include("cmp.php");

The No-Growth Economy and the Bankruptcy of the PAP Economic Model

On Thursday 14 October The States Times published a synopsis of the Ministry of Trade and Industry’s (MTI) release of the advance estimates of GDP growth in the third quarter of 2021. According to the flash estimate, GDP was 6.5% higher in the third quarter than in the same quarter a year ago, which looks impressive until you remember that GDP in 2020 fell by 5,6% from 2019. In fact, even after growing by 0.8% over the previous quarter, GDP in the third quarter of 2020 was still lower than in the fourth quarter of 2018. This means that the Singapore economy has not grown at all over the last three years. To those who might retort that this is purely the effect of the pandemic, I would point out that the economy only grew by 1.3% in 2019

This undermines the whole raison d’etre of the PAP Government which has always tried to drown out critics of its totalitarian government by boasting about its ability to generate GDP growth. When I met the UK LibDem leader, Ed Davey, he told me that one of his Singaporean fellow students at Oxford, who was there doing the PPE degree, had retorted, when questioned about Singapore’s human rights record, “You can’t argue with 10% growth”. Never mind that the GDP growth is only generated by the import of huge quantities of very cheap foreign labour, who are misled and forced to go into debt and work in slave-like conditions, and by providing tax breaks for MNCs that encourage them to artificially book revenues and profits in Singapore. Ireland has generated even more impressive artificial GDP growth by dedicating its tax policy to the service of US MNCs. Its economy grew by over 25% in 2014, leading Paul Krugman to dub it “leprechaun economics”.

The PAP’s model has always been of imposing extreme austerity on its people through high regressive taxes and fees (though almost no taxes on capital and a top rate on earned income about half that in other rich economies), the forced saving of a very high proportion of income through CPF and its diversion into buying overpriced housing from the Government rather than consumption which would raise imports. Also depressing consumption and raising saving (represented by Government supluses) is the historic easy availability of very cheap foreign labour with no minimum wage and minimal restrictions on hours and working conditions. The aim has always been to suppress domestic consumption and use low labour costs and low taxes to generate a big external surplus which can then be used to build up an enormous and secret stock of foreign assets.

I have been writing about the PAP economic model in my blog for at least ten years and have characterized as the simple model. “Economic Development with Unlimited Supplies of Labour” frost set out by W. A. Lewis in the 1950s, on steroids.

The Government has always relied upon external demand to make up for the artificial shortfall in domestic demand created by its austerity policies but this is no longer working. Exports of both goods and services remain severely depressed and well below 2019 levels, in fact at levels last seen in 2017. The current account surplus rose in 2020 but this was only because the economy was severely depressed (see singstat.gov.sg)

With external demand weak the right policy response would have been to boost domestic demand by providing cash payments to Singaporeans and much more help to the unemployed and gig workers, as the Reform Party has consistently called for. However instead the Government chose to double down on its strategy of subsidising exports by paying companies a large proportion of the wages of their Singaporean employees through the Jobs Support Scheme. These wage subsidies would probably be illegal under World Trade Organisation (WTO) rules outside the pandemic and if they continue much longer will undoubtedly attract the attention of the US and EU, who might impose countervailing tariffs were the Singapore economy bigger. Without any transparency in the Government accounts and the Budget, it is difficult to tell how much support the Government really provided to Singaporeans. I have said in my analyses (see here, here, here and here the Budget that direct support to individuals only appears to have been a few billion dollars.

Without the Government providing sufficient stimulus to offset the shortfall in domestic demand, resident unemployment has risen to close to 4%. This may appear lower than US and UK levels but Singapore counts NS men as employed and subsidizes workers to go on short courses of dubious value (other than to provide kickbacks to PAP cronies). Without these artificial aids, unemployment would probably be at least 1.5% to 2% higher.

There has been much talk, from the head of MAS among others, that Singapore has to transition to a high wage high productivity but high cost economy. But it remains just that, talk. The PM and his Government remain addicted to the opiate of cheap foreign labour and vast export surpluses. But the old world of easy growth is gone. External demand is likely to remain weak and while supply chains are snarled by COVID shortages, Singapore’s position will be severely affected. The use of large quantities of migrant labour is unlikely to work as well in future or be politically acceptable. The economy has not grown at all since at least 2018 and probably earlier. The PAP have no answers and no roadmap to get Singapore to the high productivity high wage economy. When will Singaporeans wake up to the confidence trick perpetrated on them daily by a bunch of third-rate con men and pocket liners and realise that almost anyone else can do better?

