Monday, January 30, 2012

Obama's 2012 State of the Union Address



Here's the part that matters to us:

"They understood they were part of something larger; that they were contributing to a story of success
that every American had a chance to share – the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for
retirement. The defining issue of our time is how to keep that promise alive.  No challenge is more urgent.  No debate is more important.  We can eithersettle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by.  Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.  What's at stake are not Democratic values or Republican values, but American
values.  We have to reclaim them."


You change the word "American" to "Singaporean" and you will realise he is not just describing America's problem but also our problem. We are one of 2 developed countries with extreme income inequality... outliers compared with others - our inequality is higher than the US most of the time in the past decade. The difference is Obama sees this as the most challenging problem for the American society and one of great urgency while our leaders think that some tweaks here and there and a little helping hand for the poor will be sufficient - one recently elected MP/minister wrote in her Facebook that we should find our own way on this issue of inequality and if you read the article[Link], "our own way" is not to try to narrow the gap and mitigate the effects of inequality significantly but to get the people to accept it by telling them there is social mobility and help those who have fallen very far down into poverty to stay just afloat. Herein lies the basic difference between myself and the ruling party, the opposition and the ruling party and, I believe, most ordinary Singaporans and the ruling party. What she  described is not the Singaporean way, but the PAP way...

Obama spoke about his belief that a person who works hard at whatever job should be able to raise a family, send his children to college, own a home and retire properly. You either believe this should be the goal of society as we advances or not. You can also subscribe to market fundamentalism and believe a man deserves whatever he gets as dictated by the "free" markets. Joseph E. Stiglitz warned us about this in his Nobel Prize acceptance speech:

"The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith’s invisible hand : individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency"

We must not lose sight of the ultimate purpose of having a strong economy and track the outcomes based on this purpose. Ho  Kwon Ping spoke recently gave a speech on how our "wage revolution" has been interrupted[Link]. In it he explained, how the import of cheap labor led to widening wage gaps between  lower skilled  and high income professionals. His data shows that Singapore is far worse than Hong Kong where the govt has stricter control over the import of labor. The policies that resulted in the current situation is clearly an example of govt losing sight of the ultimate purpose of having economic growth - to ensure that a broad segment of the populace enjoy the benefits of this growth.

Obama's test of economic fairness is whether a person working hard at a full time job is able to set up a family, send his children to college and retire properly. I think Singapore fails this test miserably - a large segment of our population will not have enough to retire properly based on the number that will not be able to accumulate the minimum sum by retirement age[how many will have $131K by age 55] and the large number on workfare [Link] people who don't even make enough for basic living.

We are left with 2 paths - to restore our "wage revolution" and ensure that wealth distribution is more equitable or maintain this system of inequality and retain the status quo until people show their rejection ("by occupying") more forcefully and brings this unjust system to an abrupt halt.

Sunday, January 29, 2012

Scandal January in Singapore....

This is scandal January in Singapore. There are serious allegations against an opposition politician which I'll not repeat here and 2 of our top public servants have been sack and under investigation for corruption.
Cecilia Sue Siew Nang picture found here
According to the papers, the 2 top public servants have admitted to receiving "sexual favors" from a supplier of IT equipment. That in itself cannot be condoned because it clearly results in a conflict of interest The CPIB guys are probably checking if the favors have been exchanged for something else like circumventing standard procurement procedures or influenced the decision making - that will constitute a more serious offense than "personal misconduct".  Suppliers are always out to influence the acquisition decisions and while some of it looks like just maintaining good customer relationships if they go far enough it looks more like corruption. You can replace the phrase "sexual favors" with "money" then it looks more serious. You can also replace it with "fine dining", "golf games", ...or more innocuous stuff like calenders, corporate gifts, Christmas hampers, CNY goodiess etc.  Sometimes the create a situation where you end up taking something. An IT supplier can organised a seminar to introduce its state of the art equipment at a hotel and you have to go to get the information which is part of your job. The supplier may include for a free lunch at a fine restaurant and end up taking something from the supplier. Most people in acquisition whether in the public or private sector are not so puritan to walk off  to eat at the nearby MacDonald's. You're in a group so you feel less guilty besides you're not going to let that lunch influence your decision - at least that is what you'll tell yourself. There is no "absolutes" and plenty of grey areas so I really wonder what Teo Chee Hean means by "zero tolerance"....so do they send back all the Christmas cards and calenders they get from suppliers in the public service? If the supplier pours you a cup of coffee, you're not suppose to drink it? ...

Big businesses protect their interests by influencing of public servants and policy makers. While this may differ from out-right corruption, undue influence can be equally harmful to society. In the US, they are known as lobbyists and big businesses would hire top experts as consultants and use them to "lobby" for favorable legislation especially in the tabacco and energy sectors. In Singapore, following the cooling measures implemented by the govt, a powerful organisation of real estate developers known as REDAS (Real Estate Developers Association of Singapore) expressed disappointment with the measures and that they were not consulted[Link]. Let me ask you - is there an equally powerful "home buyers association" represnting ordinary Singaporean homebuyers? The govt did the right thing not consulting REDAS on the cooling measures. In fact it should never consult REDAS for anything unless there is an organisation on the other side that can represent the interests of home buyers. Home buyers have suffered for years due to rising cost of real estate yet these developers who have been raking in big profits have the cheek to speak out against the cooling measures.  In Singapore, GLCs form a large part of the economy and these companies have close ties with the ruling party.  Unless the govt can consistently demonstrate that it will put the interests of Singaporeans above those of businesses in situation where the interests diverge, there will be a growing desire among Singaporean voters for the "check and balance" to be in place.

