Thursday, October 18, 2012

Asking for Slower Economic Growth

As usual we tuned into 93.8 on our dirve to the office. Yesterday discussion on Education was predictable and boring, but this morning talk was well worth listening to the chimes from SME owners. They mostly sound reasonable to me.

Workers and the government fail to appreciate that SMEs are almost always in fire fighting mode. They are all price takers; cannot plan but must master the art of quick and effective response to changing circumstances. As a drowning man would clutch at a straw, so SMEs will NEVER SAY NO to cheap foreigner workers. Life is hard enough and they don't need it to be harder. So I am afraid if we want SMEs to upgrade, they must be brutally forced to do so. We must also be prepared that many will find it less painful to relocate and some would prefer to even throw in the towel. Painless restructuring is a myth. I hope people asking for slower growth know what they are wishing for. Please bear in mind the track record between wishing and getting is no good. Just ask yourself how often you buy stuff and are disappointed with them. Think carefully.

The debate over how fast we should grow economically has missed the mark. We look at this as if we have a choice. I don't know why the government and media never bother to re-frame this correctly. It is really not so much about the pace of growth but our capacity to absorb it. I think nobody would be complaining about too fast growth if we had never ran into bottlenecks of housing and transport. As these twin problems are solved, the problems take care of themselves. It is just convenient for the government to allow their detractors to make a big fuss as they quietly rectify the infrastructure bottlenecks. Just clever politics.

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