Friday, March 30, 2012

Importance of Expectations in Education and at the Workplace....

I will tell you a story first before I highlight the actual issue here.

One day a university student got up late and missed his morning maths lecture on statistics. He went to the lecture theater anyway because the professor would write the homework that the students need to submit on the board. When he got to the lecture theater, he found a few maths problems on the blackboard. He copied the problem and worked on it over the weekend. He found the problems more difficult than usual but worked very hard on it because he wanted a good grade and homework was counted towards that. He missed the deadline but managed to solve the problem a few days later. He slipped his solution under the door of the professor with a note apologizing for missing the deadline. When the professor read the solution, he was shocked because what he wrote on the blackboard wasn't homework but  unsolved problems that had baffled mathematicians for decades and this student managed to solved them. You may think that this story is fictional and I've created it or it but it is a real story and the student's name is George Bernard Dantzig  This story is often told to illustrate the power of positive thinking and how performance can be shaped by what people expect of you and what you expect of yourself.

Remember this viral video from 2006?

I tell you why I put it up. When I saw the video, what struck me wasn't the ferocity of the teacher who really "took it out" on the student - I had a few teachers like that. What struck was what the teacher said 2:17 minutes into the video:

"All the good PRC students have never disappointed me from day one. You're the first student I met who did this sort of thing to me..."

I take it that this is one angry teacher because she had high expectations of students from PRC. I wonder what happened to the Singaporeans in her class? Expectations shape outcome in the classroom[High Expectations in the Classroom].

The elitist PAP has carried their obsession of sorting, selecting and labeling to the extreme in the education system. The whole education system is now a big sieving machine[my posting on this] to figure out which student is better than the other...and this is done at a young age. The system starts dividing the people early - gifted, non-gifted and sends them out to secondary schools based on 10 bands so there is uniformly low academic expectations for those in the sorted to the lower end. Low expectations coupled with poor outcomes put those at the lower end of the system into a vicious cycle - very often these are students from poorer families or poor family background and the education system lock in and worsen the social inequalities. One regular commenter on my blog, who previously worked as teacher but  became disillusioned with the system, explained that many poor students from non-English speaking homes are disadvantaged because even for maths, the questions are so convoluted for the purpose of sorting the students, they are more like English comprehension tests.

Because many Singaporeans are pushed into and became part of this education system, they are not aware other systems of education that work well- like the egalitarian system in Finland:

"The Fins adamantly oppose any form of divisions or ranking, and 'advanced'
or 'elite' divisions are major taboos.
" -
Secrets to
Finland's World Topping Education System

There are no "gifted" programs, and the more able children are expected to help those who are slower to catch on."  - Wikipedia, Finland's Education System[Link]

Imagine that, instead of trying to beat each other by paying for the best tuition to get into various streams and secondary schools of different bands - students help each other do that will be a game changer for Singapore society.

But in Singapore, the elitist PAP govt have to do this division, sorting and turn children into winners and losers in this high stakes education board game:

Here is a petition[Link] created by parents who have gathered at the Kiasu Parents Forum - these are hands on parents but many of them are frustrated the system as it is today...they are fedup:

"This petition aims to get MOE to review the following system features of our education system in order to bring the system back into equilibrium.

(1) Bell curve grading in the extreme
(2) Student pigeonholing into good/bad classes & good/bad schools
(3) Too large classes"

- Extract from Kiasu parents petition.
Mind you, these are "kiasu" parents and they find their children can't cope. What happens to children of hands off parents - steadily falling downwards in the checkerboard vicious cycle without a kiasu parent to rescue them. One of the major objections of these parents is the "pigeon-holing" of students these pigeon holes are also pigeon holes of expectations and these parents are terrified that their children are trapped in one with low expectations leading to poor outcomes.

The education system looks like a mirror image of the PAP elitist ideology to divide people into different classes based on their intellectual ability measured by exam scores then allocate resources and opportunity based on these divisions. For the talented people at the top $1M pay is not too much and those less talent at the bottom $1000 a month is not too little - can still own HDB flat so they claim. Their former mentor goes as far as to say these divisions are genetically linked and children from non-university graduates ..we should have lower expectations of them going to university:

"People get educated, the bright ones rise, they marry equally well-educated spouses. The result is their children are smarter than those who are gardeners" - Lee Kuan Yew

In the 1980s right up the early 90s, the Singapore workforce was number 1 in the world. Productivity growth was high and there was pride in being a Singaporean worker. Employers and foreign investors who came to setup businesses were impressed by the high quality of our workforce. There was a "can-do" spirit that permeated among workers who were ranked number one in the world.  When the PAP started introducing foreign workers into the workforce, they justified it by saying Singaporean workers lack talent, do not want long hours, do not strive hard enough, do not want certain jobs etc pushing down employers' expectations of Singaporean workers in order to justify more foreigners in the workforce. Over time, the Singaporean workers' branding is destroyed along with it the high productivity growth of our workforce. Today, Singaporeans find it hard to stand out in a workforce  dominated by foreigners from various developing countries. It is hard for Singaporeans to recreated the workforce branding that is destroyed as we have entered the vicious cycle of competing with cheaper foreign labor.

You think about it ...does it make sense to put our children through this intense competition in education only to have them lose out when it comes to university places and jobs to foreigners later on? The whole system puts Singaporeans on a treadmill to no where. The intense competition in the school system merely serve to push down our own children into pigeon holes of declining expectations to enter a workforce in which they have little edge over some one from Philippines, China or India. This whole system is not about making the Singaporeans better than everyone else but making the Singaporean as bad as everyone else. 2 decades of PAP policies have left Singaporeans with little to cheer about. We again find ourselves struggling  in a system that puts so many hurdles against us - while hundreds(( if not thousands?) of Singaporeans have to go overseas for further education because they cannot get a place in our universities, the PAP govt educates the children of foreigners for free by giving out scholarships. What good is this system for Singaporeans if it does not elevate Singaporeans but instead depress them, deny them and disadvantage them?

Thursday, March 29, 2012

Economy and markets....

This posting is for those with more than a passing interest in the stock market.
Yesterday the stock markets in China fell very sharply. 2.7% in Shanghai, 4% in Shenzhen.
I saw this headlines on the AFP : China shares lead global retreat as traders worry of impact of softer US recovery.

Two days ago, the US stock indices hit 4 year highs. Yesterday, according to the author investors and traders in China sold Chinese stocks worried about the slowdown in USA. This explanation just makes no sense. Why are Chinese stocks being sold and US stocks are hitting 4 year highs when there is a slowdown in USA? Shouldn't US stocks be sold down instead?

China will see growth upwards of 7.5%, Europe is in recession and US will do about 2-3% growth which is good for a developed country. The stock market in Europe which is in recession outperformed the Chinese market for this year - they are in recession and China is still one of the fastest growing economy on the planet.

Some people say that the Chinese markets are down because it is growing slower than expected so it is due to disappointment over growth. However, those who invested in China when it was growing faster than expected 8% have lost money in the past 3 years. Basically the stock market can be down, up or sideways ...regardless of what the economy is doing. But pundits love to make sense of  day to day market moves using explanations that revolves around the economy. While it is true, that markets do fall when economies go into recession - it also rise and fall for reasons completely disconnected from the economy. Investors alternate between minor euphoria and minor depression on a weekly basis.

