More sustainable economic policies needed to empower excluded communities

Around the world — and even at home, there is a crisis of sorts. People are feeling the pinch of a higher costs of living. Rising costs of housing, co

Jul 21, 2016

By Anil Netto
Around the world — and even at home, there is a crisis of sorts. People are feeling the pinch of a higher costs of living. Rising costs of housing, commuting to work, food, education and healthcare are swallowing up the incomes of many whose real wages have remained stagnant.

The long period of neoliberalism and privatisation that began in the 1980s has sucked up much wealth from the masses and concentrated it in fewer and fewer hands.

Simultaneously, the standards of government schools and public hospitals have fallen through a combination of underfunding and skilled staff moving to private schools and hospitals. This has led to remaining staff being overworked or overwhelmed.

Two examples should suffice. More and more of our middle-class friends and relatives in major cities are turning to private schools. They are willing to pay the hefty fees because of the perception of falling standards in government schools.

Many government pensioners, who should be entitled to free healthcare in government hospitals, are now turning to private hospitals and clinics to avoid the long queues and long waiting lists in government hospitals.

On the flip side, private education, private healthcare and high-end property development are now all big business. But the cost is prohibitive.

Is it any wonder that the masses are now feeling even more burdened?

Many now have to take loans to finance the purchase of all sorts of things — or to buy on hire-purchase to be repaid in monthly instalments. Homes, cars, higher education, even laptops and smartphones. Almost half the loans are taken to finance the purchases of houses.

The problem is that many developers are now focusing on building expensive homes — as that is where most of their profits come from. The definition of “affordable housing” is almost laughable.

Unfortunately, not many can afford those high-end properties, so it is not surprising that transacted property values have fallen 18 per cent in the first quarter of this year, compared to the same quarter last year.

Meanwhile, wages adjusted for inflation have not gone up much over the years. The weaker ringgit has made food imports, which we are dependent on, even more expensive. GST has just aggravated it all.

So it is no wonder that the household debt to GDP ratio rose to 89.1 per cent last year from 86.8 per cent a year earlier.


Neoliberal economic policies that favour Big Business such as monopoly privatisation, lower corporate taxes and the emphasis on high-end property development have resulted in huge profits falling to a relatively few hands.

The financialisation of the economy (contributed by the large number of loans people have to take) in turn has made banks and other financial institutions wealthy. No wonder the gap between the rich and the poor shows little sign of narrowing significantly.

It is a vicious cycle. Because people are feeling burdened, they have had to cut back on spending. This, in turn, has eroded consumer demand. Total vehicle sales volume dropped 13 per cent in May compared to a year earlier. Not that we should be encouraging car sales and worsening carbon emissions — but they are a useful indicator of overall consumer sentiment.

Meanwhile, thousands of graduates remain unemployed. Even among the ranks of the employed, many are struggling to survive in the cities on their low wages and salaries.

Indeed, there are deep structural problems with the economy which are not being addressed. Many of these problems are also being faced by other countries.

The only difference is that the massive corruption in our system is now taking its toll now that falling oil revenues have squeezed the government’s fiscal budget. This, in turn, is further burdening the people as government spending is squeezed.

The masses are growing unhappy and discontented and murmurs can be heard. But repressive laws are put in place to quell dissent.

It is obvious that we need a turn towards more sustainable and people-oriented economic policies that put people above profits.

The trickle-down neoliberal economic project, laced with corruption, has failed us. “I beg the Lord to grant us more politicians who are genuinely disturbed by the state of society, the people, the lives of the poor,” the Bishop of Rome once wrote in Evangelii Gaudium.

Francis added, “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills. Money must serve, not rule!”

It is time to explore more sustainable people-centred economic development policies that are in harmony with the environment, that empowers rural and indigenous communities, fisher folks, the urban poor and independent farmers.

Only then can we find more meaningful prosperity that leaves future generations with a hope of living a life of dignity and surviving environmental degradation and catastrophic climate change.

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