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.

Remember:

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.

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.

Book List Refreshed! 29/03/2011

I have removed:

Power Hungry by Robert Bryce
Rising Powers, Shrinking Planet by Michael T. Klare
The Shallows by Nicholas Carr
Tokyo Vice by Jake Adelstein

I have added:

Econned by Yves Smith
The Holy Grail of Macroeconomics by Richard C. Koo
Making Sense of Life by Evelyn Fox Keller
The Next Decade by George Friedman

When the PAP loses an election, it will be time to leave.

Elections are around the corner. I have not posted anything on the upcoming elections. This isn't because I am politically apathetic. On the contrary, I am politically more aware than most Singaporeans.

The reason why I have not posted anything on the upcoming elections is because I do not think the result is in any doubt. The PAP will be returned to power again. The only thing in question is how big of a majority will they command. Will it be merely overwhelming, or ludicrously so?

And we all know why the PAP is so successful during elections. It has stacked the deck in its favor, shifted goalposts where necessary, subverted supposedly non-partisan organizations, co-opted potential opponents, passed legislation favorable to itself, leashed the media in its service and cultivated an environment where dissent is stifled for fear of reprisal.

You would think that a political party that is so proud of its policy successes (and that never fails to remind us about it!) would be more confident that it would be returned to power at each election on its own merits. Yet, it wheedles for every advantage it can get.

Is this not a sign of weakness? Or is it because the PAP genuinely believes that Singaporeans are too stupid to make the "obvious choice"?

This is not a rhetorical question. How one answers it is an indication of one's view of Singapore and Singaporeans.

With all of its political safeguards in place, it would be a miracle if the PAP is NOT returned to power.

Which brings me back to the title of this post, "When the PAP loses an election, it will be time to leave."

Living conditions in Singapore would have to deteriorate to an extremely serious state for the PAP to lose elections even with all of their incumbent's advantages.

Singapore will never reach such a parlous state, people scoff. We're not Egypt, Libya or Yemen.

Actually, one thing I do agree with our esteemed Minister Mentor is that Singapore, being small and vulnerable, does stand at the edge of disaster all the time. I disagree, however with the remedy.

Our political elite decided long ago that the best solution to the problem of "The little island that could" was to have a powerful government, ruled by the PAP that is for all intents and purposes, THE government. And this government, presumably staffed with the most talented people, would run the country in the best way possible. And politically, this government would be unfettered by irksome little opposition parties that in more democratic inefficient countries, would have to be dealt with, or heaven forbid, accommodated.

That model might have worked in earlier days. Perhaps it might even have been necessary during those uncertain times. But that model is showing its age, just as the ideas, attitudes and perspectives of the ruling party are looking stagnant, unresponsive, disconnected, and worst of all, dogmatic. Any criticism of current PAP government policy is treated as heresy.

A monolithic government such as ours can coast along for a long while without major problems. But a true crisis, a black swan, one that the PAP cannot handle, will lead to catastrophic failure. And without a robust framework in place for orderly transition and change of political leadership, Singapore would fail and fail irrecoverably.

Our politics are as impoverished as our most disadvantaged citizens.

The PAP government has conflated its existence and success with the existence and success of Singapore itself. No less than Ngiam Tong Dow stated, "I think our leaders have to accept that Singapore is larger than the PAP."

By so systematically dismantling and disempowering political opposition, the PAP is planting the seeds of its own destruction. If and when the PAP slips from power, there will be no second chances for it. No renewal for the PAP can come from a desert wasteland if Singapore fails irrecoverably.

In the past few years since the last election, many Singaporeans have wondered if our country has lost its way. It doesn't feel like home anymore. The government appears disconnected from the aspirations and needs of citizens.

If this is what the PAP calls success, I am not sure I would want to stick around to see what failure is like.

If a change in direction is needed in our policies, then it is best that the change be made as soon as possible.

But just as police states everywhere have a nasty habit of tightening controls just as the population gets restive, I have no doubt that the PAP will stack the deck even more heavily in its favor if ever in the future it is at even the slightest risk of losing power.

The PAP is so sure that its policies are the correct course of action that it would persist even in the face of severe opprobrium. The only concession made would be the occasional window-dressing that we are seeing now.

And if anyone believes that current immigration and economic policy is going to be reversed after the election, they will be severely disabused of this notion in a matter of months.

This is a government that has a hard time taking responsibility and criticism even for a minor flash flood, what more a true crisis that might be a result of its own doing, such as the demographic time bomb that continues to tick.

Tick-tock.

