Went for Barcamp Singapore on Saturday. It was a really enriching event and I got to see a lot of familiar faces. I didn’t realise that I actually knew some of the people whose blogs I have been reading. I guess this is what happens when you do not look at the ‘About’ page. Or another indication that Singapore is really one small dot.
Anyway, I’ll probably share about the event when I manage to go through all the notes that was made that day.
The one thing that really stuck with me was this quote that was shared by one of the presentators that day. While she was not using it to refer to our economy but trying to describe the fight for our attention when we consume media through print, tv and the internet, I found it really suitable to sum up the whole issue of what Singaporeans are feeling about the economy:
The cake is getting bigger, but the slices are getting smaller.
Well, not all the slices are getting smaller. And hence the increasing divide. Some people (i.e. the rich) are getting bigger and bigger slices, while the rest of us are getting the same if not smaller sizes.
Just last thursday, I had a rather impassioned discussion with a close friend about the Singapore economy. It was argued that an income divide is inevitable for a capitalist society and if we did not want an income divide, we would have communism where everyone was poor. Honestly, I think even in a communist country, we would have an income divide as those in power would most likely try to aggrandize wealth for themselves as history has shown.
The thing about a capitalist society is that it rewards people (who either by good fortune, hardwork or generational accumulation of wealth have the resources to invest ) when they invest wisely. Investment in any endeavour entails risk and the returns for taking on that risk is the reward.
As an extension of the desires of shareholders, companies would want to maximise profit and one way of doing that is by reducing cost (or expand revenue). While it can be argued that not all companies just seek to maximise profit and books like ‘Small Giants’ have highlighted such companies, it would be fair to probably say that most companies operate with the goal of profit maximization and while it is possible to do that just by increasing revenue while keeping cost the same or ensuring it increases less, most companies would probably like to reduce cost whenever it is possible. And wages are definitely a significant part of cost.
While some of the online discussion has talked about how wages have been depressed because of the pursuit of growth, it is probably not presumptuous to point out that wages might have also been depressed in the absence of policies geared to pursue growth. Of course, it is probably debatable if the government’s policies were the only way to pursue growth.
The government’s perspective is that if Singapore did not carry out the measures of CPF cuts, lowering corporate and income tax and allow the influx of foreign labour, companies and investments would not have flowed into Singapore, and there would have been less jobs and low wages also. That situation might not have caused a debate on the existence of a rich-poor divide, but maybe one of why the Singapore economy was doing so badly with high unemployment rates and low wages. Of course, now, we can only speculate on what might have happened if policies were different.
One point that has been made is that the foreign workers have been taking the jobs that could have gone to unskilled Singaporeans. The government has tried to balance the need to provide companies in Singapore with low cost labour while providing jobs for unskilled Singaporeans who cannot compete in that market by implementing initiatives for retraining. Such initiatives is easier said than done. There is a reason why there is the phrase ‘you can’t teach an old dog new tricks’.
Also, repeating the argument that foreign labour took a fair number of jobs created, it should be considered that it might have been the provision of jobs for such foreign labour that allowed the other jobs for Singaporeans to be created. The foreign labour was not the cause of less Singaporeans getting jobs but the cause of more Singaporeans getting jobs. Of course, I’m speculating. Is there anyway to mine the data we have to know this for sure?
The thing is, at the end of the day, the rich will do anything to increase their wealth. And it takes enlightened leaders (be it a boss at a company or the government of a country) to see that the people have contributed to the success and spread the wealth. Companies are unlikely to do it. Shareholders of any company would probably want to keep as much as they can for themselves without losing their staff which will prevent them from earning more money. Few bosses would share just because they acknowledge your contribution if they acknowledge it at all. This is cynical, but I hold the belief that it is true. Every boss thinks that their decisions played a more significant part then the actions of the people in implementing those decisions.
So it is up to the leaders of our country to solve this distribution of wealth or rather distribution of rewards for endeavour. The problem is, our government and I say this with great presumption on my part, only wants to redistribute wealth because they see the resulting social instability due to an increasing income divide as a threat to their ability to stay in power as well as the future economic growth of Singapore and not because they feel that all Singaporeans deserve bigger slices of the cake because of their contribution.
It is a small difference, but to me this difference in mindset is important. The former will lead to actions by the government to give as little as possible to appease the people, the latter will make them give as much as possible as long as it does not hurt the future growth of our economy.
