In which direction do we head for?

Tun Dr. Mahathir,

I hold the same pessimistic view as Tun about our present economic situation. We now live in an era of massive economic hardship which most people find it tough to overcome the additional financial burden exerted by the escalating inflation.

Occasionally, Tun managed to show a sharp mind by making a good sense of mentioning the lack of domestic demand in economy due to AAB's cutting down the spending in mega projects. However, I wonder whether AAB will be able to curb the uptrend inflationary pressure if he has to continue the on-going ones or resume the shelfed ones of those mega projects as deemed necessary by Tun. I do agree with Tun that "we have lost our direction and we get no guidance." We have lost our direction simply because there is no known fixed direction about the Government's economic strategy for overcoming the stagflation problems. We get no guidance simply because AAB fails to understand the actual causes of our present economic problems.

We are not sure yet about the outcome on the issue of whether our current economic problems can be alleviated by AAB's taking measure to allow the petrol price to increase by 41% since 5.6.2008. It is because this kind of far-reaching price adjustment will create some chain effects that will involve with time lagging for several months before the real effects evidently appear on the surface. However, I personally hold the prediction that our current economic problems will be worsened off in the next few months. AAB fails to formulate a viable nationwide price control policy that will bring forth positive real economic changes to the Malaysian economy, even though he decides to allow the pump price to be pegged with the international crude price effective 1 September 2008. Ironically, the present BN government is simply lack of a national wages policy guideline, a guideline which may emulate the one that has been implemented very successfully by our neighbour Singapore since 1960s until this day.

As a man who sits at the helm of the country's utmost power, AAB by right should enjoy the privilege to seek advice from the prominent economists when formulating an economic policy, if he really knows of any, and should not simply take economic policy as something which should be decided during a 2-hours' Cabinet meeting on an impromptu basis.

The actual economic downshot of preventing price increases is that businesses are forced to bear the cost of inflation, which in turn naturally reduces their ability to hire, since they have less money. This increases unemployment, and so in the end the people who bear the cost of inflation are private individuals, since they are paid less and some have no work at all.

The actual economic upshot of preventing wage increases is to force private individuals to directly bear the cost of inflation. This would have happened anyway, indirectly, since if the pay rises had been given, the increase in costs due to inflation would have led to private individuals bearing the cost of inflation anyway.

Attempts to "reduce" inflation which don't actually involve real economic changes invariably only redistribute the cost inflation, and usually in very unfair ways. This may well explain that why nowadays there are many Malaysians, disregard of their ethnic origin, who would not hesitate to outrageously rise up and cry foul for being deprived of their fair share of the cake slice as promised by the NEP.

Onlooker

Tun's following comments are referred in the above discussion:
"7. Those were glorious years. The country grew and prospered. It became the model of the development of a developing country, a model of racial cooperation. It became known throughout the world where once no one could evenpronounce its name. It was the envy of other developing countries.

8. Malaysians abroad felt proud because the moment they identified themselves as Malaysians, immediately people talked of F1 in Sepang and the twin towers.

9. There seemed to be nothing to stop us from achieving our goal of becoming a developed country by 2020.

10. Now all these dreams seem to have faded away. We are involved in political wrangling of all kinds, our leaders seem to be uncertain about what to do, our foreign policy is in disarray etc etc.

11. We have lost our direction. And we get no guidance."