The Populist Measures That Are Protecting Our Economy

It would be a great shame in this country if the word “populist” became an insult. Already it is freely used by politicians to accuse rivals of trying to buy votes and of being economically reckless.

But it has also become synonymous with successful measures that give assistance where it is most needed such as the RM100 given to every student in Malaysia to buy books or the minimum wage of up to RM900.

Then there is the RM15,000 Felda windfall for each of the 112,000 settlers and the one-off RM500 payment to families earlier this year.

The issue is especially topical right now in the wake of last week’s RM13.8 billion supplementary budget passed by Parliament that earmarks RM7.5 billion for “liquefied petroleum gas, diesel and petrol subsidies, and cash aid.” These are also essential measures to help those most in need.

But Pakatan Rakyat strangely thinks it is onto a winner by accusing the Government of “populism” as if it were a crime like treason.

It does this despite the fact that every single initiative Pakatan has so far announced (none of them contain enough details to be regarded as policies) is dripping with vote-grabbing intent and unaffordable price tags (more on this later).

But the fact is the Government’s populist measures are not only helping the needy but defending us against the effects of a slump in consumer demand that is thwarting economic growth around the world.

American Nobel Prize-winning economist and author Paul Krugman was one of the first to say that despite the global appetite for Governments using austerity policies in the face of recession, it is a lack of consumer demand that is keeping so many economies wallowing in recession and Governments worldwide need to do something about it.

More specifically to Malaysia the Oxford Business Group, in a recent article entitled Malaysia: Pushing On, speaks of the need to sustain consumer demand in this nation.

“This will help offset the effects of a potential drop in exports to the developed world, which has been suffering the effects of debt and growth crisis,” it finds.

Perhaps rather than being anachronistic or populist our policies are far-sighted. The UK, for example, has combined austerity with quantitative easing (printing money to you and me) with the surplus cash injected directly into the banking system.

There it does nothing to stimulate demand and the UK now finds itself in its first double-dip recession since the 1970s.

“The Bank of England could print £500 per head in notes and dump them in every private bank account in the land for less than it has given its banking friends. It would be the quickest way of injecting cash into the veins of the economy,” wrote British columnist Simon Jenkins recently.

Sounds like a populist measure that Pakatan would attack.

No-one should be naïve enough to think that Prime Minister Najib Razak adopts these populist measures for social and economic reasons alone.

Such initiatives chime well within BN’s Malay heartland and they will no doubt boost BN’s fortunes at GE13.

“I can’t say if the government is good,” said one elderly BN supporter recently “but in a way, it has been helping us a lot.”

But the key thing here is not that Najib’s populist measures are aimed at the most needy. It is that they are affordable.

Malaysia’s spending plans won’t bankrupt the nation by the year 2019 as DAP’s Tony Pua is fond of falsely claiming, and the government is pursuing such measures while keeping debt at 52 per cent of GDP within IMF guidelines.

Contrast this with the Opposition that makes promises without providing details of how they will fund their plans.

The proposal to scrap PTPTN would leave a RM23 billion hole in our finances and only this week Anwar Ibrahim has been making further reckless promises.

He wants to use RM5 billion of oil revenues to fund free education despite the fact that money is already attached to other essential Government projects.

What do you plan to cut Anwar? Please tell us.

He also wants to axe expressway tolls that are used to pay for road building. And of course, he is always quick with a promise of cheap (or free) petrol and cheap (or free) electricity for all.

Not one of these measures has been costed by experts and not one is presented as a policy with a breakdown of figures showing that it is affordable to the nation.

That is the difference between policies that are responsible and spending pledges that are simplistic and opportunistic.

When Najib presented his 2012 budget in October last year Pakatan screamed “populism” and forecast that it would turn us into another Greece.

“We may not yet be facing the crisis of Greek proportions, but Budget 2012 is doing very little to avert such eventuality, leaving the Malaysian economy nakedly exposed to the inevitability.” said, you guessed it, DAP’s Tony Pua.

He went a step further in December producing this video that clearly states that Malaysia will be the next Greece.

Of course his doomsday scenario hasn’t eventuated.

As Bank Negara Malaysia chief Zeti Akhtar Aziz reported this year, inflation is sitting at two to three per cent, growth is still at 4.7 per cent and we are earning plaudits from the likes of the World Bank and the IMF.

But the reality is Malaysia’s culture of populist measures can’t last forever.

When the nation achieves developed nation status by 2020 (which are now certain to do) the average annual salary will be around RM48,000.

Government handouts of RM500 per family will by then look anachronistic and quite frankly, small.

But that doesn’t disguise the fact that cash payments have played an important role in our continued prosperity and right now, they are protecting us against a painful slump.