Will there be a trade war? Here is an event that may lead to this disastrous outcome. Some analysts think that the US government and China will work out a solution to avoid a trade war. But in a conflict, nothing can be taken for granted. Things can go wrong.
Monday, October 3, 2011
Creating employment in a recession
Read this article. It is a dilemma faced by governments. They have a budget deficit and has to reduce spending by laying off workers. But it is difficult for the workers to find jobs in a recession. The workers will receive unemployment benefits for a short period, but the benefits will run out after a while, and they may still be unemployed.
In a recession, there will not reduced demand for goods and services, as those who are still employed will cut down their own spending. Small businesses will not employ the excess workers. It is difficult for the unemployed workers to start their own business, due to lack of funding, lack of credit and lack of business. It is a vicious cycle.
The solution to a recession is for the government to employ more people, and not to lay them off. These people can be used to provide the public goods and services, that are needed by the population at large, in health, education, security, infrastructure and other useful activities. The government needs the money to pay for these services, and it has to come from taxation of those who are employed and those who are well off.
The people who are employed by the public sector do not need to be paid high wages. They only need to be paid enough to get by. When the economy recovers, they can find better paying jobs in the private sector. In the meantime, they should be kept usefully employed.
The advanced countries are now suffering from the current economic system - low taxation, wide income gap, globalisation, high unemployment and budget deficits. The current system is not sustainable. The leaders need the courage to change the system - but the challenges are really big.
Tan Kin Lian
In a recession, there will not reduced demand for goods and services, as those who are still employed will cut down their own spending. Small businesses will not employ the excess workers. It is difficult for the unemployed workers to start their own business, due to lack of funding, lack of credit and lack of business. It is a vicious cycle.
The solution to a recession is for the government to employ more people, and not to lay them off. These people can be used to provide the public goods and services, that are needed by the population at large, in health, education, security, infrastructure and other useful activities. The government needs the money to pay for these services, and it has to come from taxation of those who are employed and those who are well off.
The people who are employed by the public sector do not need to be paid high wages. They only need to be paid enough to get by. When the economy recovers, they can find better paying jobs in the private sector. In the meantime, they should be kept usefully employed.
The advanced countries are now suffering from the current economic system - low taxation, wide income gap, globalisation, high unemployment and budget deficits. The current system is not sustainable. The leaders need the courage to change the system - but the challenges are really big.
Tan Kin Lian
Improve the public transport system
The Minister of Transport, Lui Tuck Yew, has announced that the quota for increase in motor vehicles will be reduced from the current 1.5% per annum, but will state the exact figure at a later date.
I agree with this decision to reduce the growth in vehicle population. In fact, I believe that we already have too many vehicles in Singapore - judging from the congestion on our roads and the difficulty in finding parking spaces at the homes, workplaces, shopping malls and other destinations. It is appropriate to start reducing the vehicle population, e.g. by not allowing some of the expiring permits to be replaced, but I do not think that the Government will take this step.
More important, we need to improve public transport, especially the local transport that brings commuters from their homes to the MRT stations or bus terminus. This can be done by issuing licences for local bus and taxi services that operate within a town. These services can be exempted from taxies and other fees, so that the cost to commuters will be kept low through competition. It will also provide employment opportunities for older people who have a driving licence.
I have written about these ideas in this paper on local transport and also in another paper on the public transport system. I have sent the papers to Minister Lui, but he had replied to me at that time that he is too busy to study them. I have not heard from him since.
Many people have to buy cars due to difficulty in getting public transport, especially if there do not live close to the MRT station. If there is a good system of affordable and convenient local transport, they may be willing to forego the expense of owning and using a private car,
Tan Kin Lian
I agree with this decision to reduce the growth in vehicle population. In fact, I believe that we already have too many vehicles in Singapore - judging from the congestion on our roads and the difficulty in finding parking spaces at the homes, workplaces, shopping malls and other destinations. It is appropriate to start reducing the vehicle population, e.g. by not allowing some of the expiring permits to be replaced, but I do not think that the Government will take this step.
More important, we need to improve public transport, especially the local transport that brings commuters from their homes to the MRT stations or bus terminus. This can be done by issuing licences for local bus and taxi services that operate within a town. These services can be exempted from taxies and other fees, so that the cost to commuters will be kept low through competition. It will also provide employment opportunities for older people who have a driving licence.
I have written about these ideas in this paper on local transport and also in another paper on the public transport system. I have sent the papers to Minister Lui, but he had replied to me at that time that he is too busy to study them. I have not heard from him since.
Many people have to buy cars due to difficulty in getting public transport, especially if there do not live close to the MRT station. If there is a good system of affordable and convenient local transport, they may be willing to forego the expense of owning and using a private car,
Tan Kin Lian
How modern economics have failed us
This is an excellent article which explains that modern economics did not follow the teachings of Adam Smith. It has been allowed to stray from from the what the free market should be - i.e. freedom with responsibility. It explained how the financial sector made a lot of profit through excessive speculation and did not add any value in the process. Modern economics have operated on wrong principles and lack of morality.
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