Singapore is confronting the perils of please-all economics.

Came across this thoughtful piece by Andy Mukherjee over the weekend. It explains clearly the issues and trade-offs Singapore faces in building our ideal society, while ensuring that Singaporeans have jobs and economic opportunities to build better lives and a brighter future.

As the article points out, we do enjoy important advantages compared to other countries, but it will still not be easy. There are serious trade-offs, which we must be willing to acknowledge and address. If we just pretend that everything can be better, and no hard choices are necessary, we will get into trouble. Mukherjee calls this “please-all economics”, and expresses confidence that Singaporeans are too pragmatic to fall for it. We must make sure that he is right. – LHL

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The perils of please-all economics

Source link – > The perils of please-all economics
Published on Jun 14, 2014 7:39 AM,  By Andy Mukherjee

Singapore is confronting the perils of please-all economics. Ageing citizens are pushing the Government for bigger nest eggs and more subsidised health care and housing. There is also popular resentment against letting more foreigners in, and not much appetite for increasing the 7 per cent consumption tax. Squaring this fiscal circle will be a long-term challenge.

Already, there’s simmering anger in the city-state about overcrowded trains and costly public housing. About 2,000 people gathered recently to demand that the state-run retirement plan raise its 4 per cent annual interest rate.

People protested last year, too, when the Government unveiled a plan to boost the resident population by 30 per cent to 6.9 million by 2030, with immigration compensating for a drooping birth rate.

The multifaceted discontent puts Singapore’s fiscally conservative Government in a quandary.

Expanding the economy – and the tax base – with less foreign labour will mean improving the productivity of the local workforce. That’s a long shot.

Another way to pay for everything people want is to tax companies more heavily. But Singapore’s business costs are already quite high. A third strategy could be for the city-state to try to earn more on its substantial sovereign wealth by buying riskier assets. That could backfire, leaving less money for welfare.

Alternatively, the Government could skimp on investing. The outlay on the city’s development budget in the most recent five- year period has jumped by a third.

Slowing the pace might be a mistake, however. Pricey real estate would swoon if Singapore loses its urban buzz and stops attracting investors and tourists. That will make Singapore’s property- loving citizens less wealthy and more miserable. The trade-offs are difficult.But Singapore has some advantages.

Rival Hong Kong is facing an existential threat as China tightens its grip on the former British colony and boosts alternatives like Shanghai. By contrast, Singapore offers investors proximity to India and Indonesia, neither of which will boast a global city soon.

For all the grumbling, the majority of Singaporeans are too pragmatic to opt for unbridled welfarism at the next elections, which will take place by 2016.

Still, please-all economics is scratching at the door. If it finds a way in, prosperity could be in jeopardy.

Andy Mukherjee is a columnist with Reuters BreakingViews.

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Overheard:

  • Sadly, many Singaporeans have lost their sense of pragmatism, overhlemed by deceit and emotionalism- want 1st world perks but only willingly to pay 3rd world rates. Most times, anti – government commentators have no real feel of the challenges confronting Singapore at the global and regional arenas.

    Well, PAP had made policy mistakes , and will continue to do so in the years to come since no man is perfect ; thus its system. However, what is important is that mistakes were acknowledged and rectification measures taken. some cried : ‘ Vote out PAP is 2016 ‘. Seriously, given our limited local talent pool, are there alternatives? I cannot fathom WP, or a coalition of opposition parties as the next government. It will potentially be a disaster given what I have seen and hear in parliament and at the Speakers’ corner .

    Unfortunately, it may take a crisis for Singaporeans to realise the importance of good governance albeit long term damage which we may not be able to recover. This is the price of absurdity and lack of wisdom…….

