The Economics of COVID-19 Part 2

I was reading an article  asking the government  to do more to help workers.
Surprisingly there is no mention at all of "unions". This tells me unions do not protect  the workers.

We intend to help the workers but very often the outcome is the opposite  of our intention. So who protect  our workers?

There are 951 unions covering 800000 workers in Malaysia.  Are we, able to say the other 800 thousand  are not protected? The pasar malam vendors  have no unions. How are they protected?

Before the trade union  act 1959-we have no unions. Can we say our workers are not protected?

Unions protect  2 classes of people -members and the union officials. The protection given is not equal.

The strongest unions are probably  the teachers union, banking, medical, airline workers, municipal unions. We can hardly call the workers here as poor!

The unions are therefore not relevant in our discussion.  I submit they are not important.

That is not to say unions are not useful-they are.  But their leadership structure  must be re-engineered  and democratised.

That leaves the government  to do its duty:-by manipulating the employment  act through  the EPF or some employment insurance schemes  through  SOCSO etc. Or it monetises its debts. Even this proposal is misleading.

Before independence, we had no government to protect workers but workers got by. So not wholly true the government makes the difference.

Before I discuss some ways to overcome  the economic  downturn  there  are several issues  I want  to  talk about. These are the minimum  wage issue and taxing the rich  more.


Ramon Navaratnam is undoubtedly  a do-gooder who intends  to help  the poor.  Unfortunately  almost always good intentions produced the opposite  effects-producing increased unemployment  and increased poverty.  A do-gooder like Navaratnam becomes inadvertently a tool for special interest groups and the monopolists.

That's what the minimum wage rate does. Strange,  is it?

Think this way. In order  to pay the minimum wage rate the employers look for workers commensurate with the skills and qualifications  demanded  by the minimum wage rate.

What is the effect? The wage rate discriminate  against  those who don't have the required  skills and qualifications. The very people Navaratnam wants to help.
The poor are kept out the job market. They remained unemployed  and poor still.

Well intentions  but the effects  are not.  Have the government  published  results  of the minimum wage rate?

The special interest  groups  like the trade unions will like the idea.  It entrenches them and keeps off competition.
Do the do-gooders still like the idea? Unemployment  and  poverty will be on you!

Tax the very rich and help the poor says 'Robin Navatnam Hood'. Perhaps  he has not heard about Director's law(after Aaron Director). The law says almost  invariably  government  programs like this benefit the middle income group at the expense of the very  rich and the poor.

I can only say to the poor 'be still and wait without hope, for hope is to hope for the wrong  thing'. TS Eliot.