Ten years ago, government leaders of almost every country was talking about growth. Growth through trade, growth through liberalisation, growth through globalisation, and through investments. Yet, nowa-days everybody seems to have fallen out of love with growth.
Now we talk about protection. We advocate self sufficiency. We favour regulations and restrictions. We want out instead of being in trade organisations. We close our borders for every little incident. The rich countries are anti-immigration now. US government introduced 12,000 new regulations in 2021 alone. From 2010 to 2020, rich countries’ tariff restrictions on imports have doubled. UK voted for the Brexit, to keep the country white among other things. In 2007, nearly six million people have migrated to rich countries. In 2019, the number was down to four million.
Being anti-growth may have less to do with doing what is good for the
country and more to do with the flavour of the day for the politicians to win votes. Trump won the elections mainly based on this agenda. As rich countries become fully developed, the growth rates are now hovering around 3%. Even the great China, who has achieved growth rates of around 10% over the last three decades, has lower expectations of growth at around 5% in 2023. To push the growth rate beyond 5% for developed countries is only feasible, with significant investments in new technology and products. For these countries, the catch up game is over. As with all potential gains, the country has to suffer pains first. Investments in the future have opportunity costs. In a world where ageing population is growing especially in developed countries, it means sacrificing on other budget items such as social welfare or healthcare. Any slightest hint of cutting down on these is definitely going to affect the elderly votes, a hugely significant percentage of total vote counts, especially since the youth naturally do not turn up to vote. Thus politicians dare not venture in these areas. See what happened to Lizz Truss and
her pro-growth plans for Britain. In a time where the general population is facing pressures from inflation, higher energy bills, increased medical expenses, unemployment and difficulties in meeting daily needs, asking them to make further sacrifices now, so that the future generations would enjoy better times ahead, seems impractical at best and against human nature at worst. “Why would I want to sacrifice now, for the things that I might not have a chance to enjoy?”, an elderly voter asks.
Hence pro-growth policies are now in the back burner. It just suits the politicians and civil servants, most of them at least. They are good at spending, using up the budgets and claiming the entitlements. Pro-growth policies require them to work hard, make tough choices and meet targets.
Spending to appease people, be it healthcare, social security or other payouts, put them in favourable publicity and help them win votes. So why bother with something that may not translate directly into votes! Case in point: President
Thein Sein administration got a lot of flak doing the reforms and implementing many pro-growth strategies. Yet Aung San Su Kyi did nowhere near there, just sitting at the throne, spending the budget and brainwashing people with her baloney speeches. Her administration got significantly lesser hostility than the former’s, albeit achieving seriously worse economic performance. Myanmar did become the poorest in ASEAN during her administration! Such concepts have led many rich countries to accumulated debts from continuous budget deficits. High levels of debts have now constrained policy-markers’ room for manoeuvre. Across the G7, private debt has risen up to 30% of GDP since 2000. Even small declines in cash flows could make the servicing of the debt harder. Investors’ sensitivity towards additional debt accumulation has also swelled. Lizz Truss growth plan through additional borrowing resulted in significant falls in Stirling Pound and the increase in government borrowing rates.
In a world of high debts, acting on populism by Western democracies and rising tensions between global powers, even Ray Dalio, who runs the world’s largest hedge fund, was worried that the stage could be set for a situation like the great depression of the 30s, where you may experience a complete destruction of wealth as we know it!
So that is the Antidote?
Let the world issues be dealt with by the rich countries, IMF, WB, etc. For Myanmar, we cannot follow the same path and forget the progrowth policies altogether. The truth may be bitter, but the fact that we become poorest in ASEAN around 2017 is real. Our GDP per capita is lower than any of our neighbouring states, including the hyper populated Bangladesh. First we have to accept and agree on this starting point. Then we can all acknowledge
that we need growth to catch up. We need investments, we need exports, we need innovation, we need technologies to reach where we want to be. Since our income is limited, it may means sacrificing on some budget items to allocate more towards pro-growth initiatives.
Self sufficiency drives are all good, but these alone would amount to nothing. History has already answered that through the years of Mao Zedong and Nay Win. No hecatomb should be spared to promote GDP growth in conjunction with self
sufficiency, in order to wriggle our way out of the deep poverty trap.
In a world where respect is earned only based on $ and military might, we have to plant seeds of growth for our country now, so that the whole population could be shielded from uncorroborated attacks in the foreseeable future. That sacrifice would be remarkably better than having to defend, deny, dispute, disagree or
reject all the unfounded accusations from the UN and the West. Unfortunately, et tu ASEAN!
