By Steven Ooi
A playground for the rich. Disneyland with the death penalty. A vibrant city where East and West do meet. These are just some of the descriptions of Singapore by the world media over the years. My tiny city-island-nation of just 712 square kilometres rose from abject poverty in just three decades to become one of the most advanced and affluent nations in the world today. We have embraced globalisation and thrown our doors open to foreign talent and capital, and succeeded so emphatically that we now have the world’s highest concentration of millionaire households – at 17 percent. But beneath the shiny exterior of luxury condos and BMWs lies a darker reality: the poorer members of our society struggling to make ends meet. Our income inequality is now second highest in the developed world and social frictions have consequently risen. In order to achieve increased prosperity for all, we need not only to grow the economic pie but slice it more equally. This is exactly what the government is striving to do. Despite the immense challenges we face, I believe that Singapore has what it takes to achieve these goals with a high degree of success. Hence I believe it is a very realistic goal for us to attain greater material well-being for the great majority of our population, but to do this for the entire society is an impossibility not only here, but anywhere in the world.
What gives me greatest confidence that we can grow the pie is the fact that we are the world’s second most economically competitive nation, according to the World Economic Forum’s Global Competitiveness Report 2013. This is in no small part due to our clean and capable government, which has built the security, stability, infrastructure, strong rule of law and open economy that make Singapore a great place to invest and do business. This, together with the strong work ethic of the people, has made Singapore the wealthiest country in the world on a per capita Gross Domestic Product (GDP) basis, according to a study by Citi Private Bank and Knight Frank. Even though we no longer enjoy the 7-8 percent GDP growth of the past, our economy is still growing at 2-3 percent a year and continues to attract tens of billions of dollars in foreign direct investment a year, for instance, Rolls Royce’s aircraft engine manufacturing facility and Procter & Gamble’s regional R & D centre.
While Singapore has reaped the benefits of globalisation with its highly open economy, we are also constantly buffeted by the fierce and growing competition that it brings. Emerging economies like Thailand, South Africa and Brazil constantly nip away at our heels, climbing the value chain and threatening to eat our lunch. Many multinationals such as HGST, a US-based hard disk drive manufacturer, have closed or downsized their factories in Singapore to move to a lower-cost location. It is a constant challenge to stay ahead of the competition to even maintain the size of our pie, let alone expand it. But little Singapore possesses enduring competitive advantages that other countries find very hard to replicate. Besides the aforementioned clean and capable government, security and stability, outstanding infrastructure and strong rule of law, we are also free from natural disasters. A multinational can set up its headquarters or semiconductor plant here without fear that it will be shattered by an earthquake. Furthermore, Singaporeans are in the unique position of being fluent in both English and Asian languages such as Chinese, Malay and Tamil, and can thus act as an invaluable bridge between East and West. Hence I have little doubt that we can continue to grow the economic pie.
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Furthermore, our government is very determined to slice the pie more equally and reduce inequality. While there is some truth to the claims that the government had become rather insensitive and unempathetic to the poor in recent years, the disappointing election result for the ruling People’s Action Party (PAP) at the 2011 General Election – where the PAP retained power but with the lowest vote share since independence of 60.1 percent – has propelled the government to redistribute wealth much more aggressively and create greater prosperity for the majority. Among its recent wealth redistribution policies are higher taxes on big houses and cars and more generous subsidies for everything from public housing to preschool education, healthcare and utilities.
What if, in our eagerness to redistribute wealth, we destroy our strong work ethic and bring our government to bankruptcy or near-bankruptcy, a fate that has befallen several European welfare states? After all, in recent years, we have seen once-prosperous nations such as Greece and Spain succumb to the folly of populism and brought to financial ruin. Sceptics may paint this depressing picture for Singapore, but our country remains highly committed to preserving our work ethic. We are a nation of immigrants, and the values of hard work and thrift which our ancestors espoused have been cherished and inculcated from generation to generation. This pragmatism is evidenced by parents’ deep reluctance to let their children become professional athletes as the monetary prospects are still poor for career athletes in Singapore. Further substantiation is provided even by the way Singaporeans vote in elections. Despite widespread disgruntlement with the PAP over soaring housing prices, overcrowded buses and trains and the escape of the terrorist Mas Selamat Kastari from a high-security prison, Singaporeans still voted them back into office and extended their hitherto 52-year rule because of their proven track record and the still-patchy quality of the opposition parties. With our hard-nosed pragmatism, the people are highly unlikely to demand that the government introduce overly populist policies that would seriously erode the incentive to work hard and ruin the nation economically.
However, it must be conceded that greater prosperity for every last member of society is just something that exists only in one’s fantasies. There is always a trade-off between welfare and the work ethic. Hence a highly welfarist system will ultimately sap an economy of its vitality and shrink the economic pie. A close examination of the Scandinavian states makes this very apparent. Even countries like Denmark and Sweden, so fiercely proud of their cradle-to-grave welfare systems, are starting to ask serious questions about the sense and sustainability of such policies. Youth unemployment has remained stubbornly high in Sweden at over 20 percent in recent years. And hidden by the unemployment statistics are among the world’s highest proportions of people on disability pensions, even though the Scandinavian countries have among the best health indicators in the world. Clearly, these legions of welfare recipients are unlikely to enjoy greater wealth due to the limited capacity of the state to increase their entitlements. Already, the citizens of Nordic countries pay some of the highest taxes in the world. In any country, there will always be people who are lazy and do not wish to work. With almost zero natural resources, Singapore can afford even less than other countries to indulge indolent individuals with over-generous welfare benefits and hence, it is not possible to achieve greater prosperity for such individuals.
In sum, it is well within Singapore’s capability to achieve greater prosperity for the great majority, but not everyone. While we are an extraordinary country that has overcome great odds, we remain subject to the same laws of economics, society and human nature as other countries. As we have developed as a country and ascended Maslow’s hierarchy, we have steadily aspired to attain loftier goals such as social equity and equality. Nevertheless, we are very aware that a geographically-challenged country like ours must keep its feet on the ground and maintain that resolute pragmatism that built the foundations for our success today.
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The blogger, a First Class Honours grad from NUS, retired from a distinguished 14-year career as an English and GP tutor at the age of 42.
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