They appeared at http://veritas-lux.blogspot.sg/2013/03/social-darwinism-taking-its-toll-on.html. Thank SG Daily’s Facebook for drawing my attention to them.
They appeared at http://veritas-lux.blogspot.sg/2013/03/social-darwinism-taking-its-toll-on.html. Thank SG Daily’s Facebook for drawing my attention to them.
This chart shows all the economies that maintained 6% growth or faster over 30 years. S’pore’s run of 7ish% growthended in 1994, when GCT was PM and Lee Jnr was Deputy PM and in charge of the economy. Going by the things our PM is doing now, maybe GCT held him back? Or LHL has repented? And the changes he is initiating, is his way of saying, “Sorry”?. How about a claw-back of ministerial salaries? Esp of PM’sand DPM’s? If it happens to bankers, it can happen to ministers: after all ministers’ salaries pegged to bankers among others.
As usual the grumblers are out on TRE, TOC and Facebook. The question they are bitching out loud is, “Why is the govt spending our money on subsidising wage increases?”. And asking, “What about introducing a Minimum Wage?”
I’ve this fantasy that when the govt introduces a Minimum Wage scheme, these same people who say that this scheme is bad for S’pore: which it is*.
Coming back to subsidised pay rises, other than to win votes from the many S’poreans who don’t belong to Team “Govt, PAP are bastards” or “PAP govt is always wrong” or “We always bitch against the PAP, govt”, there is a good economic reason for the govt subsidising wage rises.
Rising wages give employers an incentive to increase the return to recruiting and training, if they can no longer bring in FTs by the cattle-truck load to off-set rising wages for locals. At the same time, rising wages make it more attractive for older S’poreans to look for work, rather than go online and complain about everything, while making it more attractive for employers to drop their prejudices and discrimination against the elderly.
(Having said all that, there is an educated oldie at the Marine Parade polyclinic that I wish wasn’t working there.)
And given that the SMEs are screaming that the govt is killing them by cutting off the supply of FTS, how else to give S’poreans a wage rise, on top of CPF employer rate rises.
And better to spend our money on fellow S’poreans rather than giving it to our SWFs who will spend some of it on ang moh investment bankers who bring them lousy deals.
Post on Workfare: http://atans1.wordpress.com/2010/10/13/minimum-wages-missing-the-point/
*I wish all those MPs who talked cock about a Minimum Wage would read http://www.economist.com/blogs/democracyinamerica/2013/02/minimum-wage and I’m shocked that the PAP didn’t ensure that its MPs understood elementary economics. (BTW, the piece is entitled “The minimum wage- The law of demand is a bummer”)
Most relevant excerpt: There are conditions under which raising the minimum wage will increase demand, as well as economic efficiency. According to one story, monopsony conditions for low-wage labour, ie, imperfectly competitive labour-market conditions in which there is but a single buyer of low-wage labour (or a colluding band of buyers) that is able to set wages at a level workers have little choice but to accept. Good old Econ 101 shows that under such conditions, a bump in the minimum wage, within a certain range, can boost employment and enhance efficiency. So there’s that. And such conditions no doubt exist in some sectors at some places at some times. One famous, and egregiously misused, study suggests that monopsony-like conditions applied to fast-food restaurants in Pennsylvania and New Jersey in the mid-1990s. But there is basically no reason whatsoever to think that such conditions apply generally, across all sector and regions of the American labour market.
In the absence of special conditions, we have every reason to expect the law of demand to hold, such that raising the minimum wage will make it harder for inexperienced workers—workers whose output is worth less to employers than the mandated wage, and especially teenagers from low-income families looking to get a first footing in the labour market—to find work. And this is, in fact, what empirical studies tend to conclude. A comprehensive 2008 survey of the empirical literature from David Neumark, a professor of economics at the University of California, Irvine, and William Wascher, an economist for the Federal Reserve, found that, as one would expect, “[M]inimum wages reduce employment opportunities for less-skilled workers, especially those who are most directly affected by the minimum wage.”
Again, it doesn’t have to work this way. Employers can cut hours rather than hiring fewer workers. They can turn down the air-conditioner, strictly police the length of breaks, and otherwise reduce the cost of amenities previously enjoyed by employees. They can shift to off-the-books employees willing to work for less than the legally-mandated minimum. They can raise prices, passing on increased labour costs to consumers. It’s conceivable that the only consequence would be that a larger share of profits gets distributed to low-wage workers. Conceivable and exceedingly unlikely. In reality, we probably get small adjustments along each of these dimensions.
And Western countries on how to create the conditions to optimise the working environment for an older work force. http://www.bbc.co.uk/news/business-21535772
According to ST editor Han Fook Kwang in his weekly SunT column (pg 37) “it isn’t possible for ordinary Singaporeans to absorb and fully understand all the arguments and implications. arguments and implications highlighted in the Population White Paper”. Hence our opposition. Hello Mr Han, so how come four leading S’porean economists, scholars all wrote this http://www.tremeritus.com/2013/02/09/economics-myths-in-the-great-population-debate/ (I’m linking to this republishing ’cause of the comments section)
So these four are daft too?
He was riffing on what the PM said, “Govt could have presented Population White Paper better”. And going further anddaring to call us openly what PM didn’t dare?
So how come,
– the Chief Communications Officer of the govt, s/o the former disgraced president,
– an unemployed MP who was the head of the regional business of an int’l PR firm,
– the editorial teams at SPH and MediaCorp,
– CoC Yaacob and his team at the Ministry of Truth & Spin, and
– the numerous PR senior managers in the govt and its agencies,
didn’t advise the PM and DPM Teo to take account of our daftness when presenting the PWP?
They too out of touch with us daftees? Or they dafter than us? Or did PM and DPM Teo ignore their advice? Hence they more dafter than everyone else in S’pore.
The ST Managing Editor, as a member of the Dark Side, should be using his skills to prevent us from thinking? Not provoking us to think “unhealthy”, non-constructive tots: like there are daft Men In White on the Dark Side.
So we now know that the 6.9m figure in the White Paper is a “worse-case scenario”
– “Reiterating that the 6.9 million figure should be viewed as “the worst-case scenario”****, Mr Khaw wrote: “We hope we do not reach that figure; we may never reach that figure.”
–” Prime Minister Lee Hsien Loong said … he fully agrees with Mr Khaw’s explanation that a 6.9 million population is not a target, but just a worst-case, aggressive scenario the Government must prepare for.”
(Excerpts from MediaCorp)
So why didn’t the media tell us this when the media reported the White Paper? The media reported the figure of 6.9m as though it was set in reinforced concrete that had platinum bars rather than steel bars. Surely when the staff of the s/o the disgraced president, and Yaacob*gave
the local media their instructions local journalists and editors the customary briefing, they made it clear that the 6.9m figure is a “worse-case scenario”? And that the figure was used to ensure that there would be adequate infrastructure should this happen, which the government didn’t want to happen. And that if it didn’t happen, S’poreans would have even better facilities for which they should thank the PAP on bended knees.
But these messages were never reported. They came to the attention of “the inhabitants of cowboy towns” who were happily shooting holes into the White Paper, and other S’poreans only when the PM Facebooked and Khaw blogged these messages.
Then the local media
parroted reported what the PM and Khaw had said.
Either the local media are staffed by stupid people, or are full of subversives, who take their 30 pieces of silver ** while saboing the PAP government. Or maybe the going rate is a lot more than 30 pieces of silver? And they are not getting it? Hence the government’s messages didn’t get broadcasted.
Or were the minions of s/o Devan Nair, and Yaacob, incompetent, stupid spinners? Journalists and editors are claiming that they were never
ordered briefed that the 6.9m figure was a “worse-case scenario”. They claim to be as surprised as us netizens that the PM and Khaw are now making this claim.
Whatever it is, if WP Low is to get his wish of continued PAP hegemony, PM should get a grip on the PAP spin machine. He and his ministers can’t do all the spinning themselves. Maybe Auntie Sylvia or Show Mao, in emulation of a Tang dynasty official, can whisper this to the PAP, “behind closed doors”. Remember WP, yr mission is to preserve PAP hegemony.
**He used the phrase “worse-case scenario” when one LKY gave his Hard Truth on Malay Muslims not integrating.
In “Planet of Cities”, by Shlomo Angel*, a professor of urban planning at New York University, argues that cities must prepare themselves for rapid growth, citing New York and Barcelona: In the 19th century both cities decided to prepare themselves for rapid growth. In 1811 New York’s city council approved a plan which allowed all of Manhattan to be built up and included the island’s now famous street grid. In 1859 Barcelona followed suit with a similar concept to expand the city nine-fold.
Err PM not planning to increase the population that much.
And on why working-age population matters:
Netizens, pls realise that the intellectual underpinnings are there for the White Paper. It’s the conventional wisdom. Raving, ranting and screaming will do no good.
Nothing will, not even the ballot box: “A vote for the WP is a vote for the continuance of PAP policies” says WP Low. So lie back and enjoy being raped. Think of the value of your property when you cash out and move on overseas.
And wonder if the SME financing target mentioned in this BT report from sometime in the middle of 2012, was met. As not heard any more, I suspect not.
UP to $175 million of the $250 million the government has earmarked for investment in small- and medium-sized enterprises under the first phase of its public-private co-investment funding programme for local SMEs will be seeded with private equity funds by year-end.
The programme includes a fund-of-funds called the SME Catalyst Fund, which the $175 million investment falls under, and a direct co-investment fund called the SME Co-Investment Fund.
This means that some $350 million will be placed with the PE funds by the end of this year for investment in SMEs, as the private sector has to match dollar-for-dollar what the government is putting with the PE funds.
The $350 million is part of the first phase of the co-investment fund that is expected to come up to $500 million – $250 million from the government, and the other half from private sector capital.
As to whether the White paper on population reflects a U-turn on the policy of starving SMEs of cheap FTs, only time will tell. Watch and wait. Remember the WP was bitching in parly about the shortage of labour among SMEs. Chinese-owned SMEs fund the WP.
“Do you want faster growth or do you want fewer foreign workers? Do you want more hard work or more leisure? Do you want more competitive schools and good results and good futures, or more relaxed schools and fall behind? How can we find that balance in between?” the Prime Minister asked. Whatever the hurdles, he emphasised that the PAP had always been open with Singaporeans, even when these trade-offs may be unpopular – SPH.
