Friday, April 29, 2011

When in doubt, turn to the data (Generational Shift Effect)

"Younger voters in their 20s are more likely to vote for opposition parties than for the PAP. Conversely, older voters in their 50s and above are more likely to vote for the PAP."

If you do not agree with the above statement, you may safely ignore the rest of this post. If you do agree with the statement, then read on.

Nomination Day has come and gone and the battle lines have been drawn. The chips are in the air now, and who knows where they will fall?

I asked myself the same question and decided a little data sleuthing was in order.

I am no pundit, and I lack mystical powers that allow me to read the sentiment on the ground. What I have however, is census data, and a belief that younger folks are more likely to want change, while older folks would prefer the status quo.

The logical question to ask then, is in which constituencies do younger folks comprise a larger percentage of the population now, while older folks comprise a smaller percentage of the population?

Demographic data by geographical region is available from Census 2000 and Census 2010. Note that geographical regions in Census 2010 are demarcated by the URA 2008 Masterplan available here. The most distinctive differences between the geographical regions demarcated by Census 2010 and Census 2000 are that Census 2010 includes 3 new regions: Singapore River, Mandai and Punggol. However, only Punggol among the three has a significant population today. Otherwise, I am assuming here that differences in geographical regions between the two census are small.

Those Singapore citizens who were aged 40 and above back in year 2000 are now aged 50 and above. In every single region, they comprise a smaller percentage of that region's population today due to the effects of mortality. In contrast, those Singapore citizens who were aged 10-19 in year 2000 are now aged 20 - 29 and of eligible voting age. Not all geographical regions have experienced an increase in the percentage of population who are of this young age group, due to marriage as well as moving out of the family home. However, in most geographical regions, they now do constitute a larger percentage of the population than in year 2000.

Why did I choose these age cut-off points? Because previous data analysis revealed that new PRs in the last 10 years are overwhelmingly in their 20s and 30s today. I can't separate out the new PRs from the citizens among the younger Singapore residents, but I can safely assume that census data relating to residents aged 50 and above today is unadulterated by the addition of new PRs .

For every geographical region, I calculated 4 numbers:

(1) Percentage of population older than 10 that was aged 10-19 in year 2000
(2) Percentage of voting population aged 20-29 in year 2010

(3) Percentage of population older than 10 that was aged 40 and above in year 2000
(4) Percentage of voting population aged 50 and above in year 2010

I define here the Generational Shift Effect (GSE)

GSE = [(2) - (1)] - [(4) - (3)]

or more simply

GSE = (2) - (1) - (4) + (3)

The GSE is an indicator of how much younger a population in a geographical region has become since the last census in 2000, and by extension, how much more likely a geographical region is likely to swing away from the PAP in this election as compared to the election in 2001.

Below is a table showing the regions with GSEs larger than 10%.

Larger image available here.

The next step is to match the geographical regions in the census data with the electoral map. The most detailed electoral map I could find is available here.

I lack the technical skills to superimpose the 2008 URA Masterplan with the electoral map, so all I did was to eye-ball the two maps and judge which constituency each geographical region with GSE > 10% fell in. These affected constituencies are indicated in the rightmost column in the table above.

Naturally, some geographical regions are small, so they are swamped by the rest of the constituency they fall into. However, a few geographical regions occupy enough of a constituency that I deem it possible that the GSE will manifest itself in these constituencies in this election. These constituencies have been bolded in the table above. Tanjong Pagar is a walkover constituency, so it has not been bolded.

The constituencies in which the GSE is most likely to manifest itself are, IMHO, Radin Mas, Pioneer, Moulmein-Kallang, Sembawang, Sengkang West and Punggol East.

These constituencies won't necessarily be lost by the PAP; it's just that I predict the fight will be closer than most people expect.

As I have previously mentioned, one of the effects of gerrymandering (and walkovers) is that the PAP has distorted the voting signals upon which political parties rely on to judge ground sentiment over the years. If the GSE is as significant as I expect it to be, it may come as a surprise to some people should it exert itself in this election.

On a separate note, interestingly, Tanjong Pagar is a constituency in which the GSE is very strong. However, it is a walkover constituency helmed by Lee Kuan Yew. When Lee Kuan Yew retires from his political career, I fully expect the GSE to exert itself in the following election. Many of his staunchest supporters are growing as old as he is and dying off. The numbers reflect this.

Thursday, April 28, 2011

When in doubt, turn to the data (GDP and Median Household Income)

In the vein of the previous post, I will be analyzing data published by the government and available in the public domain to obtain a better understanding of issues important to this election. These posts have been motivated by the recent completion of Census 2010 and the impending election.

Today, we will compare GDP growth and the growth in median household income.

