Monday, October 29, 2012

Understanding why PSLE needs to be changed...

Recently, OCBC granted a special PLSE leave plan for its staff:

"Now, anyone working for OCBC Bank or its subsidiaries can squirrel away up to 15 days' leave and carry it forward to the next year so that they can stay home to help their child study for the Primary School Leaving Examination (PSLE)."[Link]

Here is what Minister Josephine Teo wrote in her Facebook:

Minister Teo was badly criticised for what she said. The main issue with her remarks is she tried to apply her own situation to everyone. What her twins need to perform reasonably well may not be what is needed for other children and parents. Many parents were unhappy with her saying that OCBC move to support its staff during PSLE will "feed the fears of parents" - as if parents who take leave to help their children as irrationally fearful. She also said, "we are quite mistaken to behave as if PSLE is THE defining moment in a child’s development". It is easy for a parent to say this when his or her child is doing well and is self-motivated under the current system but lets spare some thought for the parents of children who are late bloomers, playful or haven't gotten round to focus on their academics. There is natural and understandable anxiety among these parents during the PSLE because our education system is a high stakes game, a few marks can decide if a child goes to "Normal Technical" stream where the chance of going to university drops to almost zero.

Make no mistake it is a high stakes game:

In my previous articles [Link, Link, Link], I wrote about the high stress that surrounds the PSLE exam. But I do not blame this on the parents, they are merely reacting to the system....and it is not "kiasuism", their fears are very real because the education system sorts children into various bins and with each bin is trapped in a certain expectation - this expectation shapes the achievements and the future of these children - Josephine Teo is wrong to say not the defining moment of a child's development - for many children it is, and the PSLE results is an important decider of their future.

Putting so much at stake and so much pressure of 12 year old children is very unhealthy and harms their long term development. It causes our children to over-achieve in the beginning and underachieve in the longer run because it puts the emphasis the wrong areas - exams over love of learning, learning fast vs deep understanding of basic principles.

To illustrate this lets look at some numbers. Suppose you take groups of students from various countries to test them. Lets take Israeli students, Hungarian students Austrian students, American students, Swedish students etc at age 14 , just after PSLE age and test them. Lets test them for math and instead of using all our  students lets just have Malay students whom the PAP (the former PM Lee) frequently claims are weak at maths. Someone has actually done such a test [Link]and these are the results:

Fast off the starting blocks our students are pressure cooked to the point they are way ahead of everyone else. But education is a long distance thing not a short sprint and the important outcomes are measured at the end of their education not at the initial part. Despite this spectacular achievement at PSLE only 6% of our Malays students make it to university and even fewer to Science and Engineering....we only educate 27% of all our students to university level below the average of OECD countries....and our own govt prefers give university scholarship to foreigners than educate our world beating 12 year olds who rank number 1 in the world for maths and science. This is the dismal outcome of our education system.....all the extreme stress at PSLE yields very poor results at the end - this is the "work so hard for very little results" outcomes for the system. Compare this with the Israeli system that doesn't result in high exams scores in standardized testing - the score far lower that all our racial groups - but at the end they generate more than enough people for their high tech industry not to mention the highest Nobel Prize winner per capita in the world.  Despite the frequent and sharp criticism of  the Israeli system due to low test scores, there is one thing they do right ...and this secret  makes a gigantic difference at the end in terms of final outcomes. I tell you what it is at the end of this posting.

Much of the student effort in our system which is now supplemented by a burgeoning tuition industry goes into trying to beat someone else at exams and achievement and ability is measured by exam is spent getting yourself sorted to a better streams and schools. Such a system also does not distinguish us from the systems in China and India who can pressure cook more children and beat us by sheer numbers.

After putting our children through this pressuring system, the PAP govt tells us that it has to import foreign 'talents' to fill our university and generate economic growth and vibrancy. We have to invest wisely on education but what are we getting in the end? We have to educate each child to their fullest potential over a period of around 16 years not sort them out after 6 years and 'pigeon-hole' them into compartments of decline expectations. Such a system is great for social hierarchy  with elite scholars occupying the apex in our society to provide top down directions....but where is the much needed creativity and innovation to propel us the end much social energy is lost in the sorting process as intense competition erodes the values of teamwork and cooperation that will elevate all in society not just the few to whom resources and opportunities has been disproportionately awarded

So what is the secret in the Israeli education system that makes it different? They spend the first 5-8 years of education encouraging their students to ask questions rather than teach them to answer questions. We do the opposite - we measure the success and achievement of a student and teachers by their ability to answer exam questions. Primary school education is all about learning the facts and methods to answer questions...and year after year the questions are made harder and harder differentiate students in terms of ability to answer questions. We destroy the ability of our students to challenge ideas because the faster the learn and accept, the better they do at the exams. This is why the Israeli system that produces 14 year old who are 19 places behind us in standardized maths and science tests come roaring back to over take us later. We start fast ...but they run further!...and it is the distance that matters.

