Thursday, November 12, 2009

Snippets from Capitalism A Love Story...

Managed to catch the movie yesterday. It exceeded my expectations in terms of entertainment value but objectivity and rigor are not Michael Moore's strengths. You have to hand it to him for making topics like capitalism entertaining. There are many lessons in movie relevant to Singapore including the erosion of the middleclass, hollowing out of the US economy, falling wages as productivity increases, dangers of consumer & housing debt and the consequences of tax cuts for the rich etc.

One part I found one part particularly interesting was a speech by President Carter who warned about the dangers of a materialistic society in 1979:

A society in which people define themselves by what they own and consum will eventually lose its meaning and purpose. President Carter in 1979 foresaw the dangers of a materialistic society ruled by money.

Another part of the movie I found interesting was about a memo that Citigroup sent to its high net worth individuals in 2005. It described how USA has turned into a plutocracy (rule by wealthy) in which the top 1% has more wealth than the bottom 95% combined. The only threat to this plutocracy is democracy - one man one vote means the 99% of the people at the bottom control 99% of the votes. The only reason why the 99% put up with the income gap is the belief that they too can be one of the people in the top 1% if they work hard enough. The Citigroup memo is found here:

http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report-Part-1

The movie traces what happened to ordinary American families over the past 2 decades and the bottomline is life got steadily worse under a highly capitalistic system in which leaders simply give in to the demands of big corporations . If the system does not change it is not difficult to predict what outcome will be for ordinary Americans in 20 years time. There are many similarities between what has happened in America and what is taking place here in Singapore. If change does not come soon, it is easy to predict what will happen to the ordinary Singaporeans in 20 years time.

22 comments:

chicken said...

You know, I think that the pap attitude of paying more for talent is wrong. If you want to attract the right kind of talent, you need a strong ideology, a purpose. A commitment to improving peoples lives.

How can you attract talent to a party that is infamous for legalized corruption.

Its not a matter of pay. True talents like lucky would not join such a party.

Exiting said...

As chicken above said, the right kind of talent can be attracted by a strong ideology, not $ alone. But is PAP really keen to get the right kind of talent? So far, all their stars are yes-men, even ex-critics.

So long as they have the political power, the PAP will not change. To change, the people with the votes must change first. I'm not holding my breath for it to happen.

http://vonhayek.blogspot.com/ said...

Singapore's Gini is 48.1 worse that US 45.

I can somehow exonerate US's gini on the fact that she practices friedmanomics.

Ours is similar to French dirigiste model without the equality of France.

Our income disparity can only explain by PAP's robberism. It is purely fabricated by LKY and his lackeys.

takcheksian said...

I have warned on sammyboy that we cannot have unfettered capitalism.

http://www.sammyboy.com/showthread.php?t=41401

If we allow inequalities to spiral out of control, eventually our descendants (those who are not elites) will be living in cages like HKers.

Sadly, most people were apathetic.

Anonymous said...

Just finished reading the citigroup report. I'm not sure what to make of this.

The report is actually pretty sloppy but the insight do seem plausible. But it seems oversimplistic to assert that negative saving rates is driven mainly by the rich consumer. The non-rich underemployed consumer was tapping home equity too.

Another question is how the rich earn their money - simply selling to the rich? This is not entirely impluasible since we all consume physical resources and it is really the control of those resources that determine wealth. But again, I doubt that this is the entire story.

xl said...

Jimmy Carter's warning is same as Winston Churchill's warning about Nazi Germany. Few listened to him for 10 years until Britain stood alone & he became wartime PM.

Masses are slow to wake up. Another similar area is climate change. For decades the masses are asleep.

Used to be pap supporter but its policies in 2000s had left me disillusioned.

Govt & large corporations are hand-in-hand. Corporations provide jobs so masses are happy to keep voting pap. Pap in turn do their best via tax cuts, FTs etc to keep corporations here to secure their powerbase.

Yes, we are travelling down path as America. Is not hard to see what's gonna happen in next 20years.

Communities are slowly being destroyed:

- Wet markets not good. Give way to supermarkets for > profits.

- Hawker centres not good. Give way to food courts for > profits.

- Independent taxis not good. Give way to taxi companies for > profits.

I fear for unfettered capitalism too.

Anonymous said...

Capitalism creates "efficient" markets. This enables us to "price" everything but loose our ability to to preserve and create value in our lives.

Anonymous said...

Capitalism doesn't create efficient market but creates unfair distribution of wealth and no sense of social responsibility (if not regulated).

Take an example, employers always have the options of getting a pool of cheaper and cheaper slaves (take a look on the new FTs like ZYY) which enables higher and higher profit margin. The workers will always be poorer and poorer due to more and more competitions from others (due to introduction of new machines or floodgates of cheap workers) and forced to accept lower and lower wages just to survive.