I got two gripes with the above remarks by PM.
Firstly, as usual he is framing* the issues in such a way so as to try to get us to answer the way he wants us to answer them. Dad used to do this successfully when we didn’t have the best education system in the world, when issues were less complicated, and when there wasn’t the internet. But times have changed, but PM hasn’t shaken off daddy’s influence.
– “Do you want faster growth or do you want fewer foreign workers?” Well how about asking, “How can we have faster growth without FTs? Can we substitute robots, or pay higher wages?” And more fundamentally what about, “Do we need faster growth? What about better quality growth?”
– “Do you want more hard work or more leisure?” What about asking,”Can we work smarter to have more leisure?” Or more fundamentally, “Are we working smart? Or are we working harder because we are not working smart?”
– “Do you want more competitive schools and good results and good futures, or more relaxed schools and fall behind?” Shouldn’t we be asking, “Are there other ways of educating S’poreans that ensure national prosperity and self-development?”
Now the answers to these alternative questions may well be those that the PM thinks are the solutions to the problems that we face. Fair enough, then. But let’s ask alternative questions, think thru the answers, and also think blue sky. The great and the good don’t always have the answers. Even Bill Gates got Google wrong, badly wrong http://dealbook.nytimes.com/2013/01/21/prophesies-made-in-davos-dont-always-come-true/
And lest the PM forget, the PAP has not always been open with us.
The FTs came pouring in on the quiet. The government was not open on this issue, public housing and transport, and inflation.
Mah Bow Tan was telling us that his HDB building programme was sufficient when S’poreans were saying it was insufficient. Well fact that Khaw has accelerated and expanded the building programme shows that Mah was wrong, if not in denial.
And remember Raymond Lim said GST had to rise when we bitched about overcrowded trainds and buses: he implied that we juz wanted more comfort and so should pay for it. He was wrong or in denial about the problem. Well the massive spending plans, shows that we were right to get upset.
And inflation. I’ve gone on and on about Tharman and Hng Kiang saying that higher inflation doesn’t affect S’poreans who don’t buy cars. That is obfuscation, not openness.
But never mind, the PAP can remain complacent because Low has publicly implied that a vote for the WP is a vote for continued PAP rule.
Not that I’ll complain too much. The low-tax environment and the emphasis on making sure property prices “cheong all the way” have allowed me to stop working in my 40s. And have the time to think; and grumble, constructively, I hope.
And oh, keep on spending our money on ourselves. And double it, or triple it. Better return on investment for the PAP, then letting Temasek lose it like in here http://www.breakingviews.com/tpg-runs-rings-around-li-ning-shareholders/21064940.article. And anyway, , potential returns for investors are not going to be that great anyway http://www.economist.com/blogs/buttonwood/2013/01/investing. So it’s a better investment for us and the PAP: make life more comfortable for us using our money.
*Read this on the science of framing questions, to get the “right” answers http://www.bbc.co.uk/news/uk-scotland-20512743
Updated to include links to analysis of the White Paper on FT growth released on 29 January 2013)
There is a a demographic cliff ahead: even for China
Chinese statisticians are screaming about it: In the past the NBS has counted anyone between 15 and 64 years old as of working age. That age range is consistent with international convention and China’s own statistical yearbook. But in announcing the decline last week, the NBS adopted a narrower definition: 15- to 59-year-olds. By doing so, it drew early attention to a demographic downturn that will soon apply to 15- to 64-year-olds and to the population as a whole. Ma Jiantang, head of the NBS, said he did not want the population data to be “drowned in a sea of figures” released at the same time.
Sadly, the PAP is no longer believed because its habit of prophesying doom and gloom went too far. Biy like boy who called “Wolf”, too often.
TRE readers are forever screaming that the PAP govt wants to swamp S’pore with citizens born overseas. They might like to know that in 1959, according to the u/m book, only 270,00 out of the 600,000 voters were born here. If TRE readers are correct, the PAP is only restoring things to as they were when the PAP came into power. Is that so wrong? LOL.
Interestingly the author reported that when one LKY revealed the above fact in 1959, LKY also said,”we must go about our task (of building up a nation) with urgency … of integrating our people now and quickly”. Maybe he repented building up a nation?
Singapore Correspondent. Political Dispatches from Singapore (1958-1962)(http://artsonline.monash.edu.au/mai/new-book-singapore-correspondent/) by Leon Comber*
Publisher: Marshall Cavendish International Asia
“Singapore Correspondent” covers five years of Singapore’s colourful political past – a period of living turbulently and sometimes dangerously. It is a collection of eye-witness dispatches, sent from Singapore to London, spanning a time when Singapore was emerging from British colonial rule and moving forward to self-government and independence. Many of the early struggles of the People’s Action Party (PAP) are described as the focus is on the political struggle taking place in which the PAP played a major part. Many important events which have long been forgotten are brought to life. These dispatches prove that political history need not be dull, and indeed can sometimes be entertaining and lively.* MAI Adjunct Research Fellow
OK, OK, I exaggerate: only 8% more of population if S’poreans don’t start breeding like rabbits.
DBS Vickers expects an upcoming white paper on Singapore’s population to raise its population target to 7 million from 6.5 million, which will benefit construction, land transport, property and healthcare companies. http://www.reuters.com/article/2013/01/18/markets-singapore-stocksnews-population-idUSL4N0AN3GR20130118
SMRT is not on the “buy” list. It too has concerns about SMRT, like me and many others.
Every time, COE prices rise, there is sure to be a rant from Ravi the NSP member that will appear on my FB wall that “Shumething must be done”.
But what should be done? Our mega-millionaire ministers and civil servants only mutter about tinkering with the COE system. They can afford the COEs, after all.
As to the impact on inflation and economy generally, DPM and finance minister, and trade minister say,”No sweat, if not planning to buy vehicle”. Err vehicles also used to transport goods and dispatch service workers: when I got a PC issue, I don’t expect IT techie to walk or take the bus.
San Francisco is trying out car-sharing using Beemers.
With a large and growing number of people here choosing not to own a car, German manufacturer BMW has decided to branch out into car-sharing services with a fleet of 70 cars spread around the city – initially in 14 locations, with a further 100 being added gradually …
– If drivers share rather than own cars, the overall number of vehicles in the city is reduced. Each car in a car sharing scheme results in 10 cars leaving the street, according to consultants Frost & Sullivan.
— Shared cars that are actively used most of the day do not clog up parking places while on the move.
Here is urban planning experimentation at its best.
No free market mantras or rants. Be constructive.
Well OK, “mini stagflation”, though I’m sure in other countries, the word “mini” would be omitted. But there is the ISA here, while cynical me knows that all investment banks are hungry for biz from Temasek and GIC.
Singapore is experiencing “mini stagflation”, as its inflation is likely to remain high for structural reasons even as growth stays weak this year, said Kelvin Tay, UBS regional chief investment officer, Southern Asia Pacific, at a seminar on Friday.
The restructuring of the economy, shifting from indiscriminate growth to the quality of growth, means lower growth and high inflation. It’s a structural problem, “Singapore is suffering more from structural inflation.” He was speaking at a business outlook forum organised by the Singapore Chinese Chamber of Commerce and Industry and SPH.
Even though the headline inflation rate may subside, as it did in November on high-base effects (this is a highly technical reason, that doesn’t have real world effects on us consumers), higher labour costs due to tighter foreign labour policies and efforts to boost low-wage workers’ salaries will continue to push prices up. Profit margins will also be squeezed further as businesses (esp SMEs) are forced to invest to raise their productivity.
And he thinks cost increases are likely to be be passed on: not shumething that is likely to please consumers, who are suffering from higher COEs, and property prices, and real wages that are stagnating. PAP govt will not be too happy too with stagflation, as grumbles grow during NatCon.
And it’s not because of the polar bears, or Santa and his elves (FTs?) or reindeer.
It’s the new sea route: the NE passage. It’s nothing for the “We love to rubbish S’pore” readers of TRE and TOC to get worked up about. Very few ships use this route (I think 40 this year). And while this number will increase, most ships will sail the traditional route via the Malacca Straits. For one, ships have to be specially built for this route. First gas tanker crosses the Arctic to Japan.
Given that Christmas is the season of goodwill to all men (including the PAPpies) and given that the PAP has had a torrid time, and given that Fabrications about the PAP is not doing its job, I tot I should post some facts and analysis (not Hard Truths) that support a policy that has pushy parents and netizens upset.
Sometime back, when
– PM said the desire for “personal growth” 9i.e. a university degree has to be balanced with jobs; and
– the education minister said that while the govt would increase the number of places in local universities for locals, there would be a limit (I think he said 40% of some “mark”),
both were given a hard time by netizens and pushy parents.
I was reminded of the above recently, when I surfed across a few articles recently that discussed the skills needed to get jobs in a developed economies.
In a McKinsey survey of Western countries, nearly 70% of employers blamed inadequate training for the shortfall in skilled workers, yet 70% of education-providers believe they suitably prepare graduates for the jobs market. Similarly, employers complain that less than half of the young whom they hire have adequate problem-solving skills, yet nearly two-thirds of the young believe that they do have such skills.
Perhaps the young and their teachers need to take a reality check said the Economist writer who reported this.
Then there is this: As some Canadian industries struggle to find skilled workers, others face a glut of qualified candidates and not enough jobs to go around. University professor Peter Fragiskatos says emphasising the importance of a university education only makes the problem worse.
He writes: Notions of success in Canada have been, and remain, intimately connected to obtaining a university degree. Why? After all, Plato, Aristotle, Nietzsche and Heidegger can be discovered just as easily at a public library and for a much cheaper price.
All of this might sound strange coming from someone who teaches at a university. While the joy I feel when working with my students cannot be put into words, the experience has made me realise that a love for learning is not their leading motivation, if it ever was.
Most have been raised with the idea that a secure future will only be possible with a BA or a BSc, and they enrol in university for this reason. As they get older, today’s students are likely to pass along the same message to their kids.
The reality is that Canadians are living in a new era, one where a technical education – usually obtained at a community college – has the prospect of delivering not only a steady job but better pay than what university graduates typically make.
