Spend it!


Originally uploaded by nibaq.

The 200kd give away is the best thing that the government can do for the Kuwait economy. Yes granted t
hat people can talk about how it can be spent else where, prescription website like this but this is just $.5 billion out of a $4.5+ billion surplus. I am sure they can use
the other 4billion for schools, hospitals and other things.

So how is this amazing? Well it all goes down to economics and the multiplier. When the government gives out 200,0
00,000 KD to the people of Kuwait tax free and with no strings attached, they are going to spend about
3/5th of it.

So 200m * .6 = 120m

That 120 million will then be in other peoples pockets and they will spend it.

120 * .6 = 72

This multipier will keep going and according and to my Excel sheet create 500million KD. that will be
spent and circulating in the economy.

By having the people spend the money, and companies and individuals earning it. This creates a postive
cycle and growth in the economy, leading to jobs, higher wages and a better standard of living.

Also since some of this money will also be leaving Kuwait it will benifit countries that export since
it will boost their economy and increase their wages, and reduce the burden of the high oil prices tha
t has been affecting them and encourage them to buy more oil thus helping Kuwait.

I believe within 6 months of the money being released we will see an increase in employment and overal
l wealth in Kuwait. But lets not forget there is that other 4billion that the government will spend an
d invest and that will also be part of this multiplier effect.

There are other factors to consider in all of this, but I am not Greenspan so I can’t predict it all but the basic numbers are there and poin
t to a positive growth for Kuwait.

Sadly I think this is Jabir’s swan song, and By doing this he is leaving on a high note with the Kuwai
ti people.

4 thoughts on “Spend it!”

  1. I think your comment is flawed.
    Let me explain.
    We don’t have healthy economy. The government is the biggest employer. Secondly, jobs created in Kuwai
    t go to cheap imported labour and not to kuwaitis.
    The money spent will go to stores in malls etc owned by a handful of people. Its like the government g
    ives you a loan to buy real estate and everybody ends up buying from the same person.
    So your model does not work in Kuwait. Our economy is oil and the service sector. The service sector b
    ieng banks, telecommunications, etc.

    You will spend your 200 extra KD doing whatever in about 2 weeks. Then life will go back as normal. Yo
    u will be paid the same for your work and government services will remain the same (poor). The 200KD w
    ill not make you any richer.

  2. nibaq your economic thinking is nice , but it has one flow , its not suited for kuwait , kuwait econom
    y doesn’t run like normal economy , it run on al abraka , just let it slide thats why

  3. It doesn’t matter who the money goes to at the end as long as it is spent. Just by having Kuwaitis 200
    kd richer is a little boost to their end of the month that they can spend on something nice.

    I myself believe in low/no taxes, and a government that spends money. Governments that spend help thei
    r economy. That was the problem with depression no one was spending money so it was just stagnating. T
    his way Kuwait has always been a good place for living. No taxes and a government that spends money on
    services and roads and other stuff. How many times do you see them repaving the main highways? Now co
    mpare that so Saudi roads and their economy.

    Also I dont want certain government employees to get a raise. Only ones that are productive helpful an
    d effecient should get it. Which cancels out mostly everyone like the Baladia and Customs and Fire Dep
    t etc. I am sure if these groups were accountable and their salary was based on a report card we would
    see a major difference in their work and how they treat people.

  4. In USD, what are we talking here? President Bush tried to issue the same type of “tax relief” in the
    states. The economy did not improve. Most people either spent the money on overly high bills or save
    d it for the unstable future. I personally can’t even remember what I spent the $400 USD on.

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