On the other side, the profit goes to the shareholders of the companies (capitalists, and mostly are rich people) and these shareholders basically just own the company by money, not even working (thus, not contributing to the society) and still enjoy income, consuming resource and not returning anything back to the society.

Anonymous said...

Anything taken to extremes will be detrimental.

I'm afraid capitalism today is on the brink of extremism where people who control the levers are driven by greed and an insatiable appetite for more profit.

When political office bearers are getting in on the act openly, you know it is getting ridiculous.

At this rate of income widening between the haves and have nots, it would not be too distant when political upheaval will arise.

Anonymous said...

I guess there will be different schools of thoughts with regard to the type of systems for the economy. However, I feel that the main issue in Singapore *as mentioned numerous times in this blog* is that there is a lack of checks and balances in almost every aspect of our system. We are trusting on people's capability, integrity and astuteness in getting the job done right. However, we all know that sometimes even actions done with the best intentions may not necessarily be the best solutions. Even the most intelligent people are also not infallible.

Until the day we have a system *of course not perfect* that is more transparent, more reliable, more accountability and more critical, without compromising safety, efficency and productivity, then maybe we can discuss the type of economic system that is best for the country. Right now, we are very susceptible to many factors and walking on a tight rope in terms of the well-being of the country.

History has proven time and time again. If a country is very *dependent* on one person, it will bring chaos and hardship to the people. Though humans can usually ride out of it, but the timeframe is very unpredictable. For example, throughout the history of China, a charismatic or capable man rose up to become emperor. Usually, the state of country would not be too bad. However, subsequent emperors may not be that good or capable which led to uprisings and revolutions and unstability. People ultimately are the ones who will suffer. Same like in Europe and Americas, where power cannot be concentrated in the hands of a single person or group. It is not criticising this person or group, but intelligent men of the past know that one's person capability and intelligence is limited and we are very dependent on each other to make the world or place a better place.

Only through a carefully calibrated system is trustworthy. Maybe that is why democracy is so popular in most countries and most logical to ensure the continued well-being of the nation. Trust and belief are important, but they are complementary tools to a system that is fair, transparent and accountable to all the people.

Anonymous said...

"The only reason why the 99% put up with the income gap is the belief that they too can be one of the people in the top 1% if they work hard enough."

Isn't this also true of Singapore?

In fact no need to be top 1%, 66% quite OK already. At least middle income level, slightly more than enough for a simple life.

Anonymous said...

Michael Moore should do a clip on S'pore.

DanielXX said...

frankly, the best legacy MM Lee can leave now is a system that allows the emergence of alternative voices. this is the only way that will give him a long eternal rest and not have to rise from the grave when things turn bad. without alternative voices, singapore will go down one tunnel vision with a group of similarly-visioned leaders (not saying they're no good) without a system to rein them in. should their vision turn out to be faulty, it will be too late.

in portfolio management we call it diversification. concentrate your bullets in one point of view and you either win big or lose big. this is the warren buffett way.

i don't think we can do things the warren buffett way when the consequences are millions of people's lives at stake. the principle of risk diversification applies.

Arthur Lee Lucky said...

I saw this coming in the 1970s, when the "Two-Is-Enough" policy was introduced.

My main consideration then was that the Man whom we so revered had openly liken himself to be a Machiavellian, the ruthless strategist of political governance.

His words to the effect went something like this: "I had rather people fear me than love me ..."

Fear will instill obedience no doubt, but it will also breed hatred. When hatred reaches a critical mass, it will be unleashed and explode with full force. Nothing will be able to stop its torrential momentum. The outcome can only be disastrous. But it is uniquely strange why after 40 years, this hatred has yet to reach its critical mass.

I do not wish to find out why the critical mass has not been breached but only hope to get the hell out of here when the sun still shines.

Therefore, I have prepared myself and my family for this impending "To-Each-His-Own" or "You-Die-Your-Own-Business" policy which is inevitable. My early assessment has just been verified when the demigod openly admitted that "Social divide is inevitable", which is a horrendous revelation of worst things to come.

My children have already been tucked away in some nice and comfortable, free and easy far away truly first world countries, no more within the grip, manipulation and exploitation of this Machiavellian Animal Kingdom of Perpetual Suffering-In-Silence and Perpetual Rat Race that only a few self-indulging, self-enriching, top-ranking elites call the shots all the time.

People's Action Party has become People's Agonising Parties. Believe or not, its up to you.

Now is just about the right time for me and my spouse to denounce citizenship, so that we can totally withdraw all our CPF money, and say "Sayonara".

The boot-lickers and balls-carriers can say "Good riddance" for all they want, but such feeling is actually mutual.

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