TR EMERITUS

“...We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness….” Thomas Jefferson (Declaration of Independence). Not many care what the other 95% of that Declaration was about. Most of it a summary of British injustices against the ‘Americans’. And the Declaration is generally abbreviated to “..all men are created equal…” It seems to me, there are two massive political forces, from the extreme left and the extreme right playing maximum, to the hilt, the discontent of the global working class, and this to me centers around the concept of equality. So, are men really equal, how can that be? The range, width and breadth of human diversity is as unique as more than 7 billion. Where does equality come in? So, let’s be clear, we are not alluding to clones, even identical twins are not equal. When people ask for equality they sure are not asking for Maoist culture where everyone wears the same clothes, eat the same stuff or act liked they are clones. Most research on equality, starting from kids, shows that it is not equality per se but a sense of fairness. [ 1 ] Fairness means rewarding the person that works harder even if it means he gets more. However, that is what may be called economic equality. In a capitalist system, we have let prices determine the value of products and services in a free and open market. The theory demands total access to free information and open channels of communication, unhindered regulations and no government interventions. The problem with Singapore’s economic system is that it is determined by GLCs with a dominance of Singapore’s economic activities. The Economist had ranked Singapore among the most-free economy and yet at the same time as a Crony Economy, and Hong Kong falls into this dubious category as well. This association between capitalism and cronyism gained much traction after the 2007/08 Global Financial Crisis. The individuals were left to fan for themselves while big corporations got bailed out. Big corporations are deemed too big to fail but individuals, well, they don’t matter. The Economist merely attempted to place this association of capitalism and cronyism in a readable context. The PAP had placed much of their reputation on being transparent and having a free and open market that dovetails into globalization. But they cannot answer a simple question, what is the pay of Ho Ching? No one with a logical mind believes the reason is because Temasek is a private company. It is owned by the government, and in any other country that values transparency, her pay will be no secret. It is a secret because it is a political timebomb, period. Mind you, we are not talking about corruption. The Economist had ranked Singapore with being among the least corrupt countries. And while The Economist methodology is not without criticism, it provides an intellectual platform for formally recognising what one may call a sense of injustice, unfairness in a system that is not corrupt but not equal. And one of the most important features of a free and open economy is information. And yet Singapore has no channel similar to the Freedom of Information Act [US]. And when we talk about a SMART Nation, information is the most important resource to energize new ideas and new ways of doing things. If information is only given to GLCs, then only they have the resource denied to SMEs. This is unfair and not equal. So, that is about economic equality. But there is also our sense of morality and philosophical understanding that determine our measurement of equality. Again and again we go back to Tan Chuan Jin’s ascribing old people needing to collect cardboards to be sold, as a form of exercising. This is perhaps one of the most derided statements by a Minister. We do not necessarily want to deny our Ministers from having a high pay. But if a Minister is paid the highest in the world then surely our social benefits should also be the highest in the world right? Instead we have one of the lowest social benefits among developed nations. This affronts our sense of justice , of fairness and of equality. On the global front, this sense of injustice or inequality is creating domestic tensions in the developed world, that has profoundly changed globalization and with that increased protectionism and militarism. And the trouble is, with this sense of inequality, the policies may veer too much to redistribution and neglect wealth creation. If there is no wealth there can be no redistribution. But the first step must be taken by a government that earns the trust of the people to be fair. Unfortunately, the tensions building, the suppressed anger is now overflowing, the euphoria of globalization looks to shift decisively to more parochial governments worldwide. In Singapore, we need a change of political leadership that has grown heavy with the inertia of globalization, the crony economy that masks inequality both economical and moral must be rethought and renewed with fresh politicians.   BK      Read More →

On April 22nd both Taiwan's President Tsai Ing-wen and its Minister of National Defence apologised for the emergence of a cluster of 28 Covid-19 cases on board a Taiwanese navy ship. President Tsai said "We will not evade responsibility for this," and that the military's business was also her business, given her role as commander-in-chief. She added that errors had been made by the military in its handling of the cluster, and apologised that those errors had caused a public health risk. While the Taiwanese Government acknowledged their mistake and "deeply regretted" the mismanagement of Covid-19 measures on a ship with 19 cases, no such acknowledgement or admission of mistake is coming forth from the Singapore Government. If anything, the Singapore Government has defended itself and has refused to admit that it had dropped the ball with regards to the clusters in the foreign workers dormitories. And we have not tens, nor hundreds of new cases in this cluster, but tens of thousands. First, in late April, Singapore’s Ambassador-at-large at the Ministry of Foreign Affairs, said in the first few weeks after the infection hit our shores, “no one in the world knew about asymptomatic cases, and so we didn’t know that." And now, Senior Minister Teo Chee Hean has blamed the spread of the infectious disease in the community to “communal living conditions in the dormitories”. The first Singaporean Covid-19 case was that of a Chinese woman who had come to our tiny island on a Scoot flight from Wuhan. And the Ministry of Health said that she was asymptomatic when she boarded the Scoot flight. CNN published an article on Feb 1, quoting a top US infectious disease doctor saying "there's no doubt" Covid-19 can spread even when people have no symptoms. The New York Times published an article on February 4th saying, "doctors in China claimed asymptomatic transmission was possible, and a letter published Jan 30 in the New England Journal of Medicine appeared to back them up." Furthermore, long before there were large outbreaks the non-governmental organisations working with foreign workers pointed out that the crowding in dormitories made infection spread a very real prospect. Despite all such warnings, the Government let their guards down in tackling the pandemic and exposed our society to a public health risk. To Mr Teo’s credit, he acknowledged that the outbreak in the dormitory clusters “has been a major challenge”, and that these measures “turned out to be insufficient”. But in the same breathe he also said, the Government “acted decisively” on the matter. Taking responsibility for a mistake shows integrity and empathy - which are valuable traits for any Government to win the trust of its people.   Ravi Philemon        Read More →

