By way of Jed Yoong’s blog, I’ve learned of the Bicycle Campaign by Jerit, short for the Malay name of the group, Jaringan Rakyat Tertindas. The campaign which starts today involves cyclists setting out from both Kedah and Johor towards Kuala Lumpur. They plan to stop at every town and city along the way to raise awareness of their demands. When they reach the capital on the 18th December, they plan to hand over the full list of their demands to the Prime Minister Abdullah Badawi.

Their website doesn’t seem to be laid out terribly well and I couldn’t find a definitive mission statement, but I gather that they have these primary goals:

1. Enact a minimum wage law for Malaysia.
2. Prices on goods should be controlled and kept affordable.
3. Citizens should have a right to comfortable housing.
4. Local Council elections should be re-introduced.
5. Privatization of key public services such as water, hospitals and education should be stopped.
6. Abolishing Malaysia’s controversial Internal Security Act.

I don’t have much to say about the political demands and even the issue of privatization is plagued more by problems linked to corruption and cronyism than the traditional concerns about public versus private provision of services. The first three however are economic demands and the first two in particular have long been a staple of socialist programmes everywhere, but are discredited by virtually all trained economists and have the opposite of their intended effects.

Minimum wages distort the price mechanism for labour. Instead of boosting the earning power of low income workers, they tend to promote unemployment. It is effectively saying to workers that unless they can find a job that’s worth at least the minimum amount of wages, they cannot have a job at all.

Price controls, in this case, a ceiling on prices of goods, similarly distort the prices of goods. The effects of prolonged use of this mechanism can be seen in the form of acute shortages of goods in countries like the Soviet Union and Zimbabwe. Less drastically, they can reduce the variety of goods available on the market or cause limited, localized shortages.

Finally, demanding everyone be provided with comfortable housing makes absolutely zero sense and doesn’t deserve any attention at all. Where would the houses be located? Who would build them? Where would the building materials come from?

Now, I’m the last person who’d support a socialist programme, but if that’s what you really want, at least have the intelligence to demand some policies that will actually be effective towards achieving your objectives. I suggest the following:

1. Institute a negative income tax for the poorest people who actually work. This can be paid for by increasing tax rates on rich people. It’s simple to understand, easy to administer because it works under the existing bureaucracy that handles taxation and it actually gets cash into the hands of the poorest.
2. Institute gift taxes and inheritance taxes in Malaysia. It’s pretty odd that the super-capitalist USA imposes these taxes but Malaysia does not. Gift taxes are imposed on people or organizations who give out gifts above a certain value, unless the recipient is already an approved tax deductible charity. Basically, if someone is rich enough to give out gifts to friends and family, he should be rich enough to pay an additional tax on the value of those gifts. Inheritance taxes are imposed on the estates of deceased individuals who pass on their assets to their heirs. Socialists commonly decry how the children of the privileged elite are given an unfair leg up in life through no personal effort of their own and inheritance taxes are a good way to counterbalance that. The proceeds can be used to fund public services that benefit primarily the poor.
3. Invest massively in public transportation. Poor public transportation affects the poor disproportionately because it restricts their choices with regards to places to stay and to work and increases the valuable time that they must waste on their daily commute. Public transportation is also much more environmentally friendly than private transportation on a per person, per journey basis and the poor is again disproportionately more affected by pollution than rich people because the latter have a greater range of options in choosing where to live and to install devices in their homes to mitigate discomfort due to environmental issues. This investment can be funded by massively taxing the usage of private transport.

The above suggestions are all far more effective than the ones demanded, yet socialists rarely ask for such things. Why? The reason is because my suggestions explicitly state who is going to pay for the increased costs of the things that you’re going to provide to poor while demands like minimum wage laws and price controls obfuscate who pays the final bill. And as any rational person can tell you, this alone is a good reason to beware of such proposals.