 

Kenneth Jeyaretnam

 

I’m a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That’s why I’ve never been sued in any civil or criminal court no matter how hard hitting my criticism. I’m quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don’t work. The Right and the Conservatives hate me because I’m a liberal. I’m not sure what the middle think of me. I don’t think there are more than a handful of people in the middle, here in Singapore. I’m a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I’m not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean.

 

 

yyy
READER COMMENTS BELOW

17 Responses to “The No-Growth Economy and the Bankruptcy of the PAP Economic Model”

  • MarBowling:

    Great article by Kenneth.

    The Damn Economy Model for SinKapore by the PAPigs is SWEE SWEE AND HIGH GDP AT ALL COSTS!

    GD Star Rating
    loading...
  • Flabbergasted:

    Well written Kenneth. Keep writing bro. The 56.4% loonies will eventually realize their folly and wake up. The writing is on the wall. There are ripples everywhere. In every nook and corner people are bickering among themselves as to what the fiack is going on with our government. Their management of the pandemic is atrocious. Too many elderly deaths and always attributed to underlying medical conditions. What the fiack. I can write that excuse myself. Well anyway cant wait for elections and I am absolutely sure its going to be the start of the downfall of the PAP. About time as well.

    GD Star Rating
    loading...
  • I Know:

    Pinky’s idea of growing GDP is to spend on useless multi-year, multi-billion mega projects like Jewel, Changi Airport T5, Sports Hub, Gardens by the Bay, etc.

    GD Star Rating
    loading...
  • @Flabbergasted

    Technically they are not wrong, a decayed tooth also “underlying condition”, including acne, blackhead, etc.

    In any case, let these clowns at MTF continue to wayang thinking that just because they know how to hoodwink, the virus won’t touch them. We all know that they are just as vulnerable as anyone on the island. And should the day they meet their maker, it will be due also to underlying condition, am I right?

    GD Star Rating
    loading...
  • Fire:

    消费 ,消费 ,不停的消费 。

    GD Star Rating
    loading...
  • ever ready for you:

    //Technically they are not wrong, a decayed tooth also “underlying condition”, including acne, blackhead, etc.//

    the white monkey idiots and gang are sometimes too clever for the wrong things ???? hence all the PORTMAR and FEESCAR are ever ready for you for them to look smart (with uppity self-righteousness ???) ???

    GD Star Rating
    loading...
  • @ever ready for you

    Can I not agree with you?

    Not to worry, under the C19, they will be paying the same price as peasants, some will also lose loved ones, just like the rest of the peasants who did.

    Ironically, these loved ones were not lost to the C19, but to their own arrogance and cluelessness in their handling of the pandemic.

    Need I say again that it all started with NDP 2021, least anyone forgot.

    GD Star Rating
    loading...
  • Reboot:

    The whole team including Pinky himself underestimated the Covid, especially Delta Variant. They were complacent from the start, leading to the spread to Dorm etc. Then they were so confident of High Vax will mean end of Covid is near, so proudly telling everyone about 80% VAX. But they underestimated again Delta Variant is so powerful that they spread even at 80% VAX. So now they go tell the world, promote that they want to live with virus. The flipping of prata is so obvious, these clowns were outflanked by Covid several times. If you look at the 4G team, their arrogance is now completely wiped out from their faces, LW and OYK look so drawn now. The only one not showing face is Pinky and Cotton, they are going to working for the seat warmer post.

    All the stats in Singapore are manipulated to neutralise the negativities including KPI to include part time as employment. Singaporeans cannot be so dumb to accept all the manipulated KPIs.

    PAPPY model is GDP growth and votes, continues to import foreigners, their families and convert them to citizens and PRs. Nothing else, Singaporeans need to see through all the BS.

    GD Star Rating
    loading...
  • John Dough:

    President Putin said, ‘it takes another to call one’ in reply to Biden who called Putin X name.

    Shouldn’t it be the same when PAP devised FICA and POFMA for others – it follows what Putin said.

    GD Star Rating
    loading...
  • John Dough:

    As a lay economist (when, probably I was able to answer the Queen about the economic crisis when she asked, ‘how come no one saw it coming’) – if HDB flat (what store of value PAP trying to sell?) prices are brought down by say, 40 percent from current selling prices, and CPF release with no restrictions whatsoever (like a lower ‘artificial’ MS meant for COL benchmark) , to those at ages 60 onwards, I est domestic consumption will rise up and perhaps contribute 1 basis point to GDP.

    GD Star Rating
    loading...
  • Realistically:

    @ Kenneth Jeyaretnam

    KJ’s commentary is nothing new to me…….I’ve been talking about the BANKRUPTCY of the emperor without cloths self-serving policies since even b4 he became the PM; firstly on the sintercom.org forum and then the delphi sammyboy 3-in-1 kopitiam and occasionally the delphi sintercom site………

    Unfortunately disaffected sinkies chose the snake oil con of the wayang-party when it came to casting their votes………

    What to do? Blame yourselves lah………..you had been forewarned………..a long long time ago.