  • As a Malaysian Chinese, we are constantly reminded that we are migrants, even though our forefathers are born here. Then we have politicians who will scream on front page newspapers asking us to leave, then we have to sell land, sell house so that we can provide education for our children as local university has no placing for them, believe me, I could go on. It saddens me thoroughly, when I think about all these and wonder when all these tortures going to end for all of us. As such, I sold all I’ve worked hard for, to try my luck in my current place, hoping that this place will be a home for my family. Following all these posting by your PM, if I’m a Singaporean, I’ll honour the ground that he and his team walks on. Definitely there’s no pleasing everyone, for me, all I’ve seen is good enough to earned my highest respect. I believed, God didn’t create the perfect human, if their good is more, then I’ll say, that’s a good human.
  • The past generation leaders has it easier when the people rally behind them are united and not split, maybe partly because of the hard line approve that the then Gov took but it works to unite the people and move forward. Now is very different, citizen are divided across political line and no matter how strong or good is the leader, it does not matter anymore. People on either camp are setting up to oppose one another, this will be the demise of our country if people are not united with the Gov of the day and adopting the idea of the next one will always be better. This start the revolving door of leadership that lead to instability.
  • it remains vital to separate important must do’s from selfish and emotional outbursts, stoked largely by the clueless opposition. The intelligent know that PAP does a wonderful job, seeing the larger and long term picture, and doing the best always for its citizens. You will never please all the people all of the time, there will always be noise, and when that is non accusatory without foundation, then it can become an interesting discussion topic. When it is merely baseless innuendo, need it needs to be stamped out, as it is simply not constructive or at all value adding. Keep on going PAP, you are doing the right things, and you will be recognized for that always.
  • Mr Lee, I think the majority of Singaporeans are well educated and they understand it is difficult to please all. What most people are hinging on is the transparency of the investments made by the government which pledges on democracy. Sure, we understand that the government is trying their best. But the important thing is not to identify wrongly the purpose of the noises.
  • I remember having cake on national day and many biscuit after we draw pic when I was in primary school. One things we feel sad that sometimes Singaporean bully our own people and we dunno what to feel. We never give face to our own citizen.
  • PM, in the next 10 years, leaders like you and the cabinet leaders need to engage the population more. Tell us bluntly that if we want this, we cannot have that and vice versa, just like you telling us medisave life have to increase premiums. Continue the honest conversation with us. Thank you!
  • Sir, please put the tradeoffs in the starkest possible way in your Facebook so that we’ll realize the choices we face and not be so ready to listen to irresponsible bloggers who cast things in terms of conspiracy theories and say there’s one simple solution.

    Conspiracy theories are emotionally appealling but they don’t solve problems, and life won’t get better but worse.

  • The trade-offs that Singaporeans need to make are not just internal issues like CPF or health-care but also external threats like those from the Iskandar region.

    With Singapore’s ageing population, and with the TFR refusing to go up despite the govt trying for a few years with incentives, etc, we are not well-positioned to ward off the ‘clear and present’ danger that the rising and looming Iskandar poses to Singapore in terms of attracting away investments and talents to the north!

    They are asking for a third link bridge ‘friendship’ bridge, more high-speed rail-link, MRTs, etc, connections to JB Iskandar so that this siphoning can proceed faster.

    They are building INSTANT Medical hub, INSTANT Logistics Hub, INSTANT Education Hub, INSTANT Biotech Hub, INSTANT CyberHub, INSTANT Financial Hub, etc, just next to Singapore to compete directly with Singapore after they failed with their Port Klang container port. They are launching their attack on a much wider scale now and it’s a matter of time (20-50 years) before they are as good or if not even better than Singapore in all these areas.

    Iskandar is aggressively pulling investors as well as foreign talents to their huge and vast empty land to compete with Singapore and if Singapore doesn’t similarly do so(getting a booster jab of foreign talents), we may lose out to them.

    If Singapore don’t buck up and leap-frog them quickly, Singapore may be left on the shelves! And Singaporeans may in the future have to travel across the causeway to work instead of the other way round currently!

    These are some of the trade-off Singapore and Singaporeans have to make!

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