Somehow the recent ERP hikes set off a chain of thought that strung together a set of diverse ideas to form a big picture. ..ERP ..... "Every Road Pay". ERP is one of those great innovations that changed our lives. Only Singaporeans get to enjoy ERP because no other govt in the world has been able to implement such a scheme because they are guaranteed to be thrown out of office if they do. So while other govts struggle with other schemes such as "park & ride" or "car pooling via car pool lanes", Singapore has this powerful solution - the ERP. Whenever, the speed of vehicles on the road slows, the govt simply has to up the ERP rate and magically congestion disappears. You can be sure any other govt visiting will be in awe of this wonderful solution. The govt has cleverly used the basic idea in economics that demand falls when you raise prices to solve our traffic problems. The statistical results are just great, after a few weeks of whining, Singaporeans actually change their driving behavior in response to the rate change and wahlah! magic the roads become smoother. The govt tells us that the ERP is family and business friendly because business save time and money when the roads are less congested....so far so good....
Our little island is now so crowded, our roads have become scarce resources and the way to allocate it is via a pricing mechanism. Same with taxis - the solution to long waiting times for taxis was to raise taxi fares until some people like myself give up taking them. There is a very capitalistic nature to the way things are done in Singapore - if you have money and can afford it, you get to use the road during peak hours even if you're on your way to relaxing game of golf. The people priced out by the recent hike could be the struggling lower middle class father rushing to work after sending his children to school. With the recent hike in electricity tariffs, children in poorer families may have turn off their reading lamps earlier while someone else uses the electricity to power the multicolored lights in his fish tank 24 hours a day, 7 days a week. I'll come back to capitalism a little later....
Communism and together with it socialism began to fall apart in the 1980s. The problem is you can't keep the economy going without private ownership, the productivity of a society under socialism will decline, resources are misallocated and unless you have alternate sources of wealth like oil money (example Libya or Venezuela), your standard of living will decline. That is what happened to the Soviet Union and it went into a long decline and eventual collapse. With communism out of the way, Capitalism triumphed and all the "modifications" removed - unions were dismantled by both Regean and Thatcher, deregulation and privatization started to take place in many industries. Capitalism gradually became unbridled...wage gaps started to rise.
Economist Ravi Batra explained that wages form the demand in an economy and when wages don't catch up with productivity, the demand will fall and there is excess capacity. This problem was delayed by the expansion of consumer credit which allowed Americans to spend "beyond their means". In the past 20 years, corporate profits as a % of GDP in many countries kept increasing along with the household debt levels. Right now we are seeing the crisis of capitalism as the subprime mess and consumer slowdown threaten to plunge America into a deep recession.
Singapore leaders to make sure we are not left out of the money making machine adopted all the "good" practices - workers benefits such as retrenchment benefits, pensions, medical etc were removed. 20 years ago if you worked in a govt department, you would be entitled to pension and full medical benefits today all these are removed for the lower ranking civil servants but the PAP govt retained it for the elites. The PAP did even better than the Americans by importing foreign labor which puts further pressure on wages especially for the poorest Singaporeans. With all this, we were able to achieve the highest GINI coefficient (which measures income inequality) among developed Asian economies.
Ordinary Americans under the great economic strain find Obama's message of "shared prosperity" and "fair wages" highly appealing:
It remains to be seen whether Obama will win and bring about change. But the hope of change alone is enough to drive Americans to support him because they feel they cannot continue with the system as it is.
The imbalances in the global economy are now coming to a head. The Marshall Islands declared a state of emergency because the impoverished nation can no longer afford to electricity due to high oil prices. Food riots are occurring everywhere as the price of food soars. Inflation is exacerbating the effects of income gap. Precious resources allocated to those who have money rather than those who need it. Here in Singapore we embrace capitalism to created an affluent society - or rather a city so expensive only the affluent can live comfortably. When Minister Mah Bow Tan was recently asked if the petrol tax can be reduced given the pain due to rising petrol cost, his reply was very simple - if you can't afford to drive, drive less or take the public transport....driving is for those who can afford it. He didn't ask the person why he needed to drive. It didn't matter what his needs were ....maybe he needed the car to drive his sick mother for medical treatment everyday. So much for the socialist heart......
"The island state has become a rich oasis with pockets of rising poverty, where the homeless sleep at void decks or beaches. Workers in their 60s or 70s clean toilets and sweep floors, instead of enjoying their retirement with grandchildren as is befitting the world’s seventh richest nation (in per capita GDP)."
- Seah Chiang Nee in his latest article Poverty Looms in the Isle of Riches20% of Singapore workers earn less than $1200 per month and among this 20% half of them earn less than $900 per month. One in 5 Singaporeans hopelessly poor on our affluent island. When you're poor in Singapore, there is no escape. If you're poor in Kuala Lumpur , you take a bus to Penang or Selengor where they still sell bananas at RM$0.30 per bunch. If you're poor in Tokyo and cannot stand it, you can leave and go to one of the many perfectures where the price of a home is the cost of building a home. Here in Singapore when youi're poor, you cannot run from price hikes, ....there is no escape from this PAP paradise ( a paradise for PAP leaders?) ....
If America, which has high taxes for the rich, gives out unemployment benefits, low income schemes for basic necessities such as water & electricity, food stamps, minimum wages, independent unions and the right to protest any injustice, is practicing unbridled capitalism....what kind of capitalism is Singapore practicing with 70 year old cleaners, jobs that pay wages so low a families cannot even afford basic necessities, controlled unions and leaders who after elections enhance their own salaries which was already the highest in the world to match those of top corporate climbers? The PAP has sunk itself into an ideology based on elitism and authoritarian capitalism that allows it to tolerate this great divide. There is nothing meritocratic about President Nathan making more money in a day than a low wage worker in year - we have allowed capitalistic tendencies to infect our public service. The belief that people are being paid what they deserve within a system distorted by the influx of cheap labor from China & India, monopolistic GLCs, and redirection of opportunities and resources to a small group of elites is a myth. No 70 year deserves to be digging dustbins for aluminum cans for a living when a minister still gets his bonus after losing Singapore's most dangerous terrorist.
"The human being is an unequal creature. This is a fact. We started with a great propositions all the great political movements, all the great religions, all the great political ideologies say let us make the human being as equal as possible, in fact he isn't - never will be...."
- MM Lee (1969?).
I too believe that not all humans are born equal. But consider what Buffett once said - if he was born on an island with tall coconut trees and wealth depends on how quickly one can get to top to pick coconuts, given he wasn't born with the genes to climb trees he would have ended up poor. While we are not born equal, we can create socio economic systems that don't amplify the inequality. Societies that rely on unbridled capitalism to allocate resources very often fall apart when the strain becomes too hard to bear.
"..to .build a democratic society based on justice and equality..." - Singapore Pledge
“We are in a strong fiscal position and if any country in the world can afford to find a better solution to deal with this growing income divide, it is Singapore”
- Economist Yeoh Lam Keong.
If we're so rich now that can lose billions investing in troubled western banks and then dismiss those losses as long term investments, we should be able to provide a safety net for the poor and help the aged worker retire gracefully. If we don't do it now when we have one of the highest reserves per capita in the world and an income gap comparable to 3rd world nations, we will never do it ...and it becomes apparent that it is more important to stick to broken ideologies than to help suffering citizens...