. To draw an analogy, he’s likening that it’s ok to commit manslaughter if someone pays for and wants it. To me, this line is just a fallacious argument.

And of course, that famous line in which he quotes “Singapore's diminutive size means its efforts make little difference to global warming”. Yes, Singapore is small. But does that equal to our efforts being of no significance? Undoubtedly, when you think of countries like US, Germany, China, our efforts will be puny. But this is a collective action problem. Getting Singapore involved can be thought of as sending the right signal to other countries (and actually, it is highly possible that a tipping point exists somewhere that if X countries do support the agreement, the other remaining countries will follow as well). After all, if we were to follow his trend of thought, then we as individuals should not bother about environmental conservation simply because our individual efforts are too insignificant to make a difference. But, I’m sure we have all grew up learning about how if everyone plays his part, we can make a difference. So again, I am not convince at all with his argument.

What irks me the most is his argument on how climate science is still not an exact science, and that because the evidence on whether human actions are causing global warming is still dubious, we should be cautious with any binding commitments (that he claim will sacrifice economic growth) on reducing carbon emissions. Fair enough, there is validity in the statement that
1) Climate science is not an exact science
2) The evidence of how exactly we are causing global warming is still not very clear
3) We will potentially sacrifice economic growth if we just adopt measures without much though (especially if we are talking about 50-85% cut).

But, let me point out some other interesting aspects. Firstly, any subject that is still not precise or exact does not mean we should ignore it. Economics is equally imprecise, but why is it that people trusts economists so much when economists claim that certain measures will boost growth? Also, even though the evidence on exactly how human actions are causing global warming is still dubious, but I wonder whether he hopes to see it becoming obvious, before taking any action? Wouldn’t that be too late? I mean a lot of times, people take precautions even though the results are unclear so as to prepare themselves for the worst case scenario (that’s why insurance exists). I think as citizens of the earth, we should start doing this too (and so play our part in helping to care for the environment and being more responsible for our actions). Lastly, I’m not sure of the exact details of the Copenhagen agreement, but yes, cutting emissions by 50-85% sounds really drastic (especially if they are immediate cuts!). But, a sensible route is to set a target of cutting emissions by 50-85% by a certain target year, guided by sustainable and feasible outlines of how the countries should go about doing. Even if the whole world doesn’t want to cut emissions, we should at least invest money in clean technologies that will enable us to cut emissions should we need to in future.

To summarise, I think readers should think through Andy’s arguments, and I hope many do not interpret his message as one in which Singapore should not care about environmental issues for the sake of economic growth (now, this is the other point which I haven’t hit on, and that is what is the point of economic growth? Is it purely to earn more money, or to live better lives? And if living better lives is at stake, we should be caring about sustainable economic growth, and not just about dollars and cents!). The right message to take will be yes, Singapore should not just rush head-on into the Copenhagen agreement. Instead, we should take a more balanced approach, and see how the other countries are responding to it. There is after all, a lot of geo-politics involved. Even if Singapore does not actively play a role in the Copenhagen talks, we should still be educating our people on caring for the environment, and investing money in technologies that will result in sustainable economic growth. And, we should also be playing an active role in reducing our own carbon emissions, even if no binding commitments are made.


Aside: This problem of a global treaty is similar to a Prisoner’s dilemma problem, in which no country wishes to be penalised for adopting the right policy, while the other countries don’t (imagine if Singapore supports the treaty, but the US says no, and so our earth will continue to warm up). The trick is therefore on how can we solve this international collective action problem, especially in the absence of a world government (for domestic issues, laws are in place to avoid this conflict). Sad to say, the optimal strategy happens to be tic-for-tac, and I guess the world can only hope for the best, cause if not, I shudder to think of the world that the future generations will live in.

Yale vs Cambridge

I have been literally replaying this debate in my mind (and my heart) for the past few nights. I guess it might be best that I pen down my thoughts, and maybe it will offer me a better way out.

I think most of you would have known that I have received offers from both Yale, and Cambridge for my Masters. The Yale program is a MA in International and Development Economics (see http://www.yale.edu/ide/index.html), while the Cambridge program is a MPhil in Economics (http://www.econ.cam.ac.uk/prospect/newmphil/Economics/index.html; note that this is for the course starting in 2010, not 2009, which is the old syllabus). Both programs are so different from each other, and they offer very different experiences.