Engineering, mining and many health-related professions – the three areas identified by Tal’s report as most in need of qualified applicants – do not require a university degree.
Finally from an Economist blog the work of Cambridge economist Chang Ha-Joon, has noted that Switzerland*—one of the richest countries in the world and the nation with the third-highest ratio of Nobel scientists per person—has a lower rate of college enrollment than every other rich nation, as well as other beacons of prosperity like Argentina, Lithuania, and Greece. In fact, once a country has crossed some very low threshold, there is no relationship between the number of graduates and national wealth. The explanation is simple: a typical college education does not linearly increase labor productivity. This is not necessarily a bad thing—there is more to life than making money, after all.
So maybe, the govt is right to put the emphasis on vocational education, with scholarship schemes like this?
Fat chance that most readers of TRE and TOC, and pushy parents would concur. For the former, the govt, PAP, NTUC and related entities are always wrong. Take Zorro Lim’s statement that NTUC says ‘no’ to equal pay for all nationalities because “Same job-equal pay” rule will put local workers and families at a disadvantage. Facebookers and some bloggers were bitching about this. If he had said “yes”, they would be bitching too.: S’poreans must come first. Wonder how these people feel, now that ST (whom they rightly bitch abt) agrees with them that sMRT should only use the English station names in its public announcements. LOL
*S’pore’s spending on education is only around 3% of GDP (about halve of Switzerland which is in line with developed countries), so we got to spend a lot more to have a Swiss-style standard of education. Unless the govt wants us to be third world in education, like on workers’ and refugees’ rights.
In 1988, S’pore was the 36th best place to be born in: same as East Germany. M’sia was 38th and HK was 7th. In 2013, according to an article (The lottery of life) in an Economist publication, S’pore will be the 6th best place to be born in, M’sia will be 36th and HK 10th.
Switzerland will be 1st, followed by Oz, Norway, Sweden and Denmark.
Bang yr balls in frustration S’porean self-loathers: KennethJ, Goh Meng Seng, Tan Kin Lian, Tan Jee Say, Ravi, and born- loser readers of TRE and TOC.
Maybe the WP MPs have a point in being so supportive of the PAP govt? Maybe NSP is right that the party is not ready for govt: PAP still going strong?And maybe PM Lee and Chief Clerk Goh ain’t that bad?
I’m surprised that ST didn’t see fit to publicise this. Must be full of subversives.
But this good ranking does raise a question: If so good leh, home come S’poreans are refusing to breed? Shumething must be wrong? Maybe with S’poreans?
Or do the stats leave out things that matter most to S’porean couples that decline to breed or stop at one.
Well, well. So 102 FT drivers recruited from China (5% of all SMRT’s drivers) refused to work yesterday, disrupting SMRT bus services. They were not happy about their pay. Happily for commuters using the affected bus services, they agreed to return to work while talks continue.
Whither the FT policy, and LKY’s pride in FTs? Striking was a no-no for workers (except, as I recounted yesterday, when the govt had another agenda). S’porean
sheep workers did not strike partly because they were afraid of retribution. Now FTs have led the way and have so far got away with it. They might even get more money. If they do, will locals realise that they too can get away with striking? If immigrants whom LKY respect can strike, why can’t they?
And if S’poreans start striking, will the MNCs move on?
Something for the cabinet, PM and his dad to ponder.
“For they have sown the wind, and they shall reap the whirlwind: it hath no stalk: the bud shall yield no meal: if so be it yield, the strangers shall swallow it up.”
As for SMRT, time to forget about the stock. Management is still dysfunctional, despite having a ex-SAF chief and scholar in charge. Err might even turn into another NOL, where as I have recounted another ex-SAF chief and scholar has run it aground (Search “NOL” on this site).
In a 2010 paper in the journal Tobacco Control, a group of Singapore-based cancer specialists proposed phasing-out tobacco by denying access to tobacco for anyone born from the year 2000 onwards. The researchers said their idea introduced the concept of tobacco-free generations that would “never legally be able to take up the harmful habit of smoking, at any age”
So very S’porean.
I came across the above when I read Should you need a licence to smoke? This is something experts in the West are now thinking of recommending.
S’pore’s juz the place to introduce it, less draconian than banning youngsters from smoking. We got licences to own cars (COEs) , licences to drive into the city (ERP charges), licences to buy “subsidised” public housing (got to have marriage licences first), and local media journalists need licence to think (juz kidding).
And the govt could introduce the mandatory death penalty for smoking without licences. Shan could justify it on the grounds that smokers are all going to die one day, anyway.
Look at this chart from the World Bank (via BBC). Of the 101 countries that were “middle-income” in 1960, only 13 had managed to break from the pack to become advanced economies by 2008. S’pore is there. While one LKY was wrong to say S’pore was “barren” when he, Dr Goh Keng Swee and gang took power in 1959, let’s give them credit for getting us to be an “advanced” country. And even Goh Chok Tong and Lee Jnr, even though during their time (1990s- 2011), there were no new ideas: juz following the old road map and Hard Truths. Even now, PM Lee doesn’t have any new Hard Truths. But at least he is trying finally to force the SMEs to restructure. But no thanks to George Yeo, Raymond Lim, Minister Mah or Lim Hng Kiang.
And of course we must give credit to civil servants like Hon Sui Sen (also a technocratic minister), Sim Kee Boon, Howe Yoon Chong, Pillai, Herman Hochstadt (my ex-boss), Ngiam Tong Dow and many others. Err but not including Philip Yeo and one TJS. And in response to this, Ngiam never ever wanted to be a minister or the president.
KennethJ, TJS, Dr Chee and readers of TRE and TOC: don’t always say bad things about the PAP. Be more nuanced. But pigs will fly first.
The Economist, a British weekly newspaper, seems to the PAP’s bible*. It believes that pricing is the best way to allocate scare resources and long before the government introduced road pricing, the Economist was advocating it: just like high taxes on petrol (we got this) , permits to drive cars (our COEs), consumption taxes with rebates for poor (GST and rebates) , low rates of corporate and personal income taxes, and no tax on savings (All present and reporting). Oh yes and it believes low fertility rates are bad and that immigration is to be encouraged, screw the social problems.
But even the Economist accepts that there are limits to using prices to allocate resources. It recently wrote:
– People often exclude financial considerations from their most important decisions, from the person they marry to the foster child they adopt. Even some transactions that do involve money are not really about price. Universities in America do not admit students based on who pays the most, for example. Rather, they select students based on complex criteria that include grades, test scores and diversity. Similarly, students choose their university on more than just financial factors.
Money is not essential to a market. After all, economics is about maximising welfare, not GDP. But the absence of a price to allocate supply and demand makes it harder to know whether welfare is being maximised. This year’s Nobel prize in economics went to two scholars—Alvin Roth, who has just joined the economics department at Stanford University, and Lloyd Shapley, a retired mathematician at the University of California, Los Angeles—who have grappled with that very problem http://www.economist.com/news/finance-and-economics/21564836-alvin-roth-and-lloyd-shapley-have-won-year%E2%80%99s-nobel-economics.
– Mr Shapley’s and Mr Roth’s Nobel prize illustrates a larger point about economics. Undergraduates often study “utility functions” to learn how people choose alternative consumption baskets in a way that makes them better off. Once they go on to graduate school and then a job, they deal almost exclusively with priced transactions: for wheat, autos or equities.
Yet in countless private and public policy questions, welfare can be improved in ways that do not show up in the price. Mr Roth’s work on public school admissions and kidney donations are an obvious example, but there are countless others. I recall reading that Starbucks had a plan that would let an employee in one store trade jobs with an employee in another so that both could work closer to home. The result would not change either employee’s output or wages, or Starbucks’ profits. Conceivably GDP would fall because the employees would spend less on petrol or bus fare. But provided the swap was voluntary, the welfare of both would without question rise http://www.economist.com/blogs/freeexchange/2012/10/understanding-economics.
(Cooperative game theory is waz the above is all about. It looks at how well people can do when acting together; by examining all the possible combinations, theorists can spot outcomes that individuals acting alone cannot achieve http://www.economist.com/blogs/freeexchange/2012/10/microeconomics)
Well one hopes that the government too recognises the limitations of using prices to allocate everything. And that bit about “maximising welfare, not GDP”. It’s in the PAP’s bible. Juz read it, not juz Hard Truths which incidentally is derived from this book book.
*Where they differ is on democracy and a free media. The Economist is a strong advocate and proponent of both these principles, unlike the PAP. BTW I used to joke that the government doesn’t need high-salaried ministers and civil servants to think up policy. They need to read the Economist. Declaration of interest: the Economist is my favourite source of info and analysis. I like its combi of social liberalism and conservative economics and its style of prose, entertaining, and
It says things like: “The branding function of philosophy in politics is to give individual conscience a form congruent with group interest, to transform the mathematical necessities of coalitional partisan politics into many millions of separate acts of self-congratulating private virtue. It’s a neat trick. It would be neater still if fewer pundits played along.”
Shouldn’t Jos Teo bitch about the Integrated Programmes that make PSLE such an impt exam today, rather than against employers that offer PSLE leave for their employees, and parents that take time off to coach their kids. In my time, PSLE was important to get into RI, Victoria and Serangoon English: once in if no major balls-up could do PreU in these schools (Integrated Programme is juz modern variant), but if one went to mission primary schools, going to mision secondary schools (and PreU) wasn’t that dependent on PSLE results, unless one was stupid. Things got even better when the govt started NJC. More places for PreU studies.
But then the cycle turned and now PLSE is the exam to pass.
“We are quite mistaken to behave as if PSLE is THE defining moment in a child’s development.”: Err not all parents can afford to send their kids overseas to make sure they get a good education, if the kids get culled here.
And following the logic of her outburst, wouldn’t the logic of her argument mean that the government is wrong to continue curbing the number of COEs? As even ministers and MAS concede that the rising costs of COEs adds to inflationary pressures, even if ministers are wrong to say that rising COEs don’t affect the cost of living of us plebs (those unable to afford owning cars, and have to use public tpt).
Which brings me to the inflation situation.
Remember me bitching in early August that MTI jnr minister Lee Yi Shyan, and the local media covering him, were misrepresenting the pix on food inflation? I had pointed out that there were reports of rising food prices.
