Friday, January 22, 2010

Before GST , lets talk about Budget ....(2)

I once read a book which mock off the behaviour of Government servants and politicians in a British Humor way called " Yes, Prime Minister". Few of the dialogues which 'impress' me was as follow:

'As government servant, you dont have profit driven pressure, hence, the achievement of you is measured by how much money you have spend. In other words, the more money you have , the more power you have'

'when you talk about budget you usually determine your expenditure and hence determine your income. However we like to do it other way round, that is finding money first and then spend it'

'the problems with bureaucratic is that politician do come and go, but government servant work is permanent. Hence, progress and changes may be implement temporary, but as soon as the 'disturbance' ( ie the reforming party) gone, everything back to normal'

'Minister do come and go, and hence, it is impossible for them to be expert in every area. hence, they need advice and suggestion from.... Us '

Last one , not from the book, just a common thought.
' in the election, voter usually impressed by the carrots offer by the politician, for example, subsidy, grants, lower taxes, social welfare , universal coverage etc, with a biased ignorance towards the stick behind it (higher hidden taxes, or budget deficit, or gov mounting debit...)

a quick summary for what i learned from reading 'Free To Choose' by Milton Friedman,
' the problem with central planning by government , and universal welfare system is that it was deemed to be misused and inefficiency. As a results, gov spending around 40% of our income on our behave, without much agreement seeking from us'

A note from Thomas Friedman on ' Hot Flat and Crowded '
' the degree of democracy in a country depends on how much the government depends on personal income tax and cooperate income tax revenue, if the gov can get the money without collecting tax, it sure wont consult its belove citizen about how to use them'

A last note about modern democracy system.
' in the policy making, often the voice of loudest ( activist ) is considered most , and often the wellfare of the silent mass is hurt in the process '

And a conclusion:
First, to what extent did we need a large government for? Especially when not enough were spend on welfare and too much spend on operating ....
Second, if we voice our descent, would the gov really care? Given that the mass of us contribute very little to gov budget.
Third, even if the ruling party care, how do we overcome the bureaucratic force( the major cause of inefficiency) behind it, given the special interest group voice will outloud the silent mass?
Fourth , even if above problems solve, to what extent we need our subsidy and welfare to be? as we knew, the more the subsidy or welfare, the least resilience of us againts the changes. (The 2008 petro price hike in Malaysia served a perfect example)


And finally, a thought on Singapore.
Singapore Gov success to some extent, owed to the fact that city is a small, centralized island with a one party ruled under democracy system. Further more, they use transparent high wages to attract talents to be gov servant without distorting the private sector labour market. ( one of the bad example would be China.... )

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