Let me start with a broad overview of the problem. The biggest reason why I have such a huge time deciding between the 2 programs is that they are both very very big name schools (Yale is world number 2, Cambridge is world number 3). To be honest, my life would have been made much easier if it was between NYU and Cambridge, or Yale and some other UK university. Because both are almost equally prestigious (maybe Cambridge isn’t), it is a really tough choice to make).

I have spoken to many people and a key point to note is: I have already been to Cambridge, and so going to Yale will look so much better on my CV than just staying in Cambridge. But, the Yale course is not as rigorous as the Cambridge program. I quote from my DOS,
“The overall problem is that the course is designed for students who have done much less Economics than you will have completed by July, and so is not well suited to Cambridge graduates. My contact's advice to someone with your background was that the LSE or Cambridge Economics Masters would be better as further training.”

Clearly, it is a huge problem. It’s like a course vs experience debate, and I can briefly summarise the reasons for and against Cambridge/Yale below.

For Yale:
1. It is a new environment, and so a new experience.
2. It exposes me to the American culture, the American style of learning, and also understand how Americans thing. Also, the style of learning in America is reputedly to be more vocal, and so it will train my argument and reasoning.
3. I will definitely meet a more diverse group of people in Yale than if I were to stay in Cambridge. A huge proportion of the IDE course are foreign students.
4. The course, being less rigorous, will allow me ample time to settle in and be comfortable with the environment. Also, it will help me to build up a larger network of acquaintances.

For Cambridge
1. It’s a comfortable and familiar environment for me, and so I will not have to face the standard problems of settling in and adapting to the place.
2. It will definitely help to train my skills as an economist, and help me should I choose in future to become an economist, or even pursue a PhD.
3. The dissertation (which can be torturous), will be a great experience for me to express my views and ideas, and also teach me some invaluable skills on writing a paper which can be useful in my future career (especially when it comes to policy-making). (Note: I have already written a dissertation for my undergraduate degree, so maybe I don’t need a reminder of how painful it can be. Lol.)
4. I suppose there will be time for me to build up networks with others as well. But, as what people have been telling me, staying in Cambridge will be “guaranteed fun”, since a core group of my friends are there, while going to Yale will be “exciting and refreshing).

As you can read for yourself, it is a really tough choice to make. What will you pick?

Graduation

I have finally graduated – 3 golden years of my life just ended in a flurry. I must say that so many things have happened in the past 2 weeks that I have no idea where I should begin. Maybe the pictures below can summarise some of the feelings.

Christ's Singaporeans

My Night Buddies

The huge entourage

Parting shot

But yes, behind all the happy faces, and large grinning smiles, there’s so much more emotions to graduation than just elation. I remember telling SK on the first day of graduation (I think it was King’s ceremony) that I don’t understand why do people congratulate people when they graduate – if you think about it, congratulating people when they matriculate makes lots of sense as it marks the start of 3 wonderful years of your life, while graduation marks the end of it and also the beginning of the “real world”. What’s there to congratulate about it? Lol. Maybe I am an idealist, or some one who just refuses to accept the responsibilities of life that comes when you grow up.

Apart from this sombre truth, there’s actually another feeling of graduation which I have that is so indescribable. I was around last year for some of my seniors’ graduation and I felt really happy for them at their ceremonies. And this year, same as well, I also felt really happy for my friends during the ceremonies itself. But, our post-graduation activities (or pre-graduation activities) evoked a huge wave of sadness within me. Our nightly gatherings (often lasting till some god-forsaken hours), our emo sessions, our crazy activities, our endless nonsensical banter, hmmm, it’s something so special, so sad, and so memorable.

It is hard to summarise my feelings, but I do know 1 of the main reason why I am so sad with graduation is because I made quite a lot of close friends (what Kenrick termed the “brotherhood”) in the past 3 years (actually, I think I really got close with most people only in year 2 and year 3) that I feel really sad to leave them. Worse, my close group of friends happen to encompass people from Malaysia, Brunei, Hong Kong (there’s also Singapore), and even worse, we all have very different plans after graduation. Some will be staying in the UK for their graduate studies/career, some will be heading to Hong Kong for work, some will be returning home (wherever it may be). All in all, it does look really bleak as to whether we will ever meet up again, and enjoy each other’s company like we did in the past few years. Or, as what SK correctly pointed out, the next time we meet will most probably be at somebody’s wedding (which in my opinion, looks like its going to happen in just a few years time).