Well now MAS validates what I was saying. MAS warned on Tuesday about upward pressures in imported food prices over the next few months and into early 2013 due to weather-related supply disruptions.
Jos has gd company. And this ST guy should be in line to be a jnr minister.
Note: Last sentence and link to Jos piece added at 9.09am on day of publication.
As a retiree, I was getting worried that PM, Tharman and gang had abandoned a Hard Truth that Dr Goh Keng Swee had laid down (and which has served us well, unlike some of Hary’s Hard Truths): Singapore’s exchange rate policy cannot be used as a tool to manage the country’s export competitiveness. It was a Diamond Hard Truth, engraved in granite, that the Singapore dollar is a key macro-economic policy tool to keep inflation under control.
Increasingly based on the comments of forecasters and the central bank’s actions, I had gotten the impression that the exchange rate policy was being used as a tool to manage the country’s export competitiveness.
Until last Friday that is, when the central bank, in a decision that surprised the market, decided not to ease its monetary policy in spite of slowing exports due to a weaker global economy. (The S$ has appreciated since January by 6% against US$.)
And the Trade and Industry Minister Lim Hng Kiang said on Monday, ”The [central bank] recognises the need to strike the right balance between ensuring exporters are not unduly hurt by a stronger currency in the short-term, and capping underlying price and cost pressures in the economy. However, the exchange rate cannot be used as a tool to manage Singapore’s export competitiveness.”
Over the longer term, he added, competitiveness could only be achieved through higher productivity and innovation such as creating new products that the market demands. (Ya been hearing this rubbish since the 1980s but the new products and productivity never appear, bit like Godot)
(He could, and should, have added that S’pores exports require imports. Dr Goh used to emphasise that a cheap S$ means export costs go up because the prices of imports used to make the exports goes up. Minister Lim did not make this point. He should have reminded S’poreans of this Hard Truth.)
Mr Lim was responding to a question posed by an economic literate NMP, Tan Su Shan, who is MD of wealth management at DBS Bank. She asked if the central bank would “consider recalibrating its strong Singapore dollar policy and allow the Singapore dollar nominal effective exchange rate to appreciate at a slower pace”.
“The strengthening of the Singapore dollar is a key macro-economic policy tool to keep inflation in check over the medium term,” he added.
Finally, readers might want to send this BBC clip about local inflation fears to the junior minister who talked rubbish on inflation in August http://atans1.wordpress.com/2012/09/03/err-lee-what-did-you-say-abt-food-inflation/. It’s not juz me, it’s the BBC
Hernan Cheyre, the boss of CORFO, a government body that oversees Start-Up Chile and other initiatives to support entrepreneurs, argues that while Brazil will inevitably be seen as the China of Latin America given its size, Chile can become the region’s Singapore, which has prospered by welcoming foreign talent and providing businesses with a stable, well-regulated base for their operations throughout Asia.
Singapore, however, has a long track record. Start-Up Chile is only two years old, and it is closely identified with the current centre-right government, which may be turfed out at the polls next year.
(Excerpt from article in Economist’s latest issue)
I’m sure those S’poreans who hate S’pore’s success (thinking of the many TRE readers) will be banging their balls.
Many (self included) think that NatCon is Wayang. But could it be even more cynical? Is NatCon’s aim to distract us from the govt’s mismanagement of the economy. This unworthy tot struck me when I read DBS’ analysis of the S’pore economy last week.
DBS says that high inflation in recent years is mainly made in Singapore and this has affected overall competitiveness. High COE premiums and rentals, as well as the continued increase in labour cost are the key drivers. Ironically, the bulk of these were policy-induced, it said. [Translation: Inflation is fault of the govt leh]
It goes on, “The tightening in foreign labour inflow in particular, is creating significant strain on enterprises and eroding Singapore’s cost competitiveness. The near- term impact is higher labour costs, compression of profit margins and the tendency for companies to pass on this higher cost to consumers, resulting in higher inflation. Thus, in a bid to restructure the economy, growth and competitiveness have been affected, and just when the global cycle is weak.” [Translation: The govt's policy of reducing FT inflow is making it more difficult to growth the economy]
So given that stagflation (economy not growing or is shrinking, but inflation is remains high: “Singapore’s consumer price index rose 3.9 percent in August from the year before, more than double the 1.7 percent rate in the U.S., the world’s biggest economy. Inflation in the island state averaged 5 percent for the past year<” reports Bloomberg) is the fault of the govt, what would distract the masses and netizens more than get them engaged in something irrelevant and entertaining? Even if the netizens don’t take part, they are so busy bitching abt it that they forget (or don’t realise the economy ‘s failings) to criticise and highlight the mismanagement of the economy by the government. So NatCon is the PAP’s answer, juz like in Roman times, the emperors had “Bread and circuses” to keep the rabble in Rome happy and distracted when the barbarians were crossing the frontiers?
Waz sad is that PM thinks he has to resort to gimmicks like this. He made a gd start getting rid of underperformers and supernumeries in the cabinet. He then started spending our money on making life more comfortable for us. He should execute the latter well, not get distracted by PR gimmicks. If executed well, spending more of our money on ourselves will win back the voters.
S’poreans must have honest conversation about immigration: S Iswaran late last week. But will we be allowed to, minister?
No, I’m not talking abt what Uncle Leong pointed out about the growth in FTs despite all the talk of by the government of it being curtailed. The analysis and comments of Uncle Leong and many others based on the government’s very own data has resulted in this attempt via originally new media (then amplified by the constructive, nation-building media) at damage control.
And let’s ignore what rogue scholar, TJS, has somewhere analysed*: that it’s not true declining population lead to economic ruin. He is after all, as Lawrence Wong, would put it “anti-PAP”. And he could even, at a stretch, be classified as one of Sim Ann’s demons who ”spew hate and prejudice against individuals or groups”. Remember, he bitched against bungalow owning ministers, when, I’m told, he too has a bungalow.
No: My complaint is why don’t we get told how well Japan is doing?
A country has three choices when its TFR (total fertility rate) drops Get the TFR back up; encourage immigration; and do nothing i.e. let the population age.
Most countries try to increase TFR, some succeed. Japan tried it, failed and as it doesn’t do immigration, it prefers to use robots, it is managing the decline in population.
Japan has shown, a country with a declining population can still do better than other developed countries as figures from HSBC (published earlier this year) show which contradict the doom and gloom that one LKY says abt Japan.
Growth per capita in the 2001-2010 decade
And looking at the overall GDP numbers, Japan’s record is as good as that of the Germans, who now have created the Fourth Reich in Europe.
So the Japanese have well, considering their aging and declining population. Perhaps our PM should be listening to them, and trying to take some tips, especially on the use of robots (say to replace Lawrence Wong and Sim Ann who seem to be stuck with some PAP robotic messages that are a throwback to when LKY ruled the roost). And get dad to stop talking rot on Japan.
As to the need of the elderly population needing younger S’poreans to pay taxes to keep the place going, that both PM and Tharman mumble about, ain’t the governing PAP forgetting that it instituted the CPF system precisely to avoid a “Pay as You Go” social security system. (OK, OK, I’m unfair on the PAP on this but two can play the BS game.)
It’s you die, if you got no CPF (Don’t look to VivianB for help. He will only sneer at you for being poor) So by the PAP’s own account, the elderly (like me) don’t need a growing and younger workforce to support.
So Minister, although you are a Hindoo, somehow I think this verse from the bible is applicable to you (and your fellow ministers) when it comes to having an “honest conversation” about FTs:
(Note “mote” means “a particle of wood or chaff” i.e. it’s very, very tiny)
Either how canst thou say to thy brother, Brother, let me pull out the mote that is in thine eye, when thou thyself beholdest not the beam that is in thine own eye? Thou hypocrite, cast out first the beam out of thine own eye, and then shalt thou see clearly to pull out the mote that is in thy brother’s eye.
*Sorry no link as I’m not too impressed by his analysis. He left out that his favourite Nordic countries tax its people too much for my taste.
Singaporeans must accept F1 race as necessary event: MTI (The Trade and Industry Ministry says the community must accept the Singapore Formula One race as a necessary event in Singapore. This is because the race has reaped benefits such as enhancing Singapore’s image and bringing in more tourism receipts.)
So how abt sharing the benefits with the losers? Especially since F1 will bring S$1b “additional value-add” for economy, says Iswaran. (S’pore expects expenses to drop about 15% to 20%, according to the Ministry of Trade and Industry. The cost of the race is about $150 million, with the government co-funding 6o% of the amount, reminded S. Iswaran, “Singapore’s second trade minister, who’s responsible for developing the tourism industry”. What he didn’t say is that hotels have to pay a special levy of 30% on room rates during F1 period, if they are “track-side” hotels and 20% for the others. )
Compensate the retailers at Suntec City and those who work in the city? Tax rebates for them? If no such sharing of the benefits, then it’s some private profits, and big state windfall (via taxes and other levies), and public inconvenience and some private losses. Readers might also like to know that it costs at least US$120m to build a dedicated F1 circuit (excluding, it seems, land costs), so by inconveniencing commuters and some retailers, the government is passing on the one-off cost of building a F1 track to some S’poreans annually. Whoever said there isn’t a free lunch? More reason to offer compensation.
BTW, before the race, our constructive, nation-building media gave the impression that a deal-breaker was S’pore’s demand that it be charged a nominal fee for the race (Monaco pays nothing because until S’pore’s F1, it was the only F1 race on public roads.) Well it seems, S’pore was told to f***off and it got buggered: “Ecclestone refused to confirm the cost of the new contract, although he did hint that negotiators for the Singapore race had failed to extract a Monaco-style race fee exemption. It is thought that they argued for one, pointing out how successful the race has been for sponsors. http://www.telegraph.co.uk/sport/motorsport/formulaone/9560875/Singapore-Grand-Prix-secures-its-place-on-F1-circuit-after-organisers-agree-a-new-five-year-contract.html
Mr Iswaran only said there has been “a discount in franchise fees for the new contract”: whatever happened to the deal-breaker? The silence from our media on the issue is deafening.
Seems that Bernie said that the Thais willing to stage a F1 night race in Bangkok if he pulled out of S’pore.
