Budget 2013: Quit political fiction, adopt market principles

Watching public debate for budget between BN and Pakatan is just another political play.

COMMENT

By Medecci Lineil
Another federal budget is now in progress. This time is for next year 2013 and that begins on Jan 1, 2013

Prime Minister Najib Tun Razak submitted a proposed fiscal year 2013 Budget of RM251 billion to Dewan Rakyat on Sept 28, 2012. Pakatan Rakyat announced their shadow budget of RM234 billion two days before Friday in Parliament.

Watching public debate for budget between BN and Pakatan is just another political play. Dispute on figures, numbers and financial practises and that alone can never be settled as long as they are called politician.

They trumping the other guy’s proposal and each side attempting to gain political advantage. But in the end, what happens?

Back to the budget, if I were a lawmaker in the Parliament, I would vote against both budgets for unbalanced, fiscally irresponsible, immoral budget and mostly put Malaysia in disaster path toward a welfare state.

These are Keynesian big budget. People love Keynesianism because Keynes loves government spending, I know.

Look around you, RM400 million under 1Azam programme to benefit 58,330, RM2 billion for Green Technology Financing Scheme Fund, RM3 billion for BR1M 2.0 to benefit 4.3 million households and 2.7 million unmarried individuals.

Meanwhile, Pakatan Rakyat’s budget allocated RM2.8 billion annually for 2.8 million senior citizens above 60 years old and increasing welfare payment to RM550 per month which they claim this policy immediately frees 84,000 families from abject poverty.

Sounds like Keynesian enough? For your information, Keynesianism is a philosophy of creative government spending and endless government intervention.

Revise and reverse the ideas
Good or bad intellectual influence, the masses are subscribing their ideas and they are the one who suffer its consequences if the intellectual leaders go wrong.

It is not too late to revise and reverse the influence of the intellectual leaders by moulding critical opinion that should be directed against our own interventionist government.

In so doing, first, people must acknowledge the government is running against the market. Strictly speaking, governments do not earn revenue; they expropriate resource by taxing people, enforcement, regulation, summons and seizing goods. They then use the money to acquire goods and services or pay civil servants or pay subsidies to favoured groups.

The government budget is a vast machine of wealth redistribution! Time to admit it.

Second, serious considerations to cut government spending should be debated and implemented. The cuts being discussed are illusionary and are not cuts from current amounts being spent, but cuts for the use of prospective spending.

For examples, it is a commendable effort to find the proposal of removing car taxes and lowering car prices by Pakatan Rakyat. And some people cheer when Prime Minister Najib announced that sugar subsidy would be cut 20 sen per kg effective from end September 2012. But looking at their fine prints, these must be ‘paid for’ by higher taxes elsewhere!

Cut individual income tax for Good and Service Tax?  Don’t you think these people should be prosecuted for fraud?

The significant role of saving
I can think of abolishing Program Latihan Khidmat Negara, car duties and taxes, Approve Permits, price control, 1Malaysia Brand initiatives, government linked companies, corporate welfares, the institution of PTPTN, green technology initiatives, ministries, and number of welfare programmes.

Do away with reducing the size of civil service, deregulations, rationalising interest rates and lowering taxes.

Do not focus on revenues and trust the market cooperation instead. The claim, of course good intention for social commitments will be pleaded and they promise to govern our money well. That is not the case here. It undermines all the good of individual saving and creation of wealth!

This brings me to the last point which is saving. Assuming the role of government is rationalised and the money supply is not inflated, individual would be able to accumulate real saving value of money to ensure long term personal prosperity.

What people should do with their savings? Well, the free market answer is clear “That’s your money, your fruits of labour, keep it and do whatever you want to do with it. This is what I mean by real freedom and liberty”

According to the Austrian school of economics, a low time preference society is, the more people save the more there is available to invest in the future, the rapid growth of social and economic. The society becomes wealthier!

Sadly, the significant role of saving never stated in both budgets. The politicians simply want to increase household purchasing power (e.g subsidies, BR1M 2.0, RM200 smartphone rebate and cheap money) to buy more consumption goods i.e to reduce the rate of saving. As a result, it distorts this crucial balance of spending, saving, borrowing and invest in our society.

Let us hope to see less revenue and less government spending in future. As simple as that, this country does not need bigger role of government and it is individual money really govern the economy.

Medecci Lineil is a young Austrian libertarian who is working at Institute for Democracy and Economic Affairs (IDEAS). The views expressed above are the personal views of the author and do not represent the views of IDEAS.