A number of individuals are surprised at the slow rate of distribution of the RM7 billion government spending announced in November 2008. Not even a billion of it has been spent. The Second Finance Minister Nor Mohamed Yakcop divulged that information in the Dewan Rakyat earlier this week while answering a question from MP Jeff Ooi.[1]
Am I surprised?
I am shocked. I am shocked not because only a tiny weenie fraction of the stimulus has been spent. I am shocked that there are individuals who are shocked that is so.
Gasp!
How can that be?
But seriously, the lag exhibits is inherently part the nature of government spending. It is its weakness. Those with libertarian sympathies have always known this. Those outside of libertarian circle acknowledged this.
The libertarian argument against government spending can be divided into two categories: philosophy and practicality. Philosophical argument relates to the size of government. Practicality argument relates to the usefulness of such spending due to its temporal issues.
Philosophical argument is debatable but the argument about usefulness is backed with empiric. Usually, it is hard to argue against hard data.
Libertarians have been proven right yet again about the usefulness of government spending. While it is enjoyable being right, the damage has been done, all for flawed thinking aligned with government spending advocates which I now call lemmings. It is becoming increasingly clear to me that a lot of people are advocating government spending simply because other countries are doing it, without proper economic rationale.
Again, being right is enjoyable but the damage is done. The role of government has been enlarged and as history has shown, resizing the government is a Herculean if not an impossible task.
Yet, to a lot of people, they are still oblivious to this fact. A statement from MIER — Malaysian Institute of Economic Research — is most telling.
Mohamed Ariff said that allocations under the second stimulus package must be spent very fast to provide a quick positive impact on the economy.
According to him, there is also a need for transparency in implementing the package in order to gain the confidence of consumers and investors.
“If transparency is not there, credibility will be a question and it will have an impact on consumers and investors’ confidence. Without confidence, nothing will happen,” he said. [MIER unfazed about financing budget deficit. Bernama via The Malaysian Insider. March 3 2009]
As written earlier, there is a trade-off between the two demands transparency and speed. You cannot have your cake and eat it. To demand for both is too Obama-like. Enough of yes-we-can mantra. Put your feet on the ground.
[1] — A while ago, Second Finance Minister Nor Mohamed Yakcop told the Dewan Rakyat that of the RM7 billion pledged for the economic stimulus plan announced in November, only RM567.9 million had been spent thus far — after four months had gone by.
That works out to roughly 9% of the pledged money that had gone into the system for pump-priming. [Long fore-play to a stimulus. Screenshots. March 2 2009.
Ajax, we, are through to the final 32, being the only Dutch representative in the UEFA Cup after both Twente and NEC lost to Marseille and Hamburg respectively.