Clueless in Economics?

It was in 1965, when the renowned economist and Nobel prize winner in Economics, Milton Friedman said, we are Keynesians now. The exact words were, in one sense we are all Keynesians now and in another nobody is a Keynesian. In 1971, Richard Nixon says, in Economics, I am now a Keynesian. In later years, these have been generalized into We are all Keynesians now.

Personally I am not over enthusiastic about all this we are Keynesian or not Keynesian talk. All I am interested is does our economic plan work? Or more important do we have a plan at all. When my blogger friend de Minmis wrote that our policy makers are using ancient ( in internet time) data, he was stating the very obvious but hidden from public fact. Can we trust first of all the people at the Statistics department doing their work? And the various so called economic planners in state UPENs and EPUs; how many of them familiarize themselves with econometric analyses. The production of data and the application thereof must be a rigorous mental exercise.

Now, we can't deny the Malaysia will be facing hard economic times. We are a trading and export driven economy. If the big economies are facing problems, how do we sell to them? The other recourse is how to prop up or goose up domestic aggregate demand? So we fall back to the old saying- we are all Keynesians now. That is, we believe that spending our way out is the way to overcome economic recession. The question is how where to spend on?

So far, what are the stimulus packages has the government announced? There have been 2 actually. The first was the RM5b rescue package to a certain Valuecrap Valuecap to buy what were euphemistically termed as undervalued stocks. That measure alone fortified my belief that the analysts and leaders in Valuecap can be as moronic and as ordinary as the Ah Beng investor who sits daily at the floor of his brokerage office. The Ah Beng would probably know better what the undervalued stocks are. I think the government can do better giving the RM5b to the Ah Sohs and Ah Bengs who can pick winners in the stock market.

The idea of taking money away from the EPF and placing them in the hands of more competent analysts at Valuecap is laughable. On the one hand, it insults the intelligence of the analysts at EPF and second, it exalts the paper tiger reputation of the people at ValueCap. But then come to think of it, when de Minimis mentioned about government people using ancient data, I am thinking maybe the derisory treatment of the EPF people may be correct after all. But to infer that the people at Valuecap are brighter, I am skeptical. I am mortified by this inference when the achievement of Valuecap thus far is to incur a debt of RM1.5b. So the RM5b guna untuk apa? Please la, Dato Finance Minister,boleh kasi cerita ka?

Then we have the RM7b package presented by DS Najib in parliament. It was presented as a seminar without it being debated. But how much has the RM7b been spent? Not more than RM600million. This sorry state of affairs suggest to me:-

1. The government doesn't know where to spend.
   
2. The government simply doesn't have the money.