    GD Star Rating
    loading...
  • What is moral bankruptcy?:

    “There are three classes of people: those (sagacious) who see, those (conscience-able souls) who see when they are shown, and those (morally decimated ones) who do not see…. and he who does not punish evil, thus commands it to be done.”

    - Leonardo da Vinci (Italian polymath of the High Renaissance)

    GD Star Rating
    loading...
  • Trust only myself:

    Very true, many can do better than a bunch of con men…………..

    GD Star Rating
    loading...
  • theforgottongeneration:

    The main issue facing our policies now is not just bankrupt of ideas from our highest paid PM/ministers or their apparent incompetency (downright FAILURES in many cases), but the lack of trust and confidence from the ground. This is obvious from the declining votes for PAP, Loong having the proud achievement of getting the 3 of the worst election results in our history for the 3 terms under him (Yup, 3 out of 3). If a leader is not the smartest nor the most capable, but is at least sincere and has the people’s trust, then good and capable persons will step out to help out. However, the current administration simply think they are damn how lian, can Ownself Check Ownself, convincing themselves that they are worth million$ pay, etc…., frankly can’t understand how they can think they can win the people’s Trust. Perhaps their excuse is that Trust was not handed to them on a silver platter, hor. Hmmm, very Entitled, hor?

    GD Star Rating
    loading...
  • Realistically:

    @ What is moral bankruptcy?:
    October 18, 2021 at 6:41 pm (Quote)

    >>“There are three classes of people: those (sagacious) who see, those (conscience-able souls) who see when they are shown, and those (morally decimated ones) who do not see…. and he who does not punish evil, thus commands it to be done.”

    - Leonardo da Vinci (Italian polymath of the High Renaissance)<<

    As to the last of the 3 classes, are you, by any chance, having one Tommy Koh Thong Bee in mind?

    GD Star Rating
    loading...
  • Morally dying & done dead....:

    Realistically….. Tom whoever, Dick the Duck & Harrily, Cotton genie, 30% water existentialist, lousy schools of mendacious cronycrats….. the whole Jin Geng of megalomaniac narcissists!

    GD Star Rating
    loading...
  • Harder Truths:

    Let us understand $G’s economy first. The late Dutch economist Albert Winsemius(b. 1910, Netherlands & d. 1996, The Hague, Netherlands) was an economic adviser to the Singapore government for 24 years. He was the brains behind the industrial revolution that took $ingapore from a trading port under the British to a semi-manufacturing hub in the 1970′s.

    The problem was this model was only useful for the manufacturing era, which ended in the mid -1990′s. Since then, a different model for growth and financilisation should have been applied.As expected the Regme did not know how to do it. They have continued Winsemius’ policies for growth which are not only unworkable but also outdated.

    There has been no alternative to the things that made $G work. This is necessary as technology and trade changed us and our neighbours. Now we are finding that Malaysia, Vietnam and even Indonesia have cheaper and better tourist and visitor attractions, well worth their cost.

    $G is also going to lose its port superiority once Malaysia completes the OBOR connection to Penang and Malacca, to be priced at a fraction of the cost and with China’s expertise and employees.

    Banks and financial services d onot want to spend money on a tanking economy with no future potential. Virtual banking has made physical corporate regional HQ’s irrelevant. It is easier tyo put tyhe main office in HongKong, Dubai or Mumbai and use only branches to service customers. So the banking sector will not need $G and its extortion on building rents and services.

    The whole $G skyline will change. Work from home will need only an internet connection from India or China to the $G virtual office. In fact, $G may not have anyone physically in a compny that is doing its business here!

    So the future of $ingaporeans is to become virtual citizens. Move outside of $G instead of jobs coming here. Let’s face it, most of the jobs in $G for locals are government jobs anyway.

    We are looking at a future where locals are going to be forced to work outside and cheap imports come here to replace us. What we earn in pittance outside will have to sustain the high prices here. What the FT earn here will pay for their luxury villas in third world countries.

    If $g;s future is not irony for its citizens then I don;t know what is.

    GD Star Rating
    loading...

Leave a Reply

 characters available


Scroll Down For More Interesting Stuff


Member Services
Self-SupportMembers LoginSelf-Support
Sponsored Advertisement
Search On TR Emeritus
Sponsored Advertisement
Announcement
Advertisements
Visitors Statistic
Latest Statistic

UA-67043412-1