IMAGINE you had to design a brand new country, given certain facts of geography, natural resources, location, and demography. Assume that you know the history of the societies that will become part of this new nation, and the educational qualifications and professional skills of its citizens, as well as their current income and wealth distributions.
This would help provide an idea of what the country should look like: what its constitution would say, whether it should be a federation or unitary state, a monarchy or republic, how executive officials should be appointed or elected and how powers should be distributed throughout, what other institutions are required to enable their effective functioning, and what responsibilities the country’s government should have.
To what extent should the federal or state governments be involved in educating the nation’s young? What setup would deliver the best healthcare results? How would roads and railways, ports and airports be best constructed? Are there any sectors of the population who should get preferential treatment? And what about law and order, security, foreign relations and international trade? Should the government be engaged in business directly? Thus overall, how many ministries should there be? How many civil servants would be required? And how do you ensure they don’t abuse their power?
Then you would see how you could fund the whole thing, create growth in the economy and even dispense goodies for the citizens. You would estimate the revenues from natural resources (whose extraction would have to be regulated by law too) and consider what taxes should be levied on individuals and corporations. You might feel it necessary to incentivise certain ‘good’ activities and penalise ‘bad’ ones through the exemption or application of duties respectively.
Of course, many assumptions would have to be made about the spending and saving habits of the citizens and the businesses they run, and the prices of commodities and exchange rates over which you have little control. But you would find the economists to help you make these predictions. These, I reckon, would be the things that would occupy your mind when designing a budget.
However, needless to say, this is not how any country in the world thinks about their annual budgets. Only a politician with absolute power would have the luxury of such philosophising. For everyone else, budgets may start with some philosophical considerations – the competing moralities of low taxes or of high welfare for example, or even the desired economic dominance of a particular racial group – but then other priorities quickly take over.
Whether in an autocracy or a democracy, leaders will have factions to please, coalition parties to appease, new constituencies to seduce, critics to silence, and potential enemies to pre-empt. The budget becomes a primary tool to do this, and we can deduce much from the amounts given to various ministries, agencies or government-linked companies. More broadly, where these imperatives become paramount, any ideological underpinnings disappear completely: in the same document we see greater liberalisation alongside more state control, we see pro-growth and pro-dependency policies, and we see greater reward being given to both merit and race.
These realities have crept into the budget and the alternatives that were proposed last week. The temptation to read the text with selfish eyes is understandable: Where are my taxes being reduced? Will I get greater relief on squash racquets? Should I establish that social enterprise?
For their part, many commentators have deemed this an election budget (again), analysing the various ‘allocations’ (an innocuous word to describe the redistribution of the rakyat’s money – and growing debt) as an indication of where the governing coalition thinks it most needs votes. It may well have the desired effect. If you are concerned about education and transport infrastructure, a user of the highways whose tolls are being abolished, a public servant looking ahead to bonuses or initiatives for women, you are directly spoken to in last week’s budget speech, and it may be better than whatever the alternatives are. For the opposition too has had many of its assumptions questioned, although the overall intention to reduce the government’s hand in the economy is detectable.
On that front, we have departed enormously from the economic vision of the country’s first administration, when we had fewer ministers and civil servants as a proportion of the population, when government was not directly involved in business, and when politicians were not routinely suspected of corruption and theft of national assets. However, after decades of ever growing expenditure and debt, it may become increasingly more difficult to inject any political philosophy into budgets at all. They will only ever be about winning the next election.
Tunku Zain Al-Abidin is founding president of Ideas.