Something cheesy

I want to
say something
convincingly cheesy and pithy
to you so that you know how much I miss you.

But I am so clumsy
with my fingers
and with my words
snaking through my head
and your hair!

And I hope you remain clumsier
than me
so that I can impress you
and you know, through my fumbled
words, I love you and our daughter very much.
( November 27, Phnom Penh, Cambodia)

The Flag in the Land Cruiser

The flag flutters
before the early dinner
as if it will be on the plate.

This random desire of the flag
to lead from the front
like a flaccid Washington Monument
misplaced in Asia
is pitiful, if you know what I mean.
As if anybody cares about
the flag
except in a traffic jam
when the flag is not
fluttering
anymore.

August 23, Phnom Penh

Krishnachura in Cambodia

The haunted familiarity of the krishnachuras
in Cambodia transports me
back to Dhaka
in the 1980s
when I had a father
And
the sky had a shelter.

The jamburas in the rain
are a bit pretentious here ,
though behind the green skin
I can smell my childhood
and the run
and the walk
and the dream,
raw and unspoiled.

The jambura seller in thedirty t-shirt
next to the black Lexus and the grey Range Rover
with her little son
below the Krishnachura
has a gentle face,
hiding the pains
of losing her family
in the Pol Pot ocean.

Now I know why the krishnachuras
are red and haunted
next to the Mekong River
in Cambodia.

(August 22nd, 2011, Phnom Penh)

Selected Poems

Starbucks Table

Faisal Salahuddin
(May 3, 2009)


All the tables were
taken except for
the one for the handicapped
It is big and flat -
overlooks Nassau St.

I look at my asset pricing notes:
indifferent look at Indifference Pricing,
Good-Deal Bound Pricing.
Then comes Dynamic and Incomplete Hedging -
a must learn for every new bride
to deal with
her mother-in-law.

One Polish physics geek on my right
makes a nervous move
for holding the left hand of
a shy Kerala girl,
seemingly on their first date.

And the Australian grad student
turns his back facing the crowd
and shoves his face on
game theory equilibrium concepts.

I drink my $1.87 Izze drink
with the whiny Bob Dylan dropping
from the ceiling
barely hitting
my asset pricing notes
on the handicapped Starbucks table.


A little possibility
(May 9, 2009)

It's the simple possiblity that
I might bump into you
but not suddenly recognize
your now unfamiliar
smile
comforts me
in a twisted way.

This morning
that Princeton creek by Alexander road
had the possibility of becoming
the Ganges.

Yesterday afternoon
the voluptuous D&R Canal behind the Lake Carnegie
turned on by the spring fever
was groaning like the Nile.

Sorry. I am prone to exaggeration
when I see no possibility.

But wouldn't it be wonderful if
the creek turned into the Ganges?
And the canal into the Nile?

Possiblity is
the low-income country version of
hope.
An overused campaign promise.

We all need it sometime.
I need it now.

Let's suddenly bump into each other
in the crowd.

Dear incoming government: It's the economy!

Published in Daily Star (November 2008)

http://www.thedailystar.net/story.php?nid=65467

Dear incoming government: It's the economy!
Faisal Salahuddin

WHAT would be a good translation of Bill Clinton's famous campaign slogan: "It's the economy, stupid?" A poor half-translation is: "It's the economy, bekup." It is difficult to choose between “bekup" and “boka." Unlike “bekup," the word “boka" embeds too much unintended affection and too little grudge.

Some grudge is appropriate since glaringly missing from our parties' campaign menu so far has been an intelligent and informed discussion about the economy. Parties so far have offered only some vaguely soothing but impotent headline promises like: "Bangladesh without poverty." With no details whatsoever.

Perhaps a good part of it is due to the uncertainty regarding election and the backstage drama. Perhaps some of it is due to the parties' either overly optimistic or pessimistic forecast of their own chances of electoral victory. Hence their conclusion is that issues don't matter anyway at this late in the game.

But I fear a large part of it comes from our bi-partisan culture of rear-view politics where insincere rhetoric is often passed as intelligent agenda. This strategy combined with our strong anti-incumbency bias generally worked well in the past. But will it in the coming years as times are changing (as is our electoral landscape)?

