Spending out of recession

The best thing the government can do presently is to be honest. In the first quarter, our growth was described as scorching may have been due to just padding. It was not due to substantive dynamics of the economy. Just say so. We wanted to fudge the numbers so that the people will be confident with our management of the economy.

When Idris Jala painted a doomsday scenario he was doing exactly the opposite. Making the people less confident with the government management of the economy. If he does things that jeopardizes the government, throw him out. I am sure he isn't the only native of Sarawak who is clever. I have met native Sarawakians in Shell Miri who are very much cleverer than him and more unassuming. Idris Jala? long in form, short in substance.

If the government had been honest, it would make the current justification to spend more , acceptable. We are sane and rational. If we need to spend our way out of recession we have to do. A man's got to do what a man's got to do. We don't have any quarrel with that. I have always said, spending more than our income is not necessarily bad if it's done correctly. What do we spend it on? Its only bad, if our planned deficit is the result of gross financial indiscipline, is the result on non rational justification. Then deficit spending is bad. It's bad if the spending is for prestige purposes.

We need to educate the public about this deficit phobia in as much as we need to educate the public about responsible fiscal policy. Fiscal policy refers to the way the government manages its income and expenditure. Ok so far?

So can we spend our way out of a recession? The answer is yes we can; provided that spending is high enough and in the right places. Yes, if the government doesn't treat this as a license and excuse for profligate spending. Please don't buy designer shoes for our lady army and police personnel. Can we not?

Will a sovereign government go bankrupt by doing so? No, it will not. It will only if Idris Jala manages the economy. He can't even manage MAS properly , the PM wants to entrust him to talk about our economy. Ibrahim Ali does have his point there- Idris Jala should be dropped from the cabinet. What was his strong point? For calling a spade a spade? Many bloggers can do that job without having to be appointed a minister maa.

Does government spending lead to inflation? No, it does not. Does bigger government spending mean that the government will take over the economy? No, it does not. Does it mean that all types of spending are equally beneficial? Definitely not.

Here's how government spending can be harmful and therefore objectionable. Government spending can be wasteful if there is no improvement in the welfare of society through infrastructure spending, better social programs, and other government spending, preferably employment-enhancing, that improve the standard of living of the population. Ada faham ka? The government wants to spend RM 35 billion on a mass rail transport system. Is there a cheaper alternative instead of spending this amount? The public bus system isn't that good , you want to spend on more expensive means pf public transport.

The problem is, when our government spends, it spends far too much money on wasteful financial rescues and far too few Ringgit were used for the benefits of the overall population. For example has government expenditure reduce unemployment? The minister in charge of labour hasn't got even the data on unemployment in Malaysia. How do you manage then?

Please mister government, publish your unemployment data so that economic sleuths can mine the data. Has unemployment declined significantly? I suppose not when I hear bank economists here and there speak about giving graduates more jobs. What is the employment-population ratio? If employment per population is dropping, then something is bad with the way government spends.

Want a few ideas to fight for? What about increasing health-care benefits, eliminating the payroll tax, engaging in massive green infrastructure programs( why not turn the Sungai Besi air base into our own Central or Hyde Park?), providing free education in the fields in need (not finance, economics, or the arts ok-hehe)? Study FDR's New Deal and look at the type of spending commitments that have been hugely popular among the U.S. population, have contributed to the rise of US economic power, and have not affected at all the solvency of the United States. Baca lah sikit tuan pegawai woi.

As they say, the proof is in the pudding: just look at the popularity of Medicare, Social Security, the air transportation system, the highway system and many other achievements of the New Deal and post-WWII policies. Look at the ideas that work. Forget the ideological leanings.