Government Incompetence, People Suffer

The last time (2013) the oil subsidy was reduced it was done under the name of subsidy rationalisation. The government wasn’t happy that those who were targeted as beneficiaries of subsides did not benefit as much as higher income people who were using ron95 too. Deputy Minister Ahmad Maslan said, the government saved RM1.1 billion in 2013 by cutting down subsidy.   
Did the government save RM1.1 billion or was Ahmad Maslan was just showboating. Where has the 1.1 billion gone to?

This year, 2014 the subsidy cut made previously would save the country RM3.4 billion. Where is the money?  Adding up, the government should have saved RM 4.5 billion. Where is the money?

Also, because our diesel is cheaper, people smuggled it into neighbouring countries and sell it on open seas. The government said enough and so it took back the subsidy.

Now, it is taking back the subsidy what reasons can it tell us? Surely smuggling has been reduced. Those targeted to benefit got the benefits. So what’s the reason now?

It seems the same reasons are given. The government does not say it- but Dr Mahathir appears to speak on behalf of the government who is in the drawing room figuring out what to say to the people. Dr Mahathir is of course smarter that these dumbasses.

The government helps the rakyat by making them suffer more. The price increase of ron95 and diesel will push up the price of other goods and services. Even of the humble kangkung.

Who will be most affected? The lower income group of course. Transport is a necessity. As a means of personal transport or for the transportation of something more important- food and services.

The poor, as a result of Engel’s Law spend a larger proportion of their income on food. The transportation to ferry the food will increase and gets loaded up in the price of food items. That will make the poor happy and they will thank God, lucky the price increase is only 20 sen.

Let’s look at the issue from other perspectives- the ones the government doesn’t want you to look at. The state of the finances for instance.

When government starts withdrawing all subsidies after having given them out, this indicates a few things. The government cannot sustain the spending anymore because it has no money. It has to save money.

So it scours the political horizon to identify the path of least resistance. It identifies that formless mass known as rakyat who can make noises but cannot speak as one voice. Aha- the government says, let’s take away the subsidies on petrol. The cross fires, the arguments to-ing and fro-ing will be too complicated that, taking away subsidies on petrol is easiest. There will be people who support withdrawal and those who are against. They cancel out each other and allow the government to have its way.

But why must the government take it out on the ordinary folks when the problem arises from its incompetence?  Sure, we can justify the cut back because economics textbooks say subsidies distort the market- so do corruption, high spending, falsification of pricing, inflated purchase price etc. etc. these are sources of leakages more severe than government giving subsidies on people who are hard-pressed to make ends meet and who have to use petrol and diesel.

Because dear readers- we have been suckered. This is a government of the top 20%, by the top 20% and for the top 20%. They won’t carry out policies that injure their interest. Such as cutting back on wasteful spending.

How much is our MRT going to eventually cost? How much have we lost on 1MDB- RM38 billion? How much have lost through the government inept handling of MAS? Can we cut down the humongous allocation to the PM’s office? Why don’t we cut down on our spending?

I have been advocating fixing our spending as a fixed percentage of our GDP. Say 22% of or GDP to finance government business. They must spend within this fixed allocation.

The problem is how will the government explain to the people why they are withdrawing subsidy on petrol when the world price of oil is going down? 

They can’t lie to us anymore- that could only mean, this government has run out of money and must cut back on its spending. It chooses its victims well- the hapless rakyat who must use transport to move around and do business.

But more important, the reason why government has to cut back on its spending is because it has difficulties in borrowing. the government’s credit worthiness is questionable. You have been racking up public debt to almost 550 billion that’s already near the self-imposed ceiling. The actual public debt is even bigger if we take into account all those contingent liabilities. These are essentially guarantees to loans taken by GLCs, which if they default, will cause the government to pay up. The sum of contingent liabilities is probably now RM160 billion. That makes our total public debt to close to 70% of the GDP. More likely maybe 80% considering the fact that household debt is over 85% of GDP.

The country and its people are in debt. The UMNO people have no clue about all these because they have the licenses, the secure government jobs by which they can fleece the treasury by artificial pricing, buying goods and serves at inflated price.

Its ok you want to raise the price of the 2 products- we know you have bankrupted the government, empty our treasury. The government has no idea how to raise revenue because its mentality is that of a rent seeker not a productive economic agent.