The charts below show that GDPC is positively correlated with MHI.

However, the growth in GDPC has far outpaced growth in MHI. For example, from 1999 to 2010, GDPC increased by 64.58%, while MHI increased by only 42.86%.

But let's be rigorous, lest I be accused of being selective about the base year in supporting my conclusions.

The table below shows the cumulative percentage increase in GDPC and MHI using each year between 1999 and 2010 as the base year. In each cell, the first percentage refers to GDPC and the second percentage (in parentheses) refers to MHI. Cells in which cumulative percentage increases in GDPC have outstripped MHI have been shaded red. Cells in which the opposite has occurred have been shaded blue.

There are a total of 46 red cells out of a total of 66 cells, meaning that MHI has on average fared worse than GDPC, base year effect or no.

Under the null hypothesis that each cell has 50-50 odds of being shaded blue or red, using a Gaussian approximation implies that such a result would occur less than 0.01% of the time if it were purely due to chance. Indeed, the test statistic is 3.2003, at the extreme right tail of the distribution.

But of course, such a statistical test is not truly valid, since data in each cell, being time-series data, is not independent of data in other cells. There is a dependency among the cells that violates the independence assumption of such a simple statistical test. Nonetheless, the results are illustrative.

Let's look at the data more closely. The chart below shows the annual rate of change (ARC) in GDPC and MHI for the years 2000 through to 2010.

It appears that the ARC for GDPC lies above MHI for 8 out of the 11 years. 

In addition, the AAGR for MHI lies above GDPC only in periods of recession (dot-com in 2000, the recent financial crisis). Why is this important? Because in periods of recession, the unemployment rate rises and unemployment disproportionately affects the lower income groups with below MHI. This causes less downside volatility in the MHI during a recession. In contrast, a strong economy creates full employment which tends to drive up incomes across the board.

In other words, MHI is more sensitive to economic booms than busts. This may account for why the AAGR for MHI is above the AAGR for GDPC only in times of recession.

I think I can safely say that MHI has lagged behind GDPC over the last 10 years.

But let's not stop there.

MHI refers to median household income. Household income may have increased over the years because workers in the household are being paid more. But it may also have increased because there are now more workers in each household, or workers are now working longer hours.

The government doesn't provide data on the median hourly wage. But census and household surveys helpfully provide data on the number of workers in each household (2000, 2005 and 2010), as well as the number of hours worked each week by each worker (2000, 2005, data not yet available for 2010). Time-series data on number of hours worked each week is available from MOM here, but I would prefer to stick to using census data for source consistency.

Data on number of workers in each household was grouped for large households, e.g. all households with 5 or more workers were grouped together. Data on number of persons in each household was similarly grouped for large households, e.g. all households with 8 or more persons were grouped together. I ignored the "more than" part when I calculated the weighted average number of workers and number of persons in each household.

The data is presented below. Note that year 2005 was problematic, as grouping was done for households with 4 or more workers, and 6 or more persons (as opposed to 5 or more workers and 8 or more persons, as was seen in years 2000 and 2010). This may have accounted for the break in trend in 2005 for weighted average number of workers per household. Nonetheless, there are more workers on average per household in year 2010 as compared to year 2000.
From the data, it appears that Singapore resident households are increasing in their average number of workers per household even as households are becoming smaller. This is unsurprising due to the increasing prevalence of two-income households and fewer kids.

For the data on number of hours worked each week, the number of hours was reported in bands. I took the mid-point of each band and calculated the weighted average number of hours worked per worker. For the extremely hard workers who work 65 or more hours per week, I assumed that the midpoint of this band was 72.5 hours. This is arbitrary, but unimportant as only a small percentage of the population works such long hours.

The weighted average number of hours worked per week was 47.47 in 2000 and 48.22 in 2005. Data is unavailable from Census 2010. But the two data points suggest an increase over time.

So, not only has MHI lagged GDPC, when adjusted for number of workers in each household and number of hours worked each week, the picture looks even worse.

But again, let's press on further.

One of the effects of the surge in housing prices, lacklustre growth in MHI and burgeoning income inequality is that people have increasingly moved to the outskirts of the island. Think Sengkang and Punggol where new flats have been built in the last 10 years. How have travel times to work changed?

Data on travel times to work is available for 2005 and 2010, but not for 2000.

Using the same methodology as above, I calculated a weighted average travelling time to work. For the extreme band of people who take more than 1 hour to get to work, I assumed a midpoint of 75 minutes. Note that in 2005, 5.09% of workers took more than 1 hour to get to work, while in 2010, 6.19% of workers fell into that group.

The weighted average travelling time was 30.33 minutes in 2005 and 31.81 minutes in 2010. Again, the Singapore worker is worse off.