I guess I shouldn’t harp too much on all the sad things in life. Being an optimist, let me focus on the bright side of graduation. Having graduated, I guess its time for all of us to leave our comfort zone and to continue on with our own journey, and to strive on. I just hope that people will know that no matter what happens, there will always be a strong core group of friends that will always be there for you in times of need. With today’s world, a simple FB/MSN message/email will do, and I’m very sure people will respond. Also, a gentle reminder of where each other will also be greatly appreciated.

To me, the undergrad years is more than just about academic achievement (ok, I admit, I screwed up my final year results so I got nothing to be happy about), but it is really about the friendships that were made, and the acquaintances met. To all my dear friends whom I will sorely miss after university, good luck and may our paths cross again.

Mulu

I never know how much my life was affected by my trip to Mulu until I took my GRE yesterday. Just to inform you guys about the GRE, there's this part of the test which requires you to write a persuasive argument on an issue. Now, the 2 issues that I was allowed to choose from were:

1. Governments should focus on solving the problems of today and not the anticapated problems of the future. Discuss.

2. Governments should do their best to preserve the untouched wilderness, even though most of the areas are isolated and affect only a small group of people.

Hmm, I was seriously stumped when I saw the 2 topics yesterday. Gosh, I mean it is not as if I have no materials to write about for both, but I was just shocked with how much more I could write on the 2nd topic because of my Mulu trip. And interestingly enough, I actually chose to do the 2nd topic.

Ok, but apart from Mulu having played a role in my GRE, I must say that it just occurred to me that I have now joined the new wave of eco-tourists. I mean I have travelled vastly in the past 2 years, and I have been everything but an eco-tourist or even a backpacker. But yet, my trip to Mulu actually opened my eyes to eco-tourism, and also sort of informed me that I do like the wilderness. Haha, I mean previously (or at least prior to the trip), I will have told my friends that they must be crazy to think that I will go trekking/hiking, but it seems to me NOW that I I'm ok with the wild. Haha, ok, looks like going to Mount KK is a possibility after all. Or maybe I can try something more than just KK?

Brunei

Once again, I slumped into a period of inctivity for this blog. Ha, I admit that this is largely my fault, since I really have no idea what in my life should I blog on (yes, my life is boring). Well, to be fair, I did go to the jungles of Sarawak (Mulu caves) just last week, and I had a great time playing and resting in Brunei. Usually, I would have just typed my travelogue here, but since my fellow travelmate, Jinyang, is happily blogging on it, I shall leave the honours to him. To have an idea of my adventure in Sarawak, feel free to pop by http://freeeze.blogspot.com.

I suppose maybe I ought to do some personal commentary on Brunei, since it is a place which we Singaporeans have lots of urban legends about. Ha, to give an anecdote, when I was crossing the customs in Changi Airport, the officer asked me whether I was going to Brunei for training or work purposes. I told him that I was going to Brunei for a holiday, and he gave me a really shocked look (and a really shocked response too!). Only when I told him that I'm entering Sarawak as well too that he sounded convinced that I'm really going for a holiday in Brunei. Haha.

Anyway, I must say that Brunei is fun, and a really good place for a good chill out sesson. It is true that in terms of tourist attractons, there's nothing there except for Ms & Ms (Mosques and Museums) (actually, there's lots of nature, wildlife, jungles and a lake there, but I guess for any NSF, these will be the last things he want to visit in his life), and the biggest shopping centre there (the Mall) wasn't exactly very big (maybe like the size of City Plaza?), but people have obviously missed out on the Empire - a 6-star resort and country club. I suppose most of my friends do not know of its existence, since it is a 15 min drive away from Bandar, but oh my god, it is HUGE. To put in perspective, I think it is more than half the size of Sentosa island (actually, with the golf course which I didn't go, it could jolly well be bigger). For you to move around the resort, there are buggies available. There's also a whole hell-lot of activities to do there, such as para-sailing, jetskiing, banana-boats, etc.

The best bit about the resort is that the rooms are relatively cheap for a 6-star hotel, since it costs just $200 a night. It is actually a really good place to go for a weekend getaway, or to have a class chalet (assuming that everyone has enough frequent flyer miles to redeem a free round trip to Brunei). According to my friend, the resort also has villas for rent (think 1-2k a night?), and the villas have like 3 bedrooms, 1 living room, kitchen, and a private swimming pool... And I must say the rooms were really big, and they have nice comfortable beds with comfortable pillows (the resort spoilt me so much that I'm now going to get Goose down pillows when I go back to Cambridge).

