It may be the way I personally think about public policy, after all I am not an economist but believes that mainstream economics was built on the simplifying assumption that people behave rationally.
Nobel laureate Professor Richard Thaler has played a significant role in pushing economists from this assumption. He did not simply argue that humans are irrational, which has always been obvious. Rather, he showed that people depart from rationality in consistent ways, so that behavior can still be anticipated and modelled.
It’s the economy, stupid. Tax andspend has been stretched to its elastic limit. We need a national consensus on what should be done about taking the economy into a productive age. We need to focus on how to reset and renew the productive engines of this economy.
The tragedy of the past and the present of building a Casino economy with grabbing public resources as its core philosophy has left nothing except to grab each other’s throats. Yes, from both sides of the (political) divide, economic policy doesn’t seem to be a top agenda item this time.
The inflated cost of living is making this country very uncompetitive. This is the reason behind the endless corruption in both public and private sectors. If serious measures are not undertaken to bring down the cost of living and that of doing business, it will become very hard to attract foreign investment into the country or even to sustain existing businesses. Business resilience in times of crisis will also be highly compromised since cost reduction measures will be ineffective.
Increasing salaries and wages all the time is not sustainable in the long term. The workers will keep coming for more till company’s close shop. Bringing down the cost of living is more viable as it will lower the living wage and reduce the agitation for higher pay.
Unfortunately, tactical government does not even realize there is a crisis. The government spending has expanded a lot over the last five years. This can only be sustained through borrowing.
However, borrowing has limits. Soon government will struggle even to pay salaries unless these people return on a path of fiscal consolidation and discipline.
The cost of living has become too high in this country and most of the middle class will sink to low income levels if the economic growth remains stunted especially with current economic and political uncertainty. Salaries are hardly catching up with rise in cost of living. This is what has caused endless hardships and more will be seen in the future.