I think I've made my case: The PAP has sucked at its job in improving the lot of Singaporeans as measured by MHI relative to GDP growth over the last 10 years.

I wish I had the data on annual remuneration for cabinet ministers over the last 10 years. That data I am confident will keep pace with GDP growth.

Wednesday, April 27, 2011

When in doubt, turn to the data (Immigration)

Census 2010 was completed last year. A census is a rich data source to mine for information. Since the government mouthpiece media is so completely useless in reporting news that I actually want to read, that might affect my voting decision, I have to obtain the data sets and perform the analysis myself.

If you want something done...

Readers may consider this post and my next few posts a public sharing service. All data sets obtained from Statistics Singapore.

Data for the following 3 charts obtained from here; pages v and 3. Note that SingStat considers Singapore residents to be comprised of Singapore citizens AND permanent residents.

Needless to say, foreigners as a percentage of our population have skyrocketed in the last 6 years. As of last year, 1 out of every 3 persons (36%)  you see on the street is a foreigner.

The annualized growth rate for foreigners is even more astounding. See below.

Now let's turn to PRs and naturalized citizens.

SingStat does not distinguish between Singapore citizens and PRs in much of the data it reports, so it is difficult to get a handle on what characteristics differentiate citizens from PRs, such as age, race, sex, income level etc. I think it likely that it has this kind of data, but for whatever reason, it does not disclose this to the unwashed public. Too incendiary sensitive, I suppose.

Nonetheless, I can reconstruct data sets and make an educated guess at the age and sex profile of new PRs in the last 10 years by employing some actuarial tricks.

Data for this section of the post is obtained from Census 2000 Demographics Table 3 and Census 2010 Demographics Table 3. These tables break down the Singapore resident population into single years of age.

It is possible to use the Census 2000 data to project the expected breakdown of the Singapore resident population in 2010 by single years of age. To do this, we adjust the Census 2000 data by applying mortality rates, calculated from the 2005 complete life tables. I chose the 2005 tables for as an average as they fall midway between years 2000 and 2010, when the Census was held.

For example, a group of say, 21166 male babies aged between 0 and 1 year of age back in year 2000 should become a group of 21088 ten year olds due to the effects of mortality. However, there were in fact 24463 male ten year old Singapore residents in Census 2010.

I compared expected and actual numbers for both female and male Singapore residents for all ages starting from 0 to 89. I truncated the data beyond age 89 due to the small numbers of individuals involved and the difficulty in dealing with aggregated data.

The chart below shows (Actual - Expected Number of Singapore residents) plotted against age.

The difference in expected and actual numbers is accounted for by random fluctuations in mortality, citizens and existing PRs travelling abroad/returning to Singapore from abroad, and of course, new citizens and PRs.

In relation to travel for example, many students head to overseas universities to study. So, Singapore residents aged 8 to 15 in year 2000 are likely to show a larger than expected dip in numbers, more than mortality can solely account for, when they become the group of Singapore residents aged 18 to 25 in year 2010. They could be captured in the 2000 Census, but be abroad at the time of the 2010 Census.

Similarly, the group of Singapore residents aged 18 to 25 in year 2000 who were not captured in the 2000 Census may become a bigger group of residents aged 28 to 35 in year 2010 due to return from overseas studies.

However, we do not see this pattern in the data. There is a consistent positive divergence between actual and expected number of Singapore residents from age 10 all the way to age 50 (for males), and age 47 (for females).

What about Singapore citizens who head abroad to work and then subsequently return?This is unlikely to have great effect given that people are moving away and coming back all the time; the inflow and outflow should be matched, if not exactly equal. 

The likeliest assumption to account for most of the divergence between actual and expected numbers is the increase in new PRs. This is not unreasonable given that between 2000 and 2010, we know for a fact that we added about 254000 PRs to our population (Census data 2000 and 2010). In comparison, my chart above shows that the sum of (Actual - Expected) for ages 10 through 50 add up to 269000, a difference of only about 6% from 254000.

Thus, my interpretation of the data is this:

There have been approximately 250000 new PRs in the last 10 years. Considerably more new PRs in the last 10 years are female than male (we're talking ~28% more females than males).

Most new PRs in the last 10 years are today, aged in their late 20s to early 40s. There is a small bump in the LHS of the chart that indicates that significant numbers of new PRs are kids born in Singapore to foreigner or PR parents. Either that, or many Singapore citizens had their kids abroad and brought them back in the last 10 years (also possible).

There is a persistent trend of (small) negative numbers in the chart above the age of about 50 (males) and 47 (females). Given the consistent negative numbers across ages above these two ages, this is unlikely to be a random fluctuation in mortality. This indicates that a number of Singapore residents (most likely PRs) leave the population through emigration rather than mortality.