3 weeks ago when the Chinese market were doing better, the Shanghai index had 7 weeks of straight gains in a row on 2 March 2012 and was at a 15 week high with a sharp rise on that day of 2%[China Shares End At 15-Week High; Shanghai Up 0.8% On Week] if you read reports on that day, you would think that everything is going smoothly in China, the economy is slower but still growing moderately, monetary policy is easing, housing market is recovering, ...its basically all systems go. 2 weeks later, analyst write that it is in a hard landing[JP Morgan analyst] and that view too hold and that led investors selling their stocks...this selling cascaded into a mini panic yesterday.

In the midst of noisy economic data, fast changing views of pundits on the media and stomach wrenching swings on the stock market, it becomes hard to think clearly about what is really going on and invest wisely. Much of the moves are the result of speculative trading activity pushing prices around for short term gains and little to do with big shift in the underlying economy.  A lot of major trends in the market has to do with liquidity rather than the economy.

The most significant news this week perhaps is that of Bernanke announcing that the job market in US remain weak and faster economic growth is needed to revive the job market. To get unemployment down he is prepared to print more money by doing a QE3. If you look at the chart above, everytime the Federal Reserve stop its liquidity pumping activity, the stock market faltered dampening confidence and that threatened to take the economy down with it. By pre-empting this, Bernanke may have engineered the next leg of this bull market ...and perhaps a mini bubble is in the works.

China has the tightest monetary policy in the world. I wrote in a previous posting that the Chinese economy has numerous problems but the govt has plenty of bullets to steer it. Just a hint that the Chinese authority is ready to loosen monetary policy will remind investors to look forward to more easing and not economic figures that are backward looking. Forgive me if I'm wrong but I think the sharp fall on Wednesday is just a mirror image of the spike on 2 March 2012 when investors became too they are too pessimistc (and can only feel better?) so we should see this as a bottom (or close to the bottom) rather than a precipitous drop to the abyss for the Chinese markets.

Before I forget and sign off, remember I'm not a professional in the financial sector so take what I say with a pinch of salt. It is just my personal thoughts and I can be wrong.

Chinese shares lead global retreat as traders worry of impact of softer US economic recovery

LONDON — Chinese shares led global markets lower Wednesday as investors fretted over the outlook of the world’s second-largest economy and whether the U.S. economic recovery was losing its shine.
Mainland Chinese shares saw their biggest loss in almost four months following a run of disappointing U.S. economic figures, with investors worrying that weak U.S. consumer demand could add to the contraction already being experienced by Chinese manufacturers.

The benchmark Shanghai Composite Index slid 2.7 percent to 2,284.88 while the Shenzhen Composite Index dived 4.1 percent to 909.58

“Concerns about a slowdown in the Chinese economy are continuing to depress the Shanghai Composite,” said Neil MacKinnon, global macro strategist at VTB Capital.

U.S. economic indicators have mostly surpassed expectations this year, particularly with regard to the jobs market, and that has supported stocks. An easing in Europe’s debt crisis has also helped, though many investors remained skeptical of claims — as made by Italian Premier Mario Monti this week — that the crisis was almost over.

In recent days, the economic newsflow out of the U.S. has been fairly disappointing. The Conference Board said Tuesday its index of U.S. consumer confidence slipped in March and the Federal Reserve Bank of Richmond, Virginia reported that a measure of regional manufacturing plunged this month.
U.S. durable goods orders for February, due for release later, will be assessed in the context of the country’s recovery. Durable goods are products expected to last at least three years, such as appliances, cars, machinery and airplanes. The consensus in the markets is that they grew by 3 percent in February, following a big 3.7 percent decline in January.

In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 5,855 while Germany’s DAX fell 0.4 percent to 7,053. The CAC-40 in France was 0.2 percent lower at 3,462.
U.S. shares were poised for a flat opening with both Dow futures and the S&P 500 futures up 0.1 percent.

Elsewhere in Asia, Japan’s Nikkei 225 index dropped 0.7 percent to close at 10,182.57, a day after the benchmark shot to a one-year high. Hong Kong’s Hang Seng ceded 0.8 percent to 20,885.42 and South Korea’s Kospi shed 0.4 percent to 2,031.74.

In the currency markets, the euro remained buoyant as the dollar continued to struggle in the wake of the disappointing U.S. economic news — it was trading 0.3 percent higher at $1.3363.
Oil prices tracked equities lower, with the benchmark New York rate down 90 cents at $106.43 a barrel.

Monday, March 26, 2012

News: Singaporeans to get priority in P1 balloting

"From this year, Singapore citizens will be given "absolute priority" over permanent residents (PRs) when balloting is required during the Primary 1 registration exercise, the Ministry of Education (MOE) announced yesterday....", Asia One[Link]

When this news came out earlier today, many Singaporeans who don't have children going to primary school in recent years were surprised. They were surprised not because the MOE has finally decided  to implement a "Singaporeans first" policy but because they didn't know that Singaporean children did not have priority for something as important as primary school entry all these years! Well at least the MOE is now enlightened enough to fix this ridiculous situation. 

Lets move on to something else MOE should fix.

Suppose  today you decide to go down to NUS, - say the engineering or maths department. You grab a foreign student and a Singaporean student. Then you ask them how much each of them pay for their education. Chances are the foreign student pays nothing because the MOE or a some other govt linked entity has sponsored his education while the Singaporean has to pay for his education out of his parents savings, borrowings from the bank or taking a part time job.  This is a another ridiculous situation we don't see in other countries. All that is required later on is for the foreigner to serve his "bond" by working in Singapore for 3 years - something that most Singaporeans do anyway. 

I was in my 2nd year of university education when the govt decided to hike the school fees. Students were incensed and the govt came out to explain that it is not right for university students to receive too much subsidy which comes from tax payers. Even very poor Singaporean students have to pay the fees than try to apply for aid in the form of a bursary which they don't always succeed in getting. It is incomprehensible how a govt that is so determined to make Singaporeans students pay more, can just fully sponsor so many foreign students who come here and get educated in university for free. 

You can't blame Singaporeans for being upset over this situation. It is not that Singaporeans are mean or small minded but this situation is simply ridiculous. I remember a few of my Chinese speaking Singaporeans friends could not get into NUS or NTU because they didn't do well for GP - they were intelligent people but they were just not very good at English. However, when the govt wanted students from PRC, Vietnam or other non-English speaking countries, they were willing to waive the English language requirement and today you often meet foreign students in university that can hardly put together a full verbal sentence of English that you can understand.

I always wondered why the PAP govt sometimes treat Singaporeans so shabbily. There is a certain lack of generosity and harshness towards ordinary Singaporeans - this is real and not imagined. Perhaps the result of being returned to power again and again no matter how they treated Singaporeans....some have suggested we all thank the voters in Aljunied for MOE's decision to put Singaporeans first, something that should have been done long time ago.

Sunday, March 25, 2012

Global Economy, markets...and the truth about our low birth rates....

UPDATE 26 March 2012:  I went through the comments for this posting and a number of commenters are of the opinion that it is unfair to compare Singapore as a city with USA the country - Singapore should be compared with New York instead in terms of property prices and fertility rate. I think Singapore, as a nation, should be compared with USA as a nation rather than cities. Americans have the option of living in cheaper less crowded places and that helps to balance the overall social dynamics and fertility rate. Because Singaporeans do not have this flexibility, it is necessary for public housing to help create more stable families and averted the negative effects of profit driven private housing market. New York can afford to have a small and weak public housing programme but Singapore cannot . Only a good public housing programme can overcome stresses of city living from which Singaporeans cannot escape. When the PAP prioritized reserve building over the social goals of public housing, that is when our problems started...and it will end only when the HDB get its priorities right! 

