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  • Hareeraja Thechina Murthy

    Member
    November 11, 2021 at 3:01 pm

    Summarizing the main point of the article, human behaviour collectively affects the economic pattern and government policies. In the article, it is mentioned that “the consumers want the most they can afford”, which I partially disagree. Probably I could agree to this during the pandemic period but in a normal environment or pre covid era, it could be debatable.

    Most of us as the consumer has the attitude of “Purchase what we want and justify with logic” and this attitude has been the majority attitude of consumers. Another attitude is “Purchase what you need rather than what you want”. This concept is for those who have a tight budget and someone who has the ability to manage the finance well, which the tight budget consumers can lift up their status and move to the first attitude mentioned above and the person who manage the finance well will remain in that attitude, which fills the minority in the consumer group.
    For example, we need transportation to work and for a safe ride, we want to buy a car. A fresh graduate who just got employed for 6 months might consider buying a proton saga which is affordable for him/his at that moment. After 4 to 5 years down the employment, him/his salary increases and now he may look to change his car. At this stage, he will be considering the car based on his “status” and his/her salary volume. Probably he/she will be looking for a car at the range of Honda City or Toyota Vios for an example. In reality, he could afford to buy a new proton saga which could give him a safe ride and will be able to give his/her some financial stability but his/her justification will be a better brand, country of origin, better breaking systems, airbags and etc, which Proton Saga also has but the brand value and his current status and affordability changes will contribute to his / her decision making. Based on this, the higher number of consumers behaviour determine the economic cycle and government policies. Just like in the scenario, government policies for vehicles will revolve under the category of middle-range cars which is for M40 category of consumers who is the larger number of consumers in Malaysia.

    Although the article mentioned about government initiative at the microeconomic level with consumer behaviour, the real role of the government initiative should be at the macroeconomics level. Microeconomics will have an economic cycle with scarce resources. In order to increase the economic cycle in microeconomics, macroeconomics has to play a vital role. Government should create platforms of opportunities to inject the microeconomic values. For example, bringing in foreign direct investment or empowering local companies with new technology market which creates more job opportunities, more business opportunities and bring more market values. With this new investment, many employees want to upgrade their skills and competency to meet the new technology companies’ requirements. Therefore, the training and development companies have a new area to venture which increase job opportunities with the technology company and also with the training provider. The new sectors will bring more value to our microeconomics sector. Other initiatives such as tax exemption, grants, expansion opportunities for these kinds of companies will help them grow and able to witness economic growth. Strategically, new areas or sectors which will conquer the economics for the next 30 years shall be focused on more economic stability.

    In conclusion, macroeconomics and microeconomics need to complement each other to create values and cycles. The government’s roles shall be more on macroeconomics and play the role of enforcement and facilitator in microeconomics.