Changing electoral landscape

Let's get an aerial view of our electoral landscape. In this election, over one in three is a swing voter; one in four is still undecided. Blind party loyalty is thinning -- in some places as many as half the voters are open to voting for a different party (The Daily Star-Nielson Survey).

If you think the size of the swing (37%) or undecided (23%) voters don't matter much, think again: In 1996 AL won by increasing its vote by slightly over 4%; in 2001 BNP by about 7% (sure, coalition arithmetic played its part too).

If you are still not convinced, note this: more than half (108) of the total BNP seats in 2001 were decided by a vote swing of 8% (Nazim Kamran Chowdhury, Prothom Alo, October 2006)So swing voters matter.

Since swing voters like swing dancing, economy will increasingly matter even more. The Daily Star survey also tells us the single agenda voters now care most about is economic: inflation. Then corruption, law and order -- also related to the economy. See, it's mostly the economy, buddhiman!

Puzzlingly enough, as we stand a month before the election, why does the topic of economy still resemble that of sex? Everybody knows its importance but no party is talking about it.

Unless we openly and responsibly talk about it with our candidates (or the other way around?), take electoral precautions and then vote accordingly, we might end up with some unpleasant economic STDs (stealthily transmitted diseases).

Let's talk about jobs, baby!

The next government will face enormous economic challenges. Let me point out a big and obvious one: Labour force under its tenure will grow by over 10 million.

Let me restate: total new jobs needed over the next 5 years is more than our total workers in the garments industry and in the Middle East put together (Figure 1).

That's daunting when you consider history. It took us 30 years to build the garments industry. At an average pace witnessed during 1997-2007 (about 300 thousand per year), it will take over 30 years to create 10 million jobs through only manpower export to the Middle East.

What is even scarier is that with the ongoing global slowdown, these two previously reliable valves -- garments and labour export -- to release job pressure may not be as reliable anymore.

It's not just that only voters should care about jobs and the economy. Parties themselves need to care about the economy out of self-interest. If you think inflation is unbearable, wait till voters feel inflation when they are unemployed. If parties want a recipe for political suicide, here is one: take rapid urbanisation, mix it with unemployment and then sauté with the high or even low heat of inflation over the next five years, and add some social salt of crime and poor law and order. Then serve in any portions on any plate. Suicide guaranteed.

Our politicians already know the importance of job creation for their own constituents. Some are used to creating jobs for party workers through phone calls to the their industrialist friends. You can create ten jobs using that model but not 10 million. For that you need labour-intensive export-led manufacturing growth and sound macroeconomic policies.

Needless to say that job creation does not mean jobs in the public sector. It has to be through private sector-led industrialisation. But that can happen only if government provides an enabling environment through appropriate policies. In other words, after providing a smooth dance floor and the right music, government should get out of the private sector's way.

I argued in July 2008 Forum piece "The Tentative Tiger" that the Bangladeshi economy is showing many early signs of take-off. The next elected government will get a chance to shape the quality and the trajectory of that take-off. Don't we as voters have the right to ask our politicians if they are good pilots?

That is why parties now need to spell out their economic agenda. It will help voters. It also help parties think through their own challenges of being either a responsible ruling party or an effective but constructive opposition.

Yes, I am assuming they want to be so. It takes two -- ruling and opposition parties -- to tango and to grow in a democracy.

We have many questions. What economic vision do the parties have for Bangladesh over the next 5-10 years? How would they implement that vision? What would their signature macroeconomic policies be? What are their plans to improve business environment? What would the social safety nets be and how would they be financed?

Some of these are complex and medium-term questions -- some with no quick answers. But we need to know how our politicians are thinking about them. And how thoroughly?

Is it too much to ask?

Only a month away from the election is it too much to ask:

1. That both the party leaders give us their economic vision of the country for the next ten years? Some specific proposals please -- not just headlines.
   
2. That we have a series of televised debate about their promises regarding issues like hartal, power sector, ports, inflation? Perhaps common citizens and business leaders could be in the audience and ask questions.
   