As for the opposition members currently embroiled in a scandal, there is no way nowadays to hush it up once the allegations surface and hope it will go away. There are only 2 approaches to handle this - deny the rumors if they are not true or admit it, apologise and work hard to compensate for your moral failings. Take the example of, Newt Gingrich who is running for the Republican ticket - when issues surrounding his divorce, he admitted his moral failings quickly and was able to move on. In Singapore, Steve Chia admitted his indiscretions and voters did not reject him outright in the next elections - he had a credible showing (40%?). Across the causeway, the ex-Malaysian health minister , Chua, from MCA was humiliated when a video captured him committing adultery. He quickly admitted he was the man in the video and did not try to lie about the affair.  While his moral failing was a disappointment, some Malaysians are probably smart enough to be wary of his enemies - the ones who spent so much effort to set him up and hire people to spy on him - may be after power for a more sinister purpose. Chua has since regained his presidency of the MCA and may be able to rebuild his poltical career.

While many voters still expect moral perfection, most are beginning to understand the personal sexual indiscretions are often  separate issues from integrity and performance in public office. Bill Clinton performed quite well as president by all measures and when the Lewinsky scandal emerged,  his biggest mistake was to lie to the public and deny he had any relations with Lewinsky - that lie almost got him impeached.  Intelligence files showed that JFK[JFK's liaisons, Jackie's pain]was a womaniser. It is damaging for political parties if elected representatives cannot behave in their private capaity but it is worse to be seen as being devious and trying to hide it.  The politician involved may or may not survive the aftermath of such scandals but political parties minimise the damage by being open and candid especially those seeking greater transparency from govt....you really do not want to be seen as having double standards and be accused of hypocrisy.

Thursday, January 26, 2012

Corruption - Many types and forms...

Happy Chinese New Year !- say first, in case I forget.

Yesterday afternoon, we were all greeted by this rather shocking news that top officials are under investigation for "mis-conduct".. The Chinese evening papers reported that the cases involved "sex and money".....hmmm so what else is new? We shouldn't even be shock that such things happen except this is Singapore, the cleanest country on earth. Some of you may be tempted to link this to the recent salary debate - "pay top dollar still like that" but lets not be oversimplify the mechanisms involved in corruption and in many instances things are more subtle, unprovable and even legal in nature. I'm not privy to the details of the ongoing case but by the time it gets onto the papers, the authorities have probably collected plenty of evidence.

A few months ago an interest piece of information emerged in the US. A study in a book called "Throw Them All Out" showed that stock investments made by members of the Congress have out performed market averages over the long term and CBS' 60 Minutes did an expose[Link]. Its not just good investment performance but extraordinary performance - the congressmen did better than the best fund managers. Several plausible explanations have emerged - legislators make decisions that favor their investments, they have access to information not available to the public etc. Obama is now seeking legislation to prevent the congressmen from profiting from their positions[Link].

I brought up this example to show you the elements that is missing from  our system to stop these more subtle forms of mis-conduct by those in office. Whether the congressmen have acted in a corruptly to fatten their pockets which cannot be proven in this case is secondary to importance of having system components in place to detect such problems.  First, public access to information on the assets of office holders. This is extremely important and even Malaysia has recognized this and will require office holders to list their assets[Malaysian cabinet ministers' families may have to declare assets]. The 2nd element is good independent investigative journalism. Third is vibrant and democratic system in which the people have the power to press for change and the govt cannot hush up wrongdoing.

Singapore is viewed as one of the top few corruption-free country. This is the result of what looks like a "zero-tolerance" for corruption in govt and relatively few cases of corruption. There are places where "everyone" takes  bribes especially in developing countries. Singapore and Hong Kong used to be quite bad. Good effective cleanups by anti-corruption agencies help to purge much of the corruption. However, in the past few years I notice that "traditional" under the table corruption started rising again. I follow such cases quite closely and, in many instances, by the time the CPIB steps in, the problem is quite extensive. Take the example of the case involving sea-food suppliers bribing chefs of top restaurants  - the scale and widespread corruption surprised many.  In the case that involved the famous loanshark "Ah Long San", numerous police officers were on the take. In the Citiraya case, the perpetrators were able to bribe everyone along the supply chain from store men, purchasers, managers etc to carry out their scam. My point is while people here don't go and look for bribes, many can be persuaded to take one "under the right conditions".  While we like to believe that "Singaporeans are honest", the truth is they succumb to temptation like the people of other countries and they may more fearful than honest as they believe our police is very efficient at catching them. Recent years, however, the large influx of foreigners bringing with them the culture from back home and influencing workers here has help to undo some of positive traits in Singaporeans.