PRs aren't necessarily leaving only after the ages of 50 and 47. More generally, the rate of PR departure starts to exceed the rate of PR arrival at these ages. The mean age at which PRs give up their PR is likely to be lower.

Note that Singapore isn't necessarily retaining large numbers of PRs even though the negative numbers past the age of about 50 are small relative to the big positive surges in the ages of 20 through 50. It is important to note that the departing PRs and the surge in new PRs relate to different ages and hence cohorts. Our new PRs who are now aged in their 20s and 30s today could well leave en masse five, ten or twenty years from now.

I reiterate the assumptions: I am ignoring new citizenship take-up, and emigration/travel abroad/return from abroad by Singapore residents, and attributing the divergence between actual and expected numbers of Singapore residents to PRs alone. These are not trivial assumptions to make, but I believe that these are reasonable assumptions in light of the data I have.

And all that is certainly more information than you're ever going to be able to get out of the government.

Tuesday, April 19, 2011

Why the PAP is finding it difficult to attract candidates from the private sector

I had thought that more people would have commented on the story published in the Straits Times on 16 April, on how few high flying executives from the private sector are willing to join the PAP. But apparently not.

Someone did comment on it, but while I do agree with some of the ideas in that post, my opinion is a little different, and more nuanced.

Why is the PAP finding it difficult to attract candidates from the private sector?

To answer that question, we must first ask why people enter politics.

People enter politics for a number of reasons, but the most important (and noble) reason must be the idea of wanting to make a difference.

Many of the most celebrated politicians in history took on positions of leadership precisely at the point when they perceived the need for a change in direction for their country. Take FDR for example. He rose to the occasion to become POTUS at the height of the Great Depression. It is in times of crisis that we see great leaders arise. Our Minister Mentor is another example.

When you keep that fact in mind, and you consider the nature and character of the PAP as it is today, it is not a surprise that they have problems recruiting candidates from the private sector.

The PAP today is in the business of maintaining the status quo. And I do mean business. Our economic and other policies have been deemed successful by our political elite, and as such, they have signaled that no change is warranted.

With their electioneering tactics and iron-grip control of the civil service, the PAP has assured itself victory in every election. And even its greenest candidates need not fear being rejected by the electorate; they can just coast in on the coat-tails of a "heavy-weight" under the GRC system. If there were such a thing as a election guarantee in a democracy, this would be it.

In other words, the PAP of today is not a party of fiery orators, impassioned visionaries or trailblazing mavericks, full of piss and vinegar, to borrow that piquant phrase.

They don't have to be. The PAP today is a party of technocrats and functionaries, where an efficient party apparatus guarantees risk-free victory at elections, and continuity of policy after election. Policy which is set at the highest levels of the PAP food chain, if I might add, immune to criticism and disquiet even within the party itself.

Indeed, mavericks are probably personae non grata in the PAP. Some people accuse the PAP of recruiting only those that agree with their policy-making views. I would go further. In the environment of the PAP, they can ONLY recruit those who agree with their views, as a true dissenter would probably find the PAP a lonely and hostile place.

Oh, we hear of various fresh PAP faces saying that they don't agree with this or that PAP policy. Riiight. Just as our national newspaper is fond of printing both sides of an issue to give the appearance of "balance", but inevitably ends on one side of the argument: the PAP's.

Dissenters in the PAP either don't last long, are marginalized (think the late President Ong Teng Cheong when he refused the play the role of a straw puppet and actually had the temerity to request for information on the national reserves), are co-opted, or were never true dissenters to begin with.

In light of this, it is not hard to imagine why, with few exceptions, high flying corporate executives have little desire to join the PAP.

Put yourself in the shoes of a corporate high flyer who actually has aspirations to make a difference, to become a politician.

If you genuinely have issues with the PAP's policies, you are unlikely to want to join them. Trying to change the PAP from within is likely a fool's errand.

Even if you do agree with the PAP's policies, the PAP is unlikely to be a place that can satisfy your political aspirations. It's a monolithic top-down structure, where policy is decided at the top, your role is to support the status quo, and you have to toe the line. Because, after all, it's not like you enjoy an independent power base among your constituents, especially if you coasted in on the coat-tails of another politician. How independent can your opinion be when you owe your place in Parliament to another politician?

Worse, as a former corporate warrior, you would have given up your high salary, perks AND privacy. And for what? For this pale shadow of being a politician? More like a entry level political lackey.

