
Occasionally, some events so visibly morph into historic moments that you'd feel like a blind hobo bumming around on the dark side of Mars if you don't write anything about it. I've already passed on the Chinese earthquake and the Burmese typhoon. Then again, if interwebs forums are any indicator Malaysians don't really care about thousands of dead foreigners anymore now that their pockets are being prodded so I guess that's all right.
The Lifting of the Great Malaysian Petroleum Subsidy it is. I'm sorry to admit that it'll be quite a boring piece at least until I get to the part where I insult low-wage peasants and start claiming the powers of magical unicorns, but I'll put up pictures of girls in bikinis in my next post. Promise.
Now on with the vitriol.

It all started back on the 5th of June when the Malaysian PM, Abdullah Badawi, annonuced that Malaysia will henceforth cease to fellate her citizen and reduced the petrol subsidy by 78.4 sens per litre, increasing the price at the punp to 2.704rm. Further reductions in August will bring the price to a solid 4rm, with the ultimate aim of floating the bloody commodity.
Malaysians went nuts. Petit-bourgeois traders in their shops, drivers in their cars, beggars on the streets and babies in their cribs all rose up in arm, brandishing their abacuses, steering locks, collection mugs and rattles. The height of the violence saw forums littered with the flamed avatars of the fallen. Never in the history of geekdom has so many flamed so few with so much bullshit.
Histrionics aside, this is grade-A guano. There is no excuse nor reason for there ever be a fuel subsidy, and it
is a subsidy. Some people go on about how Malaysia as an oil producer aren't really 'subsidising' oil, we're only seling it to ourselves for cheaper. It's the 'Durian Argument' of Anwar's, wherein he said that local durians are sold cheaper than the ones sold in Japan. Bollocks.
Now, Anwar might be a good guy and all and just dumbed the rhetoric down to fit into the tiny heads of voters, but such populism doesn't cut it with me. To wrangle with the example, why would a durian seller not want to maximise his profits if he is able to? If one is a durian seller, one will go find the best market to sell it in, that is what one calls international trade. Why would one be content with a low price? Remarkable.
Furthermore, unlike the privately-owned durian orchard, petroleum is a common resource belonging to everyone of us, not to be benefited more by car-owners and heavy industries. That's the gist of it. By subbing oil, we're rewarding inefficiency by supporting the wasteful. A blanket subsidy such as this benefits the SUV-drivers more than the motorcycle riders, who themselves are better off than those who ride on less.
Since oil is a common good, it is in the interest of the nation to flog it at the best possible price, the world price. The durian orchard owners have the right to even give away his fruits if he fancies it, but there is no such right with oil for no one can claim single monopoly on the resource. The fairest way is not to distribute petroleum cheaply, but by flouting it onto the market and letting the market decide who gets how much. The efficient will get more than the wasteful, the poor will get more efficient, or waste less. No one owes the poor anything.
That is why fund-managers and economists are derisive of Anwar's claims of putting the price back down once he gets into the comfy chair. It's economic suicide. Money does not come out of nowhere, and with depleting oil reserves coupled with increasing demands for oil, we'll subsidise more and more oil per barrel that we export. The march of the international price of oil isn't going to help anyone much, either.

Yes, inflation will go up. The prices of goods will go up, but that is because we've been living in a fantasy land where prices have been kept down artificially. Little known fact that in the same vein, your wages are kept down, too, thanks to the subsidy. Every time a tourist enjoys 'cheap' food and lodgings, taxpayer money is spent. Only once we have market prices for goods can we ever dream of having market wages. Live with it.
The other concern is of course transparency. No one can say that the money saved won't get misallocated, misspent or embezzled and the sleazy reputation of the current government isn't helping sentiments either. However, under a controlled economy with price-fixing and quotas there is a much greater freedom for people to enjoy opportunities to profit illegally. How do you profit from a good that is selling at the market price? With much difficulty. That's why stock traders need to go through convoluted methods to siphon money into their private accounts. The free market will reduce corruption in the long run. Market distortion causes crimes.
All in all, despite the often clumsy moves by the BN gov, they seem to have finally got some backbone and political will to do some restructuring. The move to free up petroleum, as well as the more recent ones of freezing gov projects and reducing parliamentary allowances are heartening signs of good governance.
Too little, too late? Maybe, but nevertheless we must agree that they're at least moving in the right way. Anwar did promise that he'd take over in September; as a neutral, I'm apathetic as long as he doesn't overturn these new positive moves. If he does get the comfy chair in September, but rolls back the price of oil back to 1.10rm, and yet manages to maintain budget surpluses all the way for the next five years, I'll shave my head.
also see
http://www.metronews.ca/ottawa/world/article/65187July 12th protest marches? For what? To REINTRODUCE subsidies? Populist wankers with no grasp of economics.