While the CPIB can go after a growing number of cases of traditional corruption, more subtle forms will prove difficult. One of these forms takes place through a "regulatory capture" in which industry hire regulators that leave govt paying them as consultants or hiring them into high positions in the company. The idea is to establish a relationship with regulators so that they are not so strict to the industry. This is hard to detect and prove because regulators acquire skill sets that is required by the industry so a certain level of such hiring is natural. Here are some examples : Revolving Door: From Top Futures Regulator to Top Futures, Regulators Hired by Toyota Helped Halt Acceleration Probes, U.S. Drilling Regulators Hired by Oil Companies. Such unhealthy relationships can build up between people doing acquisition in govt and suppliers especially in the defense industry. To detect these problems and know if an unheathy relationships are building up, the numbers have to be track. These unhealthy relationships are as harmful "women and money" type corruption. In the current case, these top officers appeared to have succumbed to lure of women and allowed a local IT supplier to circumvent standard procurement procedures. The same could have happened if an unhealthy relationship is formed, say, by  the supplier routinely hiring  top officers can result in influence in decision making. For the current case, it is not known who this supplier is right now but once that come to light, check its hiring record - does it routinely hire top people from govt?

A decade ago, the US implemented a law to make it illegal for US citizens give bribes when they are in other countries. This was to prevent US businesses from committing corruption in other countries in particular 3rd world countries. Businesses tried to lobby against that law arguing that they would be disadvantaged when they compete for business in some countries. Singapore businessmen learn how to get things done in China, India and Indonesia ...and very often they take those habits back home. Such practices also get here through the massive foreign influx. Our policemen are often tempted by foreigners who  resort to giving money whenever they get into trouble - they come from countries where you have to learn to bribe as a matter of survival. Unless the CPIB can keep growing its capacity to combat corruption, this problem will keep growing along with more subtle forms that the CPIB does not address.  We took a unbridled capitalistic approach to GDP growth and the rule of money has come to dominate our society and erode our core values. The importance of money in our society is clearly seen when a certain party finds itself unable to \find people to serve the public unless it pays the highest salaries in the world and argue that such high pay is necessary to prevent dishonesty. At some point unless we wise up, the benefits of unfettered capitalism will run out and its deleterous effects will cause decay in our society.

Friday, January 20, 2012

Man Jailed 12 months for stealing $32 to buy food for his mom....

UPDATE: There is an update on the case in B5 of today's Straits Times. The article is entitled "Mosque: We tried to help man who stole $32". In that article, the judge explains why he did not give a harsher sentence for taking $32! The judge says he considers the offender suitable for harsher punishments because of his past offenses but gave him an ordinary sentence because of the small amount and the fact it was used to buy food -wow! The judge is saying he is lenient. The mosque explains that it has worked with him for 3 years finding him jobs and giving aid. The man was unable to hold down a job. The mosque eventually gave him a job as an assistant caretaker but the man "threatened colleagues, hurling vulgarities at them and acting aggressively".  So they sacked him and left him desperate without aid ...that led to him committing the theft. The offender sounds like the toilet cleaner, we occasionally meet,  who would hurl a barrage vulgarities at you for stepping into the toilet while he is cleaning or the overly aggressive security guard whose anger you cannot comprehend....and he "disappears" from the job after a few complaints. I can't tell for sure in this particular case but I always thought some of these people have "mental issues"  - a combination of low IQ and/or uncontrollable aggression...manic depressive? Richer parents identify these disorders early and have them fixed by sending the child for psychologist treatment in early intervention programmes. Poorer parents cannot afford such treatment even at the subsidised rate and are sometimes not educated so they don't know what to do except to beat up the child for misbehavior. The child grows up unable to hold a job, ends up committing petty crimes and the solution today is to jail them for longer and longer periods. The safety nets and aid even for very clear cut cases of mental disability is pretty thin.....such cases that require early intervention and psychological treatment simply slip through and show up as criminal cases later on. In this tragic case, the mainstream media supplies information and bits of facts to encourage us to blame the criminal and view him as "recalcitrant" - but that approach is not going to improve our society and the well being of the underclass...we should look beyond the superficial and try to identify the root of the problem. Jailing someone for stealing $32 is not going to help us or the offender in the longer term.

One of the things I can't understand is the harsh sentences handed to people who commit petty crimes out of desperation. Here is one example. A man stole $32 to buy food for himself and his wheelchair bound mother because he was jobless and not able to get any help. His sentence was a jail term of 12 months (see report below).

A year ago, a homeless man set up a tent at East Coast Park because he had no place to stay. He was arrested and jailed[Link].
Surely hunger and homelessness should be sufficient grounds for mitigation.

In another case, a woman was jailed 11 years for steal some bangles and wallets[Link]. That was really harsh.

Then there are cases where the sentencing is not harsh. Like this case of theft of $13,000[Link] and forgery. The judge decided not to jail the criminal and let him off with a fine.
---------------------

Man jailed for stealing $32 from mosque to buy food

AsiaOne
Thursday, Jan 19, 2012
A jobless man was sentenced to one year in jail today after he had stolen $32 from a mosque.
The Straits Times reported that 40-year-old Noraizam Abdullah pleaded guilty last month to stealing the money to buy food for himself and his wheelchair-bound mother.
He also told investigators that he had stolen the money out of desperation as he was not able to get help from the mosque.

