"KUALA LUMPUR, April 23 (Bernama) -- The government can reduce expenditure by adopting a more efficient diesel subsidy scheme, according to Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad."
I agree totally with this view. Subsidies are slowly killing our economy. In economics, subsidies are efficiency deflectors, i.e. it creates an artificial price for a given demand. As the supply and demand sides are supplemented by the subsidy, direct stakeholders gain. However, in all things in life, this is a zero-sum game. Someone must pay for this benefit. In this context, economy as a whole bears the cost and ultimately as will each and every one of us. A good example of this is the starting pay of executives. In the early 1990s, a typical executive is expected to start at around RM2,000 per month. Now, 18 years later, the start pay of an executive is about RM2,200 per month. Assuming a 3% yearly inflation, the growth in starting pay did not commensurate with the higher cost of living. In fact, using the official CPI as a guide, we should be paying RM3,080 for a first time executive.
The withdrawal of subsidies must be planned and executed with the precision of a military campaign. A wrong move could lead to chaos and unrest.
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