Tuesday, October 23, 2012

Debunking the DPM Teo's immigration argument.

In a recent town hall meeting, DPM Teo Chee Hean presented his argument that our low fertility rate today means that we need to have 20K-25K new citizens per year. You can and should read his speech and presentation in full here. For readers of this blog,  you are probably familiar with the flaw in this argument - a shortfall of babies today can only be properly compensated by importing babies today or 25 year olds in 2037. ....not 20K adults which is what the PAP claims.

I want to show you visually using DPM Teo's own presentation diagrams and data to show why his argument is wrong.

This is Singapore's population profile in 2011 and 2050 without immigration:

In a steady state situation where the TFR is 2.1 and the total population is constant, the profite is a rectangle in which every red and blue bars are of equal length.

Our current population profile is a barrel shape with more people below age 40, than above age 40. In 2050, the profile looks like an inverted pyramid, with more old people than young people.

If you import a 30 year old man, say from Phillipines or China, and make him a citizen today, in 2050, he will be 78 years old and his addition will go to 2nd bar counting from the top. If you import 100,000, 30 yr old today, 100K will be added to this bar i.e it will make the profile worse in 2050 because there will be even more aged people.

The correct way to compensate for the baby shortfall and ageing population is shown here:

To get a steady state profile of a rectangle in 2050, we need to add new citizens to the 45-49 age group and younger. The 30 year old new citizen should be added in 2035 or later to contribute positively to this profile - by 2050, he will be 45 years old and added to the yellow section where he is needed. We can also equivalently bring in 20 year olds in 2025 or 10 year olds in 2015 or 7 year olds in 2012. Bringing in adults today will just make this profile worse.

If you look at the diagram carefully, it also tells us there is no other real solution except to get our TFR back up. Why? If TFR does not go up, we need to import a and increasing number of people each year roughly 20 yrs from 2050, if you look at the bottom bar 0-4 years old, we need to bring in as many as people as we reproduce, this is both unimaginable and impractical.

Given that we do not need to import adults as new citizens now and worsen the problem, we have time to push our TFR up which is the only viable solution. Using our current low fertility to justify more foreign import is not incorrect, it is harmful in the long run.

Another thing to note is the Singaporean population profile is completely different from our workforce profile which has a large number of non residents holding employment passes and work permits. This part of the workforce is always ’renewed’ causing our workforce to be artificially young leading to structural unemployment among those above 40. If you look at the workforce profile, the argument to import people to keep population young weakens further as the large number of young imported workers has already skewed our workforce profile and will continue to keep our workforce artificially young because after working here for a few years the PRC or Indian worker will go home and another young worker will take his place.

Monday, October 22, 2012

US Presidential Debate : High Stakes, High Drama...

In the US, they don't do "conversations", they debate. Technology allowed me to watch the entire debate 'live' on my smartphone mid last week[website for live broadcast]. If you want to know who is leading in this presidential race, the best projections actually do not come from opinion polls that tells us the candidates are dead even but the bookmakers in London who live or die depending on their ability to set the right odds[Ladbrokes US Presidential Election Odds]. Obama has about 65% chance of winning vs 35% for Romney.

The questions from the audience were quite good. You can see how nervous some of them were when they read out their questions but they must thought about what to ask the candidates very carefully and written it on paper so they wouldn't fumble when asking their questions.

America is in a difficult post-financial crisis economic period with high unemployment, high govt debt and high income inequality. The economy is seeing a weak recovery but not creating enough jobs for those who join the workforce. The belief of the Republicans seem to be tax-cuts being a cure-all for American economy. Candidate Romney's proposed $5 Trillion over 4 years in tax cuts is very counter-intuitive as he claims it will not only revive the economy but narrow the deficit[Link]. His proposal will cut income taxes by 20% for all, eliminate estate (inheritance) taxes, and extend the temporary Bush tax cuts by making them permanent. So far analysts have not found this plan credible as Romney claims he can recover these tax cuts by finding money closing tax loop holes which he has failed to detail throughout his campaign. Romney has also proposed increased military spending.