According to court documents, the money had been stolen from a donation box at the entrance of the Darussalam mosque along Commonwealth Avenue West on Dec 11, 2011.

Closed-circuit television footage revealed that he had carried the donation box to a staircase landing and removed the money in it after forcing the box open.

The Straits Times report also added that Noraizam had served six jail terms since 1997, which includes five years of corrective training in 2002.

Ministerial Pay : Why the man on the street is right and PM Lee is wrong...Part 2

While members of parliament debated the issue of ministerial pay, a group of 6 economists published a paper, "Inequality and the Need for a New Social Compact"[Link]. The paper discusses the causes of rising inequality and the need for govt to counter the effects of rising inequality in our society. It is a good summary of many issues discussed in this blog. Those who think about  miniterial pay and income inequality more deeply will know that both issues are linked.

"You have to pay the market rate or the man will up stakes and join Morgan Stanley, Lehman Brothers or Goldman Sachs and you would have an incompetent man and you would have lost money by the billions" - Lee Kuan Yew, 2007

Here is a video of Warren Buffett explaining how CEOs and top executives have become over-compensated in the past 2 decades:


Instead of fixing the underlying problems in our society caused by income inequality which has resulted in a 3rd world wage structure, the PAP has been using the salaries of over-compensated executives to set their own pay. This wages of this segment of high income earners much faster than the rest of workforce. most of the time, for "wrong" reasons given by Warren Buffett in the above video. Singapore adopted American style executive compensation without the corresponding disclosure practices.

"And Singapore is just such an example, according to the CFA Institute. It says that prior to Singapore adopting the Code of Corporate Governance, the Singapore Exchange (SGX) acknowledged that disclosure on an individual basis should be in line with global best practice and that share owners should have the right to know how directors are compensated.

'This awareness, however, failed to translate into policy because of considerations for directors' personal privacy ....... " - [Link]

Singaporeans have generally been very patient with the PAP. In any other country, the leaders would have been voted out if they demand the same compensation as our leaders. However as the income of ordinary Singaporeans stagnate, this patience is running out. The new pay structure is not going to bring our leaders closer to ordinary folks. You peg it to the top 1000 earniers whose income in rising the fastest relative to everyone else/ PAP ministers' high compensation will rise much faster than the wages of ordinary folks.

Over time the PAP govt eliminated the benefits of rank and file civil servants while expanding pay packages of the people on top. The ordinary Singaporean is made to shoulder heavier burdens for healthcare, housing and transport and faced increasingly uncertain and unstable employment at a the same time the PAP implemented parachute systems for its elites dropping them from, say, high positions in the SAF to top positions in the GLCs & govt. If you listened to PM Lee's speech on the ministerial salary he said that the high salaries are necessary to "sustain the system".  This system in which elitism is entrenched in not one that can take us forward to a good future for ordinary Singaporeans. Extreme distorted policies like having a foreign worker influx that is among the highest if not the highest per capita to maintain the already high profitability of govt linked companies with cheap labor and expanded demand for their services has hurt Singaporeans in particular those earning lower wages. Corporate profits which are now at a high as a % of GDP are attained by exploiting policies that keep wages down by importing foreign labor. These high profits are then used to justify high executive compensation along with factors mentioned by Warren Buffett.

Chen Show Mao said in his parliament speech that public service is a privilege. Every where else in the developed world good capable people would step forward to contribute regardless of pay and serve the people with passion. The PAP claims it is harder now to find good people - fewer and fewer people are willing to step forward to join the PAP. But that is not true if you look at the opposition, they now have more people joining them and quality has also improved.....why the sudden motivation for these people to join the opposition in recent years?

The PAP says it is being pragmatic and the Workers Party is too idealistic in its approach. But this is not true. It is not pragmatic to expect ordinary citizens to accept its extraordinary "highest in the world" compensation when the quality of life for many Singaporeans has fallen in many respects. The PAP govt says this pay structure is necessary to help it continue to recruit capable people into govt but the truth is they need to do this to sustain their system of govt - a system that has become disconnected with ordinary citizens and incapable of putting their interests ahead of those of the power elite. This system has concentrated the wealth generated by our society narrowly in a small segment of the populace and the new pay structure aligns leadership with this small segment. The PAP govt has had these high salaries for more than 2 decades...has this extremely high salaries resulted in a high quality of life for the ordinary citizens.? ....The man on the street is able to see it does not correlate and will not correlate.

Wednesday, January 18, 2012

Ministerial Pay : Why the man on the street is right and PM Lee is wrong.



I put up this video not because I want you to listen to the PM's same old argument that ministerial pay has to be high to attract capable people but to show you the empty seats next to Tin Peh Ling and behind her. Those PAP MPs didn't even bother to appear to listen to their own prime minister. You may take issue with MP Tin's intellect but she has been "on the ball" when it comes to attendance in parliament. The same cannot be said of other PAP MPs who have successful high flying careers and showing up in parliament is a part-time thing for which they are paid close to $200,000 in allowance per year.

