Much ado over Greece issue

Publication: NST

Date of publication: Feb 24, 2012

Section heading: Main Section

Page number: 024

Byline / Author: By John Teo

THE Greek sovereign debt crisis now hogging global headlines has predictably not escaped the imagination of our local politicians.

Not so long ago, Minister in the Prime Minister's Department Datuk Seri Idris Jala got public attention (as was most likely his original intention) that Malaysia may one day go as spectacularly bust as Greece appears to be heading. He was, of course, giving warning that unless government revenues are tightly aligned to government expenditures, the nation, much like individuals, can go bankrupt.

The DAP is not to be outdone. A Sabah DAP official, Junz Wong, reportedly said recently of the government's determination to implement the goods and services tax (GST) (something which, incidentally, our Asean neighbours the Philippines, Singapore and Thailand now have): Look at countries like France, Greece, Italy, Spain, etc; they all have implemented GST and what have happened to their economies today?

The DAP official added: It is the government's failure in its economic policies and management/allocation of the nation's resources which caused the problems.

Both the minister and opposition official are, of course, seeking to use the Greek (and general eurozone) economic crisis for their respective purposes - the minister on the need to look into new sources of government revenue as popular expectations on government increasingly pressure public expenditures and the DAP official denying that government revenue is a problem but expenditures may well be.

Both are in different ways off the mark. The minister conveniently neglected to mention that Malaysia does not suffer the severely compounding problem that afflicts much of the eurozone: little or no economic growth.

The DAP official is guilty of being highly selective (and contradictory to boot) on the lessons he seeks to draw from Europe. He seems oddly enamoured of the conservative American Republican Party's mantra of No new taxes while presumably also supporting Pakatan Rakyat ally Pas' ideas about a welfare state - surely one of the very root causes of the economic malaise now confronting the eurozone, with runaway public expenditures from ballooning and mostly unfunded or underfunded welfare entitlements.

What is now happening in Europe and America is turning most conventional political thinking about freedom and democracy on its head but our politicians (and Malaysians along with them) seem content to either bury their heads in the sand or see only what they want to see happening in the developed countries.

Conventional thinking holds that regular changes in government through elections are a basic requisite of good governance. Countries such as France, Greece, Italy, Spain and America all change governments as regularly as they come and look what now happens to them.

The realisation has only just begun to dawn that in the electoral contest for power, political parties everywhere tend to act almost exactly the same; that is, pandering to popular expectations of government handouts and other entitlements and, at the same time, ignoring the economic reality that such public giveaways can never be free but must be paid for somehow.

It is, therefore, correct to say that we are in danger of falling into the Greece trap but only in the broadest sense. As political contests for power become ever more intense, pressures build for sitting governments to offer ever more alluring sweeteners to voters. Overdue subsidy cuts also get postponed lest voters rebel.

Our government is only acting as any democratically elected government everywhere will do: acceding increasingly to populist pressures as the contest for votes intensifies. It at least has the honesty and no small courage to not hide voters from the reality that giveaways have to be properly funded and the only responsible way governments do so is by way of increased taxes.

The opposition still has some way to go to prove that it can be equally responsive to public pressures and responsible at the same time in confronting the hard and inescapable truths about public spending and taxation. Failing that, a fate perhaps as bad as Greece's definitely looms some day in our horizon.

teo_john@yahoo.com