When you are in a hole, the first thing to do is to stop digging. The imperial nature of our government is not a sustainable state of affairs for any country, if only because men are proud and fallible. It is even less sustainable in a country like ours.

I can feel the hole becoming deeper.

I am less sanguine than our ministers who flippantly state that if the PAP were to lose its relevance, it will lose the mandate of the people and presumably gracefully step aside for a new party. Everything about the PAP shows that it would sooner change the rules of the game before that happens.

The question is, what will the PAP leave behind for a new government when it eventually does lose power, against all odds? A smoking ruin, or a shattered country?

When the PAP loses an election, it will be too late to leave. The time to leave would have been before.

If you're at all worried about a nuclear meltdown in Japan, read this!

Article can be found here and here.

Quick Thoughts on Sunday Times, 13 March 2011

"Not just an 'ordinary' girl from HDB family" - Think p.37

This article profiled Rachel Eng, a managing partner from the top law firm WongPartnership. Interestingly, Ms. Eng said little, if anything, about social mobility in her interview, but the Sunday Times chose to put a spin on it that way, billing the article as "Rachel Eng: Top Lawyer is a study in social mobility" on the front page sidebar. The writer, Wong Kim Hoh, also started his article by citing her as a prime example of social mobility.

Ms. Eng used the word "lucky", "blessed", and "alignment of the stars" in her interview. Granted, none of the these were in relation to her transcending her humble background to becoming a high-powered lawyer, but more in relation to her current living and working situation. But clearly, this is a woman who knows and counts her blessings.

In contrast, in today's edition, the quote from Ng Eng Hen on social mobility can be found on the next page, Think p. 38, "You are the one who can determine your own success - yes, life might be hard for you, but if you try, you can succeed, and other have."

To relate to a previous post of mine which resonated with many readers, I've found that people who transcend their backgrounds tend to fall into one of two categories. One is exemplified by Ng Eng Hen, who takes the view that "If [insert underprivileged person here] can do it, anyone can." In recent parliamentary proceedings, he used himself as an example.

Ms. Eng fits more closely with the second category. Such a person tends to recognize that while their own talent played a major role in their lives, luck, chance, opportunity and just being in the right place at the right time are also very important. They are more likely to, on seeing someone less privileged, go "There, but for the grace of...".

Ms. Eng's example drew from her own pioneering experiences in the then growing WongPartnership, now one of the largest law firms in Singapore. That must have been a remarkable opportunity for her, and she probably realizes that.

Is there a "correct" view? I am not wise enough to answer that, but I am without question more sympathetic to the latter view, that luck and opportunity are just as great determinants of a person's success as talent. The former view has always struck me as being somewhat narcissistic and presumptuous. Perhaps not coincidentally, Ms. Eng is a woman, while Ng Eng Hen is a man. Make of that what you will.

Needless to say, whichever view a person hews to will have implications on their opinions on what kinds of public policies should be implemented. The fact that we have ministers such as Ng Eng Hen (and Mah Bow Tan) in government who come from very humble backgrounds is no guarantee that they will look out for the little people from their perches. Indeed, the opposite may be truer than not.

"Google Looking for a Bigger Town" - Home p.19

Google Singapore is expanding. But as I realized years ago when I first graduated as a freshly minted engineer, you have a better chance of working for Google in Singapore if you're an accountant or a top sales and business development person than if you are an IT professional.

The same goes for any number of technology and engineering MNCs in Singapore. There are engineering jobs available, but the really interesting engineering jobs are simply not here.

If your ambition is to work in manufacturing, quality assurance, batch testing or any number of technical, ok-paying (and perhaps not even that), but relatively dull jobs, you should have no problems.

But if you want really interesting work, the kind that happens in the Googleplex, you can stop hoping right now.

It's a vicious cycle. Because the interesting jobs aren't here, good students are increasingly not taking up engineering. In my time, engineering was a relatively sought after choice (but many engineering graduates did not end up in engineering). Today, as my interns and psychology experiment participants (recruited from local universities) tell me, engineering is a "dumping ground". It is not even a popular choice of study now, much less working in engineering. Popular majors now are economics, business, banking and finance and information systems.

And because good students aren't taking up engineering, there is little reason for companies to relocate high value work here. Not that talent alone is enough to ensure that; there are a multitude of other reasons why high value work does not come here to Singapore.

Is this necessarily a bad thing? Well, it's bad if you're hellbent on being an engineer. But, than again, this is a situation that artists, musicians, writers and designers have long had to live with in Singapore. And they cope with it as best as they can, either venturing abroad or moderating their expectations here on this island.