Najib’s Upside-Down Budget

The average Malaysian has to budget his monthly expenditure based on his monthly income. For example if you earn RM3,500 a month, you can only spend up to RM3,500. Spend more and you are in debt, or deficit if you like.

Najib Razak, however, has apparently decided that he is not bound by any such economic rules. In Najib’s wonderland, he first figures out what he needs to spend to win the election. He then adjusts his growth figures to fit his expenditure. He insists on defying the laws of economics!

If Najib were to attempt to defy the laws of gravity in the same way, he would fall splat on his face. That is the trouble with economics, we suppose, you simply have to play around with numbers on excel spreadsheets to defy its laws (for a while). But eventually it catches up with you. And it won’t be Najib who pays the price, it will be all of us.

Bankruptcy and the SF Golden Bridge

The individual who exceeds his budget to the frustration of his creditors and the state which does so will meet the same end; bankruptcy. And that is precisely and unerringly where Malaysia is headed now. And what is this in aid of, exactly? What is the cause? So that we can have another five years of Najib and Najibonomics where 2+2 somehow adds up to 6!

Not satisfied with handing out vast sums of cash from non-existent income sources, Najib declares that he will also…take a deep breath….reduce the deficit! And if you believe that, then I have a gold-colored bridge in San Francisco that I would like to sell to you.

The fact is that Malaysia will be fortunate to grow the economy by 4% based on the prevailing conditions in Europe and the United States. And this is provided there are no major jolts to the world’s economies from unforeseeable circumstances. Baseds on this we would end up with an enormous deficit next year. And how will Najib solve it? Yet another fantasy budget? Deeper into the quicksand of deficit budgets we will sink.

One-off, then what happens next month?

Let us now examine this RM500 that Najib is promising households with incomes below RM3,000 per month. There is a catch, of course. It is a one-off payment. So what are the poor supposed to do the next month? It’s back to good old destitution.

What Najib should be doing is addressing the issue of runaway prices which is the real problem facing Malaysians. And he should be looking at how to increase disposable income for Malaysians.

That Najib does neither is clear proof of his, and BN’s, incompetence at managing the economy. And it is a damning indictment of his tenure as Prime Minister that where there should be energetic leadership and visionary plans; there is only a leaderless vacuum. Where there should be prudent economic management, we are presented irresponsible, empty populism.

Handing out cash in scattershot fashion will not increase economic activity or output. Nor will it create jobs. What we need is focused investment in sectors where the country can compete internationally.

Najib knows the mess we are getting into with this irresponsible budget he has proposed, but he presents it regardless. His only objective is to win another term even if the entire country is to tumble headlong into the ravine of insolvency.

See you at the bottom!

Malaysia Chronicle