In 1994, Nobel laureate for Economics, Paul Krugman, published a provocative article, “The Myth of Asia’s Miracle”. He noted that the Singapore economy was no different from the Soviet economy of the 50s and 60s. The Soviet economy expanded very fast for a long period but then growth eventually slowed to a trickle as it was unsustainable. Although economists did not predict it, the Soviet Union eventually disintegrated. The comparison implies that Singapore’s growth is merely a case of perspiration rather than inspiration and just like the Soviet Union’s, would run out sooner or later. This riled the PAP leadership especially LKY, who took to bashing Krugman whenever he had the opportunity, but began constantly talking about productivity. Back in the 50s and early 60s, the Soviet Union’s growth was phenomenal, at roughly three times that of the US. At that rate, the Soviet economy could outstrip that of the US by the 70s. There was a real concern that a “collectivist authoritarian state” was better at achieving growth than free-market democracies. This was made more worrying when the Soviets launched the Sputnik and were leading in the space race. Khrushchev even pounded his shoe on the U.N. podium and declared: ”We will bury you!”, which was an economic rather than a military boast. However, upon careful study of the Soviet economy the only thing surprising about it was there was nothing surprising. All the growth could be accounted for by the labour and capital that were mobilized. There was no hint of superior productivity. The Soviet Union was very good at mobilizing resources, period. Sooner or later, diminishing returns will set in and the growth would peter off. True enough, growth eventually slowed down considerably and the Soviet Union disintegrated. According to economists, advanced developed economies are able to sustain growth because of technological advancement which results in improvements in productivity rather than just increasing of inputs of labour and capital. In the Singapore experience, according to Krugman, the increase in growth is due to the increase of labour and capital only. Almost none of it is due to an increase in productivity. Sooner or later, growth would taper off as the labour force cannot keep growing year after year and diminishing returns on capital would set in. Krugman isn’t the only economist who has this view. Back in 1984, a Harvard graduate student, Yang Tsao, did a study on Singapore’s growth and similarly concluded that it was mainly due to increase in inputs, but not many people took note of it. About eight years later, a very promising growth economist, Alwyn Young, wrote an article “A Tale of Two Cities” in which he compared the productivity of Hong Kong and Singapore. He found that Singapore poured in much more workers and especially capital, into its economy and yet their growth rate was not very dis-similar. He too concluded that the growth of the Singapore economy was due to increasing input rather than productivity. In other words, Hong Kong achieved roughy the same results with much less increase in resources. Not surprisingly, Singapore loyalists shot back at its critics. Two years after Krugman’s article, Dr Goh Keng Swee, no less, and Dr Linda Low, Associate Professor of Economics at NUS, published an academic paper, “Beyond ‘Miracles’ and Total Factor Productivity: The Singapore Experience”, to debunk Krugman. They noted that during the initial years after Independence there were similarities to the Soviet model of the 50s and 60s as the focus then was to mobilize resources rather than improving productivity. However, after the late 70s, Singapore began its industrial revolution and transited from low-value industries to high-value and high-tech industries, the workforce became more educated, more emphasis was accorded to training, R&D and technological advancement, and productivity improved. Indeed from 1986 to 1994, productivity increased 2.6 percent and this increase in productivity alone accounted for 30 percent of the GDP growth in that eight years. In their conclusion, they noted that Singapore appears to have reached a matured growth stage and according to the New Growth Theory, should be “poised for increased returns to scale and accelerated growth” and envisions joining the ranks of first-league industrial developed countries. As for the comparison with Hong Kong, they noted that it is not appropriate. Crucially, Singapore is a State while Hong Kong is a city and therefore a chunk of the former’s capital expenditure goes towards not only economic but social objectives as well. As such, it is not fair to compare the productivity of their respective capital. So, who is right? In 2010, LKY ruefully lamented: ”We’ve grown in the last five years by just importing labour”. Indeed, not only cheap foreign workers, but foreign PMETs, new PRs and new citizens. We have also grown by just pouring more capital into the economy. Since Dr Goh and Dr Low wrote their paper, the downtown skyline of Singapore has been transformed, Sentosa has become an exclusive residence for the rich and a gambling haven, the North-East, Circle and Downtown MRT lines have been added, with each subsequent line being more expensive to build, the KPE has been dug and runs beneath the newly built Marina Barrage, the artificial behemoth of a garden, Gardens by the Bay has been erected, Terminal 3 and 4 have been commissioned and in the meanwhile, construction is in progress for Terminal 5, the mega mall called Jewel has opened to much fanfare in 2019 but has since become a white elephant (hopefully, post-Covid19, the crowd will return), Keppel Port has been de-commissioned and is shifting to the new mega port at Tuas, the list goes on. And yet, growth in the last two decades has not been high, perhaps just about justify the massive input of labour and capital as well as new foreign and local private investments. Is there any hint of superior productivity? Someone once remarked: “What’s wrong with growth with more inputs?” The country may be richer but there are cost, not least of which is over-crowding, social friction, rise in the cost of living and increasing inequality. Even an increasing accumulation of capital will eventually face diminishing returns. Given our small geographical size, continual increase in inputs for growth cannot last very long. Growth eventually has to be borne by increasing productivity. So, I believe Krugman and company is right. The PAP has created a Singaporean workforce that has not become any more creative, entrepreneurial or motivated, but rather, is narrow-minded, lacks initiative but good at following instructions, and on the side, looking out for rent-seeking opportunities. You can’t fault the Singaporean because he is shaped by the environment, which the PAP has created with its policies; he is merely adapting to it.   Foong Swee Fong      Read More →