My last 2 posting on the economy were in Dec 2011 during a time of much pessimism and fear [Eurozone Crisis :Stability or Spiral into chaos?][China's Economy : Many problems, many bullets....]. I tried to explain that there were a few silver linings in the European crisis and the "backdoor" easing by ECB head Draghi will buy a lot of time for European countries by kicking the can down the road and relieve the financial system of intense stress. The stock market has risen non-stop week after week since I posted those articles until last week when investors and speculators wonder again if the stock market has run too far up ahead of the economy and started taking some money off the table. The stock market is always falls ahead of potential problems and very often falls first on the hypothesis then falls further as more data to confirm the hypothesis - the stock market is as often right as it is wrong often when the hypothesis fall to pan out, it recovers. The main fears are again China and Europe - data shows both slowing faster than expected. Data from the US shows the opposite - growth is stronger than expected.

China has numerous problems that have been widely discussed. Other Asian economies have a few real structural problems - tight labour market, rising inflation and rising deficit especially in India. The star performer in the past 3 months is the US economy, the epi-center of the crisis in 2008. This is reflected in its stock market performance, US markets are near a 4 year high - but there is little speculative excess in the US market. Even star performer, Apple (AAPL) shares which briefly crossed the $600 is not particularly overvalued[There may still be bite in Apple -  The Business Times, Teh Hooi Ling] and  it will rise or fall based on its ability to grow its earnings, beat its competitors but you don't have to worry that you're buying into speculative excess. I wouldn't buy it although it may rise further because Apple is well analysed. While the stock is valuation is reasonable or slightly under valued, it is not compelling and the current product line faces competition from Samsung and Microsoft...but there are potentially still many secret projects leading to innovative products Steve Jobs left in Apple's pipeline and those can provide the upside for the stock.

The overall US economic outlook, I think is less uncertain that the bulls and bears on Wall Street make it out to be. With European crisis converted to a long term issue (less destabilising in nature) and assuming the Chinese can soft land their economy (haven't seen any evidence, contrary to this), the US economy has a lot of potential to "catch fire" and surprise on the upside. The reason is this:

The chart shows the Ceridian Index. It shows the real time economic activity measured by the transportation. There is a big gap which shows the potential and extra capacity in the US economy. The US economy is not yet firing on all cylinders - the main reason being the collapse of the housing market has led to slowdown of activity linked to housing and excess housing inventory that takes time to clear off. There is also a high level of unemployment (8.2%). As the employment situation improve and we has seen from data over the past few months[Link], and the housing market measured in term of home sales improve:

The volume of sales is picking out so are the prices. The improving employment situation and recovery of the US housing market can form a virtuous cycle to drive the US economy forward. The restructuring and reform in China  will soft land the Chinese economy keeping inflation at bay while the US pickup the slack. This gives also gives us some time to fix our own problems to get productivity up and lower our dependence on foreign labor.

Looking at the housing data, I can't help but side track a little. The average US single family home is US$230K and the (S$290K) average size of such a home is 2500 sq feet[Link] - a landed home of the same size in Singapore costs more than $2M and something half the size in the form of an apartment costs $800K-$1M. We are often told that our fertility rate is falling because we are a developed country so people especially women pursue qualification and careers rather than get married and have children. If this is true, why does USA which is also a developed country with higher unemployment rate of 8.2% having a birth rate almost double that of Singapore's?  It is not because we are asians that we have low birth rates, we used to have a birth rate of 6 as asians - so cultural difference is out. They now tell us that unless we have higher fertility, there is no choice but to import people.
"Partly, because it takes them longer to establish themselves (in a
...people are staying in school longer nowadays. In the past, after their O
-- Level and A -- Level, people start getting economically active, get a job,
start a family and buy a flat. (Now) it is taking longer for young people to get
to that stage because they feel they need better qualifications to get better
jobs.....Elsewhere it has been shown that the demand of the job has increased and
people need higher skills to enter the labour force and get a job before they
start a family." - Lee Kuan Yew [Link]

When a person starts a family, the one thing he needs is housing otherwise he has to squeeze his family into his parents' place and you don't expect him squeeze himself, his wife and children with his parents. The key to higher fertility is affordable housing and the size of housing. The PAP govt has wasted time and money on other incentives that have done nothing but failed - they claim they are trying very hard to bump up the fertility rate as it falls to the lowest in the world. HDB even said they build smaller flat these days because Singapore families are getting smaller[Link] - they are actually putting us in a vicious cycle. I think Singaporeans are really tired and fed up of the PAP creating the problems then blaming it on Singaporeans ...then waste time and money on schemes that will not work. The next time some one from the tries to explain our low fertility and talk about solutions ....remember unless they home prices are at truly affordable levels, it is yet another waste of time and our country is further endangered by importing more people which causes population density and housing prices to go up.

The root cause of our problem has been PAP policies - first the "Stop At 2" policy and housing policies. The PAP has been using revenues from our public housing programme to fill up govt coffers [HDB paying less for land is raid on reserves: Mah] from the CPF and savings of ordinary Singaporeans. No other govt does this with public housing - linking it to the market and creating reserves - the primary purpose is to provide cheap and achieve positive social outcomes. This is not what happened in Singapore and the PAP housing policy has led to whole array of problems e.g. inability to accumulate enough to retire, low fertility, indebtedness and social inequality. Now the problems have grown to endanger ordinary Singaporeans - we have stopped procreating, we are being replaced by foreigners and we do not have children to pass our values and culture to.  Time is running out for the PAP govt to fix this and from what we have seen from them - they are not serious about it and Singaporeans are running out of patience.

Friday, March 23, 2012

Singapore : A country of Extremes

I just checked the latest results for COE bidding out today and found that the COE for big cars has crossed the $80K mark[Lnk]. Singapore has the highest cost of car ownership in the world and I wonder if we have the highest cost of car ownership excluding the price of the car! In many places you can get a brand new Mercedes for less than the price of that piece of paper[Example].

The COE is just one example of an extreme that Singaporeans have to cope with in their struggle for a better quality of life. While it is often argued that these schemes are necessary for various reasons, we should think about the outcomes and the cumulative effects of these extremes on  ordinary Singaporeans. For me, I find it quite amazing how Singaporeans have come to accept these extremes - the same situation that will make citizens of other countries jump and scream - yet our leaders express their view that Singaporeans lack resilience [Resilience building challenging for S'pore]and are too dependent on the govt.

Singaporeans pay the 2nd highest electricity tariffs in the world[Link]. Our leaders are paid the highest salaries in the world even after the recent 'cuts'. We have the most expensive public housing in the world. The biggest income gap among developed countries - nobody comes close except USA which occasionally beat us...but the people there have been occupying Wall Street for months due to the income inequality and we can't even find people to show up at Raffles Place. Our fertility rate has plunged to be the lowest among 222 countries. [See CIA's factbook]. We now have the 2nd highest population density in the world[Link]. Highest foreign influx outside the middle east. We have the 2nd highest per capita execution rate in the world[Link] after this country known as Turkmenistan which is run by mad dictators.