These tax cuts and Romney's campaign has found strong support among the ultra-rich. Some of them genuinely feel that taxes are oppressive and are strongly opposed to Obama's plan to raise taxes on the top 2% of the population[Billionaires against Obama]. Despite the need to close the deficit and narrow the income gap, these billionaires, many of whom are self-made, feel that any increase in taxes is unjust. For some, it is a combination of higher taxes and increase regulation that led them to oppose Obama so strongly. These new regulations most of which were introduced to prevent another financial crisis are opposed by those in the banking sector.

There is strong similarity between US Republicans and the PAP govt when it comes to taxes and regulation. The main difference is the PAP govt  practices strict "fiscal conservatism", they don't go into deficits or borrow to fund spending. The PAP goes further in many areas- even less on social spending, lower progressive taxes, less financial sector regulation.  In the US they debated about elimination inheritance taxes for the last 10 years - Bush could not garner enough support to eliminate it and Romney brings it back on the table. In Singapore, the PAP govt did it almost "overnight" [Link]- no debate needed.

If you go back to Obama's campaign in the 2008 election, the early part of the election before the financial crisis, his focus was primarily on the healthcare system - the high cost of care and large number of uninsured Americans was considered a severe problem. Today in Singapore we have more uninsured or under-insured people per capita than when US was having a healthcare crisis but the PAP govt does see it as a big deal. Recent case of a family having to incur medical debt of $130K payable over 42 years for their child who was hospitalized for meningitis[Link]. The boy is a PR (Permanent Resident) but such high debts can be incurred by any Singaporean so long as they are not adequately covered. What is incredible is the MSM (mainstream media) wrote about this story to highlight the generous gesture by the KK Hospital to allow the family to pay its medical debt over 42 years instead of bankrupting the family or forcing them to sell home to pay their medical bills. ...rather than highlighting the inadequacies of our medical system and high cost of medical care that left this family in dire straits. The child's father, a lorry driver who earns $1000 a month, now has to pay $250 every month for the next 42 years - all this happening in a country with the highest average income in the world. Among developed countries, Singaporeans shoulder the highest level of % of medical expenditure vs govt spending on healthcare and Singaporeans have the highest out of pocket spending.

America's inequality has caused a  polarization of its society that led to this almost acrimonious debate. Different strata of society with their own interests to protect. The decrease of taxes in US to historic lows did not lead to satisfaction of  ideological right and the expansion of the income inequality does not concern them too much. Some on the left want to go back to the days of the "welfare queen" that America can no longer afford. One side wants to expand social spending, the other side wants to expand military spending but they can do neither as the country's debt pile up. There seem to be no middle ground for either side to walk on and whoever wins the election will be opposed by almost half the people.

Singapore has a 3rd world wage structure with much of the benefits GDP growth going to the top few % of the population. PAP's policies have been extremely pro-business until its 'poorer than expected' election results in 2011. The govt has softened its stance a little to persuade the populace that it will implement policies that will benefit them. However, until we close the income gap, or seriously mitigate its effects by implementing universal healthcare, wage restructuring and transform our system we will face the same polarizing forces as we see in the USA. The old days of authoritarian style govt with control of the media to make us accept various policies are now over......The PAP has now resorted to 'conversation' but nobody is interested in 'old wines in new bottles'. The conversation initially generated interest because we were told there were no 'sacred cows' so people expected fundamental change only to find that the PAP cannot change fundamentally. Even as they converse, the problems are deepening and if there is no credible vision to take Singaporeans to a better future, it is hard to believe things will improve.

Friday, October 12, 2012

Crisis and Inequality explained ....

Here is an interesting video that explains in animation some economic history leading to the crisis and high income inequality. The speaker in the video is renowned social theorist David Harvey.

In 1984-1986, we saw the dismantling of the last big unions in England - coal miners and trade unions on Fleet Street that had enormous power in the newspaper industry. I remember the bitter "battles" fought between these unions and PM Margaret Thatcher. The "Iron-Lady" eventually crushed the power of the unions. Her counter-part in US, Ronald Reagan did the same. Along with unions, marginal tax rates for rich corporations fell. That was a solution to the economic problems of that era. But how did the unions get so big in the first place? These unions were formed when workers were badly exploited and unionization was a way of giving workers some power. David Harvey so ingeniously pointed out that the problems we have today are caused by the solutions of the past.

When you look at the video, how do you think Singapore fits into the picture? Long before the Iron-Lady of England got rid of powerful unions, independent unions already disappeared a couple decades earlier from Singapore. Long before Reaganomics caused wages to stagnate as productivity rose, Singapore leaders used the simple trick of keep wage gains below productivity gains so that per unit labor cost kept falling to entice foreign investments. We never had much welfare in our nation's history .....and Reagan slaughtered the "welfare queen" only in the eighties. Wages as a % of GDP fell to below 50% in the West in the 80s[Link]. but in Singapore we never crossed the 50% level in our entire history.

