VOXPOP ‘Keynesian economics calls for deficit spending during recession, but it has never told us to spend beyond our means.'

Wee: M'sia not going bankrupt despite rising debts

vox populi small thumbnailTelestai: Deputy Minister Wee Ka Siong, I have no problems with applying Keynesian theory only if the country's deficit was due to government spending to stimulate the economy. In Malaysia, the deficit is due to spending on projects/allocations to enrich BN cronies and that is why it is not acceptable.

YHJ: Wee, so what happened in Greece, Spain and Portugal? Yes, you may quote this and that economist for all I care, but common sense, if you have any at all, tells you that a country cannot have a deficit budget every year, and especially a deficit that is ballooning. Clearly, the country is on the brink of bankruptcy and the stupid regime is in

Bumiasli: The problem in Malaysia is we have all the wrong people in government. Here we have a BN Youth wing chief who has far passed his ‘youth' and who has no experience in managing finance, yet comments on the country's economic status.

Would you guarantee the rakyat that Malaysia will not become bankrupt under BN? Then we have a finance minister who throws public money around to be popular. The shocking
thing is that there are still morons who listen to and believe these people.

Bamboo: If the deficit is spent for the people, I can accept it. But if the deficit is ballooning due to the Umnoputras/puteris and their cronies putting their hands in the cookie jar, I will question it. Especially if it looks like a get-rich-quick scheme to earn easy money through monopolies and inflated-priced contracts.

Onyourtoes: You know, Wee, I weep for this country because I have finally come to terms that we have nincompoops even at deputy ministerial level. Please don't talk on things you know nothing about. Keynesian economics is over 70 years old. It is the over-usage of this principle that has led to the malaise in most countries.

There are no free lunches, Wee. We are just good at looking on the stimulus part of Keynesian economics, but we have totally ignored the sustainability, the inflation and the capacity-generation part.

Keynesian economics calls for deficit spending during a recession, but it has never told us to spend beyond our means when the economy is doing fine. How long has Malaysia incurred deficits? Are you saying during the past 15 years there was no occasion for a balanced or surplus budget?

You need to read more; you can't depend on half-baked economists to advise you. Before Greece went bankrupt, they also told the world that it would not happen. On countries that you have quoted, I suggest you get your definitions right.

Maybe this will help you a bit: I have high debts, but I have even bigger productive assets and reserves. So, what is the problem?

Don't talk about the United States of America, Wee. The USA is a ‘special' country. Ask your economists to explain to you. A little knowledge is a dangerous thing.

Fair&Just: He should be comparing Malaysia with Greece, Spain, Italy, Ireland, etc, where the similarities are there except Bolehland still has the depleting oil resources to delay the inevitable. None of the big government projects like NFC, Perwaja, Proton, LRT, PKFZ, etc, are revenue-generating, but all have incurred heavy losses.

How can we compare ourselves with the United Kingdom, USA, Japan, Germany and Singapore? For the latter, just compare Singapore Airlines with Malaysia Airlines.

Louis: Wee forgot that Singapore, USA, Japan and Germany are countries that investors have great confidence in their governments. Their policies are consistent and corruption is very low. And they know that every cent those governments spend is accountable. On the other hand, in our country, out of a RM500 billion deficit, most probably 40 percent of it goes to corruption.

Giudice: Wee, countries like Japan, USA and UK pump money into the economy to stimulate it, not out of greed but out of necessity. Malaysia pumps its money into the pockets of corrupt BN politicians and cronies. And you have the audacity to suggest we are in the same category?

3rdEye: Yes, Singapore national debt is 118 percent to GDP. But the Singapore government operates on a balanced budget policy and does not finance its expenditures via borrowings. It has enjoyed budget surpluses over the past decades. It has zero foreign borrowings.

Singapore does not borrow to spend. Look at our last budget: So little was allocated for investment. The bulk of it was for expenditure. It means borrowing to spend, spend, spend!

Hplooi: Oh yes, Keynesian economics, the 'poster boy' trotted out by governments all over the world. Unfortunately, you may understand 70 percent of a theory but the 30 percent that is not understood can destroy you.

The administration of former US President Franklin Roosevelt was the first test of Keynesian theory with its 'new deal'. But the 'new deal' was nothing like the programme currently run by our government. The new deal 'pump-priming' focuses on cutting unemployment (not throwing money at cronies).

Public programmes resulted in public works that stimulate and/or had direct improvement on the 'total-productivity factor' in the national economy. Witness the Hoover dam, a legacy that is still standing today. And witness Petronas Twin Towers and Putrajaya, massive building programmes that are still contributing to a property overhang.

Adolf Hitler's Germany implemented the same Keynesian economics that Wee talks about to jumpstart its economy. But Hitler mainly concentrated on building up the army. Overtly the Third Reich saw success by cutting unemployment (some economists dispute this, citing the looting of the Jewish population as a main reason for the early Keynesian success).

But by the eve of World War II, the economic policy of the Third Reich was not sustainable as the German treasury was nearly bankrupt. World War II saved the German Reich, which subsequently financed the war through looting of the conquered countries.

The moral is 'Keynesian policies' are useful instruments, if implemented competently and the results truly contribute to the economy. However if this is manifestly not met, then the result would be a 'double-whammy'. Debt used to finance useless projects will further burden the economy. So countries do not just go bankrupt. It is the citizens who will bear the consequences.

Wira: Wee, it is pretty clear you know nothing about the work of John M Keynes. In Keynesian theory a country gets into debt and deficit to spend honest money on infrastructure to build capacity and productivity.

You don't get into debt to finance leeching cronies and corruption, rearing condominiums instead of cows and building roads and bridges that lead to nowhere. You also don't go into more debt to hand out goodies just before a general election. This kind of debt
bankrupts a country.

Seadragon: What an idiot! Singapore has no foreign debt. The national debts are used for prudent investment that gives a higher return on investment, and not used to finance a deficit budget. Singapore has no natural resources like us, but she maintains a strong balance sheet with its assets way above its liabilities.

This is reflected in her strong currency. Whereas here, we borrow money to buy votes.