Our ex-MM Lee tried to explain to MP Low why being in a "Europe situation" is highly advantageous and being surround by the type of neighbors we have our situation is a lot more difficult. Well, look at Europe now and the sa-called "European situation". I didn't dig out the video to show ex-MM's comprehension of the world but to show how uncertain the world is even for someone as wise as Lee Kuan Yew. How can ordinary Singaporeans prepare and become completely resilient in such an uncertain world with their limited resources? Anyway, the leaders in Europe are not asking for more pay because they are solving bigger and more intractable problems - in fact the situation today requires them to cut their pay to elevate the declining morale and earn the trust of their citizens. 5 govts in Europe have been replaced in the past few weeks so it is not easy to be the leader of a European country.
Well I guess Minister Tharman has a clearer assessment of the current situation given he is in the IMF and has access to data not available to analysts and commentators. IMF conducts audits on European countries that it bails out so they have the "real" picture. DPM Tharman tells us the situation can get quite bleak:
"We have to prepare for the possibility, the very real possibility, of rough
times ahead, a severe slowdown in the global economy," - DPM Tharman[Link]
times ahead, a severe slowdown in the global economy," - DPM Tharman[Link]
Tough times are nothing new these days. In the last 12 years we have had 3 recessions and 2 major crisis. The one that is happening now will the the 3rd crisis and the impending recession will be the 4th. As we go through one recession after another and one crisis after another, the underlying situation for ordinary Singaporean families is not the same. We are entering each recession with bigger income inequality than the last one. We are going into each recession with more people at the borderline of poverty than the last recession and higher cost of living - medical care & housing costs.
""That has been the way we have dealt with past crises, not become all defensive, not retreat, but use the crisis as an opportunity to build up skills and build up competitiveness."- DPM Tharman
Each crisis should seen as an opportunity. However, these crisis are occurring at a higher frequency than ever before and the ordinary Singaporean is put in a highly unstable situation sometimes unable the build up his financial defenses given how fast things turnaround. For a large number of Singaporeans, they may be trained in sectors that go into secular downturns and slumps. It is easy to just say retrain yourself for another sector but much of the job experience is no longer applicable and workers have to start over. You superimpose this situation onto what we the system we have for housing, transport, healthcare and retirement, yuo can see why worries have started spreading to the middleclass. Even before our next recesssion, the bottom has already fallen out for the lower income group. This issue was discussed in today's mult-page feature in the Sunday Times describing how bleak the situation for those belonging to the bottom 30%. The cost of living incease has simply pushed many of these Singaporeans to a level where they are struggling to make ends meet and keeping their heads above wate - how is this different from living in a third world country?
The fear now is spreading to the middle class who are starting to experience the instability and insecurities that previously affected poorer Singaporeans. With the increase in healthcare costs and housing outstripping middle income growth and middle class comforts like a family car moving up the classes and out of their reach, the middle class is sliding down and falling towards a quality of life that the poorer classes are experiencing. A few days ago, it was reported that the best selling car in Singapoe is the BMW - with more people and fewer COEs, the quota now goes up to richer classes where wealth in concentrated. The COE goes not to the middleclass father who has to send his children to school and his wife to work but to the teenage child of one of our multimillionaires - a mismatch of needs so common in a society where the wealth distribution has become the most unequal in the developed world.
Minister Tharman says the challenge is for Singapore to bounce back from the slowdown. But Singapore recovers when the global economic demand picks up and the usual influx of foreigners will always boost GDP artificially. The real challenge is to contain the income inequality and poverty that expands after every recession. There is a growing number of families that are taken down after every recession and never make their way back when the economy recovers. There economic sectors that decline and don't recover when the economy recovers. Many will face a permanent loss of income and degradation in quality of life. While Singaporeans are told to be resilient, many of them are suffer from the consequences govt economic policies to always grow the GDP as fast as possible - sometimes shifts to industries that no longer require their skills but that of foreigners. While it often ideologically argued that any aid to Singaporeans in the form of subsidies and direct help should be avoided, the expanding inequality and rising poverty makes it unavoidable. Workfare, for example, is necessary in recent years because many low income Singaporeans work full time jobs but cannot make ends meet. We are not talking about a small number here but 400,000 Singaporean workers[Link] who cannot keep their heads above water. But for every Singaporean that has sunk below the poverty line, there are many heading down from the ranks of the mddleclass that will thin out as income inequality expands.
The real leadership test is not whether we can recover when the global economy recovers but whether the leadership is able to solve the real problems faced by Singaporeans. GDP growth is starting to mean very little to Singaporeans, if anything, more people are become very wary what is traded away to achieve this growth. We need leadership to think hard what was the purpose of having GDP growth in the first place - ultimately it is to better the lives of ordinary Singaporeans. But the high growth of past decade came a double digit rise in the cost of housing and medical care that outstripped the rise in income of most Singaporeans. The wealth creation was highly concentrated in the top 5-10% of the populace with the rest of Singaporeans sufferring from effects of high income inequality. For the ordinary Singaporean, what is the purpose of growth when it does not narrow the income gap and grow their income at a fast enough to make housing, medical care and transport more affordable? The frustration with the PAP in the 2011 elections showed up after the economy rebounded from the financial crisis when people realised they did not benefit much and many saw a marked deterioration in their quality of life.
Make housing affordable, make medical care truly universal, narrow the income gap and provide safety nets. The basic 1st world safety nets of good universal healthcare, unemployment insurance, affordable public housing and transport, aid for poor, sick, elderly and disabled....are the real benefits of becoming a 1st world nation. We arrived in the 1st world with a 3rd world wage structure and many did not benefit from the economic growth of the past 2 decades. With or without a slowdown, the leadership of this country faces a test whether they fix the imbalance in our economy and the real problems faced by Singaporeans today.