LETTER | Collapse of the middle-class

LETTER | These are difficult times. Very difficult times for many Malaysians.

The federal government implemented yet another nationwide lockdown on June  1. You get the impression this government didn’t really have a long-term plan to begin with when they announced the fourth lockdown in 16 months.

Hundreds of thousands have lost employment whilst a similar number of small and medium enterprises (SME) and small business owners were forced to close for good whilst many more are on the verge of total collapse due to economic hardships beyond imagination.

Lockdowns only work as a short-term measure and cannot be implemented beyond a 7–14 day period and introduced over and over again beyond 30 days. This leads to a total economic (and social) disaster for any country, regardless of how wealthy they are or even if they are a first or third world nation. 

Lockdowns are no longer about saving lives, which was the original intention as to why they were introduced; lockdowns are now literally destroying lives and incomes and are the main cause of mass job losses which in turn will lead to the collapse of industry, SMEs and the middle class who are the key players in supporting government income each year.

The majority of purchasing/spending power is by the middle class of this country. They are made up of small business owners who are captains of industry, who employ workers and provide jobs. It also professionals such as architects, lawyers, managers, supervisors and government servants including frontline medical doctors and nurses. 

The middle class hold this country’s economy together. Many have used all if not most of their savings and many others have lost employment or seen their businesses collapse.

We are now, without a doubt, in a vicious economic cycle.

Very little aid has been targeted to the middle class. Whatever aid programmes there are have almost exclusively been targeted, (correctly) to the bottom half of the population; the minimum wage earners and underprivileged who are day to day income earners. They are truly feeling the brunt of the economic hardships.

A good friend who is a medical doctor suggested that “[…] the federal government needs to be reminded that if more businesses shut down, less taxes (are collected) and therefore we, as government servants will get pay cuts […] or maybe termination from service.” I tend to agree with his point of view.

During the economic hardships of 1929-1932 there was a German chancellor called Brüning who was a ‘conservative laissez-faire loving capitalist’ who reduced unemployment benefits, conducted cost-cutting of the civil service causing a massive number of unemployed government employees, refused to raise taxes or create government-funded job creation schemes that he hoped would lead to a deflationary policy that would in theory ‘deepen the recession’ but shorten the recession.

It however backfired on the middle class and working professionals who lost jobs, homes, property and above all, their savings.

The damage he (Brüning) did to the middle class was so severe that it led to the downfall of his political party in the 1933 national elections. There was a reason he was also known as the ‘Hunger Chancellor’.

There is a belief the Malaysian National Security Council (NSC) are so cut off from reality and completely out of touch with sentiments on the ground that they do not realise their policies and decision making in 2021 have been an absolute disaster for the nation and its citizens.

Government programmes meant to aid SMEs in Sabah are not getting to those affected who need the government aid and soft loans the most; many SME business owners have shared stories of frustrations (and anger) dealing with semi-government agencies who are meant to dispense government aid but who are rejecting applications by giving petty excuses.

So why promise aid if the aid is not going to be released to the very people who need the funding desperately and who are suffering when it was the government’s decision to put a stop to business, trade and industry?

If the middle class does collapse, what is the government going to do next? 

Food for thought. 

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.