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PAP ignores SG income inequality at its own peril

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  • tremeritus
    PAP ignores SG income inequality at its own peril July 5th, 2012 |
    Message 1 of 1 , Jul 5 4:52 PM
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      PAP ignores SG income inequality at its own peril

      The letter (on the right) [Link] written by Aloysius Chia explains how income inequality hinders social mobility. I have shown a number of examples of this. There is a big gap in the quality of pre-school education [Link] and at the university level the govt restricts the numbers – richer families can send their children overseas to get degrees and poor families cannot afford this. In every developed country, there is always a path for the highly talented 10-20% of the population but when you have a large income gap, the rest will have to be distributed to the unequal wage structure. Social mobility is necessary but insufficient to address the income inequality.

      One lesson we have learnt or should have learnt is not to trade off income distribution for economic growth. There are numerous examples of economies that have slowed down temporary even going into recession then resuming growth after restructuring and finding new engines of growth. But there are few examples of developed economies being able to narrow the income gap after it has expanded in recent history [OECD Paper:Reducing income inequality while boosting economic growth: Can it be done?]. Once the income gap is there what can govts do? Is it sufficient to stop the gap from growing? Is it sufficient to just mitigate the effects of the inequality?

      Singapore’s income inequality problem is unique among developed countries. Our inequality measured the GINI index is similar to that of USA However, the effects of the income gap is not the same. The USA is divided into urban, sub-urban and farmland – the income gap between these areas may be large causing the GINI index to be bigger that it is within each of these areas. The place with the closest resemblance to Singapore is Hong Kong which is technically not a nation.

      Hong Kong has had a large income gap for a long time.

      You would think that Hong Kong residents would be able to accept this high inequality given it is not a nation and operates laissez faire economy with little govt intervention. The Hong Kong people do not serve NS and do not have reservist duties. It does not have large GLCs that dominate the economic landscape. When the income gap expanded, the Hong Kong govt expanded its social spending to mitigate the negative effects – these include free medical care for seniors, pension for the elderly, support for the poor, unemployment benefits. Hong Kong recently introduced minimum wages successfully without any negative impact to employment. If you view the Hong Kong island skyline from across Kowloon, the numerous ultra-modern skyscrapers reminds you of Hong Kong’s success as a financial center. You would think the Hong Kong people in general should be able to accept the system and the outcomes but this is not the case.

      Today in Hong Kong there is widespread unhappiness due to income inequality. A few days ago more than 100,000 people demonstrated against its the govt and its new Chief Executive Leung. Yesterday, Leung tried to hold a dialogue with residents to demonstrate he will listen to the people but the relationship between Hong Kong leaders and the people is so strained, the meeting deteriorated into a scuffle in which residents chased after him and he had to escorted out by police. This episode shows how strained and polarised a society Hong Kong has become.

      Why is Hong Kong’s example important to us? Singapore GINI coefficient is 0.47 roughly the level of inequality in Hong Kong 10 years ago. A GINI coefficient of 0.40 is considered a threshold by social scientists at which strong govt action is needed otherwise there is risk of social unrest. During this last 10 years the Hong Kong govt has done much in the last 10 years to mitigate the effects of income inequality including increased social spending and the recent implementation of minimum wage but it has not been insufficient to halt the polarising effect of the income gap.The lesson for Singapore is if too little is done, we will end up where Hong Kong is today and the people’s trust in the govt will disappear. To understand what can happen, we need only to look at Hong Kong.

      Prof Lim Chong Yah called his approach to narrow the income gap “Shock Therapy”. However, it is only shocking to those who still don’t understand the dangerous negative effects of a large income gap and what it will lead to if it is not fixed in the coming years. Small tweaks and reactive approaches means we are doing even less than the Hong Kong govt 10 years ago. We already know the outcome of doing too little, yet the PAP govt insists refuses to consider alternative ideas even those from the establishment and walks a path that is ideologically attractive to the PAP but leads to social outcomes that will become increasing unacceptable to Singaporeans.

      .

      Lucky Tan

      * Lucky Tan is an avid online blogger since 2005. He likes to study the thoughts of Singapore leaders and the laws of Singapore. He blogs at http://singaporemind.blogspot.com.

      .


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      30 Responses to “PAP ignores SG income inequality at its own peril”

      • Vomit Blood:

        The PAP is making beggers of the original Singaporeans. See how HDB woman CEO, other heads and MPs carry the PeeM on TV? You really want to vomit Blood. And they thought Yam Ah MEE is very popular, so they put Yam Ah Mee everywhere in every publicity events.

      • oxygen:

        OUR ECONOMIC PATHWAY HAVE HIT THE WALL SINCE 2006 – zero real GDP growth and exacerbated income inequality – a lot of damage have been grievously done to Singapore.

        We have to pause, reflect, rebalance and find new growth path that MUST ADD TO GDP gain without adding to population influx and aggravating the income inequality further.

        AND THAT STARTS WITH RESTRUCTURING OUR SOVEREIGN WEALTH FUND MANAGEMENT PRODUCTIVITY! No other sovereign wealth fund performs so dismally.

        OTHERWISE WE WILL DISINTEGRATE into abject failure with NO HOPE FOR RECOVERY down that sustainable pathway.

      • Hippo gee:

        LKY did address the income gap issue some years ago when a question on this issue was raised to him. He said as long as Singaporeans has a job, it is good enough. The income gap is not an issue.

      • Emeritus Singaporean:

        at the university level the govt restricts the numbers – richer families can send their children overseas to get degrees and poor families cannot afford this.

        The irony of the Singapore situation is that “scholarships” are given to those who come from the richest families with an environment that allowed them to excell in their studies.