Being a PAP Member of Parliament would be singularly unattractive in this case. It would be a corporate job without the corporate perks. In other words, it would be a step DOWN from being a corporate high flyer. Even a corporate high flyer who agrees he has benefited disproportionately from the PAP's policies and wants them to continue. No thanks, he might say, I just want a free ride on your policies.

Conversely, what kinds of people would view becoming a PAP Member of Parliament as a step up?

Simple. The people who are already in the public eye, think only glowingly of existing policy, and fall very naturally into the position of deferring to authority in the form of senior PAP politicians.

No surprise. The civil service. And the quasi-governmental organizations like the NTUC.

If you are a high-ranking civil servant, becoming a cabinet minister would represent the logical pinnacle of your civil service career progression.

Not so for a private sector corporate executive who has political aspirations. The calculus is far different.

I have a prediction here to make.

The trends are clear. The PAP is recruiting less and less from the private sector, while the converse is occurring for the opposition parties, particularly those with credibility, like the Workers Party.

Should the opposition parties actually make headway in this coming election by, say, winning a GRC, it would be a watershed moment. Being an opposition party member would demonstrably seem less risky, and more people who want to make a difference, who actually have some fire in their hearts, would join the opposition political parties from the private sector.

In contrast, because the PAP is recruiting increasingly from the public sector, it is going to be seen as more and more insular, and will find it ever harder to recruit from the private sector. No outsider wants to belong to an clubby old boys association where every former civil servant knows every other former civil servant. And over time, the PAP will become more homogeneous than it is already.

Friday, April 15, 2011

Hard truths you won’t read about elsewhere, Part V

Our systems are brittle and our country is vulnerable. And our government has no desire to encourage a “crutch mentality”. It behoves every Singaporean to have a Plan B.

Many Singaporeans instinctively understand this hard truth, even though they may not articulate it.

The recent survey by the Institute of Policy Studies is telling. About half of young Singaporeans belong to the “Disengaged” and “Explorer” socio-psychological profile.

Interestingly, these profiles come from the more highly educated, higher income groups, who have presumably benefited more from the PAP’s economic policies than the lower income groups. Yet it is precisely the Disengaged and the Explorer who are pessimistic about Singapore’s economic future. The Explorer also feels threatened by foreign talent.

Why this irony?

Perhaps it is because the Disengaged and the Explorer, who have benefited more under the PAP’s policies, understand better the fragility upon which Singapore’s prosperity is built. And they also understand that what appears to be permanent can in fact be transient, that it can all vanish in a blink of the eye.

The PAP assiduously cultivates a siege mentality among the population, telling us that Singapore is highly vulnerable. Yet it would have us all believe that the PAP is the solution to Singapore’s problems, that self-sacrifice is what is required of all of us, that all of us need to close ranks around the PAP. Otherwise, the ship would capsize without the PAP at the helm.

Well, if Singapore were that vulnerable, should we not all express just a bit of scepticism at the PAP’s infallibility? That is a logical extension of the PAP’s own argument.

But no, that is not part of the official catechism. We are required to believe in the daunting odds we face as a nation, while suspending doubts as to the PAP’s abilities to shepherd Singaporeans through any storm.

And the PAP asks for more than just faith in their abilities, but also tolerance for their obscene salaries, and forbearance for personal costs on the part of citizens that grow more exacting with each policy that they implement. No crutch mentality here, thank you very much.

I wonder if the PAP realizes how successful they have been in instilling amongst Singaporeans the fear that Singapore is indeed vulnerable. The spectre of ever present disaster may have helped the PAP to solidify their grip on power over the decades, but at what cost?

We have imbibed the knowledge that tomorrow, this could all be over. And the PAP government has demonstrably shown through its policies and speeches and admonitions that as individual citizens, we're on our own; we shouldn't count on the government for retirement, healthcare, housing...even that ineffable feeling that this place should still feel like home, what with the incredible rate of immigration, and the attendant questions it raises of what citizenship here is really worth.

And we certainly shouldn't trouble the government with our disquietude. If we do, it's our fault, again. The implicit command is for us to be silent and be governed. If we participate, we are meant only to cheer, not to question.

Our national education programs talk loftily of a shared sense of destiny, of how our people are Singapore’s only resource, and yet the government has nurtured a crisis of affinity.

The statistic of importance is not how many youth are contemplating emigration now. It is how many youth would contemplate emigration in a time of countrywide bleakness.

Hard Truth #5 is not about emigration per se. It is about being prepared. As long as the living here is comfortable, there is no fear of Singaporeans activating Plan B. But Plan B exists. And it is ever at the back of everyone’s mind.

Once, while attending a Chinese New Year dinner hosted by the ambassador at the Singapore embassy in Washington DC, I overheard a spiel from a diplomat holding court amongst a group of university students. He claimed that for reasons of national security, our wealth [meaning reserves], must be kept outside of Singapore.

