At a time when the big businesses, both local and global, are hit by their own big-headed expansion plans, the government should not sacrifice ordinary men and women for these ones by asking them to go into debt and spend. Instead, the government should find ways to help the little men and women to whether through these hard times while the big ones collapses.
At the very centre of the operation to save the national economy is the Federal Budget. I believe the Federal Budget should be looked at differently in order for us to be able to get ourselves out of this quandry.
Structure of the Federal Budget
The Federal Budget is structured in such a way that Federal Revenue is used first to fund Federal Operating Expenditure, with leftover to fund Federal Development Expenditure. If the Development Fund is insufficient, it is deemed alright to fund Federal Development Expenditure by issuing debt because development expenditure should be on development projects which are expected to earn a return in the future and earn the government future revenue.
Human Capital as Infrastructure
We are caught up by the idea that infrastructure is all brick and mortar - roads and school buildings - that we tend to favour the construction sector at the expense of all the other sectors, which are many.
1. Maintenance. Maintenance is regarded as an operating expense. This means that once an allocation is made in the Development Budget to build an infrastructure, the matter is usually left at that, with no attendant allocations made for the necessary and essential maintenance expenses. In economics, maintenance is considered as replacement investment, to mend the wear and tear. I suggest that the cost of all Development Projects should include replacement investment for maintenance.
2. Human Capital. When the Budget allocates funds for education projects, allocation should also be made for new teachers, trainers and lecturers. Human capital does not reside in buildings but in people and we must take care of the human repository of our national human and intellectual capital. The bodies and training and output of the education sector should be considered as capital expenditure, not operating.
3. Law and Order and Security. Law and order and security of the nation is important for its peace and harmony. There may be a preponderance of the Budget on the hardware, but equal emphasis should be made on the personnel. By not having enough bodies and sufficiently trained policemen and soldiers, we open our society to fear from internal and external sources. We should have proper guard of our coastline as well.
4. Cultural Capital. With the corporate world is suffering from the aftermath of a wild party, and as the economy rests, we now have the time and space to rebuild our cultural capital which we have unfortunately left unattended for too long. The Federal Budget should allocate funds to all the Local Authorities throughout the nation for them to organise culture-related economic activities which are likely to be centred on the arts. Let a thousand cultures bloom.
5. Hawking and Small Businesses. By far one of the most effective ways for individuals to counter the effects of the global economic slowdown is for them to have the opportunity to use a little capital but a lot of ingenuity and hard work and sweat to peddle things which they are in a position to produce. I therefore suggest that the Local Authorities should go all out to help individuals to set up stalls by preparing neat spaces for them to trade.
6. Lessening the Burden of the Ordinary People. The Federal Budget should allocate sufficient funds to the Local Authorities so that these LAs are not tempted to raise fees and charges during a recession just because they themselves are having a hard time with their finances. By passing their financial problems down to the general public, the authorities which are part of the government are acting as bullies instead of civil servants to the people. The ridiculously exorbitant fines imposed on small traffic offences, for example, is a disgrace to the government.
What is Operating, What is Development
As Keynes would argue, by the time you have sorted out your conceptual problem, society would have suffered untold miseries by the loss of jobs and incomes. It is far more important to act according to one's common sense and compassion to alleviate suffering rather than to be intellectually correct. There is a mental block in the way we are responding to the current global crisis and my suggestions are to show how some of the inadequacies may be overcome.