CTOS and Ideological Inconsistency

The latest controversy to strike the Malaysian political scene is that of credit tip off services (CTOS for short). The CTOS firms have gotten in trouble for not updating their information correctly, and so the government has rolled out its media and legal machinery to do battle with them.

I admit, when I first heard about the controversy, I thought it was much ado over nothing. The government would just tell the CTOS firms to keep their credit records up to date, and that would be that — win-win for everyone.

Thus, I was a bit confused when one of my friends made some harsh remarks about the government's actions towards the CTOS agencies. Apparently, the government did more than just reprimand the CTOS firms. A minister went as far as to suggest that they should be shut down.

That the CTOS firms represent a valuable service to creditors is hopefully obvious. By providing information to creditors about debtors, they make the loan market more efficient — information asymmetry is a major problem in many markets.

What strikes me as odd about this debacle is how vehemently the establishment and anti-establishment mobilised their forces against and for the CTOS, respectively.

The establishment is supposedly pro-business; a more efficient credit market is obviously in the interest of businesses and banks. Why would the establishment want to shut the CTOS down?

Meanwhile, the anti-establishment likes to paint itself as being on the side of the "little guy", the consumer. To them, the CTOS should be something abhorrent, since any mistakes the CTOS makes directly affect the guy looking for a loan. (Of course, these kind of people conveniently ignore the fact that reducing the information available to banks would indirectly harm many more people.) Yet, the anti-establishment has come out strongly on the side of the CTOS.

I speak of a general, broad anti-establishment because the opposition politicians have been quite silent about the issue (except for Lim Kit Siang, who spoke out in Parliament for regulating but not abolishing the CTOS industry — something that has not been highlighted by the anti-establishment sources, including Lim's own blog). The anti-establishment blogs, however, have been quite vocal in their support of the CTOS.

Am I happy that the anti-establishment, which is normally too stupid to recognise the value of the free market, has for once sided with economical ideas? Of course.

But what leaves me uneasy is how nakedly this controversy exposes the hypocrisy of the establishment and anti-establishment. The establishment's ostensible commitment to business and the economy has taken a serious blow, but the anti-establishment has painted itself into the corner of being the anti-government once again. Would they be so pro-CTOS if the government had instead supported the CTOS when news of the CTOS agencies' failures broke out?

If we claim we have principles, we ought to hold to them. The ideological inconsistency so brilliantly illustrated here is nothing more than outright hypocrisy.