Look carefully in Look Out Point

Unique geographical features always breed market advantages to the firms that operate in that area, as consumers' choice are limited and their willingness to spend would be increased. In economic term, we call it as price inelastic.

Recently, I went to a place called Look Out Point with my family to celebrate my sister's birthday. Basically, it is a place on a hill in Ampang Jaya that offer skyline views of KL city. There are 4 restaurants located there - Look Out Point, Gasoline, Panorama, and Haven. We changed our dining place from Look Out Point to Gasoline after found something wrong with the first one.

Why? Because the foods are charged unreasonably high. We were only given one piece of menu called "Christmas & New Year Special Menu". First page shows the foods while another page shows the beverages. The cheapest one which is the Chicken Chop costs RM27.80 while the most expensive Lobster Salad cost RM148!

Of course this restaurant got some source of monopoly power. Surprisingly, quite a number of customers were actually dining there. Even the online survey shows that it is the most visited resturant in that small area (30.1%). The use of a product by a person can affect the value of that product to other people. In economics, we call it as "network effect". There is a direct relationship between the proportion of people using a product and the demand for that product. In other words the more people who are using a product the higher the probability of any individual starting to use the product. This effect accounts for fads and fashion trends.

Moreover, this restaurant is using seasonal factor (Christmas and New Year celebration) to execute its special menu, earning excessive profits. In business world, indeed, it is nothing wrong with this kind of strategy but as a rational consumer, I would never go to this restaurant in future.

The restaurant's Indian owner may end up praising himself by making this "brilliant" decision.

Dirtycapitalism: Marxian is true!

If we look at the history of economic thoughts, Karl Marx was the one that forcefully challenge the view of capitalism if not the first one. His opinion towards the failure of capitalism exactly suit in explaining the economic situation in Malaysia. Marx‘s The Communist Manifesto (1848) says “The history of all hitherto existing society is the history of class struggles."

Marx concerns a lot with how people relate to that most fundamental resource of all, their own labor power. Capitalism mediates social relationships of production (such as among workers or between workers and capitalists) through commodities, including labor that are bought and sold on the market. For Marx, the possibility that one may give up ownership of one's own labor—one's capacity to transform the world—is tantamount to being alienated from one's own nature; it is a spiritual loss. Marx described this loss as commodity fetishism, in which the things that people produce, commodities, appear to have a life and movement of their own to which humans and their behavior merely adapt.

Commodity fetishism provides an example of what Engels called "false consciousness", which relates closely to the understanding of ideology. By "ideology", Marx and Engels meant ideas that reflect the interests of a particular class at a particular time in history, but which contemporaries see as universal and eternal. For instance, Malaysian students are being taught on the rightfulness of Parliamentary Democracy and Constitutional Monarchy. Likewise, the secondary history subject brainwashes the students about the evilness of communist (in fact, Malayan Communists fought Japanese during WWII and never got their deserved emphasis on textbooks) and the glory of capitalism in reducing poor. I would say “No. World economy wasn’t saved by capitalism but Keynesianism.” In fact, it is the government spending or frankly, the tax money from the wealthy Chinese that saved the hungry one in this country.

Most importantly, Marx and Engels' point was not only that such beliefs are at best half-truths; they serve a killing political function. In other words, the control that one class exercises over the means of production includes not only the production of food or manufactured goods; it includes the production of ideas as well (this provides one possible explanation for why members of a subordinate class may hold ideas contrary to their own interests). “Malays should be the true rulers of Malaysia”, “Chinese told their sons to be as rich as possible”.

Thus, while such ideas may be false, they also reveal in coded form some truth about political relations. For example, although the belief that the things people produce are actually more productive than the people who produce them is literally absurd, it does reflect (according to Marx and Engels) that people under capitalism are alienated from their own labor-power. In Malaysia, large-scale capital are being flowed and increased in the same community (capitalists, business tycoons, political leaders) again and again. The whole economy and the fate of 27 million people depends on the hands of just few hundred powerful and wealthy people.

Dirtycapitalism

The Conglomerates, born in the post independence age and skewed economic policies, has ruled Malaysian economy for decades with a bigger-is-better manner. Over the years, big gains and little competition made it easy for these giants to become arrogant- and grow complacent. Rent seeking, bribes and cronyism are the shadow business skills in order to survive. Indeed, GLCs are more vulnerable to a changing environment, plodding and inefficient will be always pampered by their immoral creators using tax payers’ money. Though middle class is increasing, the income disparity between the wealthy and the poor is rising too.

Not to forget that the land has nine Kings and their royal families – who reap what they’ve not sown. Love to take pleasure in luxuries and be proud by glimpsing his people bow before them for their mightiness in “making” the nation prosperous. And this little part of South East archipelago put a great emphasis on social status labeled as “Datuk”, “Tan Sri”, “Tun” and “Dato”. Most sadly, its rulers love to mar the hardworking in order to spoon feed the lazy one. Do free market and capitalism exist in Malaysia? I doubt it. And I always do.

Even we look at current generation; we’ve grown dependent on a corporate ethic that promises a “good job” and a secure future in exchange for 40 or more hours a week. We’ve accepted businesses cycles and soldiered through recessions and downturns in the economy. But most of us have always returned to the status quo, thanks to our motionless education system.