One day as I got up a bus, I saw a somewhat familiar face. I couldn't figure out where I had seen the person but I took the seat next to him. He greeted me in Hokkien and started talking to me. It took me a while to recall the man in his late forties was working at a coffeeshop that I go to every Saturday morning. He was very happy because the boss allowed him to go off early that day and he was very chatty. He started talking about his life. He had a kid in secondary school and was looking for a job at a coffeeshop nearer to his home in order to save some transport cost - his pay was $1000 so every dollar had to be squeezed. He asked me what I worked as. My Hokkien was really rusty and all I could manage was to tell him was I worked with computers. He got really excited and said he heard that computer work paid very well - "$2000 a month!". I told him, "yes, a person can get $2000 working with computers". He had that "wow" look on his face - $2000 is a lot of money for someone paid $1000. At the back of my head, I was thinking how awkward it would be for me to tell him how much I was actually paid and didn't have the Hokkien vocabulary to explain why I have to paid that amount...then again even if I could speak in fluent Hokkien, it is hard explain and justify why I have to be paid a particular multiple of his salary. You think about it ....this guy turns up for work everyday works from dawn until almost mid-night and our MPs don't even show up at the most important parliament debate to give their 2 cents worth get paid 20 times what the guy at the coffeeshop gets - some of us would rather have that cup of coffee than some PAP MP supporting policies we do not want. The Straits Times published an article saying some 2nd tier  executives are now paid $1M a year so we cannot expect to cut ministerial pay too much....so that is how much "wisdom" in the boardroom is valued at these days.  PM Lee says they need to pay what looks like a hell lot of money to the "man on the street" to get capable people. 

After so much debate, the PAP govt still cannot get people to see their point of view. They still cannot get people to accept their arguments. But why should the people accept something they see as unjust and incorrect?

 "But my bigger concern is for the long term; for future Cabinets and potential office holders, people who have not yet come in, people who must make that decision and that commitment." - Lee Hsen Loong

I listened to all the PAP MPs arguments that their concern is for the country and that good salary is necessary to find good capable people. But all these arguments misses the central key issue in our society - that of high income inequality. You cannot justify such high salaries pegged to the highest income earners at a time when income gap is so large. Yes there a practical issues for the PAP because they cannot find dedicated people unless they pay out these skyhigh salaries. It also has an ideology unattractive to many capable people who don't anything to do with the PAP. But that is a problem the PAP created for itself by allowing the income gap to grow and the wages of a large segment of the populace to stagnate and fall. There is now growing evidence that influx foreign workers which the PAP euphemistically explains are here  to create jobs for Singaporeans has suppress the wages of many Singaporeams. The whole system needs remaking[Singapore Inc needs rethinking] and the inability of the PAP govt to set ministerial salaries at a level acceptable to the man on the street merely reflects urgent need for change in this country.

We shouldn't accept the principles laid out for ministerial pay when the issue of excessive executive compensation and low worker wages remain unresolved. These high ministerial salaries are linked to bigger problems in our society and the more the PAP MPs argue with passion in support of their own compensation, the less we feel they are able to solve the real problems faced by Singaporeans. We never hear them stand up to talk with the same passion about better compensation for workers - minimum wages, better work benefits, greater worker protection.

Tuesday, January 17, 2012

DPM Teo : Don't compare S’pore ministerial pay with other countries

In a country where so many citizens work full time jobs and cannot make ends meet, something has to be wrong when you need to pay the ministers the highest salaries in the world. You cannot understand the underlying problems unless you understand why this is so.

"He also explained that the option of benchmarking local ministers’ pay to that of foreign leaders was
rejected because salaries at foreign countries may not correlate to Singapore’s situation, and that it was more appropriate to peg ministerial salaries based on local factors." - Yahoo! News[
Link]

After the salary review, Singapore ministers are still paid the highest salaries in the world.  Teo Chee Hean tried to explain this:

"But Teo, who is also Coordinating Minister for National Security and Minister for Home Affairs, explained that salaries of foreign office-holders look smaller but exclude such perks or benefits that such leaders enjoy."

If you look at other developed countries, they too are very transparent about salaries and benefits. If they are getting anything they are not suppose to, their political adversaries and the independent media will be all over them. In fact the recent ministerial pay review reveal many things Singaporeans did not know about bonus, pension and benefits of our office holders. We should not be comparing ourselves with 3rd world leaders anymore where leaders do many things "under the table".

It is true the PAP govt cannot peg its ministers' salary to those of leaders in other countries but not for the reasons given by Teo Chee Hean. Singapore has a political economy and its scholarship system created a power elite structure from which the PAP has to recruit its ministers. We often hear our minister say they can get better pay "elsewhere" - this elsewhere is often a position in the GLCs, law firms or banks. You would think that years of investing in scholars and nurturing them would result in a sense of public duty and these people would like to "give back" to society but that has not happened. PM Lee has a difficult job persuading them to enter politics. Singapore faces numerous challenges and social issues yet he has a hard time finding capable people. A large number of these people don't want anything to with the PAP because they don't share its ideology and, until recently,  they won't join the opposition due to fear of political repression. The rest would rather build their careers in "cushy" high paying positions in GLCs away from public scrutiny.

