Thursday, June 14, 2012

The Real Economic Trade-offs for Singapore....

Here's PM Lee's speech at the ESS (Economic Society of Singapore):


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 know that some Singaporeans welcome the prospect of slower growth. Some go further, and want us to slow down even below our economy's potential. They argue that we already have enough material success, and should give less weight to economic factors, and more to social considerations. And that we should spend more on ourselves and our generation, and put aside less for the future.

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.









35 comments:

Anonymous said...

When the Hong kong govt and the Obama Administration are confronted with levels of income inequality comparable to that in Singapore, the attitude of these govts have been to do everything politically possible to address the situation. But why mot the govt in Singapore? Basically our govt doesn't have the welfare of the citizens in their heart

Anonymous said...

Unanswered Question #7
------------------------

"Elected MP of Hougang, Png Eng Huat,
will have to seek the support and approval from rejected MP, Desmond Choo,
for the housing or upgrading programmes for Hougang residents."


Why must an elected representative of Hougang seek the permission from a government appointed grassroots advisor?

Grassroots = citizens or
grassroots = Pro Alien Party ?

related source:
http://mysingaporenews.blogspot.sg/

Anonymous said...

The same song is sung to different audience at different tunes. When ministers up their pays, they tell people we must pay them well or few would want to work as ministers. When come to low paying workers, they tell them Singapore need to compete. You are lucky you got a job. FT expect lesser.

I am afraid we are reaching the breaking point already.

sgcynic said...

I take it at face value the PM's assertion that the PAP government had not gone for "growth at all costs".

The question is what would have the government done beyond what they did if they had gone for "growth at all costs". That will help us understand the PM's explanation. Help us see the difference in the supposedly two different approaches.

gm . 绿效精神 said...

Singaporeans are not against meaningful growth, but the abuse of pro-foreigner policy resulting in over crowding problem that citizens have to face everywhere (HDB/ public transport/ work place).

It is also strange that government can quickly implement ethic HDB quota, but yet resist (expecting miracle from tweak on FW levy/ fallacy of TAFEP) implementing job quota to stop unhealthy practice of foreign enclave.

Ng Eng Hou said...

Well,if the government keeps giving excuses for minor actions blaming this on external factors and other countries also facing the same problems, then what justifications do they have for still being paid excessively higher than other world leaders?

We don't want to hear any more excuses or any more apologies in the next election!

Anonymous said...

> The PAP has been trying to explain away the high income inequality here wrongly blaming it on globalisation and telling us it is acceptable

globalisation my foot. If Singapore is truely globalised, we will be allowed to
1. Buy cheap patrol from JB without restriction.
2. Buy cheap cars from Malaysia and drive them in Singapore
3. Buy very cheap housing in JB,

Globalisation is working against us.

But seriously speaking, Singaporeans are addicted to cheap labor in the form of
1. Household maids
2. Coffee Shops, Hawker food
3. Cleaners

When we complain about government bringing in foreign workers we have to blame ourselves for using their services too. Unless we drastically reduce the cost of living, it will be difficult for Singaporeans to take on such low paying jobs. Neither will Singaporeans want to pay so much for these kind of services.

Clear eyed said...

Same old, same old ... Like a stuck record. Time for PM Lee to change his speech writer? Or for us to change the PM? What do you think?

Anonymous said...

The real trade-off for the PAP govt is this : make fundamental changes or be forced to change.
Lucky Tan

Forced to change? But who is willing or able to force them?
The opposition?? The 60% ??

If you know the answers to these, then you will know why there will be no fundamental change.

A better way is to change oneself. That is make more money and be richer. Or if in Singapore cannot, go elsewhere to do it.

Anonymous said...

The signals are increasing in amplitude and the time they have is running out.
Lucky Tan

In what way? Less votes for PAP since GE 2011? Definitely not right, if you looked at Hougang BE 2012 outcome.

And Hougang BE 2012 outcome shows that there is plenty of time till 2016 or even later. Where got run out of time?

Anonymous said...

Dear Mr Lucky Tan,

Every time I read your writings, I am impressed. I just want to say, once again, I am really grateful that you continue to share your wisdom and knowledge with all Singaporeans.

A fellow Singaporean..

Anonymous said...

Sigh. I hadn't bothered to read Lee's well publicized speech because I didn't think it was worth my effort. Thanks, Lucky, for commenting on it.

Indeed, I find PAP can't change. It's too mired in its old thinking, complacency, materialistic comforts and self important to actually change for the greater good os Singaporeans.

