Bite the bullet

So with the rising costs around us, the government has repeatedly ask companies to pay one time inflation packages to help citizens offset their increasing expenses. Yet today - Finance Minister T Shanmugaratnam warns S'pore may face 2nd round of inflation if workers' pay is raised. More pay is not the answer!

Seriously, if more pay is not the answer, perhaps a reduction in GST, or ERP or even the waiving of fuel surcharges would help.

I do not understand the policies our government is undertaking, be it monetary or fiscal. The conventional anti-inflation strategy would be to tighten demand by cutting government spending or raising taxes. But this would drain income from an economy already suffering from higher oil prices. The result would have been a sharp rise in unemployment. And if government was to chose to counter the loss of income caused by the rising oil prices, they would have have to increase spending or cut taxes. Since neither policy could increase the supply of oil or food, boosting demand without changing supply would merely mean higher prices, which is what we are observing right now.

First of all our government is increasing spending on projects such as F1, new sports stadium for the Youth Olympics, IRs, saving foreign banks from collapsing; followed by raising taxes and withholding subsidies. So the strategy employed is totally unconventional, and confusing because we have to deal with higher goods' prices, higher taxes and competing with government projects for the limited resources (for example: its harder and more expensive now to get electricians or plumbers, skilled trades which are earning more from the extensive construction boom). Which basically means - we are screwed. No increase in pay, and paying for things which are going to be priced way above the means of the poor.

In my previous post, many countries have either stopped projects or increased subsidies to enable their citizens to cope with increasing living costs.

I am just wondering how Singapore would fare in the coming months. And I hope our Finance Minister has more up his sleeves besides telling the people to bite the bullet or source for alternatives - cheaper fuel, cheaper housebrands..my suggestion would be a cheaper government. A 20% reduction in the entire cabinet and MPs' salaries, allowances and expenses can go a long way. Or maybe hold a retrenchment exercise like my company and let go of stagnated or ill-performing labour in their ministries, especially those Superscale salaried officers.