The problem is, people who are doing ok or well tend to say that the poor or those complaining should do more for themselves. That is presumptuous. Who is to say that they are really not trying? And just because they have not contributed directly to the economy does not mean they have not sacrificed for it. As a people, we could have voted the PAP out because of the unpopular measures (i.e. allowing such an influx of foreign labour) yet a fair majority still voted for the PAP because I believe we still trust in their policies and for want of a better phrase, we sucked it up and sacrificed. We allowed the foreign workers to come in and depress wages. We took wage cuts. We accepted GST and fare hikes. The sacrifice made to accept these policies was the contribution.
Whether directly, or indirectly, all Singaporeans have contributed to the recovery. While I do not begrudge ministers their pay and pay rise because they consider themselves having done their job (and done it well?), maybe it is time they do not deny all Singaporeans better distribution. While it is probably not going to be easy to implement measures to redistribute wealth, and difficult to balance measures of redistribution to discouraging private and corporate investments in Singapore, it is not impossible and I’m sure the ministers’s pay will probably cover the brain juice involved in solving these issues.
But I guess we can only hope that in the end, the rich finds it beneficial to themselves to help the poor, if not, the issue of the income divide will never be solved without the need to pry the money out of their hands.
tourist | 22-Jan-07 at 7:09 am | Permalink
we are all in the same boat. the small people go down, the big people will go down with them…eventually.
as for the problems of the poorer members. they are the making of the richer minority members simply because, they decide on the rules of the game. naturally, they will take the bigger share of the pie and this is by virtue of the fact that they hold the all important knife that divides the pie.
real question is: can you trust someone talking about your welfare whilst waving a knife at you?
as the world becomes flat, good people and talents become grey. and those who begrudge not, unknowing to some, may also be collaborators?
Gadgit | 22-Jan-07 at 7:11 am | Permalink
The size of the slice is not merely determined by how much you get, but how much you owe and will potentially owe - housing and medical/education/etc respectively. When you compare the present with the past - 60s through to the 90s - , the cake has indeed gotten bigger, but the slices have evolved from munch to nibble sizes. It is the new generations, who have no memory of the past, who are relied upon to validate the status quo because they are born into it as opposed to having experienced better(past) times.
iantimothy | 22-Jan-07 at 8:08 am | Permalink
I think we are actually not in the same boat. The ‘big people’ have the money to buy tickets to go onto another boat or maybe just switch to another form of transportation altogether.
Hmm…@tourist, are you trying to take a dig at me with your last line? In any case, I think there is a difference between not begrudging their salary and supporting them in everything.
Would I like their salary to be lower? In a way I would because I have an idealistic notion of public service. But one has to be pragmatic. Do we believe we can indeed get capable people to do the job without such a salary. Of course, we can always argue that such a salary would not be sufficient to attract the talent and that could be indeed the case now. But is it necessary? If it is indeed not necessary, and we are so against the current crop of ministers, then why have not more capable ones step up? Are the only capable ones all anti-PAP? And if so, and if they are indeed capable, then one might make the (tenuous) inference that the barriers that our government has imposed on the opposition is so insurmountable that they cannot compete. Is that really the case? Is it so insurmountable for capable people?
And if that is indeed the case, is it then that no person who is capable and with strong moral fibre would join the PAP? But wouldn’t such a person put petty (well..maybe not so petty) differences aside and strive for the greater good of Singapore with the PAP as the platform. Or is the PAP so ‘evil’, that no such person would put themselves in a position to work together with and within the PAP.
I do not have answers to these questions of course. And I honestly think no one has answers to these questions. But if there are indeed people who are capable enough to run this country, then let them step up. And let them reduce their own salary if they are against it. Till then, I think we have no viable alternative. Because from the way things seem to be, it seems like we have no capable non-evil people in Singapore serving our nation or who wants to do so. Which of course I think is untrue. Just because they have a salary we do not agree with, does not mean they do not have the best intentions with regards to serving our nation. Their actions we may disagree with, but their intentions is something we should not call into doubt so quickly or at least for some of them.
Russ | 28-Jan-07 at 3:31 pm | Permalink
I believe all of you are missing the following;
1. Large businesses in capitalist, free enterprise systems are in competition, including competition for people. Thus, the idea that since wages and salaries are a large cost component the imperative is to take them down as far as possible, is offset by competition.
2. Those who are in “pure commodity” jobs (ie. anyone can do that job - one just as well as the other - so the competitive factor is low) benefit and have always benefited from the uplift of growth in the capita;list free enterprise system. Such people enjoy a standard of living today that is dramatically better than the past. Think about TV, air conditioning & heating, food, transportation, and the always elevating definition of “poverty”.
3. The obsessive resentment (indeed ressentiment) towards “the gap” is a losing mentality, and no strategy at all. The winning strategy is to enter the competitive landscape and prepare oneself, or one’s children, for jobs, trades and professions that are more rewarding. In other words, “progress”. Personal, individual level progress fuels capitalism and free enterprise, and causes the tide to rise synergetically, and always has.