As citizens of this country, if you want change, you must work on it. Go reach out to your friends, neighbours, family and acquaintances. Talk to them about the issues Singapore faces. Join a civil society group. Attend community activities to spark the consciousness of a need to change. And if you are just too busy, donate to a worthy cause.

Change has to come each one of us.

Anonymous said...

"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."
Lucky Tan

PAP voted out? Only in Hougang and Aljunied lah. And it stops there. In fact things got better for PAP in Hougang!

I tell you, even if 60% voted for opposition, the opposition govt will be worse and weaker than PAP lah.

Because if the opposition is not strong and united before election, how can they be strong and united after election, right or not?

Anonymous said...

PAP did try to tackle income inequality,in their own way.firstly they discovered the importance of importance of productivity but did not manage to find the way to increase the productivity of workers here.

Then they discovered a fairly quick way to tackle income inequality,via handing out of budget surplus preferably before General Elections,it did not work well either but is copied across the causeway now.The effect on Gini is almost instantaneous.

Be rest assrued that with their super intelligent ministers,they will find some other interesting ways to tackle income inequality.

Commentary: Income Inequality as a Public Health Concern:
www.ncbi.nlm.nih.gov › ... › Health Serv Res › v.38(1 Pt 1); Feb 2003

Anonymous said...

"A better way is to change oneself. That is make more money and be richer. Or if in Singapore cannot, go elsewhere to do it."
Anon 14/6/12 12:38

That's what 60% did. Because the PAP govt provide opportunities for them to do it.

That's why PAP will never be voted out as long as PAP provide opportunities for majority 60% to make money and have a good life.

Lucky Tan is only speaking for the 40%. And the outcome is only 7% seats in Parliament.

Anonymous said...

It will stop at 40% or get better.

If I were PM Lee, I would not be concerned at all by Lucky Tan's or similar blogs.

In fact I am happy that Lucky Tan is even doing very well under PAP, staying in a condo instead of HDB flat.

Anonymous said...

The strategy is:

Choose an environment where you play into your strengths and where that environment ignores your weakness.

ISA is a strength
SAF is a strength
Control of CPF is a strength
Control of the media is a strength
Control of Parliament is a strength

and the environment is capitalism
which ignores the weaknesses:

Being tight fisted with welfare
Being nice to students
Being nice to opposition
Being nice workers
Being nice to citizens


So, what do you think?

Anonymous said...

Things got better in hougang? As in more 145 votes after Shit times unfair publicity and all the character assassination and 2000 voters disappeared. Are u still living in Singapore?

nanyanguo said...

Dear Lucky, can u do more for the country than jus blogging and sharing your wisdom and knowledge. With patriots the likes Lim Hock Siew, Francis Khoo gone, the country will need to depend on good and capable guys like u now. Come out to join and help alternative party WP or SDP to rid of the ruling traitorous bloodsuckers.

Anonymous said...

Lucky Tan is merely waiting for luck to be on his side before throwing his hat into the ring, and this can only happen when one father and son kick the bucket together, or they take a dive together from top of MBS, or they suffer the same fate as Julius Caesar ...lol

ghost of brutus

Anonymous said...

I share the same view as Anon14/6/12 13:08.

Reading Lucky's blog (and also MySingaporeNews, Tan Kin Lian, YawningBread, Online Citizen, MollyMeek, TamasekReview, Yahoo, FeedMeToTheFish, etc) have become my everyday's habit. Have stopped reading PAP's Newsletter (I mean Straits Times) long time ago.

Thank you, Lucky.

Anonymous said...

I do not think that growth fueled by debt or immigrants are good for Singapore. LSL should understand that he works for Singaporeans and not for growth.

Anonymous said...

It is amazing how foreign talent is used to push down salary. While looking for a job in accounts, HR person commented that they do not employ cheap labour (Foreign Talent).

I was stunned because, Singaporeans are looking for a sustainable salaried job so that we can plan for children which are also living in Singapore.

Singaporeans are more expensive because of the cost of living to sustain many mouths in Singapore but not Singaporeans’ demand is higher salary for extreme leisure.

Foreign talent is cheap because of the Singapore exchange rate is good and with that kind of low salary they demand in Singapore, their family in other countries can already live very comfortably.

PM got to explain this well to me because I am already very pissed off with what is happening (include transport, school, Housing price).

Anonymous said...

" If you refuse to listen and if something goes wrong, then don't blame others, it's your own FUNERAL".

How many remember this expression used esp. in the 50s' and 60s'?

Well, we can all work to make it the PAP's own funeral come GE2016, if it persists in not listening.

Anonymous said...

