Mahathir economic theory

I take a long time to study my accounting qualifiation. When I study Economy. Initially I study traditional economic theory like Adam Smith's "Invisible Hand" theory, David Ricardo's "comparative advantage" theory, which is the basis of free trade and globalisation today and keynesian theory.

The world and technology has change so fast that. Later, I have to study Reaganism and Thatcherism theory.

What is Reaganism and Thatherism? It is the economic theory implement by the then US president Donald Reagan and British Prime Minister Margaret Thatcher. Both theory are similar to each other call Supply Side Economy.

What is Supply Side Economic theory. Actually, it is implemented by our ex-Finance Minister Tun Daim Zainuddin. Part of it is Privatisation.

Privatisation in Malaysia, initially has successfully reduce our Income tax rate from 40% to now 28%. However, tax rate remain unchange at 28% for many years whereas privatised company like PLUS keep on increasing it toll rate. TNB increase it tariff and even Post Malaysia Bhd also inrease it postage but no reduction in income tax then.

Indah Water also fail to redue local government rates and assessment.

Thus, we can say that privatisation in Malaysia successs initially but fail eventually.

Ex-Prime Minister Tun Dr Mahathir used currency peg to help Malaysia to come out from Asia financial crisis, unlike it neighbour Thailand and Indonesia and even South Korea, Malaysia reover from Asia finanial crisis without the help from International Monetary Fund ( IMF ).

The recent de-peg of Ringgit and USD fail to lifted Malaysia stock market. Thus, it prove that currency peg is not the main cause of weak performance of our stock market. Further, Hong Kong currency peg has longer history than Malaysia and until today after China and Malaysia has de-peg it currency. Hong Kong urreny is still remain peg with US currency. But Hong Kong status does not affected by the peg and it still remain a financial centre like Singapore and is yet to be challange by Shanghai. However, nobody critise Hong Kong policies!

In history, we do not lack of Doctor turn Economist, like William Petty 1623-1687 etc.

However, the basis of Mahathir theory like:

1) Opposed traditional economic theory especially Anti-Free Trade.

2) Different country in different development stage should have different economy policy. The centre of this theory is that we should protect certain industries via prtectionist policies.

The above theory sound familier, always stress by our ex-Prime Minister Tun Dr Mahathir. However, the above theory is theory from German Economist Friedrich List 1789-1846.

Thus, like Ronald Reagan and Margaret Thather is the implementor of Supply Side Eonomy. Mahathir is Implementor of Friedrih List economic theory.






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