Singaporean workers work the longest hours according to ILO[Link] (without minimum wages). Workers have the 2nd highest stress level in Asia[Link]. Singapore has the fastest growing number of millionaires [Link] likely due to the naturalisation of high net worth individuals here for the low taxes. The 2 casinos here have overtaken the total revenue of casinos in Las Vegas[Link], Lee Kuan Yew left his PM job as the world's longest serving prime minister[Link]. We also have the world's the longest-serving prisoner of conscience, Chia Thye Poh [Link]whose detention exceeded that of Nelson Mandela[Link].

Singaporean workers are the world's unhappiest[Link]. Singaporeans shoulder the heaviest share of healthcare expediture among developed countries and our govt % expenditure of healthcare is the lowest. Our expenditure on defense express as a % of the govt budget exceeds that of Israel.

The foreign maids in Singapore are the among lowest paid in the world[Link] - large part of what you pay goes to the levy yet the whole country can debate for months over giving the maid one day off per week when this is mandatory in every other country where they are better paid. Singapore probably has some of the best educated cabbies in the world due to severe structural unemployment - it is not uncommon to meet a cabby with a degree and if you're lucky, you can meet the one with a PhD from Stanford[Link].

Our team based (GRC) election system is quite unique in the world and generate results that are also very unusual - a govt opposed by 40% of the people has 95% of the seats in parliament.

We have elderly cleaners [Elderly toilet cleaners a sad reflection of society here] - they are sometimes so old that even people from developing countries like China and Phillipines get a shock when they see these cleaners. Singaporeans have the highest savings rate in the world due to the CPF scheme but more than half will not have enough (minimum sum) to retire on. Singapore has one of the highest reserves per capita in the world - large part of which comes from the the sale of public housing to Singaporeans many of whom now have great difficulty retiring unless they are willing to lose their homes.

It is strange how we have come to accept some of these extremes as normal over time. When you talk about spending a little less on defense some Singaporeans will worry about being less secure. When we discuss about giving maids one day off Singaporeans worry about what the maids will do during their day off - yet they trust the maid to look after their expensive homes and their children. When we cut the pay of our leaders which was the highest in the world, we cut it to a level that is still the highest in the world. The govt is terrified of giving a little more aid to the poor elderly so that they do not have to work yet they are okay with with losing a few tens of billions of our reserves in bad investments.

There is a tipping point when people begin to see reality for what it is and the distortion becomes hard for the mind to accept. There will be a point when change becomes inevitable and people begin to push things from the extreme back to normal - the propaganda can only do so much for so long. I often wonder if it is going to be a long slow process towards normality or we are going to snap out of this deep hypnosis by a single event in 2016.

Tuesday, March 20, 2012

SDP's Healthcare Proposal....

You can find the 87 page report here. The proposal is for a single payer universal healthcare system and contains suggestions on how it can be financed. I will leave you to read the report and go through the details yourself. I want to just highlight a few interest ones from the proposal.

When countries become wealthy, one of the first thing the govt does is to ensure that people have good universal healthcare. It is one way to mitigate the negative effects of income inequality. The belief in many countries is that no matter how poor you are, you will be taken care of when you're sick. Not just taken care of but receive equal care. One example is France, the no. 1 healthcare system in the world, they do not have different class wards, luxury private hospitals - when you're sick, you receive the same high quality care as the person 10 times richer than you. That is also the same philosophy that shape the healthcare systems of  developed East Asian countries like Taiwan and Japan.  Having universality and equality of access to healthcare is one of the main advantage of being born in a developed country ....unless that country is Singapore.

As Singapore became more developed, the PAP govt shifted more and more of the financial burden to the sick and their families. The cost of healthcare rose faster than wages and the inflation rate. At the same time the income gap rose and the PAP approach to shift the financial burden to the sick and their families increased the strain on the finances of families in the middle class and below. Today Singapore hospitals hire debt collectors to go after those who cannot afford to pay. About 21 per cent of Singaporeans who sought financial counselling from Credit Counselling Singapore had to do so due to medical bills. Today families are at risk from rising healthcare cost because many are uninsured [Research Paper]or under-insured. There are healthcare cracks such as the lack of coverage for children with congenital illnesses and old folks (over 60s) who simply cannot afford the high insurance premiums. Quality of care over the last 2 decades has become more differentiated with private hospitals forming a medical hub for the rich Singaporeans and medical tourists drawing down the limited healthcare resources such as experienced surgeons, specialists and nurses leaving public hospitals with insufficient beds[Link] and capacity[Link]. In 2010, former Health Minister Khaw allowed the use of Medisave for Malaysian hospitals for those who can no longer afford healthcare in Singapore[Medisave can be used in 12 Malaysian hospitals]-the solution for these people is to get treatment in a developing country.

While there is extreme parsimony in healthcare spending which is now the lowest among developed countries as a % of GDP, the PAP govt increased defense spending over the last 2 decades  relative to our neighbors and we now have the 4th highest defense spending per capita in the world and our defense spending exceeds that of Malaysia and Indonesia combined - countries with land area hundreds (or thousands) of times the size of Singapore. About one quarter of our budget is spent on defense and this is even higher than Israel which spends 18% of its budget on defense. You might think that such high defense spending will lead to better security in the long run. Think again. Such an imbalance in budget allocation was only possible because Singapore has been run as a semi-authoritarian state in which the PAP has the support of the mainstream media - which allows the PAP to play up the "vulnerability narrative"- and win elections using various uniquely Singapore means such as upgrading carrots and GRCs. The power to spend our budget in an such unbalanced manner will be reduced as Singapore makes political progress. This excessive defense expenditure just cannot be maintained and planners are better off if they start preparing for a more realistic level of spending instead of depending on an excessive unsustainable spending to secure the country.

The SDP suggestion to fund the new healthcare plan:

We propose several sources of revenue to make up for the extra $6.5 billion in government spending on healthcare: 
1. Spending on defence should be reduced to those nearer that of other small developed nations ($5.75 billion).
2. Because the burden of spending on healthcare under the plan has shifted from private enterprise to the government, we proposed a slight increase in the corporate tax rate ($1 billion). 
3. A luxury tax on luxury items ($1.85 billion).
4. A tax on foreign buyers of local properties ($200 million).
5. Spending from the revenue of the Tote Board will be recalibrated to focus more on healthcare and other social welfare programmes as priority areas. 
6. A larger dividend payment from earnings from our past reserves should be made available for use on social programmes including healthcare.

The bulk of funding comes from cutting the defense budget to a less excessive and more sustainable level. Unfortunately, there is a lot of secrecy surrounding our defense spending and information asymmetry exists between those who have a vested interest to maintain this excessive level of spending and those who want a better outcome for Singaporeans. The defense spending supports a number of govt linked companies such as the ST Group  that is also a major employer of high ranking officers leaving the SAF. The SAF is also closely linked to the PAP leadership - just count the number of former SAF generals and rear admirals in the cabinet. With this network of vested interest, it is hard to change the system to benefit ordinary Singaporeans who just want a healthcare system worthy of a developed nation and does not burden them so heavily when they get sick. If Singaporeans want a better outcome, they are left with very little choice - they can wait forever for the PAP to shift from its ideological extreme or select representatives who will put the public interest ahead of special interests.

The SDP has put forth a bold plan to move our healthcare system forward and leave decades of misdirected PAP healthcare policies behind. The PAP spent the past 3 decades shifting the healthcare financial burden from govt to the sick and their families and commercializing healthcare resources for profit by promoting Singapore as a medical hub for the rich from other countries. What the PAP govt has done has hurt ordinary Singaporeans and it is time to reform the system and do what is right.

