The economic errors of the PM, part 4. Devil's advocate series 60.

1. The PM, to my mind has committed further economic errors 

2 . The much overhyped good governance, the perpetuation of monopolies, bail outs of inefficient companies and the populist whimsies of gratuitous income transfers. 

3. I actually see misgovernance in 2 notable examples 

4. Tax refund arrears and the spurious budget deficit 

5. If tax refund arrears is allowed to be 34 million, and we have no record of how much has been paid except for the unproven statement of the 2nd FM in parliament , the claim of good governance is hollow 

6. It implies slothness not good governance caused the tax refund arrears to balloon up to 34billion. 

7. If there had been good governance, tax refund arrears shouldn't have been in the region of 30 billion. 

8. It should have been managed to say 3 to 4 billion at close of accounting year. 

9. Ada butot ka, Mr Lim guanyin , Monash U accountant? 

10. If our tax refund arrears had been properly managed at 3 to 4 billion , that would have been our K-percent rule of tax refund arrears quantum 

11. I am not going to make you pusing kepala by discussing the K-percent rule of money growth, conceptualized by Milton Friedman. 

12. The badly governed tax refund arrears caused a spurious deficit on a false GDP. 

13. To my mind, the 4% deficit ( say it is 4%) is built on a false GDP 

14. It's a false GDP because the tax refund arrears is included as revenue earned , thereby inflating the GDP 

15. Let's say the false GDP is 30 trillion. The true or actual GDP is 20 trillion. 

16. It's going to be 4%of 30 trillion not 4%of 20 trillion. 

17. Now, that false deficit can hide a host of financial shenanigans. 

18. It can be used to provide soft loans to crony companies, bail out crony companies, fund stupid projects and opened the doors of corruption. 

19. So claims of good governance are hollow without meticulous policing and great care . 

20. The perpetuation of monopolies is the grossest form of government intervention in the free market economy. 

21. By not managing this, the PM has committed an error 

22. That will be discussed in the next article. 

23. Have a break, have a kit-kat. 

Tweet

Read more...

The errors of the PM, part 3. Devil's advocate series 57.

1. Another error the PM makes is his refusal or reluctance to gradually scale down central command economics institutions 

2. This is a belief that central command centres made up of politicians and bureaucratic can drive economic development. 

3. The concept was coined famously by American economist, Milton Friedman 

4. Our own obsession with command centres of economics, stems perhaps from the influence of Fabian socialism 

5. Tun Razak, our bapa pembangunan was greatly influenced by Fabian socialism. 

6. The beliefs of Fabian socialism maybe good and served it's functions in the 50s and 60s, but it never imagined it will grow into grotesque command centres controlled by bureaucratic brahmins. 

7. The beliefs of Fabian socialism run counter to the teachings of Adam Smith, the idea of free market economics. 

8. The ideas of Smith were expanded by people like von mises, Hayek and most famously by Milton Friedman. And countless other free market economic adherents . 

9. It's from each according to his ability and areas that interest him, to society what they want secured through price signals 

10. I am not going to use the term capitalism in lieu of free market economics 

11. That term carries much evil connotations, wrong most of the time . 

12. A group of people, the evil capitalists owned and controlled means of production 

13. The ordinary people, the proletariat have nothing to sell but their labour 

14. The proletariat are paid just enough for their upkeep but the value they created is very much more 

15. The evil capitalists appreciate the surplus value and this is the source of much exploitation 

16. The central command economic centres often drive the economy the wrong way. 

17. This is because they are driven by such factors as political expediencies and other policy factors. 

18. Not by price signals and therefore not,( economically) rational 

19. We can in fact call these central command economic centres as centres of economic irrationalities. 

20. These centres will need troops in the form of middle and lower ranking government officers to 'police', monitor and nursemaid the chosen economic activities 

21. This may lead to a big problem. Civil service corruption. 

21a. Upon retiring these people can buy 15-20 million houses at county heights kajang, taman tun or damasara heights. Houses with big land, high ' shilling ' and with 'water featured'. 

22. Economic actors respond to market signals not to directives from central command economic centres. They don't need EPUs or ICUs 

23. They have their own. Internal EPUs and ICUs. 

24. I am constantly amazed at the ingenuity of our petty traders such as restaurant operators 

25. They come out with novelty dishes and premises with good ambiance. 

26. Certainly they do not respond to the dictates of the central command centres but to free market signals. 

27. Like Friedman said, greater economic achievements are gotten when economic actors respond to free market signals 

28. The refusal and reluctance of the PM to scale down gradually the size of the central command economics, I believe is more due to ignorance and not giving much thought to this edifice from the previous UMNO regime. 

29. I see this as an an error on the part of the PM. 

30. May I suggest the PM reads ,von Mises, Hayek and Friedman?

Tweet

Read more...

The errors of the PM. Part 2. Devil's advocate series 56.

1. The biggest economic misstep is continuing the pick-and -choose-winners economic strategy. 

2. A cabal of crony carpetbeggars will be chosen to spearhead economic growth. Especially for the Malay economy. 

3. A number of people will be given contacts exclusive licences to carry out government business. 

4. A variant of voodoo economics, where it is hoped the economic prosperity so created will produce the desired trickle down effects. 

5. They have not produced that but more of drip down effects 

6. It's a situation like the Malay says, bagaikan enau dalam belukar melepaskan pucuk masing2. 

7. But as Robert Kuok says, the higher the tree top, the more violent the hail and wind you attract. 

8. People don't envy you are rich but they will start asking how did you get rich? 

9. And they will find out you get to be that because of government patronage, lots of it . 

10. We now have bestinet, NexG, monopolistic importer of beras impot, the man who rents out helicopters to the government when it's better for the government to buy and form a company of technicians, companies patronized by khazanah, the companies earmarked for IPOs, GLCs mollycoddled by the government and the list goes on. 

11. The pick and choose winners economic model is here to stay. 

12. This kind of economic strategy creates favorites and a coterie of crony carpetbeggars. 

13. Their prosperity will depend on continued government assists. 

14. The PM has got the basic building block bringing up the economy wrong 

15. Instead of democratizing the economy , he's elitizing the economy 

16. That's the UMNO way of bringing up the economy, especially Malay economy by creating an economic nobility, economic bangsawans. 

17. A variant of voodoo economics. 

18. If our dear PM perpetuates this economic way forward, where is the reformasi? 

19. Where? Where?

20. We must employ the Zaaba way. Build endogenous competencies compete freely on a level playing field.

Tweet

Read more...