It’s the case where European is at odd with their opposite Atlantic counterpart, US. To curb deficit, European led by Germany prefers the austerity measure by cutting down the spending heavily. US thinks this is not a good idea especially when global economy is still in recovering mode. Obama lobbied hard for European to spend, but Merkell said sorry, this is European way of solving the problem. Prominent economists from US such as Krugman is arguing that by slowing down the spending, the economy will not get any better. This translates to low revenue for government, thus, cancelling out the efforts of austerity measure. Remember, the purpose is to reduce deficit in government spending. It makes sense, when the revenue is decreasing, how you could tackle deficit? When the government is reducing the budget, it is a big deal! Looks closely here in Malaysia. Without government spending, the economic activities could not thrive well. It’s a like a chain reaction, less inputs equal to less outputs. No job creation, less businesses, etc etc. But the problem with austerity measure in Europe, it affects the global economy because they are a big deal in world’s economy.
But I’m not supporter of deficit spending either. I don’t like us to be like Greece or PIIGS for that matter. Government should spend responsibly which ensure resources are distributed evenly to the community and not benefitting to cronies only. Wasteful resources should be avoided. In the case of subsidy, I’m against it from the start. I know it’s hard to take away the free candies. Thus, it should be gradually removed. It’s pretty simple, subsidy create an artificial demand and supply. It can easily lead to wasteful consumption. When price is according to actual demand and supply, we will become more responsible. Imagine when price of petrol is RM2.80 per litre, we will definitely plan ahead how to consume effectively.
I can say we are quite lucky nowadays to live in a period when nation is still growing economically. We have plenty of opportunities right here in Malaysia. I’m scared we end up like Japan one day. Japan has really lost it now. The lost decade period is still affecting them till this day. Not much job opportunity for freshies and society is aging day by day. Why this is bad, an aging society simply could not contribute productively to the economy. When the market is becoming so matured, there is not much room left to grow. They need a young vibrant society to inject some innovation. Unfortunately, when the cost of living become too expensive, not many couples intend to have many kids. The trend is happening here in Malaysia and definitely has happened quite some time in Singapore. Our grandfathers use to have 5 – 10 kids, our parents 2 – 5 kids, you? I’m assuming 0 – 2 kids. There you go, we could end up like Japan one day.
But I’m not supporter of deficit spending either. I don’t like us to be like Greece or PIIGS for that matter. Government should spend responsibly which ensure resources are distributed evenly to the community and not benefitting to cronies only. Wasteful resources should be avoided. In the case of subsidy, I’m against it from the start. I know it’s hard to take away the free candies. Thus, it should be gradually removed. It’s pretty simple, subsidy create an artificial demand and supply. It can easily lead to wasteful consumption. When price is according to actual demand and supply, we will become more responsible. Imagine when price of petrol is RM2.80 per litre, we will definitely plan ahead how to consume effectively.
I can say we are quite lucky nowadays to live in a period when nation is still growing economically. We have plenty of opportunities right here in Malaysia. I’m scared we end up like Japan one day. Japan has really lost it now. The lost decade period is still affecting them till this day. Not much job opportunity for freshies and society is aging day by day. Why this is bad, an aging society simply could not contribute productively to the economy. When the market is becoming so matured, there is not much room left to grow. They need a young vibrant society to inject some innovation. Unfortunately, when the cost of living become too expensive, not many couples intend to have many kids. The trend is happening here in Malaysia and definitely has happened quite some time in Singapore. Our grandfathers use to have 5 – 10 kids, our parents 2 – 5 kids, you? I’m assuming 0 – 2 kids. There you go, we could end up like Japan one day.