Friday, March 16, 2012

"Singapore’s Defense Policy: Essential or Excessive?"

Singapore spends more than any other nation in South-East Asia on defense. Singapore has the 4th highest defense spending per capita in the world. As a percentage of govt expediture, Singapore's defense spending is even higher than Israel. In absolute terms, Israel spends more but balances its spending with social spending.

"The Defense Ministry budget for 2009 and 2010 was NIS 50 billion in each of those two years. That works out to about 15% of the national budget, which is very high. Of course, we have become accustomed to that. Since its earliest days, Israel has always devoted a large part of its budget to security, mainly to the Israel Defense Forces  (the military )....." - The Shekel Stops Here[Link]

Singapore's budget allocation for defense is 24.4% [Link] vs 15% for Israel shows the severity of the imbalance in govt spending shaped by 4 decades of an ideological extreme under a semi-authoritarian rule. Ordinary citizens face extreme parsimony in social and healthcare spending as cost of living and income gap rises while defense spending increases even as the defense spending of our neighbors trend downwards in recent years[Malaysia Slashing Budget for Defense]. This is neither acceptable or sustainable.

 I have seen SDP's shadow budget and they suggest that we cut defense budget by 20% and increase NSmen pay to $1200.  But why 20%? Given the lack of information in this area, I think it is unwise that opposition parties jump in and start proposing the amount we should cut from the defense budget. In my previous posting on this topic, I discussed Ng Eng Hen's reply to MPs who questioned the defense budget including MPs from the PAP.  Minister Ng's reply was rather generic and superficial - did not get down to the underlying reasons for our high defense expenditure.

I researched this topic and found an interesting  masters thesis written by an SAF Officer that provides a good summary of how our defense policy has evolved over the years and how the purpose of defense expenditure has changed since we gained our independence.

"However, the magnitude of the country’s defense expenditure has also led to the occasional raised eyebrow. For example, Singapore’s reported defense budget for 2009 was more than that of Malaysia’s and Indonesia’s put together, which some may find surprising given the relative sizes and populations of these three neighboring countries" - Maj Lee Yi-Jin, "Singapore's Defense Policy : Essential or Excessive"[Link]

Maj Lee explained that our current expenditure level is no longer linked to maintaining security alone but is maintained and increased to expand our international influence
 "The role of Singapore’s defense policy has since evolved alongside changes in the security environment. As the threat of interstate conflict has receded, the significance of Singapore’s defense policy has become increasingly associated with its contributions to Singapore’s non-military instruments of power, and in particular its economic and diplomatic instruments. Framed in terms of Singapore’s national goals, this analysis contends that the primary motivation underlying Singapore’s defense policy has shifted away from a provision of security and towards an increase in the country’s international influence

He further explained that the high expenditure represents a commitment to defense and any reduction will perceived as a change in philosophy which can be interpreted as weakness or "waning commitment" to defense.

Here's the interesting bit from the thesis:

"Singapore’s leaders would appear to have skillfully removed any debate on Singapore’s defense policy from the realm of economic cost-benefit analysis. Instead, the current policy is couched as necessary to maintain the unquantifiable concept of “deterrence”, and to provide the stable environment necessary for foreign investment and productive economic activity. Such arguments are obviously extremely difficult to disprove, leaving the odds heavily stacked--at least for now--in favor of the status quo. Whether this trajectory can be sustained in the longer term will depend on at least three factors: 

(1) the public continuing to buy in to the vulnerability narrative;

(2) sustained public confidence in the military as an efficient and effective use 
of public resource towards reducing that vulnerability; and 

(3) the continued credibility of the political establishment insofar as making decisions that are consistent with the broader public interest"

The govt can keep increasing our defense spending relative to that our our neighbors as long as we buy the "vulnerability narrative" but in actual fact the current level of spending is far more than needed to maintain security. The purpose of our defense spending, according to the thesis, has evolved to become diplomatic instruments of national power, which in turn facilitate an expansion of  Singapore’s international influence.

The question on Singaporeans' mind is what is has been traded off to maintain such a high level of defense spending. As income inequality and poverty rise,  Singaporeans are told that they have to continue to work until an advanced age, and the sick and their families are told to shoulder the rising cost of healthcare, it is time to re-evaluate our spending priorities to maximize the benefits of govt spending for Singaporeans and ensure the long term sustainability of our society. Defense is not just about external threats and international influence. Cohesiveness of our society and the willingness of citizens to die for their country are equally important. If there is discontent, if ordinary Singaporeans think the Singapore Dream is dead, ...and "don't know what they are defending anymore"[Link], no amount of expenditure can bring security to our nation. Govt expenditure has to be properly balanced to achieve long term sustainability. We cannot maintain this level of defense expenditure relative to social spending as the social issues increase in severity and the deleterious effects of social inequality drives a wedge through our society.

Thursday, March 15, 2012

Malaysia implements minimum wage....

In a move that is considered both bold and risky, Malaysia has decided to go ahead and implement minimum wage. I've explained in detail in  earlier postings why it will be difficult for Singapore to implement minimum wages. For countries that have kept income inequality low and the cost of living relative to wages low, implementing minimum wage is a non-issue and will help people at the margin.

However, in Singapore, 2 whole decades of neglect and bad policies by the PAP govt has resulted in a large income gap, dependence on cheap labor and a cost of living that is very high relative to wages of the lower income group. A meaningful minimum wage will affect business that have become dependent on cheap labor. The PAP govt decided to implement a soft option - workfare. Workfare is highly disadvantageous because it traps workers in menial low paying jobs and does not incentivise businesses to invest to improve productivity. In fact workfare is sometimes called slavery because it encourages businesses to depend on cheap labor [Link] instead of moving up the value chain - it actually a subsidy for businesses to keep wages low and retain the menial nature of the jobs they create.

Malaysia has decided to make a risky move to go for disruptive change[Link]. Businesses, especially small enterprises, are dragged along screaming that the move will lead to displacement and unemployment as these businesses operates on low margins of 3-5% and the wage increase will cause them to close down[Link]. These small enterprises hire up to 4 million workers. The dynamics that result from the minimum wage move is not so straight forward - it can indeed push businesses to invest, improve productivity and operate more efficiently.

“If companies cannot afford to pay a minimum wage that is set at around the poverty line, they have no business being in business.” , Andrew Lo, Malaysian Union leader.

There is no guarantee the bold move will succeed but at least it has a chance. The  approach adopted by the Singapore govt locks us in our current unhappy state and preserves the status quo of cheap labor dependency, rising income gap and poverty. After 2 decades of using cheap labor from foreign countries and falls in productivity, we are left with no more effective safe options that will address the issue. We can keep the status quo and drive this economic van along until the wheels falls off and that will be soon ... the current model is just not sustainable and there is no courage in our leadership for real change.

Tuesday, March 13, 2012

Petition by parents of autistic children...

There is a petition put up by a informal parents group called Shoulders.
Shoulders - Appeal for Asd Adults
The Online Citizen highlighted the plight of these parents [Petition by parents of children with autism- MP Denise Phua on the defensive]. The parents are asking for more govt support to create work opportunities for their autistic children when they grow up and significantly improve the care for autistic adults who are unable to work.

