Allow me first to predicate my response on the, by now, obvious observation that the broad direction of a country's economy is made by leaders who seldom come readily equipped with vast, if any, experience of having, to quote the author, “led a major state economy”, “balanced an annual national budget” or “ever done business as a local coffee shop owner”.
Bill Clinton (a lawyer), Mahathir Mohamad (medical professional), Tony Blair (a lawyer and at one time rock-musician wannabe), Angela Merkel (chemistry professor) and, of course, our very own Lee Kuan Yew (lawyer and once opposition leader) had presided over periods of robust economic growths in their respective countries but who had limited experience in governance, corporate or otherwise.
So how did they run their economies? By keeping abreast of economic history and developments, seeking the views of experts, and, most importantly, listening to their fellow citizens. How do I arrive at my views on our economy? By keeping abreast of economic history and developments, seeking the views of experts, and, most importantly, listening to my fellow citizens.
If we are going to use Sim Ying's yardstick that our political leaders must be experienced in the portfolios they handle, then isn't it dicey to have an oncologist as a defence minister, an airforce general as an education minister, an accountant and businesswoman as a youth and culture minister, an opthalmologist as a foreign minister, a mathematician as the prime minister and, of course, a lawyer soon to be the guardian over our national reserves?
And speaking of the presidency, Dr Tony Tan who, as general manager at OCBC and later finance minister, had accumulated a lifetime's worth of experience in the world of investments and finance.
Indeed, when he was running for the presidency in 2011, he touted: “With the knowledge which I have of the financial market, and the global economy, I believe that I will be able to make the contribution to and help the government."
Except that he left out the little detail of the disastrous investments he made in Western banks – despite repeated warnings from experts – when he was the executive director of the GIC which caused the GIC to suffer a $60 billion loss. If it weren't for the bailout money from the US government to rescue the banks, we would have bid our savings a heartbreaking adieu.
I plead guilty
The writer accuses me of “denigrat[ing] the Singapore economic achievement, both in the past and for what it might continue to be”.
I plead guilty. But only because I have very able tutors. Wasn't it PM Lee Hsien Loong himself who confessed that the PAP has “maxxed out” on easy ways of growing our economy?
And what are some of these easy ways? “We've grown in the last five years by just importing labour,” his father revealed in 2011. (emphasis mine)
In fact, we have become so incapable that PM Lee said that “without the foreign workers, we would not have attracted [investments].” Lee Kuan Yew echoed: Without foreigners, the jobs will not be there to begin with.
Such an unhealthy state of affairs is not a recent occurrence. As early as 1972 – that's a full 45 years ago – the late Dr Goh Keng Swee (then finance minister) warned that “[Singapore’s] position is probably unique in that she is now dependent on a continuing supply of foreign workers to sustain growth…”
In case it's still not clear, let me reiterate: After 50 years of rule – uninterrupted – the PAP has failed to develop sustainable (population growth, education and economic development) policies that will enable locals to drive our economy, that is, creating jobs and attracting investments, with foreigners playing a complementary role. Instead, the situation has been turned on its head. Foreigners are now the main force behind our economy and Singaporeans are playing the supporting role. Lees' words, not mine.
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All this has had a pointed effect on local wages and job opportunity. Take, for instance, PM Lee's recent lament of the shortage of engineers in Singapore. The problem has become so acute that we have had to engage Swedish and Japanese engineers to help us figure out what's causing the interminable breakdowns of our MRT system. Transport Minister Khaw Boon Wan even exhorted our train operators to look to Taipei to emulate the reliability of its rail system.
At the risk of belabouring the point, how did we come to this after 50 years of PAP rule?
Mr Yeoh Lam Keong, former chief economist at the GIC, posits that this was due to the excessively liberal importation of cheaper regional engineers for over two decades which “has bid down the real wages and working conditions of such professions such that the return on investing in such a tertiary education and career is unattractive to locals.”
The policy, he adds, has created a vicious circle where engineering firms have found it difficult to recruit Singaporean engineers because of the shortage in supply and have to continue to hire foreign engineers.
More broadly, experts Pang Eng Fong and Linda Lim conclude that “foreign investors attracted by capital subsidies had been creating skilled jobs mainly for foreigners.”*
What's more, economist Manu Bhaskaran points out the PAP's immigration policy “has made us addicted to cheap labor, and it was done without providing enough infrastructure to cope.”
So, no, I am not enamoured of the PAP's economic achievements.
The PAP's achievements (or not)
I am also charged with not acknowledging that “Singapore has always succeeded beyond all expectations.”
But so have Taiwan, Hong Kong, South Korea and Japan. The latter two countries were ravaged by war and had to build their economy up from ashes. Taiwan and Hong Kong also boast of rags-to-riches narratives. We are not unique.
The crucial difference is that these economies, at least as far as Japan, South Korea and Taiwan are concerned, have all of turned decisively towards democracy. Because these societies are open and free, they have succeeded in producing an entrepreneurial class that enables them to compete in an ever-changing world.
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In contrast, we are still stuck in the politics of one-party rule with a centrally planned economy. And while the Japanese, Koreans and Taiwanese are drivers of their own economies, Singaporeans, as I pointed out, have been shafted to the back seat.