3. That, last but not least, both the print -- and the tele-media along with the bloggers and netizens give a more prominent and thoughtfully thorough coverage of parties' economic agenda or lack thereof?

A simple equation captures the economic urgency of the next government: 5 years and 10 million jobs equals to 2 million jobs a year.

Only a month away from the election is it too early for our parties and the MP candidates to tell us: how?


Faisal Salahuddin, a macroeconomist, can be reached at faisal.salahuddin@gmail.com

Longing for Bangladeshi Obama

Published in Daily Star, November 2008

Longing for Bangladeshi Obamas
Faisal Salahuddin

AMID a breezy fall campus night when old leaves were falling in the wind, new hopes rising and students cheering, I watched Obama moving America to tears as he gave his victory speech. We all have been moved by the poetry of his improbable journey and the melody of his symbolic victory.

Amid swelling inspiration, oddly enough, I felt a tinge of jealousy book-ended by sadness. Jealous of the Americans for having Obama's promise of inclusive tomorrow and sad for us Bangladeshis lacking recent leaders who have offered us such confidence.

In the wake of alternating emotions, I felt some premature longing for Bangladeshi Obamas -- young Bangladeshi leaders who can inspire our youth to believe that we all can live beyond us -- for each other and for the country.

No, I am not completely naïve or delusional. I know the distance and the difference between the US and Bangladesh. In my own defense, I would just say that longing does not harm, cynicism does.

We have a very fertile cottage industry of cynicism, especially when it comes to politics. The ritual is to first get angry, then apathetic and finally cynical. But these often are just lazy emotions to support easy excuses for not getting involved.

Obama's victory raises an immediate but wishful question: How long will we have to wait for our political leaders to inspire and unite us and then govern the country?

A more introspective and responsible question is: What are our individual responsibilities to perfect our shared destiny as a nation? How long should we harbour hope unbacked by action?

Obviously, I don't claim to know the answers, but I know that the choices facing our young generation are stark: to sit back, wait for Great God to come from the heavens (to paraphrase the late, great Bob Marley) to fix our politics or to get involved in our own small capacity both in and from wherever we can.

Alexis de Tocqueville once wrote: "Among democratic people, every generation is a new people."Since change takes place generationally, the burden of responsibilities is heavy on Generation Bangladesh who are born around the time of Independence and are 100 million strong. As someone who has not been very involved with the political process I acknowledge that responsibility with guilt.

Each generation has to take its responsibility. Our earlier generation did not have independence handed over to them. Independence was their dream and they snatched it from Pakistan. Power does not cede easily.

If our generation wants a different political culture, we have to participate in the culture. Not just hope or whine about it as passive onlookers. If our generation wants newer faces in politics, we need to stand up. Not hide behind the stale veil of excuses.

I argued in April 2008 Forum that we have some of the ingredients to have our own Obamas: a young, connected and politically aware demography in a society that is undergoing rapid urbanisation and industrialisation in today's globalised world. This group is tired of old politics and hungry for change.

True, political change takes time. We are not going to have one big Obama tomorrow. Many small ones for now will do. From the small ones, will emerge the bigger ones. That's how leaders should emerge -- not through the family-sponsored dynastic hatcheries, be at home or abroad.

What are some key highlights of the Obama phenomenon and lessons for us?

The Obama Phenomenon

Obama used several powerful instruments and harnessed several emerging trends in American society. He built a bottom-up grassroots movement using modern technology to form, organize, and fund his campaign.

He started a political process that began with a smaller group of committed individuals. He gave people genuine hope and inspiration.

Lessons for our political parties

1. Groom young and bottom-up national leaders who have made (are making) it on their own and retained their integrity (no Picchi Hannan or Lomba Hazari please!)
2. Nominate young leaders. Given our demographic destiny, it is not only the right but also the smart thing to do. It will be a low-cost high-return winning strategy for the parties over the next 10 years.
3. Whoever comes to govern Bangladesh after December election should appoint some inspiring honest young leaders in the cabinet. I refuse to believe that the existence of such leaders is nil.
4. Whoever loses the election should learn some grace from McCain's concession speech and the winner could learn some unity from Obama's victory speech. We are tried of seeing after elections greedy hands waving "It's all mine!" when they win and pouty lips whining "I don't want to play now!" when they lose.

