In his speech he outlines the main economic challenges that Singapore faces and goes on to describe his govt's approach towards these issues. Most of what he said is familiar to us - need to keep taxes and govt expenditure low, maintain growth to grow the pie and need to import foreign labor so on. Essentially, he propose to keep going along the same path of the last 15-20 years with adjustments to address the challenges. His speech was titled "Remaking the Singapore Economy" contains little remaking but excuses on why we cannot make fundamental changes to economic model.
"Globalisation and technology will widen income distributions all over the world. You can see this trend in all developed economies, from capitalist USA to socialist France, over the last 30 years. Talented and enterprising individuals will continue to earn a high premium, while pressure will grow on jobs in the middle, because competition is intensifying globally. So inequality will grow worldwide, and angst and social pressures will go up." - PM Lee
In this part of his speech he suggests that income inequality is a global phenomena. This is partially true but it is seen as unacceptable by leaders elsewhere in the world and their approach is to proactively reduce the inequality or mitigate its negative effects in their society. Singapore has the highest inequality among developed countries and our leaders try to blame it on globalization. While globalization is a factor, it does not fully explain why inequality in Singapore is so much higher than elsewhere.
I respect these views. I agree fully that material goals are not everything in life. But we are not going for growth at all costs, nor have we done so. Growth is not an end in itself, but a means to improve our lives and achieve many of our other goals. We must always maintain the balance between economic and non-economic objectives, and ensure that the fruits of growth are invested for social purposes which benefit the wider population." - PM Lee
PAP does not go for growth at all costs? ....Look at what they are willing to do to capture growth - building casinos, massively importing labor and accepting a high level of income inequality. Singaporeans have seen the "cost" to them of this growth. Few or no other govt in the world go to the same extreme as the PAP to keep the GDP numbers up. Since 2003, Singapore has an average growth of 6-7% ...this is very high but has it translated to improvement in the quality of life for ordinary citizens?
"Nevertheless, without growth, we have no chance of improving the collective wellbeing. Far more countries worry about growing too slowly, than growing too fast. For Singapore, slow growth will mean that new investments will be fewer, good jobs will be scarcer, and unemployment will be higher. Enterprising and talented Singaporeans will be lured away by the opportunities and the incomes they can earn in other leading cities. Low-income workers will be hardest hit, just as they were each time our economy slowed down in the last decade. Over time, our confidence will be dented." - PM Lee
The real economic trade-off for Singapore is not between fast growth or slow growth. It is also not a trade-off of economic equality for faster growth. After our rapid development in the 70s and early 90s, Singapore economy was suppose to go through a period of remodelling and pause so that we can go on growing in a more sustainable manner. But the PAP stepped on the accelerator - importing foreign labor and supplied our companies with cheap foreign labor. Instead of rising productivity and a more innovative economy, we had a economy driven to grow by importing foreign labor. Our social inequality has expanded to untenable levels. The tradeoff has already between made - there is no more equality to trade-off for more growth. There is nothing to tradeoff now.
The focus now for govt has to be to fix the excesses that have build up due to very unbalanced policies. History has shown time and again that if social inequality persists, people will reject the system and the govt. There are numerous examples from the past and in recent times of govts voted out or thrown out for this reason.
There is a big difference between the PAP and the Hong Kong govt....and the PAP and the Obama Administration. When confronted with comparable levels of inequality, the attitude of these other govts have been to do everything politically possible to address the situation - Hong Kong implemented minimum wages with good results[Link]. Obama quickly put in place a healthcare bill to ensure that every citizen is covered by health insurance to mitigate the effects of income inequality.
The PAP has been trying to explain away the high income inequality here wrongly blaming it on globalisation and telling us it is acceptable - making hard-to-believe claims like those earning $1000 a month can still afford a flat and that the poor are better off in Singapore than elsewhere in the developed world including USA . They have blocked and rejected every idea that will have a real impact on the problem such as minimum wages, Lim Chong Yah's "shock therapy" and Tommy Koh's ideas for universal healthcare.
PM Lee now tells us the trade-off is between fast and slow growth. He misses the point completely - from 2003 to 2010 Singapore grew an average of 6.3%, Singaporeans already know what the PAP way of obtaining high growth is about and how it impacted their lives - they expressed their understanding by sending and clear signal to the PAP govt in the 2011 GE.
Many countries have gone through periods of slow growth or even recessions during which they restructured their economic and political system to comeback stronger to achieve sustainable growth. The S. Koreans is a good example - they had a growth model that ran its course and broke down during the Asian crisis. They restructured and made their comeback. The US economy saw a major "reset" in the 1930s during the Great Depression. In the 1920s, they were on an unsustainable growth trajectory of rising debt and social inequality. The lesson here is if you keep pushing for growth and allow imbalances such as income inequality to keep rising, you will see abrupt breakdown of the system.
The real trade-off for the PAP govt is this : make fundamental changes or be forced to change. The signals are increasing in amplitude and the time they have is running out. Yet they resort to little tweaks and still continue to present to the people false options and trade-offs to justify a system that is no longer sustainable.