We should all take a leaf from the PAP’s investment playbook and hedge our bets abroad. Don't put all your eggs in the Singapore basket. What is good for the goose is also good for the gander .

I started this post by stating that many Singaporeans instinctively understand Hard Truth #5, even though they may not articulate it. For many of us, it is not a hard truth, but a simple reality, prudence even. I do not think I need to point out who the hard truth is meant for.

Thursday, April 14, 2011

Hard truths you won’t read about elsewhere, Part IV

As I should have made clear by now through all my previous posts, it is that unique combination of the PAP’s assuredness of political victory, single-mindedness in achievement of its goals, dismissal of criticism and self-aggrandizing braggadocio that puts us all at the mercy of their policies.

I do not think the result of this upcoming election is in much doubt, just like other elections. The PAP will be returned to power again, and for the foreseeable future. This is because of the PAP’s electioneering tactics, because a large segment of the population is supportive of the current regime, perhaps because they benefit greatly from current policy, and also because there is another very large segment of the population that votes like sheeple, perhaps to their own and others’ detriment.

As much as I and some other Singaporeans would prefer an alternative, hope is not a viable strategy.

Therefore, Hard Truth#4 is:

The PAP will continue to be returned to power for the foreseeable future, and their policies will continue to be set to our benefit, as well as to our detriment. Plan accordingly. 

Some segments of the population do benefit disproportionately from the PAP’s policies.

The rich, the highly educated high income earners, the large business owners, foreign investors, foreign talent, high level corporate executives – these are the ones that Singapore welcomes and bends over backwards to accommodate.

If you are a member of one of these groups, life in Singapore is sweet indeed – so long as you toe the line and ignore the bad social outcomes all round. If you are a current net beneficiary of present day policies, you have less to worry about after elections are over. Does that mean that you should ignore issues of social and economic inequities? Perhaps, perhaps not. However, the shoe may well end up on the other foot one day.

If you are not a current net beneficiary, you should think about what’s going to happen after the elections.

Hard Truth #4 is about containment. It emphasizes mitigation and contingency planning, rather than changing a problematic situation.

What is likely to happen after the PAP returns to power?

A resumption of business as usual. A sequel of the movie we have just seen in the last few years, except that sequels by definition are sophomoric in effort.

Choose your career, your job, your course of study, your lifestyle, the number of kids you intend to have, your house, and your living arrangements with care. 

Think critically about what you hear and read, especially from government-controlled media. Do not make decisions solely on advice from the government. Such advice may be in the best interests of “Singaporeans”, as per Hard Truth #3, but may not be in your best interests.

Hard Truth #4 means being self-sufficient, flexible and accommodative, like living and getting medical care across the border to mitigate the higher cost of living here. Such arrangements may not be ideal, but they are prudent.

It would be unwise to count on a PAP government for assistance when the same government has publicly expressed its desire to discourage a “crutch mentality”.

Hard Truth #5 in the next post will be the last in this series. 

Wednesday, April 13, 2011

Hard truths you won’t read about elsewhere, Part III

Policy-making in Singapore is indifferent to its ill-effects on large swathes of the population., much less to individuals. The term “Singaporeans” is an abstraction used to justify policy-making. In reality, individuals do not figure in the calculus at all.

Do Singapore’s policies sometimes go against the interests of individual Singaporeans? Do they occasionally curtail Singaporeans’ civil rights and privileges? Do policies sometimes require sacrifices from Singaporeans now and again for a greater good?

Of course they do. And sometimes for good reason. Some policies such as National Service exist for a reason, even if the implementation is unprofessional and the personal cost large. 

But does this standard apply to all of the PAP’s policies? And do some policies result in such harm to individuals that they should not have been countenanced at all?

I can think of several off the top of my head.

As furrybrowndog has highlighted in his excellent post, CPF returns are dismal. And this policy, designed to serve retirement needs, is in fact failing on a grand scale. Instead, CPF Life is being introduced and is being made mandatory, along with the retirement age being raised. Realistically speaking, retirement is receding into the horizon for many Singaporeans. Yet while Rome burns, the PAP has over the years preferred to “invest” excess reserves.

Really, folks, while CPF monies are not directly linked to GIC and Temasek investments, that is just a verbal sleight of hand. The CPF fund holds Singapore government bonds, which means that Singaporeans are general creditors of the Singapore government. The proceeds of bond issuance to the CPF commingle with the working capital on the Singapore government balance sheet. Some of that money on the balance sheet inevitably ends up funding investments. It’s time to call the CPF what it really is, a cheap source of long term financing for the PAP government.