        There seems to be a disconnect when the poorest that need help are not given the help, while those who do not – are given more help by the PAP LEEdership.

        It is even more ironical that – in the 1990s – the PAP Mentor had the audacity to tell the Muslim community that those who have benefitted from the PAP Government support plans and have advanced in society, should “take themselves off the support plans” – and allow those less fortunate in their community to get more from the support plans.

        Clearly, the “double standards” of the PAP is not too mind boggling especially when it is clear that the beneficiary of the “double standards” will be the PAP.

      • oxygen:

        I SEE ECONOMIC GENOCIDE GOING ON – locals displaced by foreigners by PUBLIC POLICY DESIGN to conceal decades of FAILED ECONOMIC MANAGEMENT. They are clueless of turning around this country and lacking in the political will to admit they are wrong needing to change direction.

        That is why we are in this torrid ‘SHIT” now – the Monkeys-in-White just single-minded focussed on their wealth accumulation of humonguous pay checks and they happily give lip service to “inclusiveness” propaganda talk actually meant for naive public consumption.

      • Hogzilla:

        Actually, I think they know the inequality. Just that they give the Yao Ming face to the figures.

      • Get Smart:

        PAP once had the trust of the people and fail to maintain it. Perhaps an alternate government party could gain back that trust in 2016 once they are voted.

      • Tofu:

        The only solution is to kick out the dynasty family.

        All policies by Papies are made to enhance and consolidate the dynasty family rule.

        That is why Singapore can not get out of the low income trap and an ever widening Gini coefficient.

      • Devil Woman:

        Papies have lost it long time ago.
        Old evil man ideas had backfired. Scholars Anyone? My Foot!
        Gap between rich and poor still widening they cannot close the gap.
        Lost lots of our reserves and still no accountability or transparency.

        They are now clueless, have to please the rich or else they the rich will move out, just keep suppressing the poor and rule with iron fist,and let the commoners and average earners and middle class to swallow the bitter pill.
        While they go on air or through their “shit times” and keep spreading the propaganda. They have no mercy no compassion for the citizens anymore, just pride and arrogance to the extreme. Soulless lot would say.

        They ought to be deleted/get rid of from our system of governance for good.
        These no good for nothing people do not deserve mercy no more,come 2016.

      • Singaporean:

        We Singaporeans should do something about this.Do not wait till it becomes like Hong Kong. We can see the Hong Kong example vividly and it should not be allowed to happen to Singapore. These shoe box apartments and traffic congestions and train crowds already becoming intolerable getting to be like Hong Kong. At least Hong Kong has China….Singapore doesnt.

        The longer we wait the more traumatic it is going to be. Confronting them is the only way to go…as is in Hong Kong.

      • concerned sporean:

        That is Y you see so many own pple in the cabinet. It is clear cut this is a dynastic rule. Just trying to get the real meaning in the dictionary of “meritocracy”. Don’t know who is right.

      • eaglefly:

        LOCALS ARE TOO DAFT TO DO SOMETHING,

        SELFISH INDIVIDUALS, GREEDY TO THE BONE, NIL MORALS TO THE CORE,ZERO INTEGRITY LIKE THE MENTOR MINISTER, SHAMELESS COMPARED TO PIGS EATING IN STY…………………

        THIS IS AN ISLAND WAITING TO STINK/SINK TO THE GUTTERS,

        SLOWLY BUT SURELY

        END OF DAY, THE MILLIONAIRES MINISTERS AND ALL CROYNIES, PUPPETS,STOOGES,

        BENEFITS

        IN SWISS , UBS……………STANDARDS

      • Integrity Maintained:

        Thank you, Kuan Yin & Hsien Tau! You have done a damn Great “Fcuking” job! It is time you deserved a “Permanent Break” when 2016 comes.

        Both of you…have done “Really well” (for yourself @ least).

      • James Ong:

        Maybe Lee Hsien Loong has shifted all his cash and assets out of Singapore and is ready to leave at first notice of any trouble.

      • Richard Lu:

        @Emeritus Singaporean: July 5, 2012 at 10:56 am

        “The irony of the Singapore situation is that “scholarships” are given to those who come from the richest families with an environment that allowed them to excell in their studies.”

        +++++

        Yes, it is time for a re-think on the scholarships awards.

        The elitism, demand for recognition and job promotion expectations of some of these scholars are scandalous. Ngiam Tong Dow said some of them think they are little Lee Kuan Yew’s.

        Maybe there should only one type of scholarship – a Singapore Government Scholarship and restricted to poorer Singaporeans. Scholarship bond will still be applicable. The returning scholar should serve his NS and then go out to the industries or civil service. If the scholars are employed in the industries, the companies will pay to the Government a portion of the graduates’ salaries to defray the cost of the studies.

        Shell, DBS, Police, SAF etc. could stop their scholarship awards and support the single Singapore Government Scholarship. In this way elitism can be eliminate. Rich Singaporeans should not participate in these scholarships awards. They do so now because of the prestige that the scholarship brings e.g. SAF Scholarship.

        The President Scholar scheme can continue. Here the rich and poor can participate. The President Scholarship is a recognition of the 4 top all-round students for the year. Maybe the President Scholarship can be increased to say 25 per year.

      • TrueBlueSporean:

        Pushing to the limit, even obedient cat will turn into biting lion! PAPigs will soon go to laughter house for its corrupted blood n meat!

      • LIONS:

        Even the most glorious rockets and satellites will be grounded some day or other; so too those who think they will always FLY up HUGH.

        NO ONE CAN DEFY THE LAW OF GRAVITY. Even if they could try to do s

        (Message over 64 KB, truncated)

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