But the hurt wouldn't sting so much if our way was a sustainable one. Unfortunately, experts tell us that it is not. MIT economist Alwyn Young said: “The days in which Singapore can continue to sustain accumulation driven growth (forced national savings and foreign investments) are clearly numbered.”**
Economics Nobel laureate Paul Krugman dismissed our miracle growth and pointed out that “all of Singapore’s growth can be explained by increases in measure inputs. There is no sign at all of increased efficiency.”***
Of late, we have turned to building casinos and becoming a tax haven to augment growth.
Of course, the writer brings up the PAP's favourite trope: “There're probably at least 150 national economies out there in the world that would just love to be comparable to Singapore’s.”
This solipsism of everybody-is-so-envious-of-us-because-we-are-so-advanced has led us to the high mediocrity of low expectations. Case in point: Mr Lim Swee Say's “suaku” moment when he recently travelled to China and realised how backward we were in terms of the use of cashless payments.
If we have to compare ourselves with others to make us feel better, there's always Chad, Mauritania and Yemen that we can point to.
Adopting the untested
Sim Ying also rebukes that “Chee's ideas about how to achieve a vibrant and viable future economy are about as vague and untested as his own business experience.” Perhaps. But if they are vague and untested, wouldn't our ministers be reckless to adopt them, even in variation?
Adoption #1. In 2010, the SDP proposed that we bring up the tax bracket for top earners closer to the 30% mark. In 2015, Finance Minister Tharman Shanmugaratnam raised taxes on the top 5% of income-earners.
Adoption #2. The SDP has been pushing for minimum wage since 2001. The PAP introduced the Progressive Wage Model in 2015 to pay certain categories of low-income workers a minimum wage of $1,000.
Adoption #3. In the 1990s, the SDP called for a Singaporeans First policy where local employers hire Singaporeans first before they employ foreigners. In 2013, the PAP introduced the Fair Consideration Framework requiring “employers to consider Singaporeans fairly before hiring Employment Pass holders.”
Adoption #4: The SDP launched our National Healthcare Plan in 2012 where we called for individual healthcare risks to be pooled. In 2015, the PAP announced that its Medishield Life ensured that “everyone shares in the national risk pool”.
Adoption #5: In 2010, the SDP proposed a retrenchment insurance scheme to provide financial support for those retrenched. Just this year, the PAP introduced the Returner Work Trial to do the same.
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Undoubtedly an A+ grade
The writer also notes that my calls for innovation and productivity “fall on infertile ground because this work is already being done by the current government”.
Yes, but let's dig a little deeper. Citing a study done by Nomura Securities, Mr Han Fook Kwang, former Straits Times' editor (you can't get anymore establishment than that), wrote that “the Government has spent $21.2 billion since it launched its restructuring exercise, including paying for the National Productivity Fund, Work Credit Scheme, the National Research Fund and all the various productivity incentives. That's almost the entire Education budget this year, but with little progress to show.”
If the grading is for work “already being done”, the government undoubtedly scores an A+. Unfortunately, as the PAP tells our students, you don't get credit for effort. When you spend $20 billion to increase productivity levels, there had better be increase in productivity levels.
And if you think that the PAP is going to break new ground in dealing with the productivity malaise by setting up the Committee for the Future Economy (CFE) which Sim Ying notes has “called for the government to be bold in its planning”, you would be mistaken.
Again, don't just take my word for it. Professor Linda Lim said that the solutions proposed by the CFE are “exactly the same” as the ones put up by the Strategic Economic Plan in 1991, Committee for Singapore Competitiveness in 1997 and the Economic Review Committee in 2003. “Essentially,” the don noted dryly, “[the CFE report] is saying the same thing in different words.”
Sim Ying ends off the essay exhorting that “Singapore's watchword should be, Forward, not retreat.” I couldn't have said it better.
But tell that to our workers who are the unhappiest and most stressed out lot in Asia, the families who are facing record household debt, our retailers whose businesses cannot survive because of the high cost, our retirees whose life savings are withheld, our elderly who have to collect cardboard or clean tables to survive, and the retrenched who see themselves being replaced by foreign workers.
To be fair, raising productivity and fostering an innovative culture, as PM Lee notes, is hard to do. But his deputy Mr Tharman Shanmugaratnam pointed the way forward in 2014: “At the end of the day, it is a matter of social culture. It has to be more intrinsic, not just relying on extrinsic incentives.”
This is what I wrote in one of my books: “At a societal level, an intrinsically motivated people is a people more productive and innovative than one fed on a staple of extrinsic rewards.” The year was 2001. (Make that Adoption #6.)
Society. Culture. Intrinsic. Extrinsic. Incentives. These are concepts studied and applied in the realm of psychology. If we are going to truly take Singapore forward, would the task not be more suited to a psychologist than a mathematician?
*Pang Eng Fong and Linda Lim, Labour, Productivity and Singapore's Development Model in Singapore's Economic Development: Retrospection and Reflections, Linda Y C Lim (Ed.), 2016, World Scientific.
**The 2001 Index of Economic Freedom, The Heritage Foundation.
*** Paul Krugman, The myth of Asia's miracles, Foreign Affairs, 1994, Vol. 3, No. 6, p. 71.