Monday, October 27, 2014
Spend, spend, spend….
There's a belief in the economic circle that the more money a government spends, the faster will development occurs. Put more money in people's pocket and let them spend it lavishly. Demand for consumer goods goes up, the market expands and the economy will boom.
How wonderful. If that is true the government can then just allocate billions here and billions there, create mega projects here and mega projects there, approve hundreds of millions for this and that project at the whims and fancies of the leaders to please their supporters.Development gets going, the government gets more support,
people are happy spending money, and if you belong to the low income group you can get cash assistance from the government every now and them.
can everyone lives like this?
Question is: how does government get the money to spend? Tax the rich and kill the geese that lay the golden eggs, pull in foreign capitals by opening wide the doors of economic opportunities in the country, give foreign investors as much freedom as possible to take away the profits they make in the country, sell the assets of the country as much as possible, borrow money by selling bonds and debentures, make liberal use of deficit budgeting, or what?
Will the economy of the country really boom or will it boomerang? Shouldn't a country spend only as much money as it can afford at any time and ensure that the immediate needs of country and people be taken care of first rather than embark on very ambitious programs to become a rich and developed nation as quickly as possible? There's a Malay saying: "Mau kaya cepat" (to get rich quickly), and it leads to disaster. There is also the possibility of achieving an allusion of wealth, like what the credit cards can give to the middle-income wage earner. Only when the cash-flow takes a real dip will the actual damage be known.
Malaysians today seem to be really enjoying a generous budget for the year 2015 with a lot of tax cut and increases in cash assistance for the low income group. Shopping Malls and business centres everywhere seem to be
always full of people and the roads are jammed with luxurious cars. Heavy cranes and mechanical equipment are seen everywhere in the towns and cities constructing new infrastructural facilities and buildings to hasten the paste of development and modernisation.
this still exists
Yet…..there are gripes and groans of fear and disappointment about government spending. Despite announcements on the influx of foreign investment in the country the boom it brings are also having some boomerang effects. Prices of consumer goods are going up as usual and the price of condominiums and semi-D houses or bungalows are
going into millions. One can foresee the administrators and servicemen going back to the villages to build or purchase their homes for the towns and cities are becoming too expensive for them. Only the rich businessmen and political leaders can afford to remain in the cities.
candidate for a welfare home
One wonders how long the spend, spend, spend, approach to the economic development of the country can continue.
The earlier we reevaluate the spending capacity of the nation as against its income and liabilities, and give the welfare of the people more emphasis than economic development per se, the better.