Related post: http://atans1.wordpress.com/2011/09/25/is-f1-worth-it-updated-with-2011-estimate-of-additional-tourism-revenue/ BTW not seen any details of estimated 2012 revenues despite all the talk of benefits.
The rising inequality of incomes mean that even moderately well-off people do not feel that rich; not least because the elite have driven up property prices in desirable areas … to levels that those not working in the finance sector cannot afford. Meanwhile, the very elite can insulate themselves from everyday life. Think of the experience of the average first, or business, class air passenger. They sit in a different lounge from the other passengers, enter the jetway through a different door, sometimes enter the plane through a different door as well, sit in a curtained-off section and then leave the plane before everyone else. They could make an entire transatlantic flight without coming into contact with the hoi polloi.
The problem is that the political elite tend to mix with the financial elite … and, for security reasons, also have to cut themselves off from the average voter. So it may be doubly hard for them to understand the pressures of those who are actually on median incomes.
Two quotes from Dale Carnegie’s How to Win Friends and Influence People, that could teach PM, Heng, Sim Ann and other ministers a trick or two:
– “No one likes to feel that he or she is being sold something or told to do a thing. We much prefer to feel that we are buying of our own accord or acting on our own ideas. We like to be consulted about our wishes, our wants, our thoughts.” (Actually Auntie Sun’s hubby, pastor Kong, could teach them this, what with his Sentosa Cove penthse to prove it. But PAPpies prefer to learn from FTs.)
– “The only way on earth to influence other people is to talk about what they want and show them how to get it.”
The second quote explains why PM’s dad (and a hero, flawed, of mine) was successful in getting S’poreans to vote for him and the PAP despite his bullying, thuggish ways.
He spoke to S’poreans of his and older generations what they wanted to hear: “A better life for yrself and yr family.”
And how to achieve it: “Vote for the PAP and accept my policies be they throwing dissidents into prison without trial (anyway they are commies who want to steal yr money or work you to death), and have union leaders like Devan Nair who are my running dogs, and accept my lectures, hectoring, thuggery and bullying.”
He got the message right* and delivered the prosperity bit (whether or not the prosperity was the result of his** policies and methods is open to debate***) for most elderly S’poreans. True, there are some elderly S’poreans who missed the prosperity (and who now need to be helped), but in general, many are reasonably well-off, especially if they suffer from severe illnesses. I’ve relations much older or juz slightly older who have benefited from the then HDB housing policies of the 70s and 80s. And who are benefitting from the present healthcare system.
(One said during the Chinese New Year, “We were poor when we were young. Thank the Lord (her family are Christians) that in our old age we are comfortable. Nothing worse than being poor when old.”)
They are the first to admit it, their children and grandchildren are not finding life that easy. But hey LKY’s only a mortal, even if at times the constructive, nation-building media, esp ST, portrayed him as a demigod.
*And he is a genius when it comes to marketing “Authentic marketing is not the art of selling what you make but knowing what to make.” Philip Kotler, academic (1931–), Marketing Management (1967)
Above and more marketing quotes from http://www.economist.com/blogs/schumpeter/2012/09/z-business-quotations
The problem. is that since the late 1980s or early 1990s, the PAP wants S’poreans to do want the PAP wants them to do; but it is unwilling (and unable) to promise S’poreans material prosperity in return. It is only willing to say,”We will try to help you achieve material prosperity. But we still want yr soul.”
The governing PAP used gimmicks, like asset
enhancement inflation and indiscriminate importing of , that have backfired on the PAP because of their negative consequences, intended or otherwise, on S’poreans.
**And don’t forget the role that Dr Goh Keng Swee, Lim Kim San, Hon Sui Sen and Ngiam Tong Dow played in the economic policies. They wisely left the bullying, lecturing hectoring and thuggishness to LKY.
***Remember that in the 1960s and 1970s, S’pore was one of the few places (HK was another) that welcomed MNCs to set-up factories. MNCs were looked upon as a form of neo-colonialism by most of the developing world. Today, every developing country wants MNCs to set-up factories. So credit must be given to the PAP for this policy. But as we know, this policy resulted in the lack of home-grown companies like Foxcomm and HTC in Taiwan and Samsung in Korea. But breeding these cos led to problems in these countries.
Shumething I came across on Facebook: To be frank, I think the default is now, “Why should we listen to the government?” and we should all realise that they’re listening more and we’re listening less. Old knee-jerk political reflexes are not useful anymore. We need to be clear-minded and work on both qualitative and quantitative data and input, not just the same old stories on all sides.
He is spot-on.
Then this: “S’poreans [are] urged to share and listen with open minds and hearts” said Education Minister Heng Swee Keat who “is heartened by the many conversations that are going on about the national conversation and follows them with great interest.” Mr Heng had been tasked by Prime Minister Lee Hsien Loong to lead a team of younger ministers to engage Singaporeans in a national conversation about the country’s future direction.
So how come
– a “CNA producer rescinds invite to bloggers to a forum with Prime Minister because her ‘bosses bosses have decided not to have bloggers on the forum because apparently bloggers have already had a private session with the Prime Minister already” http://www.raviphilemon.net/2012/09/because-pm-has-engaged-dr-jiajia-he-has.html
–” TOC was uninvited to the Singapore National Games”
Now to a suggestion of a topic.
The conversation, to be meaningful, must include the issue of public access to govt data bases. This explains why it should give access: In knowledge discovery in datasets, the major barrier to entry is access to the data. When corporations, governments or other private firms jealously guard their proprietary data, the number of people playing with the data and trying to discover valuable things, or putting that data to good use, will remain small. When data is made public, anyone can put that data to work. In recent years governments have begun making large troves of their data publically accessible. The U.S. government’s open-data project, data.gov, for example, has begotten over 200 citizen-developed apps. Similarly, the city of Vancouver, an early mover in the municipal open-data space, opened up their data in 2009, spawning valuable mashups of transit data, the water grid, and common spaces.
It’s gd for a knowledge-based economy.
Netizens who want to take part should take time to read this http://www.spp.nus.edu.sg/ips/docs/events/p2012/SP2012_Bkgd%20Pa.pdf. Written by some of the best economists in S’pore (Jedi Knights all: wonder who is their Yoda? Tommy Koh?), it gives plenty of information to counter the governing PAP’s Hard Truths.
Finally, the calls by some netizens for a debate rather than conversation are misguided. Debates are by their nature rigid. The emphasis is on point scoring. This format suits the government. So better to keep it at the conversational level.
(Or “Kishore Mahbubani’s thesis about Asian power proven wrong again”)
It seems likely the long-term recessionary scenario as described by Mr Taylor, Mr Reinhart, and Mr Rogoff is what economies in the West are now experiencing. Within developed markets, the financial sector occupies a larger proportion of the general economy than ever before. In the 1990s and 2000s, the level of private debt on bank balance sheets far outweighed that held by sovereigns, despite a simultaneous increase in sovereign debt levels. Given the greater severity of recession Taylor concludes is likely following a period of both private and public debt accumulation, the damaging effects could go on for some time.
http://www.economist.com/blogs/freeexchange/2012/09/financial-crisis Warning: very chim
Let’s see if the BRICs and other Asian economies can save S’pore from a recession or slow down like what a certain PAP apologist is implying about the days of ang moh and Jap tua kee are over: now China, India and Asian (ex Japan) tua kee. He got his balls blown-off over Standard Chartered!
Credit Suisse is relocating dozens of back-office jobs from Singapore to India and Poland as part of efforts to cut costs, the FT reported on Monday. It also reported that Morgan Stanley last month completed shifting about 80 back-office jobs to India and Hungary, from Singapore.
And that other banks were planning to move back office jobs to “cheaper” countries.
Our constructive, nation-building media were very quick to report a survey that UK investment bankers wanted to come here, but while Today and BT (online) reported bits of above, ST never did. And BT (the paper) does not seem to have reported it.
AND they all don’t publish the bit about Morgan Stanley and the other banks. Remember you read it here.
Last month when asked about the current drought in the United States Midwest which is affecting corn and soybean crops, Mr Lee Yi Shyan, Senior Minister of State for Trade and Industry and National Development and chairman of Retail Prices Working Group said it is not likely to have an impact here in the near term.
This is because Singapore imports a negligible amount corn, and only seven per cent of its soy beans from the US.
But a sustained price hike for the grains, which are used for animal feed, he said, may raise commodity prices in the long term. (More)
Funny then that on 30 August BBC Online reported
Global food prices have leapt by 10% in the month of July, raising fears of soaring prices …
The bank said that a US heatwave and drought in parts of Eastern Europe were partly to blame for the rising costs.
The price of key grains such as corn, wheat and soybean saw the most dramatic increases, described by the World Bank president as “historic”. http://www.bbc.co.uk/news/world-19431890
So the issue is not even that only in the long term food prices here will rise, but how soon. That it will rise in “the near term”, despite his denial, is a probability. Even before the spoke juz before National Day, prices had alread risen. I mean as a MTI minister, surely he would have access to that information, unless his officials hid data from him to make him look stupid?
Discounting that possibility or the possibility that MTI does not have access to near-live data (highly unlikely), either this jnr minister doesn’t know economics (maybe taz why he did not get promoted to minister?*) or he was juz mindlessly spinning knowing that the constructive, nation-building media would not challenge him, and that people would believe him.
Methinks one test of whether the government is sincere about having a national conversation is for ministers to stop assuming that the people are simple-minded to believe whatever ministers say. Those days are over. S’poreans have the internet and social media to keep tabs on waz happening in the rest of the world and in S’pore. The days when the constructive, nation-building local media filtered everything are over.
*Unlikely given Tharman’s and Hng Kiang’s grasp of basic economic theory
(Or “How S’pore’s PMs are chosen”)
We know that Tharman as finance minister has failed to control inflation (Yes, yes, I know latest number is 4% but remember grain prices are flying), when all he can do is to make jokes about it, and that the government (where he is now the senior most minister in charge of the economy) has consistently failed to raise the productivity of S’pore workers* despite talking the talking on this since I started working in the late 1970s. I’m now a man of leisure and the government is still talking about raising productivity. SIGH.
I was reminded of another failure of the government’s economic policies when the July export data came out last week. No it wasn’t the failure of the government policy to diversify away from electronics. If S’pore has a comparative edge here, so be it.