4. Visit Cuba. The wealth gap has been solved. I dare you to live there. Or try North Korea, or any other marxist system where that awful wealth gap has been shut down. Finally:
5. There really are those at the lower end of the economic spectrum who choose not to work hard, not to compete, and not to prepare. They might have chosen alcohol or drugs, or having babies at a young age out of wedlock, or any number of other irresponsible and unprofitable choices. Even these can be overcome by winning strategy and hard work, but many will not choose that. They should not be allowed to starve or to die of common illnesses, but neither should they be rewarded for their lack of effort.
There simply is no more successful system than capitalistic free enterprise, and any “wealth gap” that may exist is simply a part of the landscape. In and of itself, the “gap” causes no harm to anyone, and pales in comparison to the tidal uplift and incredible opportunities the system creates over time.
iantimothy | 29-Jan-07 at 3:55 am | Permalink
Hello Russ. I agree with your points. Actually, I think my post wasn’t resenting an income gap per se. It is something that I acknowledged will exist and it is part of the capitalist system. And I do believe the capitalist system is currently the best system we have now in terms of implementation.
What I was actually saying is that there is an increased in terms of income gap and how the increased happened. If the economy as a whole has growth along with income gap, what it means is some people are benefiting more than others. That in itself is not wrong. The point is, it is in the nature of the capitalist system where sometimes the rewards of contribution is not equal. Specifically, I am saying Singaporeans have contributed to the progress of the economy, but they are not benefitting from it because companies are not distributing that reward.
The notion that there is competition for talents which will result in companies offering more to their talents is a fair one. But if there is a over supply of talent? Then what happens. And even if a person is not what can be deemed as a ‘talent’ but one in a commodity job, shouldn’t such a person be rewarded for contributing to the growth and progress?
In any case, I believe that a victim mentality is bad. Take the influx of Indian programmers. We argue that it depresses the wages for local programmers, but we can actually move up the ‘food chain’. In fact, if there are so many Indian programmers looking for a job, why not start your own company and hire them? The fact is, I agree that there are always opportunities, and the victim mentality is a defeatist mentality which will not help ourselves.
But that still does not mean the argument that maybe some better distribution of rewards can be achieved does not carry weight.
Also, I do not think there is no income inequality in either Cuba or North Korea. I am pretty sure there is a gap between those in power (i.e. the ruling class) and the general population. The only difference is most of the general population have no income inequality between themselves.
Also, even though it is true that the capitalist system has benefited the people in commodity jobs and the standard of life might be argued to have improved, that does not mean that the distribution of rewards is fair nor does it negate the argument that maybe we can look into ways to reward people more fairly (this is of course hard to measure) for contributing to Singapore and its economy.
Russ | 30-Jan-07 at 1:11 pm | Permalink
Good points all.
I wonder, though, how we can come at the issue from a “fairness” perspective without a built-in victim mentality. If the problem is that some are contributing but not being “fairly” rewarded for their contribution, and if the reason is that others (the “wealthy” or the “corporations” or whatever party happens to be in the sights of redistributors) are withholding from them their “fair” rewards, then automatically we have victims and oppressors.
I might argue that a capitalist, free enterprise system - while it could never be perfect in anyone’s eyes - accounts quite efficiently for rewards distribution as long as its fundamental underpinnings are in place. These underpinnings, without which a capitalist free enterprise system loses efficiency and ultimately breaks down, are simply “values”, such as honesty, integrity and trust. To the extent they are weakened, the efficiency of free enterprise as a rewards distribution mechanism suffers.
So perhaps what we are really talking about here is the inefficiency of a system in which the fundamental underlying values are weak or weakening, resulting in oppression and victimization. To put it simply, someone is stealing from someone else, resulting in unfairness in final wealth distribution.
Again, we have oppressors and victims.
So we begin to attack and treat the results by arguing and advancing various forms of “wealth redistribution”. It could be anything from making a tax system more progressive to rationalizing the “poor” stealing (back) from the “wealthy”. Either way, or anything in between, and we have a worsening class warfare, an additional symptom of broken values.
We also reap the madness of unending arguments about definitions. Who says what is “fair”? How is that decided? How often should the definition be adjusted, for what reasons and by whom? What is the authority? Who says?
This approach, I fear, could never solve the problem, but only make it worse, and worse, and worse. I see a tremendous amount of energy, debate and animosity around supposedly curing the symptoms of this desease, but relatively little about the disease itself.
As we substitute mushrooming laws and regulations for shared values, as is happening in the U.S. and other western economies, we create a vortex from which little can escape, except greatness.