So yes, Brunei isn't that boring. And I must say the food there isn't too bad too! In fact, the Quarry Kor Lo Mee was amazing. Sheesh, I think I ate enough food in Brunei to replenish all the energy I lost when climbing in Mulu.

I guess I will definitely pop back Brunei again next time (partly for Temburong, but largely for the Empire). It is indeed a good place to just chill out and enjoy life.

Oh yes, after all the caving and climbing, I'm starting to think that I actually do like climbing and all the heights elements. Maybe I should actually pick it up seriously...

Institutions and Funding

The papers today reported on how NUS and NTU both managed to pull in large sums of money from their alumni (NUS drew $112 million, NTU drew $72 million). Now, I'm just wondering whether it is possible to do an economic analysis of institutional funding?

If we were to analyse, I would expect university alumni funding to be correlated to

a) Prestige of the university (I think you can use the year that the university was founded as an IV for that)
b) Alumni base (should be possible to calculate the number of graduates a year and possibly the number of living alumni or how big the alumni is)
c) Differences in culture (Western vs Asian societies)
d) Any others?

Well, I guess it might be an interesting study as we could then identify what are some of the key factors influencing alumni donations back to their alma mater.

Actually, I'm not sure about whether anyone has written anything on this before. It should be interesting, since almost every modern university today is trying their best to convince their alumni to "contribute back" so as to build up a huge endowment for research and education purposes. It would be interesting to see why American universities seem to be so much more successful than other universities in getting large sums of money every year.

Housing markets

The housing market is a fascinating one - it is consistently filled with booms and bubbles. Be it Japan, UK, USA, Singapore, Thailand, etc. , there's numerous examples in which the housing market experienced an amazing boom before suffering an equally amazing collapse.

Just looking at recent house prices in Singapore, I'm starting to wonder whether we are in the midst of a bubble. Prices are amazingly ridiculously high (especially given today's economic climate). This is pretty interesting since house prices in US and UK have definitely gone down significantly over the past 6 months, and yet the Singaporean housing market looks no sign of abating. In fact, HDB announced that it will be building more flats in the upcoming year, and I definitely do see more condo projects coming up all over Singapore as well.

And so, are we in a bubble now? I'm thinking of trying to model the determinants of housing bubbles, and see whether there might be any common trends to those that we have observed in the past. And also, possibly attempt to predict whether we might be in a bubble (a probit model?). I'm not sure whether this will work (I have been kind of lazy and have no searched around for any literature on the topic), but it might be viable and feasible.

Hmmm, on a sidenote, I think Singaporeans are definitely not feeling the pinch of a slowdown in the economy. The travel fair this year looks significantly bigger than the past, and the attractions seem to be way more exotic as well. Many Singaporeans are definitely going to the cinemas - I went to watch a 1045 show today, reached GV Tampines at 1030 and started queuing, got my tickets at around 1100 (that's how long the queue was), and when I collected my tickets the queue was as long as before, and equally long when I left the cinema. Gosh, I can imagine how packed the cinemas will be in Orchard.

Stagflation

Yes, it is true. The once 'much-feared' word in Economics might be making a reappearance around the world. And yes, I'm not sure whether Economics has much to offer as to how we could go about remedying the situation.

Comparing today and the 1970s, the stagflation that we might be looking at now is of a different nature from the past. Unions and wage demands are no longer the key driving reasons behind today's economy, so what could it be? Higher consumer demands? The affluent societies leading to market bubbles?

To be honest, economists never really got round to understanding stagflation well. The only episode that we ever saw was back in the 1970s, and that's the only available dataset that we have. With the recent economic turmoil, and the possibility that stagflation might make a reappearance, economists might now be able to seize the moment and study stagflation better, as well as understanding it better.

The above is purely looking at things from an academic perspective. There's also the other key question of "what can we do about stagflation?". Interestingly, there might be a renewed need for governments to play a more active role (as opposed to letting the free-market system run rampant) in trying to keep inflationary pressures under control. In terms of public policy, we might be on the verge of experiencing another revolution in terms of what governments should and can do to ensure that the economy functions smoothly.

The last period of stagflation led to the death of Keynesian economics, and the birth of monetarists as well as the importance of central banking in ensuring that the economy runs smoothly. Will today's world lead to another paradigm shift, in which another institution is necessary for the economy to avoid the woes of stagflation? I do not know, and I guess only time will tell as to what today's world will bring forth for Economics as a discipline.