Lessons for Generation Bangladesh

1. It may be a cheesy cliché but we need to believe that individuals can make a difference. A committed group of individuals together can make a big difference.
2. We need to be involved in our own village or community by leveraging modern technology. We need to go beyond the op-eds or concerts. We can now travel faster and look further than any earlier generations. It is now much easier to organize and contribute to any movement from home or abroad.
3. Let's remember the simple calculus of hope. If you double a dream every hour, you will have more than a million dreams by the end of the day. Don't trust me? Just verify with a calculator. We have to double our hopes and halve our cynicism. That's how the infectious mathematics of optimism works.
4. We also have to remind ourselves that politics always and everywhere in the world is messy because life is. As in life, when moderates avoid politics, it gets only messier. The best way to clean dirty politics to get all of our hands dirty in it. Many hands make the work light and clean.
5. We need to be hopeful but remain patient. Both life and hope share the same rhythm and they need work. The journey of life begins in a single cell in mother's womb. The journey of hope begins in small increments in our soul when we share a common faith in our future wrapped in individual sense of responsibility.

Only then we can bend time, shape culture, and compose our own generational history.

Faisal Salahuddin, a macroeconomist, writes from Princeton University
(faisal.salahuddin@gmail.com)

Where is Bangladesh Bank in The Inflation Debate?

Published in Daily Star (June 2007)

For chart see:

http://www.thedailystar.net/2007/06/14/d706141501124.htm

Where is Bangladesh Bank in the inflation debate?
Faisal Salahuddin

Why is inflation at a 9-year high and increasing? Policymakers and citizens need to get the answer right as effective policy responses can come only after appropriate diagnosis.

This article argues that higher money supply has contributed to rising inflation and that a sustained decline in inflation would therefore need monetary policy action by the Bangladesh Bank.

Inflation debate

Debates on inflation in Bangladesh have mostly been populist. Our policymakers and analysts have identified two sets of villains. The first set includes structural factors: (i) hoarders and syndicates; (ii) middle-men in the supply chain; and (iii) poor business confidence.

The second set includes supply shocks -- both international (rising global food and oil prices) and domestic (higher transportation costs and energy prices). Temptation is strong to explain inflation with only supply shocks -- implying that as the supply bottlenecks improve, inflation will go away.

Not surprisingly, policy measures so far have also been either populist: "four whole-sale markets in the four corners of the city" and "dal-bhat program for the poor" or too long-term to be immediately meaningful: "research to improve agricultural productivity" (budget speech, 2007-08). These measures -- while useful to limit the impact on the poor households -- will not succeed in containing inflation and may eventually risk bringing down the popularity of any government instead of inflation.

Inflation ultimately is a monetary phenomenon -- when higher level of money chases few goods. Any meaningful debate cannot exclude the role of money in inflation.

Surprisingly, missing from our national inflation debate has been the role of monetary policy and how the Bangladesh Bank (BB) should/could be made responsible and held accountable for controlling inflation.

Unfortunately, even the BB has chimed in with the populist debate and frequently pointed more emphatically to the structural and supply factors -- almost never to its own monetary policy.

Show me the money

Popular argument is that recent inflation has primarily been driven by structural villains --implying money supply has little to do with it. Of course, some of the structural and supply-side factors may have raised prices. But is it the real or major part of the story? Let's look at the big picture.

Inflation steadily went up from 2.8 percent in 2002, to 4.4 percent in 2003, to 5.8 percent in 2004, and to 6.5 percent in 2005. It exceeded 7 percent in 2006. Clearly prices -- of both food and non-food -- have been rising for a while.

Recent temporary factors alone, either structural or supply shocks, cannot explain this rising trend. Definitely, forces other than structural or temporary supply shocks are at play. What happened to money supply -- the ultimate inflation generator?

