If public spending didn't go up, gdp wouldve shrunk drastically, like sg's. Then instead of complaining about higher public debt, people will complain about falling gdp.

Yep. Its basic keynesian. Govt spending replaces absent demand because if there's no demand, there's no growth, businesses fail, people get unemployed and the recession gets worst - like greece going into recession AND needing to cut spending and jobs.

On the contrary, the us and europe are cutting spending. What they're doing now is quantitative easing - printing money - which is not the same as public spending. Quite the opposite, in fact.

during those years malaysia had horrible current account deficits (more imports than exports)



the current account surpluses we take for granted these days were common only after 1998 - before that most years were heavily in the negative. #untoldstories

you're missing the point. the (artificially high) exchange rate was inherently bad for the economy - but because it benefits the average joe it was popular - a populist move.

so what you're saying is like an ex-drug addict thinking back of his druggie past and saying "actually, things were much better before i got clean". which is silly.

also, if the rate wasnt so artificailly high, another thing that wont happen is the precipitous drop in 1998, or at least it wont be as bad of a drop.

the causality is reverse - our exports are positive BECAUSE myr is down, not the other way round. the smoke is there because of the fire, the fire isnt there because of the smoke.

more jobs, greater wealth, lower reliance on exports of primary goods (industries build up because who wants to produce such and such product when you can simply import it?)

im happy to hear which part of it is wrong.

i dont deny that its higher, whats your point?



lowest is about 1980, but thats still above 2rm per dollar

so yeah, my turn - can you find the graph to show how our import and export situation was?

edit: go http://www.tradingeconomics.com/malaysia/currency the graph goes back to 1972, but cant copy the resulting graph

This post has been edited by empyreal: Aug 14 2013, 09:55 PM

there's always bound to be low-wage low-tech businesses - even in japan there's McJobs to be done.

thing is its how sufficient in numbers our businesses are who are exporting. while we still produce palm oil, low value products like textiles arent a significant amount of exports anymore. back then, our banking sector is pretty much local - now we have a few regional banks.

construction companies are doing well, consumer products (which most consumers think of when they think of exports) kinda lag behind though, but meh.

i personally dont agree with the govt's focus on services as the driver of growth. i think services grows OUT OF the strength of manufacturing. after all, you need to 'service' someone rather than each other.

lol, the link is right there.

oh, speaking of south korean... one internets for you if you can show krw/myr movements from 1957-201X, you know, just to show the link between currencies and exports/gdp growth.

you're assuming malaysia's economy = america's economy.

america's economy is in a continuous current account deficit. malaysia has a current account surplus. large current account surpluses in fact, even as world demand falls, the surplus is still okay. so the real deamnd is there - if not driven by domestic consumption, at the very least there's lots of exports to be had.

covering the expenses is for when the ecnoomy is in a good shape. this is where greenspan had it wrong, and bn had been having it wrong. during good times, you curtail spending (save up) for the bad times. given, a developing country has a lot to spend even when cutting down expenses to build up infra, but during the better times the deficit should be cut down a little.

besides, the other solution, increasing the money supply (i.e. quantitative easing) isnt really working, is it?

apart from pumping up the stock markets that is. get ready for a whole load of inflation when things get better

actually if we can move up the value chain, a weak ringgit will help those products too.

in a way, the development of higher value products are a bit of a hope-and-pray for governments. they can pump in to promote this industry or that product, but if there's no private citizen who takes up the risk for say, a biotech company that produces implants for midgets, then all that effort is for nothing.

of course, if the govt supports an entrepreneur TOO much, then he becomes a crony, doesnt he?

it takes a bit of balance

actually your concern should be the inflation rate.

as for increments being less than the rate of inflation, i have to say that it would be that wage-earner's fault - either they're not productive enough, not value-adding enough, or just in the wrong industry. if you're worth a million a year, the company wont pay you minimum wage.

apart from the tax-dodgers, tax evaders, those who pay in tax-deductable zakat, yeah, it is.

truth hurts, doesnt it?

nope, but im saying a lot more ARE eligible. trading stocks, i know a lot who arent declaring profits properly.

are you saying that ALL of those not paying taxes currently are honest-to-goodness poor? dont make me laugh.

for those who still arent, well...

im giving you a lot of info here, any more i need to charge a consultant's fee lol

about 40% of the workforce is in the grey informal sector, from students giving tuition lessons to freelancers and casual agri workers.

once gst is implemented, these people who are currently escaping from taxes should be paying their fair share. they'll start getting better data to play around with too. at the very least, lhdn can send in auditors to areas where there's a whole lot of gst income, but low income taxes.

the relation is slightly complicated, but yes, rm will go up with gst.

they can reduce it by other means, but the direct result of a gst (well, as direct as possible) is that its positive for the ringgit, through increased confidence in the fiscal strength of the gov, and more foreign purchases of local bonds.

gst doesnt affect exports - so they have no bad effects on export demand. it may likely have a negative affect on imported goods, so there's a lower demand for imports there also.

This post has been edited by empyreal: Aug 14 2013, 11:27 PM

kinda depends. you can decrease from source B, because there'll be a whole lot more of source A (who have been previously avoiding taxes).

basically, those people who are currently escaping taxes will subsidise those who are currently paying taxes. which is good.