http://thestar.com.my/news/story.asp?file=/2007/10/28/nation/19306308&sec=nation
Drop the ‘goreng pisang’ mentality, says Abdullah
SEREMBAN: The Malays must shed the goreng pisang mentality and learn to become successful agricultural entrepreneurs, Datuk Seri Abdullah Ahmad Badawi said.
“When one person sells fried bananas, many others follow suit.
“When this kind of situation happens, eventually supply exceeds demand, causing prices to drop,” he said.
The Prime Minister said despite efforts by the Government to promote agriculture, the Malays are still sceptical about venturing into the sector.
They blame the banks for not giving out loans when they, in fact, had not proven anything.
This is simple economics.
Price is a function of supply and demand. When prices are high, suppliers have more incentives to produce more. Higher production increases supply and causes a downward pressure on prices.
Such situations tend to create efficiency by promoting more efficient and cheaper methods of production. This kind of competition is good for the economy and the government should promote it.
A nation can only compete in a global economy without protectionism by means of comparative advantage (producing things so they are cheaper or better compared to rivals). As a nation, we should aim to produce more goods where we have a comparative advantage compared to other nations, and this means competition is totally favored.
In the end, the economy's main goal should be to increase standards of living. If people are able to buy a certain good cheaper, they can increase consumption somewhere else (or invest for future consumption), and this increases the standard of living.
Be very afraid when politicians take the side of producers. Policies of this sort benefit a few producers out of the wallets of those of us who don't produce that good or service.
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