It must self-destruct

Only then a new version can emerge
It is the way nature intended..

SPH,NTUC,.. all must self destruct

If they cannot, forces beyond their control will destroy them.

They become irrelevant

Anonymous said...

Unanswered Question #8
------------------------

Does Prime Millionaire Lee worry more about money or more about the hardships of everyday Singaporeans?

What is upper most in his heart?
How to make more money? or
How to improve the lives of Singaporeans?

Does Prime Millionaire represent the people of Singapore or
the money of Singapore?

Anonymous said...

Either Lucky is lying
Or
The Prime Millionaire is lying.

They both can't be right.

Do you think the Prime Millionaire is running Singapore for your benefit?

Anonymous said...

it is joke what he said about raising income inequality as it was disproved by the economists such as Emmanuel Saez, 39, (a French-born economist and professor at Berkeley, and a winner of the John Bates Clark medal). he said that these high income earners increases their pay as much as the public can tolerate and there is a negative correlation between tax rates and the level of high income earners pay.

this was written in the book... end this depression now by Paul Krugman.

LHL is effectively asking the local economists to lie for him.

FPC

Joe Khiang said...

"Either Lucky is lying
Or The Prime Millionaire is lying.
They both can't be right.
Do you think the Prime Millionaire is running Singapore for your benefit?"

PM is not lying but mistaken and wrong in his assesment of Spore. He is convinced that the long term interests of the common man lies in the cultivation of a globally connected, very rich and well paid elite. HE IS WRONG. He has never had to live like a common worker to REALLY know whats going on. The elite in Spore will invest heavily in this ruling party because it serves their interests to do so.

Lucky is right, in his assesment.

Anonymous said...

searncLucky is right, in his assesment
Anon 14/6/12 23:49

So? What difference has it made in Hougang BE 2012?

What difference will it make to the opposition?

What difference will it make in GE 2016?

Joe Khiang said...

Dear Anon 14/6/12 23:49

You pose questions that WP have to answer. At this moment they represent a ray of hope. A large sector of the general populace appear to trust them.

They need to take risks, like the one which LTK took when he left Hougang and joined the Aljunied GRC, and ratchet up their work as a viable alternative to the ruling party. Voting against next budget and other bills put forward by the elitist ruling party will be a good first step( sigh...they voted for the ruling party's budget this year). The terms "constructive oppostion party" and centrist politics are relative. WP need to at times, not all the time, be confrontational in expressing their beliefs and positions in parliament.

Anonymous said...

"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.
"

Concur.

The Pariah said...

20-min mark of video:
PM said: "Singapore too must aim to be outstanding. If we are content to just be above average in the league of cities, we will fail. That is the greatest danger if we tell ourselves to slow down, enjoy life today and not worry about tomorrow."

What do u say: ____________? As a people, are we all aspiring to sit under the coconut trees?

To me, the greatest danger for Singapore and Singaporeans is to continue NOT having checks-and-balances in Parliament. At least, a one-third Opposition is needed in the House to check against any excesses. WDUT?

The Pariah said...

At 31:15-min mark of video:
PM said: "Of course without being as generous as the Scandinavians, we could still increase our social spending and raise our taxes moderately as part of a new social compact. Within limits, that is indeed what we need to do in the longer term, with an ageing population and growing health care needs. But the limits are tighter than many people realise."

What do u say: ____________? Now we are being told that "limits are tighter than many people realise" for us to increase social spending?

Previously, they say our SWFs' investments earn average annual return of 17% (Temasek) and 7% (GIC) since inception over past 35 years. Assets Under Management of Temasek (US$150 bn approx) and GIC (US$250 bn guestimate). "Tight" - So what happened? WDUT?

The Pariah said...

At 36:15-min mark of video:
PM said: "Only when citizens accept the political system as legitimate, and economic order as fair, will they give the government of the day the mandate to run Singapore in their best interests. And only with this mandate can the government do the best for Singapore and all of us."

What do u say: ____________? Under 1G PAP with Dr Goh Keng Swee, Dr Toh Chin Chye, S Rajaratnam, etc, I can largely agree.

But look back over the past years since (i) 2G PAP under Mr Goh Chok Tong, (ii) 3G PAP under PM Lee and (iii) 4G ministers like Ke-Chiu Chan Chun Sing, Heng Swee Keat, Lawrence Wong, Tan Chuan Jin .... do you see our "economic order as fair"? Run Singapore in our "best interests"?

WDUT? You will know the answer after listening to this parody of Kit Chan's national song "Home" 家 :

http://www.youtube.com/watch?v=PnoQtS-DjLQ