Our leaders like to say that our income inequality is due to globalization - so they don't have to do anything drastic to solve this problem. But the truth is the problem for Singapore is the rest of the world became more like Singapore in the last 2-3 decades and our leaders stretched their old tired strategies further so that they can attract capital. The last card they are playing is to open the floodgates to foreign labor. A policy that has caused our income gap be to the worst among developed countries and the cost of living to shoot up. This policy has caused the wages of hundreds of thousands of working Singaporeans to fall belong what is needed for basic living - 400,000 Singapore workers have wages so badly depressed they are eligible for Workfare.

In a recent dialogue session, DPM Teo Chee Hean tried to present the case for more immigration[First hand account of the dialogue session. He wants to double down on policies that have failed to deliver positive outcomes for a vast majority of Singaporeans. The audience of Singaporeans who have already seen the outcomes of this policy were not so easily persuaded. We all know what the outcomes are if we give the PAP a free hand to import as many people as it wants. To even tell the audience that the PAP wants to import more people before the deep problems caused by the current influx is solved is simply unacceptable for ordinary Singaporeans. If the PAP imports more people, the problems will just get larger.

When the PAP started importing foreigners, they told Singaporeans that it will create higher paying jobs and opportunities for Singaporeans. It will improve our quality of life - more vibrancy etc. None of these promises have been delivered ...yet the PAP chooses to invent reasons to pursue this policy. This time Teo Chee Hean tried to sell to the audience the idea of importing people to solve our low fertility problem. This line of reasoning is simply flawed.

No other govt in the world has resorted to importing foreigners to solve a low fertility problem. The solution to low fertility is to find the root causes of low fertility and raise it. Also, the massive foreign influx that the PAP govt has allowed for the last decade  has already over compensated for the low fertility rate - even if we had high fertility, we wouldn't be able to achieve the kind of population growth we had in the last 10 years.

Let history be our guide. If we allow the PAP to continue to pursue its policy to import people at a rate not seen anywhere else in the world, our problems will grow so large it will completely crush us.

Thursday, October 04, 2012

National Conversation goes on in a familiar circle...

The National Conversation started in a broad manner with some tweaks in education in the right direction. Even the radical idea of getting rid of the PSLE was discussed and general agreement that the MOE has to find ways to reduce stress level among parents and students. If there is one redeeming feature in the PAP system, it TV d ;is education. The PAP govt has been willing to spend on this area as an investment - however, in recent years gaps have opened up. Pre-school education quality has become extremely varied, a massive tuition industry draining resources (best experienced teachers) from the system and education has become a high stakes board game sorting students - focussing on selection and amplifying small difference among students. It is good that a frank open discussion about the problems with the system. I welcome the move to eliminate banding of secondary schools and the announcement to educate more students to university level (40%) from a below OECD average of 27%, so that more people have access to better education.

Having evolved the biggest income gap in the developed world, the PAP message now is even if your situation now is bad, your child will have a shot at a better life. Great if a poor parent has a child with an outlier IQ able to overcome the hurdles but not so good a low wage worker whose son gets streamed to normal technical because of poor pre-school, poor language skills and no financial ability to get tutoring. So the message to these people is wait another generation? Maybe your grandson will make it.  When prosperity is not broadly shared, you can't elevate the quality of life of ordinary people. I think most Singaporeasn today understand this and they are waiting for National Conversation to boldly address this issue. But this is not where we are heading in this conversation:

Singaporeans 'accepting of foreigners': Participants of forum with PM Lee
PM Lee talks about population of 6M.
Lim Hng Kiang talks about need for foreigners to generate growth
Minister Tan claims that foreign influx is calibrated
Ex-MM Lee : Singapore cannot do with foreign talent
Foreigners can help anchor new sectors: Minister

Unless you have buried your head in the sand, you should be able to see that the PAP govt is trying to get Singaporeans to accept more foreigners. Without them, the PAP tells us, our economic growth will slow and we will be less competitive. The PAP govt will "calibrate" the numbers. When the govt talks about "calibrated" slower pace of growth it refers to the 34,000 foreign workers excluding domestic helpers in first 6 months of this year or 68,000 annualized. This is roughly double the workforce growth if we count Singaporean joining the workforce. It looks "calibrated" only if we compare with our own numbers in the past but it is still extremely high compared with any other developed country.

