or blurbs, or ramblings, or muse, or ... whatever lah!

Tuesday, July 1, 2008

Keynesian Paradox of Thrift at Work .....

Hungry ... I went out for lunch to a nearby restaurant where I usually get my regular fix of fried rice. The first thing that I noticed was the absence of the usual chatty voice of one of the waitresses. When asked, the owner said that she could not afford to pay the monthly salary of the waitress, so she had to let her go ... What happened?, I asked. The reply I got was just as I suspected. The owner of the restaurant said ever since the increase in fuel prices, she has been getting less and less customers. In order to cover the increase in fuel expenditure, her clients had to cut down on eating out. The regulars who often come for casual chit-chat over a few cups of teh tarik now do that at their own homes. I noticed a few of my colleagues bring in their own lunch to work, instead of going out to the restaurant for lunch. All these had reduced her overall operating income. Things were made worse when her cook demanded a higher salary to cover for his commuting cost due to the increased fuel cost. The restaurant owner had to increase the cook's salary, because without the cook, she would have no restaurant to manage. She had to pay more for a cook and covers the waitress part herself. One customer, sitting at a table adjacent to mine, overheard the conversation joined in the chat and said, "Sejak harga beras naik, nasik goreng Akak dah naik harga dari RM3.00 ke RM3.50 ... mana tahan!" (Since the price of rice went up, your fried rice is now up to RM3.50 from only RM3.00) , he said he had cut his lunch spending by half, only going out for lunch every other day. I understand how the restaurant owner is feeling right now ... confused, but she had to set her priorities, otherwise, she would be running her business at a loss. If this trend is true throughout the Malaysia economy, I fear a recession is not far ahead. As it is now, the government had cut down spending to ease their burden on fuel subsidy. Cancelled or deferred projects means a lot of businesses would be losing a lot of potential income, not to mention the negated employment opportunities. The company I worked in (automotive business) depends on the success of these business entrepreneurs and professionals. The more they earn, the more they'd spend on automobiles. If these people reduce their spending, my company would suffer a reduced income, and I could go the way of the waitress at the restaurant. This seems so familiar .... Keynesian Paradox of Thift at work???

1 comment:

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