Gerald Ee and his committee try to solve PM Lee's problem by not going too low on ministerial salaries. Ee said he went around asking his friends and they told "under 1 million, don't bother me".  The need to peg minister salaries to the top 1000 earners in a country with the biggest income gap among developed countries reflects the distortion in our society's wealth distribution. The imbalance needs to be fixed not mirrored. These high salaries along with corporate profits which are at historic highs as a percentage of GDP are build on top of low stagnant wages of the ordinary Singaporeans and the import of cheap labor from 3rd world countries that is pushing the bottom 20% of Singaporeans towards poverty.

We had good ministers in the past without having to push salaries to these astronomical levels.  We should be asking ourselves how even ended up with this problem and why 4 decades with the scholarship system in place and sending thousands of our best minds overseas to the best universities has resulted in a dearth of good dedicated political leadership willing to serve without such sky-high salaries. Our situation is different from other developed countries but not for the reasons cited by Teo Chee Hean. The real reason is the PAP system which has resulted in a political economy with extremely unequal distribution of wealth. Elitism and a sense of entitlement has crept in to public service and selected talents believe they deserve their millions as much as they believe the bottom 20% of our society deserve their slide down to poverty. The belief that these high salaries are fair is as distorted as our income distribution....you accept it and you accept the widening inequality in our society and leaders with this belief will never be able to hold our society together.

Saturday, January 07, 2012

My thoughts on the ministerial salary review



If you want to throw a spanner to this whole review, the question to ask is why we can't peg the pay of our political leaders to those of political leaders in other countries instead of the highest paid members of our society. Before you start asking the hard questions, I suggest you listen to Gerald Ee's explanation on how he and his team came up with the new pay structure. I think we should all thank Gerald Ee for taking up this unenviable task. Remember this is the same feller who was called up to take sort out the mess at the NKF. We have all done our national service but Gerald Ee has to do extended national service many times. A review like this will not yield recommendations that will satisfy everyone and exposes Gerald Ee and his team to criticism. How much we should pay a person in the absence of a free market mechanism for political leadership is highly subjective and depend very much on your own value system. Ultimately, the system has to work effectively to attract good honest people who will can secure future progress for Singapore to enhance the citizens' quality of life.  Progress means different things to different people and finding a set of perforamnce measures that is widely acceptable is not so easy. You can design a pay structure that looks fair and later on find out you cannot get good political talent.

What I want to do in this posting is not to go through all the findings of Gerald Ee's team but to look at the larger system in place. Why do we have to pay so much more to get good leaders? Are our leaders so much better? What is so unique about our system that leads to the current situation? Why are there so many SAF generals and rear admirals in the cabinet?

"When I made the decision to join politics in 2006, pay was not a key factor. Loss of privacy, public scrutiny on myself and my family and loss of personal time were. The disruption to my career was also an important consideration. I had some ground to believe that my family would not suffer a drastic change in the standard of living even though I experienced a drop in my income. So it is with this recent pay cut. If the balance is tilted further in the future, it will make it harder for any one considering political office" - Grace Fu on her Facebook

Grace Fu now says she was "mis-understood" but what she said is no different from what the PAP has told us in the past and what it believed or used to believe. One just has to look up old youtube videos on the ministerial pay debate [Link]to see that she is fully consistent.

How did we end up with such high pay for political office holders? The story begins many years ago.....

The war for talent which people talk in recent years began in very early in Singapore. The PAP govt  strongly believed in good leadership which in itself was not a bad thing. However, it also had this highly elitist belief that ordinary Singaporeans will go nowhere without the PAP and this belief amplified the importance of leadership over the contributions of ordinary citizens. While good leadership is important, believing that success is primarily or solely due this leadership is another matter. Today all East Asian countries have succeeded under various styles of leadership even thriving under bad leadership for certain periods - one just have to look at Taiwan, S. Korea, Hong Kong, Japan etc. This "without the PAP, Singapore would have failed" belief drives Singapore's early war for talent. To capture the best talents, the PAP govt expanded the scholarship scheme to harness talent signing up the best "A" level students - not just the president and SAF scholarships but a long list of scholarships from PSC, various GLCs and stat boards. 30 years ago,  ordinary Singaporeans couldn't afford to send their children overseas and these scholarships were the only way to get an education at top overseas universities. You take a quick look at the ministers who were scholars, top civil servants....even Straits Times reporters like Chua Mui Hoong, former Straits Times editor Han Fook Kwang, ...even the opposition now has ex-govt scholars ... Tan Jee Say, Hazel Poa, Benjamin Pwee. This system was already extensive decades ago but when Singapore became more affluent, the PAP govt expanded the war on talent by giving scholarship to foreigners. It even had civil servants going to China to get the best students to come here. With so much emphasis on getting top talent, getting the best, nurturing them and allocating resources and opportunity to selected talents, you would think that Singapore would be running circles around our competitors - but we have not, we grow by importing labor, having casinos ....our productivity has been falling , we appear to be less innovative than most developed countries, we seem to have fewer home grown industries per capita than our competitors.....what has gone wrong?

Along side this "talent war" was the growth of an extensive network of GLCs that own businesses ranging from supermarkets to transport services. Think about where you buy your groceries, where you do your banking, who owns the shopping mall next to your home, who owns the airline you take to go overseas, ...the taxi you take to the airport, the newspaper you read, the cable service you subscribe to, your telephone service, your power supply, your gas, your water supply....and so on. If you tabulate your family expenses, you will find the amount that goes to these companies is not small because the GLCs form a large part of our economy and many are monopolistic rent-earning businesses with little competition and/or had benefited from access to vast state resources. These GLCs crowds out local private enterprises and cut off market-based paths of upward social mobility.