No, it was the failure many yrs ago to realise that pill-making is not a steady business. Example: in July, while pharmaceutical shipments were up 1.3% after rocketing 24% in June. It was brought in to smooth the volatility of an economy dependent on the export of electronics, a volatile commodity.
It didn’t work because while selling drugs is a steady business in gd times and bad (unlike electronics), making pills is not. It’s a very volatile business. Drug cos are forever tweaking their supply chains to minimise production costs and inventories. Production is not smooth.
So while pill-making has become an important driver of economic growth, it has not made the economy any less volatile. In fact combining it with the manufacturing and export of electronics causes the economy to gyrate wildly at times.
Guess who introduced pill-making? One Lee Hsien Loong. He was once responsible for raising the productivity of S’porean workers? In the UK, a Chancellor of the Exchequer, who goofed on two major policy decisions, would not get to be PM.
Looks like better not bet against Tharman being PM. With the failures on inflation, productivity and the following on his CV, nap that he will become PM:
– Another failure is the rise in the number for homeless S’poreans at a time of reasonably gd economic growth.
– They are exemplars of the “working poor”, something articulated so well here. Read it.
– Article also explains why Workfare, as it is constructed, doesn’t help the poor. Related posts: http://atans1.wordpress.com/2012/02/27/budget-a-plague-on-both-your-houses/
Update after posting: Promotion here is via failure? Presidency of S’pore and Temasek. So the PAP’s meritocracy is achieved via failure, not success? So Orwellian. Reminds me of Beckett’s, “Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”
(Or “Think short-term, not long-term says minister Lee or “MTI minister does not know econs?” or “Govt’s spin machine is stuck in the stone age”)
The Retail Price Watch Group (RPWG) last week emphasised that the slower pace of food inflation impacted positively on household expenditure as food expenses take up a considerable portion of each household’s monthly budget. This slower pace of food inflation is good for S’poreans is the message that the constructive, nation-building media is spreading, not challenging. Example of how inflation is reported . At the end of this piece are two links on the numbers on inflation, and what they mean.
Earlier this year, when inflation was hitting new highs, in addition to the sick jokes by Tharman and Hng Kiang on “no worries” if “you don’t rent private housing, or want or need to buy a car”*, S’poreans were told to look forward, not back. Inflation would “moderate”. It hasn’t has it? The rate of growth has slowed a tinny winny bit, taz it.
Now the message seems to be look back, not forward. If you wonder why, read this, ”Another food crisis looms”: grain and meat prices are rising fast (not rice though but note ”Rising wheat prices and a failure of America’s soya harvest might scare nervy Asian countries into a rice-export ban just as during the food crisis of 2007-08.”).
And there is this: Global food prices sharply rebounded in July due to wild swings in weather conditions, a UN food and agricultural body has said.
The rise has fanned fresh fears of a repeat of the 2007-2008 food crisis which hurt the world’s poorest. BBC report
But when asked about the current drought in the United States Midwest which is affecting corn and soybean crops, Mr Lee Yi Shyan, Senior Minister of State for Trade and Industry and National Development and chairman of RPWG said it is not likely to have an impact here in the near term.
This is because Singapore imports a negligible amount corn, and only seven per cent of its soy beans from the US.
But a sustained price hike for the grains, which are used for animal feed, he said, may raise commodity prices in the long term.
So said minister is downplaying the effect of drought in the US on food prices. And our media is not questioning him. And they all are wrong to downplay the rise in retail prices.
There are floods in Brazil, the other large exporter of soya. So it isn’t juz the US.
There is no getting around the fact that two of the staples of the world food industry are about to become scarce commodities.
That means they will also become more expensive. Soya beans and corn make oil, animal feed, and ethanol (to be added to petrol), and are used in snacks, fast food, even soft drinks. America’s drought is going hit us all.
FT gave a concrete example: Based on the numbers of a big US producer of chickens, Sandersons, a US$2 increase in corn, like the one that just took place, adds about US7 cents to the cost per pound of chicken meat. And as the margins are tiny, so prices of chicken have to rise unless there is a serious recession.]
Then there is the issue of time frame. The USDA expects further rises in prices, and it is predicting that global corn trade will be sharply lower this month “in response to tighter US supplies and higher prices” reports the BBC. So minister, if “this month” is “long term”, what is “short-term”? Ten minutes?
But this downplaying of inflation and the misuse of the term “long term” is not all.
But a sustained price hike for the grains, which are used for animal feed, he said, may raise commodity prices in the long term.
So after always being tot to think long-term, and with the government always praising itself that it takes the long-term, strategic view, and taz why we should always vote for the PAP, we are now told to think short-term?
Whatever happened to thinking and planning long-term? Retired juz like one LKY?
And why is the media not pointing out and commenting the change in govmin thinking? Are they waiting for approval?
Could minister and media been trying hard to avoid spoiling the national mood ahead of 9th August?
Or waz it all, “An honest mistake?” Or is this Lee trying to ape Tharman and Hng Kiang as a standup comic?
Or, as is most likely, could the government PR and corporate communications machine still be in the pre-internet age when real-time information was expensive and limited to traders in financial institutions? Then media releases, and ministerial statements and Q&As could be crafted days or weeks ahead of time, with each officer in the pyramid making changes until the final draft reached the minister. Now when communicating to any audience, ministers and their minions must be aware that real-time info is available at a touch of the screen.
(Links on inflation
Inflation has accelerated, fueled by rising housing and private transportation costs … The monetary authority last month estimated consumer-price gains will average 4 percent to 4.5 percent this year, compared with the 3.5 percent to 4.5 percent range it forecast previously.
DBS says S’pore facing stagflation with one of highest inflation rates in region.
*OK, OK I exaggerate but only a little.
And local poly provides training to work in casinos.
Citizenship has its privileges in Macau (and there is no NS).
Yet casinos are still expanding in Macau despite not having cheap FTs as croupiers and dealers.
Must have lessons for S’pore?
[I]t’s a world where young people like Tommy hold all the cards. With the law favouring local workers, jobs are handed to the polytechnic’s graduates on a plate. Many receive offers of employment from casinos long before they finish their courses.
Brent crude reached its highest-ever average price at $111 a barrel in 2011: from BP’s Statistical Review of World Energy 2012 published on June 12.. Oil prices were consistently high last year affecting economic growth and investment plans
Smaller Asian hedgies are closing (US$120m is “peanuts”). http://www.reuters.com/article/2012/06/04/lehman-hedgefund-closure-idUSL3E8H420G20120604
Not gd news for S’pore’s financial centre aspirations. It once (pre 2007 crisis) had lax rules to get these guys in, hoping they would grow.
But hope springs eternal.
Coming our way? Many of funds in Switzerland had juz relocated from London. But now the Swiss government is considering rules that would turn a relatively “light-touch” regulatory environment into “one of the most exacting jurisdictions in the world to run a hedge fund,” the Financial Times reported about two months ago.
Funny that our constructive nation-building media don’t report this news. Been too busy sliming WP, to report on a possible positive development.
Reading this, one ends up asking, “If things are so screwed up here, why isn’t S’pore as poor as Bangladesh, Laos, Cambodia or Burma?”
There are problems: rising inequality, persistent low productivity (despite all the govmin talk and campaigns), lack of local entrepeneurs complacent BSing ministers, and bad public transport. But taz not the same as saying that S’pore is an economic disaster like Bangladesh.
(Or “Why group feeling is so impt” or “How times have changed since the late 70s (Worth of being a S’porean)”)
Reading the u/m, I was reminded that Ngiam Tong Dow (Sparta, Athens and the Chinese imperial exam system) and the PAP (George Yeo and his mis-readings of history, one being why Venice did better than Genoa*) have used history to preach to S’poreans
First was the widening gulf between the social classes, rich and poor. When rich and poor start to live completely different lives this leads (then as now) to the poor opting out of the state. All studies today show that society is happier when the gap between rich and poor is reduced …
Widen it and you affect the group ethos of society, and also the ability to get things done through tax.
In the Roman West real wealth lay more in land and property than in finance (though there were banks) – but in the 300s the big land-owning aristocrats who often had fantastic wealth, contributed much less money than they had in the past to defence and government.
That in turn led as it has today to a “credibility gap” between ordinary people and the bureaucrats and rich people at the top.
Other strands in the collapse of the Roman West are more difficult to quantify, but they centre on “group feeling”, the glue that keeps society working together towards common goals. Lose that and you get a kind of nervous breakdown in the social order, which leads to what archaeologists call “systems collapse”.
The growing inequality in S’pore society we know and bitch about, but the loss of “group feeling” is shumething “we see through a glass, darkly”. We sense it but we have problems articulating this loss of group feeling. Symptoms of it are often ascribed as the problem. Examples: The
– unhappinness that male FTs (like PAP MP Puthu) have a free ride here because they don’t have to do NS;
– resentment against the PAP government because it appears to elevate FTs to a higher status than locals;
– resentment against one LKY who called S’poreans “daft”, who needed to be “spurred”,
are symptoms of this loss of group feeling, not the problems themselves.
The government is largely to blame for this loss of group feeling thru its strategy of keeping the economy growing by using FTs to keep wage costs down because otherwise the strong S$ would make S’pore an uncompetitive economy. Its asset enhancement policy and forcing S’poreans to leverage to their foreheads to buy property, has it made it impossible for S’pore to have low economic growth without triggering serious problems for the PAP and S’poreans. Imagine all HDB owners having -ve equity on their flats?
The sad, funny thing is that the PAP government fostered the sense of collective identity through schemes like NS to strenthen its grip on power after S’pore was ejected from M’sia. Older S’poreans like me can remember the days when the government told us that we S’poreans were special, compared to the Indons and M’sians. Look at the M’sian and Indon Chinese trying to get in. Today, according to the then PM, S’poreans are “daft”, and need “spurring” (or is it to be “spurred”?).
Oh and as the extract showed, “group feeling” is linked to wealth inequality. The bigger the gap, the less “group feeling”.
*Actually, I’m surprised that he didn’t put in down to the Venetians having a more authoritarian form of republic with power centralised in the doge). A rebuttal.
On Friday, the Economic Development Board (EDB) said April’s manufacturing output shrank 0.3% from a year ago, after a revised 3.1% drop in March.