If you’re a low wage worker, think of how the relaxed immigration policy, GST hikes, and strenuous protestations by the PAP against a minimum wage policy, were all meant to boost economic growth, “help” the lower income groups, and increase national competitiveness.

Economic growth has indeed increased over the years, except of course, we all know that economic growth in the last several years has disproportionately benefited the higher income groups, putting paid to the idea that broad benefits accrue to “Singaporeans”. More like the top 20% of Singaporeans, per the Pareto distribution.

If you’re in the market for a house because, say, you’re a newly wed, you’re out of luck. Just like if you have ever been inconvenienced by a completed but unopened MRT station. Well, the just-in-time policy I described in Singapore, Inc. works just fine, according to the government. Too bad for you, the individual who has to delay marriage or deal with the inconvenience of public transportation.

If you’re single, “lagi worse” as we would say in the army. Regarding property, you can fuhgedditboutit. Private property is currently in the stratosphere, you won’t be eligible for HDB housing until 35, and even then, it’s going to be a pricey resale flat. Family-friendly values never sounded like a dirty word until you wanted your own place, even just a tiny little tenement, but were single and hence ineligible.

And if you’re one of those suckered into a “growth” industry that the Singapore wants to nurture, I hope your career had a roaring start. That is, if you even got a job in the industry. Attracting investment into the chosen industry was ever the apple of the PAP’s eye, never the individual, so take that lesson and learn something from it. [Take note, prospective Yale-NUS liberal arts students. You are lab rats, even if you don't know it.]

Finally, the death penalty could conceivably deter serious crimes, but if you are the one on death row, you as an individual certainly never figured in the policy-making process. Neither did any of us, as I recall. The death penalty in Singapore simply was.


Policy-making in Singapore is indifferent to its ill-effects on large swathes of the population, much less to individuals. The term “Singaporeans” is an abstraction used to justify policy-making. In reality, individuals do not figure in the calculus at all.

The next time the PAP claims a policy is necessary for the continued well-being of the nation/“Singaporeans”/economy/the Merlion...

Take a deep breath, and batten down the hatches.

Hard truth #4 in the next post.

Tuesday, April 12, 2011

Hard truths you won’t read about elsewhere, Part II

The current policies in Singapore have questionable sustainability, and their origins derive from misplaced incentives. As long as the incentive structures remain, we can expect new policies to be equally unsustainable.

For the longest time, strong economic growth has been the paramount policy objective. Yet, for a government so single-mindedly focused on economic growth, and so well-compensated for thinking about it, the PAP’s policies are remarkably unimaginative, loaded with undesirable side-effects, and in many cases, one-shot wonders.

In decades past, we followed a foreign direct investment and growth by exports economic model that was successful beyond our wildest dreams. This strategy has been replicated in economies such as Japan, Taiwan, South Korea and now China. China is the FDI elephant in the room, squeezing just about everybody out. Indeed, the FDI and export-driven model is unsustainable for just China alone; the world is too small to accommodate a mercantilist economy of China’s heft without severe global imbalances building up.

In response, the PAP has employed strategies such as massive immigration, casinos and a policy of keeping wages low. Our race up the value chain to secure higher value-added work is falling flat. Don’t ask about productivity increases.

We are bumping up against limits on every one of these policies. How high can the population go before our infrastructure simply breaks down? What destabilizing effects will continued massive immigration have on the social fabric in Singapore?

Are casinos worth the social problems they cause? And won’t their benefits melt away as more casinos spring up in neighbouring countries to capitalize on the gaming market? Are these transient benefits worth the permanent side-effects?

What about keeping wages low? Doesn’t that run counter to the aspiration of a better life for Singaporeans? And how low can they in fact go, compared to countries with rock-bottom costs like China?

And what of the high inflation period that we are entering into now? How will people with low wages survive in such an environment? What will low wages do to income inequality? A widening income gap already causes all sorts of problems. Do we really want it to be wider than it already is?

It is not just the PAP’s economic policies that are unsustainable.

The CPF scheme has morphed over the years beyond all recognition. It simply will not be sufficient to fund retirement for most people; retirement is going to be a dim possibility for many Singapore citizens. And the PAP’s stop-gap measure is CPF Life, which I have previously stated is simply a means to transfer the burden of longevity risk solely onto the shoulders of the individual. Perhaps it is time to call the CPF scheme what it really is, a cheap source of financing for the government.

The HDB 99 year leasehold problem has been commented on by another blogger. I personally do not think this is a *very* serious problem (for too many reasons to be elaborated here), but there is no question that that is also not a sustainable state of affairs.

Worse than being unsustainable, many policies work at cross-purposes to each other, such as immigration to boost GDP growth and family-friendly policies aimed at increasing the fertility rate.