There is spectacular social mobility for our elites in this system:

"My mom is a machine operator" - Chan Chun Sing., 1988

Minister Chan's humble background probably account for his folksy ("kee chiu") style. Recently, the Straits Times featured him as one of those with the potential to be our next Prime Minister[Faces of 2012: Chan Chun Sing - Next PM?]. There are many examples of such cases of social mobility among the selected elites. Their own success reinforces their belief  that the "meritocratic" system and PAP ideology is the best for Singapore. That is why the PAP recruits from this power-elite structure - this is where they find people loyal to their system. If you look through the list of ministers, most,  if not all, are recruited from GLCs, SAF, stat boards or the civil service. The reason why they have to be so highly paid is there are many opportunities in the network that are more financial rewarding and possibly more "cushy" than political appointments. For instance,  Chan's fellow general in the SAF, Ng Yat Chung, transited to a newly created Temasek Holdings position ("portfolio management managing director") and he will leave Temasek this year to take up a CEO position at another GLC, NOL. Yes, our SAF generals are highly capable and can move one industry to another easily without any prior experience. So one cannot fault Chan Chun Sing for feeling he is making a sacrifice when he takes up a political position as minister of MCYS putting himself under the scrutiny of the public. Similarly, PM Lee has had a much tougher job than his brother, a former SAF scholar-general who became the CEO of SingTel.  I'm sure many ex-SAF generals would rather take up a post in Singapore Power, ST Electronics or one of the many GLCs than be in poltics.

Cutting the high pay to "less high" is necessary to placate an increasingly angry public. The anger is at a level that hinders the PAP govt ability to lead.  However, reviewing the high pay without looking at the whole system that drives the demand for high pay misses the big elephant in the room. Although it is always true that good leadership can elevate a country and make life better for everyone, the PAP has pushed the idea of grooming and nurturing selected talent to a detrimental extreme. Allocating  disproportionate state resources and opportunities to a group of selected elites puts them on a virtuous cycle of upward social mobility at the expense of everyone else in the society. The close link between the ruling party and this network of businesses that form our GLCs and the PAP's links to the civil service & SAF has resulted in interests that diverged from those of ordinary Singaporeans. That our political leaders' salaries are not peg similarly to the political leaders of other developed countries, is the result of this skewed system... the basic architecture of which has to changed for Singapore to progress. For those who still argue that this system is good for everyone, the decades of talent war and talent grooming of scholar-elite should have elevated the quality of life of ordinary Singaporeans to superior levels not seen anywhere else in the world since no other country practises this extreme form of elitism....but that has not happened and for many ordinary Singaporeans quality of life has fallen. Today we see the best quality of life for ordinary people in egalitarian societies such as Finland which is also the most competitive economy in the world[Egalitarian Finland most competitive, too]....over there, the govt does the opposite and allocates the most resources to the weakest members of society to build a cohesive society the strength of which is the ability to compete as a team. Singapore has to find a new system structure for future success because we are starting to see the cracks in the current system and outcomes that are increasingly unacceptable to a growing number of ordinary Singaporeans.

Wednesday, January 04, 2012

Malaysia implements free outpatient care for seniors....

Read this scoop from TRE.

Seniors referring to those who are above 60. For a long time, they charged a token amount of RM$1 but that has eliminated for the new year.

One should always be wary of free health care as it tends to lead to long waits and rationing at govt clinics. Having said that, our polyclinics which are supposed to be subsidized but are more expensive than many private clinics in Malaysia also have long waiting times.

"The circular, issued by ministry's finance division secretary Wong Foong Lai, stated that the exemption was in appreciation of the contributions made by senior citizens." - The Star

In Singapore, most seniors above 60 are expected to work - following the  Retirement Age Amendment Bill passed early last year, they can only have access to the bulk of their own CPF after they reach age 65. There are however one group of people with pensions and free medical care - our ministers and top civil servants. These people are also the ones who earn so much money they don't really need these schemes.

Singaporeans are always leery about such schemes implemented in Malaysia. Quality of care, for example, is an issue. However, for the many seniors whose ailments are common like high blood pressure, gout, arthritis, the access to free medication will relieve their financial burden. The PAP govt still makes the sick pay GST. They also collect GST on the amount you pay for medical insurance[Link]. The Singapore govt expenditure on health care is the lowest among developed countries as a percentage of GDP. This is not achieved by being cost-effective or efficient but by passing the rising cost of medical care to the sick and their family members. Not having a universal health care system in which everyone is covered and can go to hospital for treatment without family members having sleepless nights worrying about medical bills amplifies the effects of income inequality in a society with the largest income gap among developed countries.

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Free outpatient treatment for senior citizens at govt hospitals and clinics[Link]

By LIM WEY WEN wwen@thestar.com.my


Effective yesterday, the Government abolished the token RM1 payment senior citizens needed to pay each time they sought such treatment.

