Whackiest political idea [1]
Saturday, June 20, 2009 - 19:30. Updated on Sunday, April 27, 2014 - 19:00.
Editor,
Your report (Fix it with flowers, 19 June, 2009 [2]) best illustrated the People's Representatives anti-growth mentality, lack of business knowledge, while salivating for Big Government to control business and finance.
Even Ha'apai PR and businessman 'Uliti Uata wants government to regulate how local commercial banks conduct their loans and deposits programs. He accused commercial banks of unfair practices by giving "some of their favourite clients . . ." special treatment.
How would Mr Uata like it if government started regulating what prices he should be charging customers at his business? Banks do give special treatment to their favorite customers with good credit risks. Banks are not in the charity business.
The U.S. economy is suffering now from the "sub-prime" loans scheme government and Congress forced on major banks (Fannie Mae & Freddie Mac, etc.) to qualify poor people in purchasing homes and business properties they could not have otherwise afforded.
How is Money Created?
Sounds like Mr Uata is promoting the same idea. He favors the lowering of financial institutions' standards to accommodate people with poor credit risks at the expense of the country's healthy economic growth.
Ironically, as a longtime businessman, Mr Uata should have known by now the danger of regulating commercial banks. If he is playing on people's ignorance of finance to gain votes, his leadership ethics can be questioned. How is money created in the economy, Mr Uata? Is it the zero-sum game you are proposing?
I believe the Central Bank allows commercial banks to offer loans at regulated interest rates. Qualifying consumers receive loans based on their credit records. Thus, the bank creates new money with favorable rates fluctuations offering loans to promote business growth.
Meanwhile, government prints paper money backed by the bank loans. If consumers default on their loans, the printed money is useless, plus it contributes to inflation. Therefore, Mr Uata's criticism of banks is economically suicidal. The Central Bank must operate independently under strict economic and finance principles. Mr Uata cannot politicize banking regulations.
Private Sector
While urging government to regulate commercial banks, Mr Uata calls government the "Enemy No. 1 of the Private Sector." Which shall it be, Mr Uata: are you talking out of both sides of your mouth? Or, do you prefer government handouts, but without government control?
Checkout the U.S. Obama so-called "stimulus money". Government now owns America's largest banks, insurance companies, and automobile corporations. There is no "free lunch" folks. Even after Pres. Obama declared, "We have no interest in running corporations." Ask AIG, Fannie Mae, Freddie Mac, General Motors, etc., who is running the show?
PR Teisina Fuko wanted government "to implement . . . any industry." Well, Mr. Fuko how about automobile production? Doesn't it sound as nutty as his idea? He wants high school graduates to learn employable skills "go overseas and send money back to Tonga." There's a novel idea; remittances are consumption expenses, not invested.
Mr 'Akilisi Pohiva wants foreign aid money to build exporting factories. Given government's failure records in running businesses (Royal Tongan Airlines), why are PRs yearning for it to takeover and create more failures? None of the proposals were about some business plans that have been studied and carefully researched to be feasible and suitable for the economic growth of the country.
Whacky ideas
Mr Pohiva has won the "Whackiest Political Idea" award. He suggested forcing Chinese-Tongans away from their businesses to work in his exporting factories. Sounds like ethnic cleansing to single out Chinese.
And the Chinese business people's only 'crime' was being savvy entrepreneurs who are showing Tongans how to run businesses competitively. There is no other way to call it but a racist proposal. It is a human rights violation to deny people their rightful ownership of their work and business.
Mr Pohiva wants the Chinese removed in order to leave "the retailing and the wholesaling for the Tongans." He wants government to determine where customers should go to do their shopping. After all, Tongan customers had voted with their money that they preferred Chinese merchants.
He also criticized the Nuku'alofa rebuilding projects preferring to see businesses grow flower gardens instead of building constructions. Hasn't Mr. Pohiva realized that buildings and fixed capital are essentials to the economy of a country? Building construction provides employment. Buildings attract business growth, which feeds economic growth.
Obviously, Mr Pohiva must have a study predicting a booming floralist industry in Tonga. He proposed tourists are not coming to see more buildings. According to him, they will be coming for flowers. Like the Hippies flocking to San Francisco in the 1960s and 1970s?
Sione A. Mokofisi