This petition reflects the deep and persistent fear of parents of autistic children about who will take care of their children when they are gone. Unlike other first world countries where the govt gives extensive support for parents of disabled children, the Singapore govt leaves much of work to charities with limited resources. Much of the financial burden are borne by the parents who are usually the primary caregivers - very often one of the parents stop working to look after the child. For lower middle income families, having a child with special needs leads to a financial burden that results in the parents pushing back retirement or being unable to retire. Several years ago, the plight of these parents was brought up to the MCYS. Given that they take care of their child while they are alive which is all they can do, they were hoping that the govt could help them with the care of their children after they pass on. After much deliberation, the PAP govt came up with a CPF scheme that allows parents to put aside the own money for the children.  CPF will lock up the money and release it in small instalments when the child becomes an adult[Help for parents with special needs children]. So after much discussion, the govt decided to play an administrative role.

You will notice that the petition will be sent to the PM, ministers and MP Denise Phua. Why send it to Denise Phua? Denise Phua has a autisic child and founded a charity known as WeCAN which helps caregivers of autistic people and offers early intervention programmes for autistic preschoolers. Before she became an MP, she often wrote to the newspapers and govt bodies to highlight issues that concerns children with special needs. Many people in the charities and volunteer groups see Denise Phua as their champion in parliament. If there is any thing good about the PAP, it is Denise Phua.

"Recently I read an appeal for signatures to Government for more services for persons with autism especially for the adult space. Indeed this space needs attention, as the authorities have
heeded and done much more for the younger ones in recent years.

However, it would be good to be updated first on what's happening on the
ground, then make an informed appeal if that's the way to go. I urge you to find
out more first so together we can be effective in advocating not for those with
autism but other special-needs folks who similarly need support."

- Denise Phua's Facebook entry on this petition.

Denis Phua urges the people putting up the petition to be patient. The Online Citizen says Denise Phua is on the defensive. Things have been incrementally better for parents of  children with special needs  thanks to MP Demise Phua. However, Singapore has been a developed country since the early 90s and there is a big gap between what the govt does here  for children with special needs compared with other developed countries. Denise Phua said in parliament last week that the defense budget should be reviewed to finance social spending - a position that is similar to WP's Pitram Singh. I'm not too sure how much Denise Phua can change the PAP by being part of the PAP. You can just imagine the frustration among parents of children special needs when the cost of medical care increases or when the cost of transport increases - they need a car or taxi to bring their child to school and to the hospital. When the rest of us experience the pain of price hikes, it is this segment of the populace that feels the most pain. Few Singaporeans will disagree that we should do more for these parents and these children - it is just the PAP, less a few good MPs like Denise Phua, that limits what we can do as country for these fellow Singaporeans. We should all be petitioning for more to be done for these parents and make it clear that the govt is not doing enough here...and we are not going to accept the status quo,

Friday, March 09, 2012

Dyslexia, Streaming and Inclusive Education....

Yesterday the govt launched a pilot programme costing $3.6M for 20 mainstream primary schools to identify and help students with dyslexia. This programme is targeted at primary 3 students to improve the quality, accessibility and affordability of special education (SPED).[Link]. There are 177 primary schools and every year there roughly 15% to 20% of students have varying degrees of dyslexia. So what has been happening to these dyslexic students before this pilot programme for a small number of schools?

Dyslexia is learning disability it is often mistaken for lower intelligence or "slowness". A dyslexic child can be of normal or above normal intelligence - intelligence and dyslexis are uncorrelated. Today, the onus is very much on parents to find out if their child is suffering from dyslexia. A test by a psychologist costs about $500 and the cheapest one available is by DAS (Dyslexia Association of Singapore) and costs $375. Many cases of dyslexia go undetected every year and this is so especially for children from poor families whose parents don't understand the problem or cannot afford to get their children tested. In some other country more well balanced education system, there is a good chance the child overcomes the problem and start to catch up by the time he gets reaches age of 14. But this is not what happens in our education system which is a sorting system obsessive about streaming, ranking and exam scores. Schools will sort their students according to exam scores putting those with higher scores together and those with the worst scores in the same class. This is done in the name of efficiency - students with different ability has to be taught at a different pace. I'm not against this idea per se but the problem here is students are sorted at a very early age without sufficient effort to tackle the real issue. The weakest class in a school can consist of students with dyslexia, attention deficit, those with poor discipline, those with family problems and the genuine slow learners - and many do not need the pace of teaching to be slowed but their underlying problems. Very often we put these children in a vicious cycle - a child with attention deficit or dyslexia is put together with children with discipline problems and behavioral difficulties. The behavior of the other children in class will affect these children negatively.

OECD recommendations Ten Steps to Equity in Education::
Some parts of it such as directing resources to students with greatest needs run against the elitist nature of PAP govt which has been e directing excessive resources to a small number of selected elites who receive the best Ivy League education, groomed careers and placement in govt and GLCs, What the PAP has done in the last 2 decades has been to expand the inequalities in our society under the guise of meritocracy while telling the populace there is great social mobility in the system by giving using exceptions as proof. We just have to look at the outcomes to know that something has gone very wrong - the extreme social inequality and a distorted perception of reality among our leaders the same parliament that debate why ministers cannot be paid less than a million otherwise their "lifestyle will be affected", we had another debate in which the same ministers argued that a family can be decently supported and can afford housing with an income of $1000 per month.

The recommendation of leading experts in OECD [Education Today 2010 : An OECD Perspective][Summary] is to limit early tracking and streaming and postpone academic selection in order to achieve an inclusive education system. Instead of focusing on streaming and sorting students, 2 areas that require more investment is pre-school education and early intervention. With the large income gap and rising poverty among Singaporeans, there is a need to do more to break the link between low socio economic background and poor academic performance. While the PAP govt avoid giving more direct aid to the poor, preferring to spend more on defence and giving scholarship to foreigners, it has claimed that it wants a more inclusive society.  They cannot let the children from poor families enter primary school without good pre-school education. insufficient aid for early intervention then stream them down to the worst classes and  still claim they are interested in building an inclusive society. We are seeing the education system stratifying, many good teachers leave the public schools to start tuition centers that only richer families can afford to send their children. Primary school teachers are pressured to move up the pace of teaching leaving those with poor preschool education behind because some parents invested heavily in pre-school and their children enter primary one knowing the entire syllabus. Our celebrated "social mobility" is starting to look like a lock down of our social classes - only 1/6 of the students from the bottom 1/3 of our socio economic class make it to the top 1/3 of the PSLE scorers[here]. You only have "half  a chace" if you're poor and the difference start to show up within the first 6 years of edication.

Wednesday, March 07, 2012

Jakarta warns of "Singapore Flu"....

This Singapore flu is non other than HFMD (hand, foot, mouth disease). Those with kindergarten kids will be familiar with the spread of HFMD and very often it reaches epidemic scale in Singapore. The disease reached epidemic levels again last week[HFMD cases in Singapore at epidemic levels for 2nd week]. I have not heard HFMD reaching epidemic levels so often in other countries and the Indonesians now call it "Singapore flu".....really wonder if this is one of the side-effects of our high population density.

S. Jakarta residents warned of Singapore flu

The Jakarta Post | Mon, 02/13/2012 10:01 AM
A | A | A |
JAKARTA: The South Jakarta Health Agency has warned residents to stay alert and always maintain personal hygiene following the threat of hand, foot and mouth disease (HMFD), also known as Singapore flu, in Depok.

“We must be very careful because the virus is transmittable through the air and saliva. In addition, direct contact with infected people can be very dangerous,” the agency’s head Hakim Siregar said as quoted by on Sunday.