This poor showing surprised economists, whose consensus forecast was for manufacturing to grow 4.1% and could not be blamed entirely on the 7.6% fall in volatile pharmaceuticals output. The poor showing is because of falling demand from key markets such as Europe and the US especially for electronics.
Thailand has reported a surprise fall in its exports for April because of falling demand from key markets such as Europe and the US. Shipments fell 3.7% from a year earlier. Many analysts had forecast an increase of more than 3% http://www.bbc.co.uk/news/business-18203209. Remember that Thailand has replaced S’pore as the world’s manufacturing hub for hard disks.
Expect weak manufacturing numbers for M’sia. It too is a big manufacturer of electronics for export. And Najib is planning an election later this yr.
(Or, “Isn’t high inflation and misrepresenting its effects a local issue, Desmond, Tharman & PM?”)
Update on 27 May: The PAP are singing the blues! Gd for you 62.1% of voting Hougangers))))
Should rich kid Tharman (he from ACS) and poor RI boy, but now multi-millionaire, Hng Kiang (The model examplar that ministerial performance is irrelevant so long as the voters don’t get too upset?) be punished by the voters of Hougang for their tasteless jokes on inflation? Latest stats: inflation at 5.4% (even higher than March’s 5.2%)
Deputy Prime Minister Tharman had said the “average Singapore” will not be affected by the high inflation after the latest set of Consumer Price Index (CPI) figures for March was announced only http://atans1.wordpress.com/2012/05/03/telling-coc-jokes-ministerial-coc-needed/.
Minister Lim Hng Kiang when explaining in Parliament why most of will not be ‘directly’ affected by inflation said, “The two largest contributors to CPI inflation are expected to be imputed rentals on owner-occupied accommodation and car prices. Together, they will account for more than half of the inflation this year. As the majority of resident households in Singapore own their homes, they do not actually incur rental expenditure. Likewise, the majority of resident households will not be directly affected by the rise in COE premiums as new car buyers make up a small proportion of all resident households. “
And a few years ago, when the price oil rise was leading to higher inflation, he recommended that people switch to “cheaper” brands, as if people don’t know that already.
According to Jentrified Citizen:Every average person whom I have talked to from the aunty who makes my favourite teh tarik to the taxi-driver say that they are feeling the pinch of inflation every single day. Most Singaporeans who pay their own bills would know just how hard inflation has hit them. The list of prices increase seems to get longer every day – the infamous housing and car/COE prices, the higher charges for public transportation (yes including taxis as they are a commonly used form of public transport), petrol, car-parking, healthcare, vitamins, medicine, groceries, food and electricity and water bills.
They are not trying to be comedians, I think and hope. Trying to be fair to them, their comments show the difficulty of representing complex arguments over policy in terms that average voters can get their heads around. Problem is that they are so out-of-touch that they end up insulting our intelligence.
But I’m sure by DPM Teo’s, extremely high standards (DPM, Png made “an honest mistake”, he is no lawyer or scholar, juz one of the “little people”, so a little inaccuracy is surely acceptable?) , they would not be men of intregity, if they were not PAP cadres and leaders.
(Or “Is PM on the same channel as S’poreans?”)
“Prime Minister Lee Hsien Loong has said the Hougang by-election should not distract the country from focusing on national priorities and building an inclusive Singapore,” CNA reports.
Either this is the latest of PM’s tasteless jokes in his attempt to outdo Tharman as the cabinet’s and PAP’s mgt committee’s stand-up comic, or it shows us that he doesn’t even bother to glance thru the nation-building constructive local media.
Because if he does, he would realise that “national priorities and building an inclusive Singapore” are at the top of most voters’ concerns: the state of the economy and public transport infrastructure, and of family finances. Examples:
– a MRT system that does not breakdown almost every other day,
– less crowded trains and buses,
– lower inflation (even the crown prince of jokers says the latest inflation number is ”a high figure” though he quickly quipped that it didn’t affect most of us “lesser mortals” (my words not his),
– how to earn more money,
– how to afford to own a HDB flat on $2,000 a month,
– how to buy a van (what with escalating COE prices), or
– worrying that ”Our system of integration doesn’t work. Why? Because before we were able to integrate those who were received on our territory, others arrived. Having taken in too many people, we paralysed our system of integration.”
A worrying tot has juz struck me. What if his (and the PAP’s) ”national priorities and building an inclusive Singapore” are different from us “lesser mortals”? He wants faster economic growth via becoming a low-cost producer as “national priorities”, while “building an inclusive Singapore” means treating FTs better than locals?
Chart shows that the authorities are pricing S’pore out of fees to themselves, and to the accountants, lawyers etc based here by making S’pore more expensive than HK when it comes to charging cos fees to set-up and maintain here. HK is the leading Asian centre for registrating and maintaining offshore companies outside of the “Sunny places for shady people” to misquote Somerset Maugham.
And S’pore non-executive directors are well paid and do less work vis-a-vis our neighbours.
Non-executive directors (NEDs) in Singapore got the second-highest pay when compared with directors in Malaysia, Indonesia and Thailand, a report by Hay Group showed yesterday. Those in Indonesia were better than S’porean NEDs.
But boards in Singapore also meet the least often, and hold the least number of committee meetings compared with their regional peers.
The management consultancy analysed data collected from 200 large companies in the four countries from 2008 to 2010.
The results showed that at the median level, NEDs from large companies in Singapore were paid US$75,300 in 2010, second to those in Indonesia, who took home US$178,600.
By comparison, NEDs in Thailand and Malaysia received US$46,600 and US$46,300 respectively.
In Indonesia, NEDs take home a substantially higher pay because state-owned companies and some private companies stipulate their pay to NEDs as a percentage of the president-director’s compensation for both the salary and bonus portions. These which are supposedly linked to performance – already made up about four-fifths of NEDs’ pay.
Most of the remuneration for NEDs in Singapore, Thailand and Malaysia is made up of a flat fee, not performance-linked.
The salary of NEDs in the region have been heading higher over the past few years.
In Singapore, the increase was 9% in both 2009 and 2010, while in Malaysia, the NED pay rose 17% in 2009 and 3% in 2010.
In Indonesia, the increase was% 13% and 10% respectively in 2009 and 2010. In Thailand, the NED pay rose 14% in both years.
Thai companies held the most number of board meetings between 2008 and 2010, on a median level. In 2010, an average of nine board meetings were called by the 48 Thai companies reviewed.
Singapore fared the worst, with the 50 companies calling just five board meetings each in 2010. Malaysia’s top companies held six meetings, while those in Indonesia conducted seven.
Indonesian companies also had their audit committees meet more than 10 times a year between 2008 and 2010, which is significantly more often than in Singapore – at four times a year – and Malaysia, at five times a year.
As audit committees have a heavier responsibility than other committees, in Singapore, the chairman and members of the audit committee get higher annual retainers than those in other committees. Thai cos also do something similar
The median tenure of independent directors is the highest in Singapore, which stands at seven years. Malaysia follows with six years, Indonesia is at four-and-a-half years and Thailand has a median tenure of three years.
Proposed revisions to Singapore’s Code of Corporate Governance note that companies must explain the reasons that a director who has served more than nine years on the board is still deemed independent.
Hay Group’s review showed that 62% of the top companies in Singapore have at least one independent director who has served more than nine years on their board.
Given that Professor Lim Chong Yah’s “shock therapy” proposal is a variation of what was implemented the early 1980s (until the 1985 recession: neutral article on the recession and one blaming it on the original “shock therapy”), when one Ngiam Tong Dow* was Permanent Secretary in the Ministry of Trade and Industry, I thought it would be interesting to reread a speech Ngiam made in March because MTI had once upon a time analysed the problem of severe manpower shortages and the economy’s increasing reliance on lowly paid foreign workers. Its solution was to restructure the economy by raising wages substantially to dampen employers’ demand for lowly paid workers, what Professor Lim is recommending.)
Rereading Ngiam’s speech, I don’t think he would agree with Dr Lim’s proposal because Ngiam says, “Rising productivity enables workers to be paid more. Inflation sets in only when wages are raised without any increase in productivity.” So productivity comes first, then wages rise as a consequence. Dr Lim would go back to the 1980s plan of raising wages to force up productivity.
(BTW, the government, especially Tharman, keeps “talking the talk” of raising productivity, despite not walking the walk. I’m sceptical of its announced plans to cut the “FTs are betterest” policy until I see how it is being implemented.)
The speech is long and can be divided into an economic analysis of S’pore and a sociopolitical analysis of S’pore,
In this post (Part I), I report and comment on the economic part of the speech**. In Part II (
later this week), I will report and comment on the sociopolitical aspects of his speech.
Evolution of the policy of importing cheap foreign labour
“Singaporeans of my generation remember vividly the slums, joblessness, dirt and disease of the 1950s. Through dint of hard work and discipline, we moved rapidly from a labour to a skill-intensive economy. By the early 1970s, we achieved full employment with an unemployment rate of 3 per cent.
‘In the early 1970s when we achieved full employment, some of us in the EDB began to ask the question about the critical size of populations. We did some desktop research and found that there were several industrialised European countries with population size of around 5-6 million. These were Israel, Norway, Sweden and Finland. Our town planners went to work and concluded that Singapore with a land area of 670 square kilometres can comfortably accommodate a population of 5-6 million … we allowed in one million foreigners in the last decade.”
He went on, to give another reason for the FT policy, “As our births fell below replacement levels, we resorted to immigration as an instrument to top up the babies that young Singaporean couples are not having. There are also elements of political re-engineering. Submerged in our immigration policies is the belief that to maintain racial harmony, we need to keep the current population balance constant.”
He challenged the premise that S’pore needs a bigger population pointing out that
– “Singapore is already straining at the seams with a current resident population of five million … The economic assumption is that we can increase our GDP if we can accommodate more people … even doubling our population to 10 million people will not make things better. More likely, a larger population can only make matters worse.”
– “[C]omputer technology has made many manual operations in production obsolete. The key is to produce more with less manpower.”
“The great challenge … is that we have reached the limits of our skill-based model of growth. Singapore has to move from a skill to a knowledge-based economy. The products and services … are characterised by high technological content. To position ourselves for such an economy, Singapore devotes the greater part of our national budget to education and training.”