The Health Ministry announced in its latest circular that patients aged 60 and above would be exempted from making any payment for outpatient treatment at government hospitals and clinics.
This means that these patients will enjoy medical consultation, check-ups and medication at no charge at all.

The circular, issued by ministry's finance division secretary Wong Foong Lai, stated that the exemption was in appreciation of the contributions made by senior citizens.
Senior citizens would only have to pay a nominal fee if they required specialist care, treatment or hospitalisation.

Civil service retirees under the Employees Provident Fund pension scheme already enjoy free medical facilities at government medical establishments.
Health director-general Datuk Seri Dr Hasan Abdul Rahman said yesterday many senior citizens had chronic diseases that required regular hospital visits.

“If a senior citizen needs to see his doctor once a month or fortnightly, he could still make some savings. We must also bear in mind that X-rays, medication and several tests are already provided free for them,'' he told The Star.

Asked whether the ministry was considering a blanket waiver of hospital fees for the elderly, Dr Hasan said those who could not afford the hospital fees were already eligible for free medical care.
He said the latest exemption could cost the ministry an estimated RM2mil in revenue annually.
“Government hospitals and clinics receive an average of 40 million visits from patients every year and about 5% of these comprise senior citizens,'' he added.

Fomca president Datuk N. Marimuthu welcomed the Government's latest initiative.
Society of Active Generation of Elders (Sage) president Chin Sek Ham, 71, said the body had called for the RM1 exemption a long time ago.

According to the latest census report (2010), 1.5 million Malaysians (5.1% of the population) are over the age of 65.

Sunday, January 01, 2012

2011 : A year of awakening....

I spent some time to look through my own postings on the SMRT and what my fellow netizens have said about the SMRT. More than 5 years ago people have discussed the deteriorating service quality and how the tension between the need for SMRT to generate profits for shareholders and meet rising demand from a growing population would lead a serious trade off in service quality. 2 weeks ago, when the trains broke down, many quickly understood the flaws of the current system.

Similarly, the problems with the GRC system has been discussed for many years - how such a system  allows new candidates to ride on the coat-tails of established ministers will not result in voters having the best people to represent them. In the 2011 elections, the flaws of the GRC system was clearly demonstrated when the PAP can't get its own foreign minister back into parliament while Tin Peh Ling rode on the coat-tails of ex-SM Goh Chok Tong into parliament. It remains to be seen whether the PAP govt wants to keep the GRC system. Without GRCs, new candidates will have to work the ground long before the elections to win support and trust. The public has already realised the flaws in the GRC system and most people, I believe, do not want it.

For the past 5 years, this blog discussed the rising income inequality in Singapore and around the world  2011 was the 'tipping point' that saw protests around the world against economic inequality. The Occupy movement that started in 2011 has not ended. In Singapore, there was much anger among voters surrounding this issue and the rising cost of living. While the Occupy movement did not spread to Singapore in the form of protests due to our political climate, income inequality continues to be a serious unresolved problem in Singapore.
Malaysia took a bold step to eliminate the ISA in 2011 as part of its political advancement towards greater democracy. It is hard to believe that Singapore was once among the most democratic nations in Asia where the rule of strongmen, military juntas etc was common. Today, the political progress in S. Korea, Thailand and our closest neighbor has left us far behind the curve. Why does one the most well-educated, well travelled and best behaved citizens anywhere in the world not deserve greater freedom , rights and democracy? Our men, committed to defend this country, deserve less rights than people in Taiwan, S. Korea and Malaysia?

2012 will be a critical year for the world as a number of serious political and economic problems have surfaced. The eurozone crisis remains unresolved and mis-steps can lead to negative implications for the rest of the world. Inflation remains high in Singapore even as our economy begins to slow. The US presidential elections will be conducted on 6 Nov 2012 and we cannot be sure it will be Obama as his popularity has suffered due to the economic conditions in USA. The global economy with the huge imbalances i.e. high debt, high income inequality may just crack leading to some serious economic pain but that will pave the way for change towards a more sustainable system. In Singapore, we have been put on this economic threadmill of GDP growth that no longer produce better quality of life as Singaporeans work longer hours,  experience sharp rise in cost of living and have less ability to save for a proper retirement.


Going forward, Singapore needs to raise its productivity level instead of depending on cheap imported labor to spur economic growth. Singaporeans are now well aware that expanding the labor input to achieve GDP growth will not deliver a better quality of life but has numerous deleterious effects of widening income inequality, overcrowding, rising cost of living, structural unemployment etc.  To make our economic growth more sustainable and to produce better outcomes for Singaporeans, our economy has to be restructured in the coming years.

2011 was a year when many Singaporeans were politically awakened to see that change is badly needed in our country. Many of the negative effects of PAP policies were felt  by ordinary citizens and social contract  under which Singaporeans gave up certain civil liberties in return for prosperity was broken. Ordinary Singaporeans today know they cannot simply trust a power-elite with diverse interests in businesses linked to it to undertake policies that will generate the best outcome for them and their families. A strong political alternative capable of taking on a larger role and an active citizenry with access to information can serve as checks on the govt. New emerging tools such as Facebook, blogs, internet forums and YouTube will help to overcome one-sided propaganda disseminated by state controlled media to allow citizens to aware of the change needed in this country.