2008, the Year That Could Have Been
Halfway around the world from home, I await the coming of the new year. Most people would take this as an opportunity to look back on the year — it has been quite an eventful year, after all. But I think for now, I will look to the future and think of what could have been.
The Malaysian economy, contrary to popular belief, has not been and is not doing well. The government unleashed upon us yet another five-year plan, meant to usher in more growth and development. It announced a new budget, promising a better economy.
But it does not take a keen observer to realise that for all the fanfare surrounding these hollow pronouncements, there is really a dearth of ideas in our government for moving the Malaysian economy forward. Nothing is being done to encourage enterprise amongst the Malays. The government won't even encourage enterprise amongst the Malaysian populace in general. We are content to rest on our petroleum-laced laurels, pretending that our oil won't run out any time soon.
The government has continually pursued a policy of protecting industries and businesses close to its heart. It has refused to open up our markets, either to foreign or domestic competition. The firms which dominate our nation are either owned by the government, or its cronies. There is no opportunity to compete, no incentive to innovate.
2007 was an interesting year in one respect, economically. For the first time, an opposition party issued an alternative budget, competing with the government's for attention. Of course, in a media market which has been regulated for the sake of inculcating pro-government bias, the opposition never stood a chance. But competing on the basis of ideas alone, credit really must go to the Democratic Action Party for preparing a budget which could rival that of the governments in many other countries.
The DAP was founded as a socialist party, and they have had some crazy ideas in the past, no doubt. But the amazing thing about their budget is that they buckled down, refused the temptation of populist rhetoric, and proposed sound economic policies.
Their alternative budget for 2008 would end our distortive fuel subsidies and price controls. Neither would they implement a minimum wage, rejecting it as inefficient and likewise distortionary. To compensate for the social welfare issues that would otherwise be unaddressed, they propose something along the lines of a negative income tax — basically a refundable tax credit in inverse proportion to one's income. Though there is not an exact consensus on this, many economists (including some usually thought to be dogmatic free marketeers) agree that this is one of the better ways to deal with social injustice.
The DAP's alternative budget would reduce government bureaucracy and red tape in many areas. Acknowledging that the government cannot help everyone who deserves aid nor implement policies by itself, chunks of the budget are actually allocated to non-governmental organisations and charities. Instead of protecting workers in sectors which cannot employ them any longer, the DAP proposes to retrain them and provide for them, without hampering the gains of innovation and trade.
Significant tax incentives would be put in place to encourage investment, and no longer would government contracts be tendered behind closed doors. Where in the short run the government cannot open the market, the DAP proposes sensible policies to regulate the existing monopolies - most notably in telecommunications.
The DAP's approach to finance likewise seems sound - it deplores the government's heavyhanded interference in the banking sector, and proposes some incentives to promote continued growth in Islamic banking.
Perhaps most importantly, the DAP would invest a substantial amount of petroleum-related revenue in a specific fund to ensure that our oil money will continue to yield us returns long after our actual oil reserves have been exhausted. Economists could come up with better ideas, but this is certainly a very sound one compared with what the government in power is doing.
Indeed, aside from a couple of issues with import restrictions and some perhaps overly socialist housing proposals, practically the entirety of the DAP's budget is very well-founded in economic principles. I would be hard-pressed to think of a budget proposed by any government in the world that is more attentive to economic ideas.
If only 2008 would be a year where half of these ideas could be put into action. Our longsuffering economy would benefit immensely from an injection of fresh ideas and economically-sound policies. 2008 could be a year of immense economic promise for Malaysia — it could be the year we free ourselves from our dependence on God-given natural resources and government-given protection. But I fear as long as the ruling Barisan Nasional coalition is in power, 2008 will be more of the same. Our elected representatives could have done something, but as always, refuse to — no idea, good or bad, is acceptable to this Parliament of no ideas.
A lot of terrible things happened this year — not just economically, but politically. I do not think I need to enumerate them — simply perusing the archives of this very website should be enough. Most depressingly, many of these things could easily have been foreseen; they have either happened before, or were only a matter of time.
Nevertheless, I wish you a very happy and peaceful 2008. May we make the right choice in the general election that is sure to come within the year — it would be disheartening, come 1st January 2009, to write yet another summation of the terrible things that had been and the wonderful things that could have been.