Malaysians on slow boil
By Stanley KohCOMMENT Since last week, when the Barisan Nasional government ambushed Malaysians with an announcement that it had reduced subsidies on some essential items, the mainstream media have been interviewing economists whose common stand seem to be that the cuts wont hurt because they are so gently administered.This reminds us of the way chefs prepare Smiling Boiled Frog, a dish familiar to Malaysian frog eaters.
If you drop a frog in a pot of boiling water, it will frantically try to clamber out.
Similarly, if the government were to remove the subsidies all at once, it would cause a jump in inflation, followed by a public outcry and political repercussions.
The BN cannot do that, especially with the coming Sarawak state election and, as some have speculated, the likelihood of an early general election.
However, if the frog is placed gently into a pot of tepid water on low heat, it will probably float there quite placidly. As the water gradually warms, it will sink into a tranquil stupor, somewhat like a human enjoying a hot bath.
Hence the so-called baby-steps pace at which subsidies are being removed. BN is hoping that Malaysians will not feel the heat, although it is there nevertheless, boiling them to death.
The economists mentioned above say Malaysians are able to cope with rising food prices, noting that in the past five months wages in the manufacturing sector have increased between four and five percent.
So are we seeing smiling Malaysians in a hot bath like frogs unaware that the warm water they are enjoying will eventually reach boiling point?
Comforting information
For now, we do not really mind the slight increases in the prices of sugar and petrol. In other words, the water is not too hot and not too cold.
We are given the reassuring and comfort! ing info rmation that the inflation rate measured only 1.6% as of May. In that month, according to statistics, price increases for food items ranged from zero to 10%.
The economists also comforted us by saying that increases in the prices of vegetables and other food items were inevitable due to crop diseases and adverse climatic conditions. And they point out that the prices of some food items had actually gone down.
But not all Malaysians can be lulled by a warm bath. Many suspect that inflation will eventually hit with a vengeance because BN has no credible programme to control greed.
Dr Low Bin Teck, a skin specialist and founding member of St Johns Ambulance, said: I notice that every time the government makes a move to withdraw subsidies, it always triggers a disproportionate price increase.
This should not be the case. Traders in the business circle should be generous once in a while to refrain from price increases, as a gesture of goodwill for customers who have supported them for all those years.
Like frogs on low heat, many Malaysians are probably feeling nothing but pleasant warmth listening to the soothing messages of the economists, oblivious to the real predicament ahead.
After all, economists are experts. If we do not listen to them, who else should we listen to? Never mind that cynics see economists as people who do not know what they are talking about and are experts at making ordinary people take the blame for imperfections in the economy.
But to be fair to the economists, it is also said that they come in two types: the type who cannot forecast interest rates accurately, and the type who do not know that they cannot forecast interest rates.
When economists predict that the inflationary rate will taper off in the long term or food prices will stabilise toward the end of this year, should we believe them?
Comic-nose
Economists and statistics have common characteristics. They both speak a lot for th! e short term, but what they say amount to nothing in the end. According to another joke, an economist is an expert who will know tomorrow why the things he predicted yesterday did not happen today.
But the best popular joke about economists goes something like this:
A man walking along in the countryside came across a shepherd looking after a huge flock of sheep. He told the shepherd, I will bet you $100 against one of your sheep that I can tell you the exact number of sheep in this flock.
The shepherd took the bet.
You have 973 sheep, says the man.
The shepherd was astonished. Thats exactly right! Im a man of my word, take an animal, he said.
The man picked one up and began to walk away.
Wait, cried the shepherd. Let me have a chance to get even. Double or nothing that I can guess your occupation. Youre an economist for a government think tank.
Surprised by the shepherds accurate guess, the economist responded, Amazing. Youre exactly right. But tell me, how did you deduce that?
Well, said the shepherd, put down my dog and Ill tell you.
The moral of the story is that inflation can never be forecast accurately, even by so-called experts.
English Economist Nassau William Senior once described his own kind the political economist as someone who will confine his attention only to wealth while disregarding all consideration of happiness or virtue.
That is more complimentary than George Bernard Shaws remark. The Irish playright said: If all the economists were laid end to end, they will never reach a conclusion.
They both may be right. If you re-arrange the letters in economics, you will get comic nose.
But there is nothing comical about allowing ourselves to be slowly boiled to death.
Stanley Koh was the former head of MCA research unit.
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