Money supply for some years now has been rising at a rapid rate (over 50 percent in total during last 3 years) due to both external (higher exports and increasing remittance) and domestic (government borrowing from the central banks and strong private sector credit growth) factors. Real interest rates (bank rate or 28-day T-bill rate minus inflation) have recently turned negative, suggesting loose monetary policy.

Compared to nominal output, money supply has clearly grown faster. In other words, the amount of money chasing a unit of output has been on the rise year after year. As theory suggests, so have the prices. And hence inflation.

It is puzzling that not many commentators are talking about monetary policy or money supply yet.

Some may retort that money supply can grow fast without creating inflation due to financial deepening -- people's higher willingness to hold more money. This argument lazily bypasses the responsibility of monetary policy in controlling inflation and the costs of not doing so.

In fact, contrary to this popular belief, money supply (M2) growth and inflation in Bangladesh have been closely related in recent years (see graph): the higher the money supply, the higher the inflation.

Ignoring monetary causes of inflation can be very costly. Many Latin American countries with populist policies learned it the hard way: once high inflation expectation gets entrenched, controlling it becomes exponentially difficult. People then ask higher salaries which in turn raise prices again -- creating a vicious cycle.

Zimbabwe -- with inflation at over 1,000 percent in 2006 -- is now feeling the pain of earlier monetary policy inaction and populist polices. The US in the 1970s tried wage-price controls to reduce inflation and predictably failed. Inflation came down only when the Federal Reserve Bank under Paul Volcker in the 1980s tightened monetary policy.

Timely AND appropriate response is of essence -- un/mistreated cold may lead to pneumonia.

Asleep at the wheel?

Unfortunately, the BB, despite its past achievements like banking sector reform, has not provided the policy leadership on inflation expected from modern and independent central banks.

The BB should take the central stage in this debate by providing proper analysis and actions needed for containing inflation. People should know that inflation ultimately is a monetary phenomenon and that it takes some time (12-18 months depending on monetary transmission) and may involve hard choices (higher interest rate/lower government deficit and borrowing) to reduce inflation. Forward-looking monetary policy, like a large oil tanker which takes time to turn, needs to target inflation 12-18 months ahead, based on forward-looking indicators, to deliver it.

Like a financial shepherd, the BB should guide the country to anchor inflation expectation by publicly announcing its inflation target and needed monetary policy instruments.

Fortunately, the BB does not need to start from scratch; it can learn from others' experience.
After a decade of over 10 percent inflation, New Zealand successfully reduced inflation by making its target (now under 2 percent) explicit in 1988 and acting accordingly. New Zealand then, somewhat similar to Bangladesh today, lacked sophisticated financial system, a good inflation forecasting ability, or even a robust measure of inflation.

In our own neighbourhood, India and Pakistan are also moving in that direction. The Reserve Bank of India in May 2007 just reduced it medium-term inflation limit to 4.0-4.5 percent to anchor inflation expectation. The State Bank of Pakistan (SBP) is increasingly embracing the role of monetary policy to reach its targeted inflation. Let's not fall behind.

Wanted

The current BB mandate (1972 and 2003 BB Order) is too broad -- covering price, exchange rate, economic growth, and high employment. If the BB tries to achieve so many objectives and promises to deliver everythinghigh growth, low inflation, strong but competitive currency by targeting all of them -- it will surely end up delivering none.

The BB needs to: (i) prioritise its mandate of price stability; (ii) ask for independence with regard to management of monetary policy; and (iii) build its credibility. To be effective, it needs to act independently from the government (or politicians running the government) so that interest rate and exchange rate decisions are depoliticised. It should ask for operational independence for inflation targeting and start acting as the primary champion to target inflation.

It is high time that the BB properly diagnose the causes of our national fever (inflation) and be ready to firmly apply its medicine (monetary policy). The sooner it acts, the less bitter its medicine would taste. Wishing like an ostrich that inflation would simply vanish as supply shocks dissipate or that supply response through structural measures will bring it down may only worsen inflation expectation down the road.

It's time for the Bangladesh Bank to take charge and redefine the inflation debate. We are waiting.

Faisal Salahuddin is an actuary and economist.