The secrets that we missed

Many of us tend to laugh, snigger or sneer at some of the policies that were meant for the good of the people. But we simply missed the point. I too. And so too will be the brilliant economic professors from Harvard or Stanford or the Ivy League Ivory Towers. We were too superficial, and simple minded and could not see the brilliance of such policies. They were were grounded on solid economic principles, supply and demand. Take the case of the raising of GST to help the poor. Yes, we laughed. But after implementation, the results tell. The people, especially the poor are happy that they have been helped. Otherwise we will have them protesting violently on the streets. Such evidence of contentment must be proof that the policies are working well and well received. There are many wonderful policies that have made us successful. The last few days we were hearing people warning about inflation. But over the years inflation has been tamed. Though it tries to raise its ugly head again, immediate measures were taken to curb them. Take the ERPs and the raising of toll rates as an example. It is not just to curb traffic alone. It is multi prong. It also helps to allow more people to buy cars. But what is important is how this tackles the inflation tendency. The middle class, the motorists, have a pretty big pocket and can afford to spend. By making them pay more on ERPs, and petrols, that will take away some of their spending power. Then they will not compete with the lower income people for food and necessities. Without them spending like crazies and saying everything is cheap, there is less likelihood of raising prices by the providers. The biggest and most effective effort in controlling the people's spending power is the CPF. When the money are locked up, you simply cannot spend. So the purchasing power is reduced. So inflation too will not be an issue. People with little or no money to spend cannot cause inflation. So don't laugh when minister called on companies not to raise the pay of workers. This is an important inflation curbing measure. If all the workers are getting a pay rise, they are going out to splurge and spend. Everything will go up when there is increase in demand. This is Economics 101. Raising salaries of those millionaires is not a problem. First, the money will be extra cash that they will likely put away. It does not bother them nor would it affect their lifestyle even if you give them another few millions. They already have everything and are living it up. Their main concern or problem is what to spend on? That is a big headache. Very likely they would not be spending locally and so will not drive up demand and inflation here. They will export the inflation overseas, in their holidays and big purchases in Paris, London or 5th Avenue. Now, that should be ok as the people who will be badly affected by their inflationary habit will not be the locals here. The wonder of it all is that all our policies are so carefully worked out, implemented, that even the best economic gurus will be stumped. They are simply ingenious.