Hakim said the incubation period for the virus was around 2-4 days, and could result in death if infected people did not immediately receive treatment.

“If any family members suffer from high fever and have symptoms like chicken pox with rashes on the hands, bring them immediately to a hospital or health clinic,” he said.

Singapore flu is caused by the coxsakcie virus A16 and EV17. Typical symptoms include high temperature, loss of appetite, difficulty swallowing and rashes on the hands, feet and inside the mouth.

To prevent the virus from spreading, Hakim suggested residents maintain personal hygiene, washing hands thoroughly after cleaning their nose, using the toilet or changing diapers. “Don’t forget to clean the nails on the hands and feet as that’s where the bacteria hides,” he said.

Those who have been infected with Singapore flu must undergo an isolation treatment. “So far we don’t have isolation rooms in health community centers, only in hospitals.”

Dr. Ng Eng Hen's reply on the Defense Budget...

A  number of MPs asked about the size of our defense budget : Pritam Singh, Dr. Lim Wee Kiat, Ms Ellen Lee, Mr Ong Teng Koon and Denise Phua.  There were also suggestions in parliament to re-allocate some of the defense for social expediture.

"To finance the increasing social expenditure, Ms Phua suggested reviewing the budget allocation to defence expenditure" - Today[Link].

Dr. Ng's full reply to the MPs is found here.

Dr. Ng answered the question in 2 parts WHY we need to spend so much and HOW we decide what to spend on and how much to spend:

"No one, no country, wants to be violated. Dr Lim rightly pointed out that we remain vulnerable. He and Mr Pritam Singh have asked the right questions. How does Singapore, a small country with little natural resources, defend itself against traditional and non-traditional threats? What kind of SAF do we need? How will we know when we have achieved it? Sir, these immutable constraints force us to leverage on technology, innovation and unflinching human will to overcome our limitations. Translated to stark military terms, we have to know more, see first, and respond sharply and decisively to disable, if not destroy, would-be aggressors. That kind of capability is hard to come by, even if we are willing to pay for it. But we have made considerable progress over the years. The questions that you today asked indicate that we have made considerable progress. How are we changing our SAF? Can we afford to relax a little? Can we now reduce NS commitments? The very fact that you are asking this is a reflection that we have succeeded."

Basically Dr. Ng is saying that we need to leverage on technology, build up capabilities and transform the SAF into a 3rd Generation (3G) fighting force. One example of an advanced capability he gave was that of an "integrated strike" in which the SAF can respond rapidly to threats and targets by linking various sensors and weapons platforms such as HIMARS and fighters. An impressive video of such an operation was shown in parliament. According to Dr. Ng, once such advanced capabilities are attained, it is necessary to maintain it.

Dr. Ng on HOW we decide on how much and what to spend on:

"I want to assure MPs that MINDEF is mindful of our responsibility to spend carefully and wisely. We are acutely aware that we are a major share of the government budget. We buy only what we need, scrutinise available options for the most cost-effective solution. Our first instinct is to upgrade existing platforms to extend their lifespan, instead of purchasing new ones. So for example, the Navy's corvettes - some of you may have served on it - are 21 years old, but instead of being replaced immediately, will be upgraded to add many more years of operations. Our two Archer-class submarines were bought second-hand and upgraded to be stealthier, with longer endurance, and extended reach. "

I would like to thank all the MPs who brought up this issue and Dr. Ng for his reply. However, I'm not convinced that we have struck a balance between social spending and defense. Today 25% of our govt budget goes to defense and this proportion is even larger that Israel's defense spending as a % of govt budget. At the same time, we have the lowest % govt expenditure on health care among all OECD countries. Singaporeans shoulder the highest % of health care cost among developing countries. For a govt that pledge change, it cannot leave this imbalance unaddressed. Minister Tharman's maths on the "$1000 income can own flat" and $400K subsidy for the poor is fuzzy to say the least. All we need to do is look at the budget allocation to tell if govt has struck a balance between ocial spending and defense spending - the current allocation tells us that much more change is needed....

Sunday, March 04, 2012

Changing Budget Allocation to meet changing needs...

UPDATE: Yesterday many MPs spoke up in parliament to question the size of the defense budget. There is no question that Singapore needs strong defense, however, the size of our defense spending appear to be disproportionate to our needs and threats. I applaud the MPs for having the courage to take on this subject. Its no longer enough for the defense minister to just the amount by simply standing up in parliament to say the spending is needed because we are small and vulnerable because such arguments lack logic and are not quantifiable. In light of the rising poverty and income gap, the defense budget can no longer be a blank cheque. It has to be scruitinised the same way our health care spending is scrutinised. Otherwise, it will weaken our social compact and endanger our long term stability as a nation. 

Big defence budget questioned by MPs
inSharemy paper

Tuesday, Mar 06, 2012

SINGAPORE - Many MPs yesterday called for a review of the defence budget as they felt it is too big.

They suggested the money could go towards the country's social spending instead.

Opposition MP for Aljunied GRC Pritam Singh said that the region's security architecture and good military relations give reason to be "relatively positive about the low probability of outright military conflict breaking out in the region".
The moment WP spoke about improving the lives of Singaporeans by having better safety nets, the PAP responded by using words like "Nigerian Scam" and arguing that higher social spending will lead to high taxes and govt debt.  So much for 1st world parliamentary debates. The conclusions are formed even before we do a decent analysis, work the cost and decide how we should pay for measures that will improve the lives of ordinary Singaporeans.  If the PAP is determined to improve the lives of Singaporeans, it has the means to do it. We shouldn't get into debt but if tax reform can yield better outcomes to the majority of Singaporean families and narrow the large income gap why is the PAP  so averse to it?  But even before we consider changes to the tax code,  there is plenty that can be achieved by examining the way our budget is allocated.

In the US while most politicians agree that balancing the budget is essential , ideological differences between major parties result in a long drawn debate. The Republicans resist all efforts to raise taxes and cut defense spending and the Democrats will resist cuts in social spending and want to raise taxes. Obama tries to stand in the middle and sometimes takes the heat from both sides. The American public wants some of the tax cuts reversed, some social spending cuts, and defense budget to be cut. Here in Singapore, things have been one-sided for 4 decades. We get policy extremes seen here that is not seen anywhere else in the world.

A few days ago, I looked a friend lecturing at our local university. He was not around. One of his colleagues told me that he was overseas to recruit students for his research programme. If you look at the roster of researchers and PhD students in our universities and research institutes, it is filled with foreigners. The reason for this is very simple. In the past few years, the govt has been spending billions on R&D more than what the we can take up and capacity has to be expanded by funding foreign students to take up graduate studies here. The end result we hope to see is transition of this research to industry and ultimately get results that show up in  our economy. Very little transition has taken place for the amount of money spent, yet the PAP continues to spend on it because they believe in it - so every year we spend millions to educate the children of foreigners waiting for outcomes to materialize. Okay fine. But contrast that with what is going on at the other end of education spectrum. Every year thousands of Singaporean children from poor or broken families enter primary 1 without proper preschool education because it is not compulsory. This is left to self-help groups that try to do something for these children so they can have a better start in life - last year 300 lucky under-privileged students received a $10 four week Bridging Programme at Bottle Tree Park[Link] with this 4-weeks of pre-school costing $10, they leap into primary one to compete with children with 2 years of kindergarten + enrichment + Montessori + Kumon etc. We have the budget to educate children of foreigners but not Singaporean children for pre-school. The money is there and it is the PAP govt that  chooses how to spend it ...and how they do this is a result of their ideology.