“When I was in school in the 1950s, only three out my O level class of 40 went on to university. Today, 30 per cent of a primary school cohort enrol in tertiary education. Raising our average educational level from primary to post-secondary should make a world of difference for our international competitiveness.”
“Our higher education levels and superior infrastructure enable us to compete in knowledge-based industries and services.”
“I observe with some dismay that the manufacturing share of our GDP dropped from a high of 30 per cent in the 1980s to 20 per cent currently.”
“Our total factor productivity should be rising not stagnating. In my view, productivity and real wages of the bottom 20 per cent of our work force have not risen because our labour policies allow employers easy access to low wage foreign labour.”
He explains that for S’pore as a whole, there are costs to this easy access to cheap foreign labour, “If we add the cost of housing, transportation, health and other social services which employers have to provide for their foreign work force, they may be better off training and equipping their Singaporean employees to raise their productivity. Rising productivity enables workers to be paid more. Inflation sets in only when wages are raised without any increase in productivity.”
“Productivity can only be raised when CEOs … take direct charge of the production process. They have to be hands on, not resorting to outsourcing. Productivity should be the key KPI (key performance indicator) for the award of bonuses to CEOs and management.”
“Like any other country in the world, Singapore now competes in a global economy. In such an economy, importing cheap foreign labour is no longer a viable strategy. It is a dead end.”
“We have to grow through raising productivity, not higher headcount. We need to be smart enough to produce more with less. Our higher education levels and superior infrastructure enable us to compete in knowledge-based industries and services. We transformed ourselves in the 1970s from a labour to a skill-intensive economy.”
But he accepted that “raising total factor productivity .. is not easy. A Japanese scholar pointed out … that the optimum rate of productivity increase achieved by [Japan] averaged 4 per cent annually … Japanese are one of the most diligent people in the world.”
Why importing cheap labour is not the solution – it’s a race to the bottom
“Singapore now competes in a global economy. In such an economy, importing cheap foreign labour is no longer a viable strategy. It is a dead end.”
“In a global economy, you will be competing not only with friends and classmates but with the best and brightest of your generation in India, China, Brazil, Russia and Eastern Europe. University graduates in China and India are willing to work for a tenth of what our young engineers and scientists expect. If we fail to raise our total factor productivity, Singapore would just be an also-ran in the race to be a knowledge-based economy. The window to raise total factor productivity through application of knowledge and training is fast closing with the opening up of India, China and Indonesia. Singapore has lost two decades relying on low-wage, low-skilled foreign labour to drive economic growth.”
What can help
– “Our managers and administrators are among the best paid in the world. They will have to get off their high horse and personally lead the drive for higher productivity. Outsourcing is a bad word in my vocabulary. Companies and government ministries should figure out how to train their staff and redesign jobs and processes to achieve more with less.”
– “[I]nterest free loans should be given to enterprises with clear roadmaps to re-equip and raise the productivity of their workers.
What he is against
“Grants should not be given to management (consultants) to do a job they are already paid to do.”
‘I am against job credits in any form because they are simply wage subsidies which do not raise productivity in any way. My personal observation is that job credits simply add to the bottom line for payment of bonuses to management who do not have to lift a finger to raise the productivity of their enterprises.” Based on this, I suspect he would also be against having a minimum-wage.
“The 2012 budget is politically adroit, replete with spending proposals which basically are income transfers from the taxpayer to the poorly paid, the disadvantaged and the aged. Income transfers are palliatives, temporary reliefs to abate rising social discontent. They do not help to raise productivity.”
“We failed to bite the bullet in the 1980s to restructure our economy. There may be no second chance the next time around.”
*Ngiam was in the 1980s one of Lee Kuan Yew’s and Goh Keng Swee’s most trusted civil servants and if anyone, could be called a co-driver of S’pore’s drive from third world to first world, it would be he.
**The quotes are taken from a transcription published in BT.
S’pore’s average wage is juz behind Germany’s and juz ahead of Australia. HK is a long way below us. So Gordon Lee and David See (TOC contributors) stop talking BS when comparing S’pore to HK. Lots of things wrong with S’pore but there is a difference between facts and rubbish. (Funny that TOC use their stuff when TOC has contributors of the quality of Ghui and Uncle Leong.)
Funny also the our mainstream constructive, nation-building doesn’t report how well S’pore ranks globally. Cock-up or subversion by friends of Gordon and David in the newsrooms of our constructive, nation-building media? ISD should investigate.
Article 14 has got it absolutely right last week http://article14.blogspot.com/2012/04/electricity-prices-go-up-because-of.html. He is right to point out that SP Services explanation of why electricity prices have to rise (that the price of natural gas is going up) is absolutely rubbish. World prices of natural gas have collapsed as Article 14 pointed out.
The explanation is simple, but I suspect it is an explanation that SP Services and the government want to “hide” from ordinary S’poreans who don’t follow energy prices and trends, or the evolution of the energy industry over the decades. The sad but funny reason is that there is no selfish or self-serving reason to “hide” anything.
Here’s an opportunity for the PM (“working together”) or Tharman (“I think it’s important for us to retain a relationship of trust between whoever is the elected government and the people”) to show that they are “walking the walk’ of “engaging” us.
As it’s the economics and evolution of the natural gas market that make us pay more for natural gas while prices keep going down, this should not affect perceptions of the government by reasonable (the majority) of S’poreans.
Over a week ago, the NYT reported, the price of one million Btu of natural gas fell below US$2.20 for the first time since 2002, while oil prices slipped a little but remained above US$100 a barrel. The last time natural gas was this inexpensive, oil cost about US$20 a barrel.
Unlike the oil market*, the natural gas market, is not a global, nor an efficient one (outside of the US). (I’ll explain this in detail later using S’pore and Qatar as examples).There is only a limited global trade in gas (the S’pore government is trying to encourage such trade with the building of a gas terminal), which can be transported in tankers, but mostly gas must move in pipelines over land in Europe and North America, the biggest users of energy. Example: natural gas prices have been rising in Britain this year even as they have been falling in the US.
Supply has soared in the US because of increased production from hydraulic fracturing (a newish technology), but demand in the US cannot change rapidly. Power plants that can burn gas or oil were shifted to gas long ago. And a relatively mild winter in the US has reduced demand. There is now a glut there.
S’pore, as readers, will know gets its supply of gas from gas fields in Indonesia and Malaysia. The energy MNCs who developed these kind of fields did not develop these fields until they were assured that there were assured long-term buyers of the gas (This is still true today). There are a lot of upfront costs and the lead period from the time the fields are being developed to the first shipment of gas to the customer are measured in decades. Example: gas was discovered in Qatar in large quantities in the 1980s. It became a major exporter only in the early to mid-noughties. It took that long to build the facilities to ship the gas to places like Japan and South Korea, taking into account the time to negotiate the contracts.
Then there is the issue of pricing. Until very recently, natural gas contracts were priced off the price of oil because they were often found together, and both were scarce.
When the gas contracts for S’pore were negotiated all those many years, the price of the gas that S’pore pays was priced off the price of oil. Hence one reason of the paradox of us paying higher prices for gas when the price of gas is at a 10-year low. Another reason is that S’pore is locked into long-term contracts, and another is that until the gas terminal is operational in the second quarter of 2013, we can’t get gas from another source. BTW, the plans for a gas terminal show that the government can get things right.
Now S’poreans are not the only people who got “screwed” by the breakdown between the price of gas and oil. KKR and TPG, giant and successful US private equity investors invested billions of their investors’ funds in TXU. One of the things they were betting on was that gas prices would be priced-off oil prices for the foreeable future. Err now even Buffett has lost money buying TXU bonds.
So why don’t we get told the truth of why we are paying higher prices when the price of natural gas has collapsed, when the answer has nothing to do with government or its agencies incompetency?
One reason could be that the PR people in these organisations are still stuck in the pre-internet model of news management. They believe and advise that “news” can be manipulated to fool the people all of the time.
More seriously, the government and its agencies may want us to think that their value (and high salaries of the senior staff) lie in making the right long-term decisions all of the time.
They should realise that S’poreans are no longer dependent on the government, its agencies and the constructive, nation-building local media for facts and analysis.
And that S’poreans have realised that long-term decisions don’t always result in benefits for S’poreans. We know that already because of the FTs, and public housing and transport problems, the result of long-term planning and decisions.
In the case of gas, it was (and still is outside the US) a rational decision to buy on long-term contracts gas that is priced off oil. It’s not a balls-up on the lines of the FT, and public housing and transport policies which has the government throwing money at the public housing and transport systems, and telling us that it’s changing its “FTs are betterest” policy.
Finally, market expectations are that this time next year, oil prices are expected to be almost where they are now, while natural gas prices are forecast to have risen more than 50%. What a great time then to shout about the competency of the government, when telling us that electricity prices are relatively stable?
My point is that facts are changing, what may look bad for the government one day, may look good another day, depending on the facts. It shouldn’t “hide” the truth (especially when the truth doesn’t discredit the government) if it wants S’poreans to regain trust in the government.
*Oil moves around the world in tankers that can be diverted from one destination to another in response to shifts in demand. A sharp change in demand or supply in any place is likely to show up in prices everywhere. Oil prices can also be affected by geopolitical concerns. Example: oil prices have risen on worries that Israel might attack Iran, leading to a drastic reduction in Iranian oil exports.
Analysts Maplecroft rates five countries at the “extreme” level of risk for the pandemic spread of influenza, with Singapore top, followed by the UK, South Korea, the Netherlands and Germany.
Singapore is rated the highest for the speed at which influenza could spread, because of its dense population (all those FTs?) and its status as a global travel hub.
One reason why Wilmar had such a bad set of results was because it’s Jing Long YU (China’s biigest cooking oil brand) could not raise prices because of administrative measures imposed by the government to control inflation. Pre-tax margins in this segment more than halved.
Now that Chinese inflation has fallen to a 20-month low in February, Wilmar should be able to raise prices for this brand?
No, not profits from lending to gamblers and loan sharks but from raising money for Sands.
Las Vegas Sands, controlled by Sheldon Anderson, hired DBS Bank, OCBC Bank and UOB to coordinate a S$4.6bn loan for Marina Bay Sands, Bloomberg News reports. The loan may be split into a S$4.1 billion term facility and a S$500 million revolving credit facility.