The MTI warns of slower growth without the inflow of foreigners. We know that expanding the workforce by importing labor is a sure way to generate economic growth - it is simple maths, the imported labor drives up demand for housing, medical care, attracts investments etc. We also know how such approaches of growing the economy will not lead to desired outcomes for ordinary Singaporeans. Tommy Koh and most economists have said that  such imports have depressed wages[Link] - it is ultimately a transfer of wealth from the lower income to the rich in our society. Is the PAP govt going to do this at a time when we have the largest income gap among developed countries? There are certainly better ways to grow our economy such as moving up the technology ladder, innovation, higher productivity etc but the PAP govt seems determined to import more foreign labor to artificially ramp up the economy.

Even MP Tin Peh Ling has woken up, but the rest of govt is still living in the dark:

“In a way, Singapore has to go into ‘cold-turkey’ after years of allowing huge inflows of foreigners. Politics should be about having the courage to make the best decision at any given point in time, and act on it,”, Tin Peh Ling[Link]

Importing labor to generate economic growth has numerous deleterious effects that Singaporeans are all too familiar with - the relentless rise in cost of living as the demand for necessities like housing and medical care shoots up, the depression of income, and widening of our income gap.

I have been watching this episode involving a group of SMRT bus drivers requesting for help from the NTUC to revolve issues with pay and work load[Link]. Our bus drivers are the among the lowest paid if not the lowest paid bus drivers in the developed world. Bus drivers in Taiwan are paid about twice that of Singapore bus drivers[Link] - this was revealed in parliament by Josephine Teo, Minister of State for Transport. In the US,  a bus driver is paid US$40-50K a year[Link], this is about 3-4 times what our bus drivers are paid and in Scandinavian countries it is even higher. This low income relative to the high cost of living(Singapore is one  of the most expensive cities in the world [Link]) means workers such as these bus drivers face enormous financial strain and have difficulty with housing, medical care and retirement. It was recently announced that these drivers who make gross salary of about $1200 a month were given a salary increase of $225 but it turned out they were badly shortchanged because they were required to work 6 days a week instead 5 days a week.

However, if you look at the situation for bus drivers, there has been a shortage of drivers inn the last few years]Link]. The reason for this is obvious. The pay offered by SMRT is too low to attract drivers and the shortage should have driven up the pay of these drivers to a more reasonable level.  The assertions that "few people want to drive buses" and "bus company have difficulty finding drivers" are just ridiculous. These ridiculous reasons are often told to the public to get them to accept a larger foreign influx. If you go to Germany, Australia and France, they can find drivers for their public buses even though their their populations are better educated (more holding university degrees). The truth is these companies can't recruit because they offer wages that are too low.

"SMRT said it has drivers from Singapore, China and Malaysia, but did not break down the figures.."  - [Link]

The govt solution to this is to allow these companies to keep wages low and recruit from overseas. You can find easily find drivers from developing world countries who will accept these salaries because they come from countries where the cost of living is just a fraction of Singapore's - they can raise their families back home and go back to buy homes after working in Singapore. But we are not just talking about bus drivers but imported labor at all levels in our economy and this has driven wages as a component of GDP down and profits up. Right at the top are a small number people who are richly rewarded based on profits generated rather than actual work.

The unbalanced policies of the PAP has resulted in a 3rd world wage structure in our economy adversely affecting the lives of Singaporeans at all levels. The increase population density also resulted in a cost of living increase that made life tougher for everyone including young graduates:

HDB index Q3 at 96.7
Grad starting pay $2.5k
hdb/grad pay ratio = 39

HDB index Q3 at 198
Grad starting pay $3k
hdb/grad pay ratio = 66

The PAP in the National Conversation says it desires to pursue policies along the same direction to keep the GDP growing and its policies of the last 10 years were essentially correct. Looking further down, it is very clear that these policies will cause Singaporeans' quality of life to deteriorate further and undermine the ability Singaporeans to retire.

After pursuing policies that caused a large segment of the population to struggle from rising cost of living and depressed wages, PM Lee in a recent interview said:

“Singaporeans are not poor, but feel less well-off relative to others in society and that there is a relative sense that they should get an entitlement....

Singaporeans will get help, but the help is not something they are absolutely entitled to...”[Link]

There is no greater sense of entitlement than that among th e people whom we are supposed to be our leaders - they feel they are entitled to the highest salaries in the world for the same job . Yet PM Lee is saying those who have fallen on hard times due to our wage structure resulting from his policies have a sense of entitlement when they need a helping hand. What people want and need are decent wages. Singaporeans want to be paid fairly when they work. His disdainful view of Singaporeans who have suffered due to his policies and are not doing well "feel that they should get an entitlement" says a lot about what he thinks of ordinary Singaporeans and their struggles.