Today Singapore has the lowest govt spending on healthcare compared with all OECD countries. We are not just low we are an outlier if you look at the numbers. Singapore govt spends 1.5% compared with 6.2% average among OECD countries. As healthcare cost increases, the PAP govt has been keeping the healthcare expenditure low by shifting the rising cost by increase the healthcare burden of the sick and their families. There cases of Singaporeans selling their homes[Link] and going to Malaysia for treatment[Link] as a result of this policy. Many more are at risk because they are under-insured or have no health insurance as the cost of healthcare goes up. While extreme parsimony is applied to healthcare spending which cause enormous financial burden and pain to ordinary Singaporeans, it takes a different attitude when it comes to spending on defense. Australia spends 9.8% on healthcare and 1.8% [Link]of its GDP on defense. Japan's expenditure on defense is 1% and in Mauritus it is zero after the govt did a study and ascertained that the globalization, world trade and new geo-political structures has eliminated the need for defense spending and all such spending would go to waste[Link].

Singapore\s defense spending is very high at 4.9% of GDP. This year it has been raised further by 4.3%[Link] and is set to reach 25% of govt spending. In Australia it is 7.3% of govt spending and even the the US, a  super-power, spends 20% on defense[Link]. Even Israel, a nation constantly under threat, spends 15% of its govt budget[Link] on defense lower than the 25% that the PAP govt spends on defense. While the Israelis spend more when defense spending is measured as a % of the GDP (6.3%), they balance this with high social spending so that as a whole defense spending takes a smaller proportion of the national budget compared with Singapore. The Israelis know the importance of social cohesion and you cannot maintain the security of a country by not properly balancing your defense spending with social spending - behind your weapons are ordinary citizens and your success depends on whether he feels whether the system has been just and equal.  The imbalance in healthcare+social spending vs defense spending reflects the ideological positioning of the PAP govt. The defense spending has been kept at a fixed allocation of the GDP and not adjusted based on changes in external environment. This has resulted in defense spending growing far faster than that of our neighbors and today, Singapore spends almost as much on defense as the combined spending of Malaysia and Indonesia.

Defense is very important for a small nation like Singapore, however, if  this spending is not adjusted based on changes in geopolitics and threats but simply increased year after year as a fix allocation of GDP, it will hurt us in the longer term. The threats have shifted from all out war to low intensity conflicts as surrounding nations plug into the the grid of global trade and democratize their political systems to shift power from the rule of strongmen dictators to the people. This means we have more time to build longer term defense capabilities and lengthen our acquisition cycles for hardware to delay obsolesce. Most bloggers avoid commenting on defense spending as there is a lack of information in this area which has been kept secret and our knowledge military hardware  is limited to the Jane's  Defense Weekly and the Changi Airshow held several weekends ago - when you have a big budget, its like the IT Show, there is no limit to the amount you can spend to build capabilities and you don't necessarily limit this to what you need because the money is there for you to spend. Today defense spending is planned by people with a vested interest to see it increased  every year - by those who have build careers on our defense spending and what is more alarming is the increased number of ex-SAF generals and admirals in the ranks of our political leadership which makes it hard to correct the imbalance we are seeing in our budget allocation.

Former Prime Minister Lee Kuan Yew was asked about defense spending and this is a piece of hard truth that came from him:

"We are not vulnerable? They can besiege you. You’ll be dead,......‘If we are not vulnerable, why do we spend 5 to 6 per cent of GDP (gross domestic product) year after year on defence/. ‘Are we mad? This is a frugal government." - Lee Kuan Yew

Notice the circular logic here. Because we spend more we have to be vulnerable otherwise we are mad. With this logic billions in defense spending is justified? ...True reform means we have to think deeper and harder about this hard truth.

The PAP  lean towards an ideological extreme that will not gain acceptance in the long term - they have won elections by limiting political freedom of its citizens, repressing opponents using lawsuits and detention without trial, using estate upgrading to gain votes and controlling the media. We see no real determination to change anything at this point in time and the gap between what the PAP wants to do and what the people want them to do grows much faster than the change they are willing to make in the system. The debate on the budget reflects the growing divide - the WP was merely asking what almost every Singaporean wants yet their request engendered only harsh responses and wild baseless accusations from a govt that does not want fundamental change. The ratio of our healthcare spending to our defense spending show the gap between the needs of the people and ideological leanings of a govt that has lost its way after 40 years of semi-authoritarian leadership.

Friday, March 02, 2012

Tharman : A Family with $1000 income can own a flat...

UPDATE:  In a comment, a reader pointed out that he or she lives quite comfortably as a single for under $1000. So the sensible thing to do is not to climb Everest with one arm tied behind your back by trying to start a family and own a home on an income of $1000 - its going to be a long hard painful struggle. 

Another commenter tried to read Tharman's mind and he did a good job. Tharman's claim is probably based on a combined grant of AHG + SHG [Link] that works out to be $60,000. But to qualify for these grants a man with low income of $1000 has to be married to a PR or citizen - this is an assumption because many low income workers have not been able to get PR for their foreign spouses who are granted only long term visit passes. Assuming he can find a 2-rm flat costing about $100,000 near his workplace for $1000 (it has to be near otherwise transport costs will drain his $1000 income),  he will service a 30 yr loan of about $40K paying $160 from his CPF every month.. Assuming none of the numerous problems crop up during this 30 yrs and he lives a spartan lifestyle and doesn't have children(?), he owns the flat after working continuously for 3 decades. So what does he do the day he stops work? He probably has to reverse-mortgage his home back to the HDB because he has no money to retire. So what is the purpose of this whole exercise? ....To show that you can struggle for 30 yrs to own a flat that you have to give back when you finish paying....and prove Minister Tharman right!? To perform this feat with no financial buffer serving as margin for error...many of these families will lose their home along the way due to unemployment, illness, emergencies, inflation in cost of living etc. 

You try to make those low wages do wonders when you should be asking why wages are so low - no developed nation has workers who work full time earning $1000 a month except in Singapore. Minister Tharman in making his extraordinary claim simply expose the extraordinary income disparity the PAP system has created. 

In an earlier posting, I wrote about a family with an income of $1200 living in a rented flat not having enough money to see the doctor when they get sick. The mother has not seen a doctor for 10 years even when she gets sick according to The New Paper.

Minister Tharman now makes this claim that a family with income of $1000 can afford to own a flat. Maybe he forgot to tell us his assumptions. Engineers will tell you that you can always adjust your assumptions to get the conclusions you want. The family has to live on maggie noodles. They cannot get sick and see the doctor. They have to wear cheap clothes that last for decades. They cannot furnish or renovate the flat they purchase. They cannot have school-going children. If they have children, there is no budget for entertainment - no movies, no electricity for computers, no handphones, etc. They have to walk and not take the bus if the destination is within 2 km to save money. They cannot go out unless it is for work or groceries. They have to bathe once a day (or every 2 days) only to keep the water bill down. If the bread winner break his leg during the 30 years he has to service his housing loan he can set it back himself and go to work the next day because low paid workers are fired if they take too many days of MC.

What are Tharman's assumptions?
Someone commented in an earlier posting that a Canadian MP tried to live on $600 welfare to find out if it is possible to do so in Canada. Somebody from the PAP should take up Minister Tharman's challenge to raise a family ..and own a flat with an income of $1000....otherwise this is a fairytale created with a busload of assumptions.