Waste a lot, want a lot

  • Business
  • Saturday, 14 Mar 2015

THE Economist reported recently that the Government Accountability Office of the United States paid over US$3mil in subsidies to 2,300 farms where no crops of any sort were grown.

It was a neat racket. Uncle Sam paid farmers for all the wheat they did not grow and they used the money to buy more land to increase the amount of wheat they did not grow for which they would be paid more money that they did not really earn.

The United States was a progressive country that progressively pushed its ideals of freedom, democracy and free trade all across the globe. And it knew that it was right because it had produced Elvis Presley, Cher and the Marlboro Man and no other country had.

It advised other countries to open their markets, eschew protectionism, and expunge subsidies from the face of the earth if they ever hoped to produce such gods.

But it politely remained silent when asked about the US$20bil a year it harvested from taxpayer wallets to subsidise farmers in Iowa to grow corn and soya beans.

The Abu Sayyaf of the Philippines whistled admiringly and wondered if their business model was going out of style.

For the past two years or so, they had been religiously kidnapping tourists from Sabah and holding them to ransom and it seemed like too much hypertension for too little reward.

They wondered if a better business model might be attained if they could persuade Putrajaya to subsidise them not to kidnap any more tourists from Sabah.

Putrajaya dismissed the suggestion instantly as it had been having trouble balancing its books.

Actually its books hadn’t been balanced for 20 years now but it knew it was a just a matter of time before it did.

The trouble was subsidies. For 15 years, the Government had tried to fool all the people all the time by cheaply fuelling all the people all the time and it was a hideously expensive business.

Now fuel subsidies were out the window but there were other subsidies which were equally expensive.

Food staples were subsidised and so was gas for industry players like glove makers which prided themselves on their global competitiveness.

Insidious subsidies

But there were other more insidious subsidies because it was wildly egalitarian in this Land of the Knave and the Home of the Fee. In Malaysia, even a jurist could become a businessman.

The trick was to have An Idea. A businessman could come up with an idea like, say, installing closed circuit cameras nationwide to prevent, say, theft.

If for some reason the plan was scrapped and if he had invested some money in the project, it was no problem.

He could turn around to sell The Idea to a government-linked firm for a couple of hundred million. What the said GLC felt about it was irrelevant.

It was simple economics really and even had a mane. It was a New Economic Model and in analyst-parlance, it was “what the market can bear.”

But it was getting more than what Tun Dr Mahathir Mohamad could bear because the country’s Eldest Statesman knew that such things had never happened during his 22-year tenure. Dr Mahathir was a sensitive man who cared deeply for his country and was irritated at its rising cost of living.

Why, it was getting so bad that during his birthdays, the candles had begun costing more than the cake!

> S. Jayasankaran is a former journalist who misses journalism. The converse, however, does not hold.

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Business , jayasankaran , comment , politics , economics


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