The manifestation of policy schizophrenia is a reflection of the system’s misplaced incentives, placing GDP growth on a pedestal far above all else. As commenter Ponder Stibbons had previously remarked in my “Policy Schizophrenia” post, it is difficult to discriminate between policies genuinely designed to improve the quality of life for Singaporeans, from policies which improve the quality of life only as an incidental benefit. The main objective of many policies remains GDP growth.

After all, our politicians are incentivized to target this, much as Wall Street banksters game the system for short term gains.

As long as our incentive structures in government remain the same, government policies will continue to be unsustainable, with frequent stop-gap measures such as CPF Life and raising the retirement age, which brings me to Hard Truth #3:

Policy-making in Singapore is indifferent to its ill-effects on large swathes of the population, much less to individuals. “Singaporeans” is an abstraction used to justify policy-making. In reality, individuals do not figure in the calculus at all.

Description forthcoming in the next post.

Hard truths you won’t read about elsewhere, Part I

With elections so near, the Straits Times has gone to town with recent prognostications and opinions by ministers from the ruling party. Coverage has been extensive, and article layout in the paper has been tweaked to give the PAP maximum favourable exposure. Most of all, Straits Times journalists have hung on to every word spoken by our ministers, branding each gem with the moniker of “hard truth”. The most recent egregious example was about how anything more than one strong political party was “unworkable”.

Since the media has seen fit to play fast and loose with the term “hard truths”, why shouldn’t I take a stab at it as well?

Here’s *my* list of hard truths, one you won’t read about in the mainstream media. Readers can judge for themselves how “hard” and how “truthful” they really are, compared to what is in print today.

The PAP government will fail one day. And when it does, it will likely take Singapore with it, permanently.

The long form argument for this is available in my previous post. Additional points follow.

Failure can be measured in many ways, just like success. And as anybody who has measured things over time will attest, measurements are useless unless they are consistent over time.

It wasn’t so very long ago, a decade perhaps, that our government laid down bold plans for Singapore to aspire to a Swiss standard of living, sending a football team to the World Cup (among other grandiloquent visions), and making Singapore a “best home”. For whatever reasons, these goals have been lost along the wayside. The GDP figure is now the primary determinant of success.

The PAP could already be failing Singapore, if held to the same measures of success and failure that were espoused by it so many years ago. That it sees itself as being successful may be a function of shifting metrics rather than a reflection of true performance. In other words, the PAP’s performance has been and continues to degrade, but its decline has been masked by the managing of its appearance.

Even in elections, the PAP chooses to delude itself. Gerrymandering may be a tactical strategy to retain power by the incumbent, but the flipside is that it also has the side effect of distorting the voting signals that political parties rely on. Without consistent GRC boundaries, how will any political party track its performance and endorsement by the population over time?

Unless the PAP knows the vote of each and every individual, and can model its election performance based on the votes cast and the historical drawing of GRC boundaries as they have changed at each election cycle, it will not understand how sentiment towards the PAP has evolved over the years and how this might translate into the political change. Possession of this kind of data is clearly prohibited under the current legal regime, if the regime is in fact adhered to.

Hypothetically (or not so hypothetically), if the PAP was indeed failing, and sentiment on the ground was indeed souring, it would not be apparent at all. And no political change would occur due to this masking of sentiment. The PAP would continue to congratulate itself on a job well done (and pay themselves accordingly). Wrongheaded policy errors would continue to be perpetuated unabated, until their deleterious effects become too late to reverse, and too obvious to ignore.

When an adverse outcome does finally materialize for Singapore, I expect its appearance (but not occurrence) to be non-linear in nature. In other words, it could happen really, really fast.

Consider how the severity of public transportation and housing problems in Singapore are related to the PAP’s immigration policy.

And consider how apparent these policy missteps were when the immigration policy was first conceived (Do the LTA and MND even talk to ICA??? And this is just for a country of all of 4.5 million people, not even as populous as the greater New York or Tokyo metropolitan area).

And consider how much consultation, monitoring and review the immigration policy subsequently received, after problems started becoming apparent. Or were criticisms just pooh-poohed and then superficially addressed only when elections finally rolled around.

Now imagine the effect multiplied a hundred-fold, across all the policies the PAP crafts and implements, those policies that have been articulated publicly, and those that are now being quietly implemented which none of us know about. And which will not brook any argument, criticism or consultation in the future.

The quality of the PAP’s policies is often criticized. But the quality of the PAP’s policy-making processes itself separately deserves scrutiny. The latter could have greater implications for Singapore’s future than any one policy crafted by the political elite, and I do not have a sanguine view of that at all.

Hard Truth #2 to be unveiled in the next post.