Thursday, September 15, 2011

Roots Of Discontent

In the ST Interview with visiting Professor Aneel Karnani from University of Michigan, it was quoted that the Gini coefficient has risen from 0.43 in 2000 to 0.452 last year. That puts the Singapore wage gap second-largest among the world's developed economies according a United Nations report. He said, "The sense I get is that Singapore has focused too much on growing the size of its economic pie and not enough on distributing it."

In presenting the case for more foreigners, Lee Kuan Yew once used the line that a small slice of a bigger pie is better than a big slice of a small pie. This was a variant on the NTUC's 50th Anniversary Dinner speech he gave in May 2011, when he said unionists played a key role in the productivity movement since 1980, deciding on enlarging the pie rather than fight for a bigger slice of a small pie. Here Professor Karnani's analogy of the barber comes in useful. The guy who takes 20 minutes to give a haircut 100 years ago, still needs 20 minutes to complete the task today. For people engaged in similar work, productivity just doesn't rise. These are the folks who will never benefit from polices that grow the economic pie and make the country rich. Unless the government intervene in the markets by introducing a minimum wage, empowering workers to collectively bargain for higher wages, or providing free public-funded services like education or health care.

Dream on. When Mayor Sam Tan announced that the Central Singapore Community Development Council (CDC) has set aside enough funds for a Recession Economic Assistance Package (REAP) to help families with laid-off workers in the forthcoming economic downturn, he was talking only of a 2-month reprieve. And the lucky recipients will have a 2-month wait for the rescue package. Not exactly the kind of cash hand-outs or "conditional transfer payments" the professor was contemplating to temper the social inequality.

The picture looks real dismal when you reflect on the survey results from the Sept 10th -16th issue of the Economist. Just substitute Russia for Singapore, and the itemised roots of discontent could have been our own. While corruption among civil servants may not be as bad, recent press accounts of confidential information being traded to settle gambling debts may be just the tip of an iceberg. Even the definition of corruption may not stand up to public scrutiny - where else are politicians paid to be honest? The Economist article about the current mood in Russia is titled "Time to shove off". The disillusioned may take it as sound advice.


  1. Mr Lee forgot to mention that if the small size of the bigger pie is the same size as the big size of the smaller pie, then the big size of the bigger pie is going to dwarf the small size of the smaller pie. The naive population must have missed out the bigger pieture.

  2. //Empowering the workers to collectively bargain for higher wages//

    Tan gu gu! Unions have lost all their respect and spine from the people. Since when do they know how to fight for the workers anymore? As long as you have a Union Leader like LSS whose mantra 'cheaper, better, fastener" is the way to go, the straight path is down to hell. He's the next Minister to be voted out , so he can go apply for his new job as Chief of New Cheap Labour in China or India instead. There're plenty of CBF workers for him to manage there.


    This is our new lot of cheaper faster betterer workers. If it is not modern day slavery, or legalized human-trafficking, then what is? Who end up being penalized? Those poor sods who gave their money and lives for a promised land that never was? All because we want to save our money to avoid respectable minimal wages for our local workers and end up exploiting these people. Where's your conscience PAP? And Mr Shanmugam has the cheek to dispute USA's claims on human trafficking. Shame on our MIW. 3-4 decades of learning from the western civilizations only yields these sort of decaying morality. And now we are using CHINA as our model? This country is going down the tube.

  4. Continue to vote wisely in GE 2016.
    Persuade, friends, relatives and elderly parents to join you.

    It cannot be helped.
    There is no other way.

  5. The immigration route to replace TFR is not sustainable model.

    1) Unless migrants are couple with young children or intend to start one, there's high chance they are transient workers to exploit opportunities in SG , thus depriving locals their place. This has been proven that many have used SG as a stepping stone to migrate to other western countries. Unless SG Govt release the success of such figures, we accept and view that as mostly true based on anecdotal evidence.

    2) Migrants may also bring their aging parents/grandparents over to SG, and that help push the aging population further, thus constraining and consuming more of our healthcare and other social subsidies.

    3) Unless SG stipulate the new SG citizens must have 10yrs of residence here before their offspring or immediate family can enjoy the local benefits like ordinary singaporeans that could range from healthcare to education. If such a tiering is not in place, then SGreans will always ask why do I need to serve NS -- for whom?

    4) For low skilled workers like those mentioned in Yahoo, they could contribute to the income inequality ratio further, and again will place more strains on our resources, instead of helping the old-age dependency ratio.

    5) Since SGreans have shortages of service/social worker volunteers, one other way is to require the new applicant/citizen to serve a mandatory 2 years of volunteerism to ease it. And that would placate locals more.

    6) Even out MIW refused to take a 3rd world wages (used to by our founding politicians) in today's economy, why else do they think is fair and do-able for these group of bottom 10% ? That's just pure hypocrite.

    In short, I hope more academics and singaporeans come out and debate and scrutinize those arguments put forth by IPS. As every country are doing the immigration route, it is really a zero-sum game. They will have to come from China/India largely.

  6. The barber who takes 20mins for haircut at $10 now faces cheap competitor who takes 20mins at $5 for shoddy work, and cannot be undone, and needs more supervision.

  7. Link:

    Is Population Growth a Ponzi Scheme?

    By Joseph Chamie | Thursday, March 04, 2010
    The basic pitch of those promoting population growth is straightforward in its appeal: "More is better." Joseph Chamie, who has spent a lifelong career as a demographer, including 12 years of service as the director of the United Nations Population Division, finds that more is not necessarily better.

    Bernie Madoff's recent Ponzi scheme has drifted out of the world’s headlines. However, there is another even more costly and widespread scheme — "Ponzi Demography" — that warrants everybody’s attention.

    While it may come in many guises, Ponzi demography is essentially a pyramid scheme that attempts to make more money for some by adding on more and more people through population growth.

    While more visible in industrialized economies, particularly in Australia, Canada and the United States, Ponzi demography also operates in developing countries. The underlying strategy of Ponzi demography is to privatize the profits and socialize the costs incurred from increased population growth.

    Concerns about population growth become radioactive. Politicians, journalists and environmentalists choose by and large to sidestep the entire issue.

    The basic pitch of those promoting Ponzi demography is straightforward and intoxicating in its pro-population growth appeal: “more is better.” However, as somebody who has spent a lifelong career as a demographer, including 12 years of service as the director of the United Nations Population Division, I find that more is not necessarily better.

    As has been noted by Nobel laureate economists Joseph Stiglitz and Amartya Sen as well as many others, current economic yardsticks such as gross domestic product (GDP) focus on material consumption and do not include quality-of-life factors.

    Standard measures of GDP do not reflect, for example, the degradation of the environment, the depreciation of natural resources or declines in individuals’ quality of life.

    According to Ponzi demography, population growth — through natural increase and immigration — means more people leading to increased demands for goods and services, more material consumption, more borrowing, more on credit and of course more profits. Everything seems fantastic for a while — but like all Ponzi schemes, Ponzi demography is unsustainable.

    When the bubble eventually bursts and the economy sours, the scheme spirals downward with higher unemployment, depressed wages, falling incomes, more people sinking into debt, more homeless families — and more men, women and children on public assistance.

    That is the stage when the advocates of Ponzi demography — notably enterprises in construction, manufacturing, finance, agriculture and food processing — consolidate their excess profits and gains. That leaves the general public to pick up the tab for the mounting costs from increased population growth (e.g., education, health, housing and basic public services).