Dear Editor,
My sincere appreciation to you and Linny Folau for your up to the hour coverage. I respond herein sir to dispel the fallacy put forward by the Government that the PSA demands of a 60 ... 80% pay increase will cause high inflation.
Their logic is based on the weak notion that the pay increase will put greater disposable income in the hands of consumers by way of the civil workers pay increase, leading to increase in consumer spending. Thus, greater consumer demand will cause the general price of goods and services to increase, hence inflation. They throw around the name of the World Bank to add creditability to this non-sense claim. It is especially appalling that they try to pin the already rising inflation on the PSA demands, when it is caused by their own misguided policies.
The true cause of inflation according to economic principles and empirical facts show that inflation is directly proportional to money supply, which is governed by monetary policies traditionally controlled by Federal Reserve Banks, which I presume is under the Minister of Finance portfolio. So, the government should take a closer look at the mirror before it blames the people for rising inflation. The pay increase will not add any new money to the Tongan economy; it is simply a reallocation of resources from the hands of government to the hands of hard working Tongans. You tell me who is more deserving of our resources?
The PSA demands will do greater good for the Tongan economy than the Government is willing to admit. A pay increase for the civil worker sector of the consumer market will give them greater spending power that will generate greater business activities. This is precisely what Tonga's depressed economy needs, increase economic activities in the private sector to revitalize the economy. However, the Consumption Tax is restricting importation of goods available to meet consumer demand. Another reason why Government should look at the mirror first before shifting blame to the people of Tonga.
Sincerely,
Thomas Monson Uata
Las Vegas, NV
uatas [at] juno [dot] com
