Tag: government spending

Categories
Economics

[1627] Of Malaysian Keynesians kicked out of the window?

From the look of it, many of the planned huge government expenditures are not going to happen any time soon. Where are these Keynesians now, I wonder?

For the uninitiated, one hallmark of Keynesian economic policy is the encouragement of government expenditure, especially during times of low economic activities. The rationale is that these spendings would rejuvenate a faltering economy back on its feet through the famed multiplier effect.[1]

At this moment of uncertainty in the Malaysian economy, Keynesians everywhere would more or less give one prescription: more government spending. After the announcement of the Ninth Malaysia Plan, I had expected that the policy would be impressed upon even harder on the Malaysian leadership by Keynesians. Yet, we might be seeing a roll back on government spending.[2][3]

Keynesians, where art thou to stop these rollbacks?

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — See spending multiplier at Wikipedia.

[2] — KUALA LUMPUR: The nine-month delay in the Penang second bridge project is due to problems in land acquisition, design and rising cost, said Datuk Seri Abdullah Ahmad Badawi. [Second bridge delay due to costs and design issues. The Star. April 23 2008]

[3] — KUALA LUMPUR, April 22 (Reuters) – Malaysia has shelved plans for a bullet train linking its capital to neighbouring Singapore because of the cost, a top planning official said on Tuesday. [Malaysia drops Singapore bullet train project. Reuters. April 22 2008]

Categories
Economics Politics & government

[1561] Of deficit reduction through increased spending!

BN’s manifesto says that it promises to reduce fiscal deficit:

In its election manifesto, Prime Minister Abdullah Ahmad Badawi’s coalition also pledged to create two million new jobs, encourage one million new businesses and rein in the fiscal deficit over the next five years. [Malaysia PM woos non-Malays in election manifesto. Reuters. February 25 2008]

I wonder, I wo-wo-wo-wo-wonder, how is he going to do that with his planned increase in public spending for IDR, NCER, ECER, SCORE, SDC, OMG, WTF, LOL, ROTF, ZZZ, etc, etc…

Will it be through private finance initiative? Or based on hope that the economy will improve tremendously? Or through multiplier effect brought upon by projects implemented? Or taxation? Or what?

Categories
Politics & government

[1525] Of pave the road, give out freebies, enforce gender segregation

As election nears, incumbents usually try hard to keep their constituents happy. Potholes paved, freebies distributed, streetlights repaired. For PAS — I do not know for sure but I suspect as much — it is enforcement of gender segregation:

KOTA BARU: All supermarkets and hypermarkets must have three separate checkout counters or risk being fined following a decision to enforce the policy more strictly in Kelantan.

[…]

He admitted that enforcement had been lax and Mentri Besar Datuk Nik Abdul Aziz Nik Mat, who is also spiritual adviser of PAS which rules the state, had chided local authorities here for not enforcing the rule of separate checkout counters. [Kelantan to enforce policy on sex-segregated queues. January 24 2008]

The phrases “more strictly” and “enforcement had been lax“, if read with the expected upcoming general election in mind, could mean that PAS thinks that the policy is popular. Who dares to introduce or enforce unpopular policies when election is around the corner anyway?

Keep in mind that what is popular in Kelantan is not necessarily popular in other states.

Regardless, this is a typical case of election: keep your electorates happy only when election nears.

Categories
Economics

[1041] Of Malaysian government spending and private investment in 2007

I was reading the Business Times and I saw this:

In 2007, Malaysia’s GDP is estimated to grow at more than 5.0 per cent. The two key drivers of demand will be higher government spending and an increase in private investments, particularly with the implementation of the 9th Malaysia Plan.

Quiz for students of macroeconomics: with ceteris paribus, what will happen to private investment when the government increases its spending?

Answer: See crowding out at Wikipedia.

Nearly four months ago, the Malaysian Domestic Trade and Consumer Affairs Minister announced that his ministry planned to combat shortage with — drum roll please — price ceiling!