Economics and zero-deficit budget
It is not enough to master economics theories to be a good economist. One needs proper grounding in history, social science and other disciplines.
One has to be a specialist and generalist at the same time. The reason is that economics deals with ideas which in most cases are matters of common sense and anybody can comment on them; although some comments are childish to economists.
I know some people are asking President Joyce Banda to cancel the zero-deficit budget.
They are also asking the President to increase salaries of civil servants, give K10 million (about $60 000) to a certain faith group, complete new university in Thyolo and build another one in Lilongwe, so on and so forth.
The Ministry of Information and Civic Education did not educate the public on the significance of the zero-deficit budget.
When you ask more services from government, you must be prepared to pay more taxes. The more services you demand from government, the higher the taxes you should be prepared to pay.
Countries which shield their people from different hazards of life from the cradle to the grave such as Sweden and Denmark impose high taxes on their citizens.
Today, few countries have balanced budgets.
We dislike the zero-deficit budget, yet governments that give us money have deficit budgets in their countries.
The more services people demand, the more taxes they collect from them.
Where governments raise money through taxes, but still fail to run social services and instead borrow elsewhere, we call this deficit financing.
The late president Bingu wa Mutharika was forced by circumstances to introduce the zero-deficit budget because donor funds were not forthcoming.
The zero-deficit implied not only hiking taxes, but also curtailing expenditures.
He did not want to retrench the civil service, cancel or postpone all programmes. All the same austerity measures were inevitable.
Normally, governments try to introduce deficits stage by stage, usually over a period of five years.
They establish a sinking fund out of which debts are paid. They raise taxes by percentages which the taxpayer can easily shoulder and postpone certain programmes.
It is most likely we will soon be having budgetary assistance from Britain, but that does not mean we should not make sacrifices. Donors help those who help themselves.
It is high time we, Malawians, realised that a country’s development is the responsibility of its citizens not donors. Foreigners can help only up to a point because they also have their own priorities and poor people to take care of.
President Banda should not rush into dismantling the zero-deficit budget. She should examine it thorough with a competent economic and financial advisory team.
Meanwhile, the Ministry of Information and Civic Education should explain to Malawians why government cannot completely do away with the zero-deficit budget. No government can run without money.
The second name of our President, Hilda, is the second name of Dame Margaret Thatcher. Thatcher was the first female prime minister of Britain.
Perhaps our President already read The Downing Street Years, a biography of Dame Thatcher.
It is a fascinating book and one of the best biographies I have read. It is about how one can make great feats against all odds.
The inside cover reads: “No prime minister of modern times has sought to change Britain and its people in the world as she did. Her government she says was about the application of a philosophy, not the implementation of an administrative programme.”
When she assumed the partnership in 1979, Britain was known as the ‘Sick Man of Europe’,.
It was a Britain that was receiving financial assistance backed by conditionalities just as the International Monetary Fund does with developing countries.
By the time she left office 10 years later, British economy was in the front league. The philosophy that guided her policies were later adopted by Tony Blair’s New Labour Government.
