Archive for September, 2010

The housing bubble trouble

September 30, 2010

Dear Mr Gyourko,

I refer to the 29 Sept 2010 reports ‘The housing bubble trouble’ and ‘I bet that housing does not drive child-bearing decisions’ of your interview with the Straits Times.

The housing cycle is undesirable and should be smoothened out as much as possible. People who buy at the crest of the cycle suffer a loss. People who sell at the trough of the cycle also suffer a loss. We can’t say that these cycles even out over the lifetime because no matter how we look at it, the person who paid higher prices simply lose out to the person who paid lower prices.

As an example, Tom bought a flat for $100,000 when prices were low. Three years later Jerry bought the flat next door for $200,000 when prices were high. Let’s say ten years later, the flats Tom and Jerry bought have risen to $500,000. For Tom, that’s a gain of $400,000 but for Jerry, the gain is only $300,000. So for the rest of their lives, Tom will always be $100,000 better off than Jerry. That is easily five times the median annual salary. It’s like Jerry has to work an extra five years just to be even with Tom. Or Tom can afford to quit working for five years and still end up on par with Jerry.

People can’t time their housing purchase to coincide exactly with the trough of the cycle as they can’t time when they get married. It’s not fair that they lose out simply because they got married a few years earlier or a few years later. So they are at the mercy of the property cycle which should be managed.

There is no truth to the saying that our houses are affordable even to those with modest incomes. Who are we comparing with? Only when we compare with some of the world’s most expensive places like Hong Kong and London do we find Singapore home prices lower. Try comparing with American cities, our homes are so much more expensive.

You also need to understand that the financial inducement for child bearing is in terms of thousands of dollars. But housing price is in terms of hundreds of thousands of dollars. Even the initial down payment can come up to tens of thousands of dollars. In Singapore’s context, setting up a home comes before child bearing. If we can’t even afford the tens of thousands of dollars to set up a home first, what use is the few thousand dollar carrot for child bearing?

While Singapore is far more prosperous than Bangladesh, cost of living is also much higher. Singaporeans simply do not allow their kids to run around unclothed or to be fed the simplest of foods. As a society progresses, the standard of living rises and with it comes higher cost of child bearing.

Since income affects fertility while housing eats up a huge chunk of income, housing cost should affect fertility too.

MM Lee’s interview with The New York Times

September 28, 2010

Dear MM Lee,

I refer to your interview with The New York Times as reported by Today on 13 Sept 2010.

The so-called enormous edifice we have today was built by Singaporeans, not any one man. So you can go with no regrets knowing that Singaporeans will continue to build on this edifice as they have been doing so since 1819. Also, don’t worry about second chances too. If Singapore can bounce back so strongly after the Japanese occupation, it can bounce back again if necessary.

While your concern for racial politics is understandable, do not forget that David Marshall, Devan Nair and JB Jeyaratnam were minority candidates voted in by the majority long before HDB’s racial integration rules were entrenched.

While English has given us progress by connecting us to the world, Cantonese, Korean and Mandarin have similarly given progress to Hong Kong, Korea and Taiwan respectively. China’s progress for the last twenty years comes without a strong English connection.

The life that we are enjoying today started with Sir Stamford Raffles. Without him there would have been no Singapore. For nearly 150 years since the time of our founding, the hard work and enterprise of Singaporeans from all walks of life helped lay the strong foundation upon which modern Singapore would eventually rise. But the catalyst that would propel Singapore forward came from a winning formula by Dr Albert Winsemius without whom there would have been no modern Singapore.

It might relieve you to know that the communists and killer squads you supposedly fought were in Malaya. How you fought them when they were in Malaya while you were in Singapore is a mystery. Singaporeans would have had a true hero had you used your guts and gumption to fight the Japanese like Lim Bo Seng and Lt Adnan instead of just working for them.

There is not an ounce of doubt that you and the PAP are absolutely incorruptible. You are paid more than what Chen Shui Bian could stash away over eight years. If you asked Chen Shui Bian to choose between million dollar salaries in Singapore versus million dollar corruption in Taiwan, he would probably have chosen Singapore.

If a journalist makes a factual report of political dynasties across Asia, why should he get sued? Is it a statement of fact or an allegation of nepotism that the prime ministership which you started is now passed on to your son?

How can you say that locking innocent people up for decades and robbing them of the most fruitful years of their lives is honourable? You once said: “Until 1962, Singapore had endless strikes. By 1969, there were none. In seven years, industrial relations had been transformed profoundly”. In other words, the leftist movement had been largely extinguished by 1969. Why then did you continue to lock up Dr Lim Hock Siew and Chia Thye Poh until 1982 and 1998 respectively? Can you say that Dr Lim was playing on Chinese language and culture when he is essentially English educated?

There is no truth to the saying that the leftist movement in Singapore were killer squads who believed in one bullet, one vote. Show me one single bullet fired by the leftists in Singapore. If you are telling me that a bullet fired in Malaya means a bullet fired in Singapore, then you might as well show me all the bullets fired in Vietnam, China, Russia and Cuba.

There was at that time a lot of controversy with your keeping down the Chinese language. There is no end to debate on the purpose that it served. But there is one tangible outcome that came out of it. The breaking of the Chinese language also meant the breaking of the power of the Chinese speaking masses, a turn of event that would benefit English speaking leaders like yourself immensely whether or not it was intended to be that way.

Guard against romanticising leftist past

September 27, 2010

Dear Mr Ong,

I refer to your Straits Times article dated 23 Sept 2010.

We must avoid the common mistake of portraying the acts of violence by the Malayan Communist Party (MCP) in Malaya as being acts of violence towards Singapore. We must not deny the historical fact that all acts of violence by the MCP took place in Malaya, never once in Singapore.

No matter how negatively we view the MCP, we must not view the labourers, students and intellectuals associated with the left-wing movement as communists. Even though there is some association between the MCP and the leadership of the left-wing movement, it doesn’t mean that that association extended throughout the left-wing to include labourers and students. It is the same when we look at the NTUC and the PAP. Even though there is a close association between the two, it doesn’t mean that ordinary NTUC members who just want to enjoy discounts at NTUC supermarkets are hard core PAP supporters.

When you say that the MCP took and threatened innocent lives on both sides of the Causeway, you are committing the common mistake of equating the MCP violence in Malaya as being violence in Singapore. The MCP took and threatened lives on the other side of the Causeway, not on our side. It will make your case more persuasive if you can at least make this fundamental differentiation clear.

The perpetrator of the June 1974 booby trap incident was the MCP, not the rest of the left-wing movement. While the danger posed is real, it is nonetheless an isolated incident more commemorative in nature than having any real intent or purpose. Communist assassinations in Malaysia in the 1970s serve to reinforce the fact that the MCP or its breakaway faction operated in Malaysia, not Singapore.

You said that recently declassified British and Australian archives would likely be read against the grain to challenge the narrative of the state. With that you are betraying your own innate bias that the natural grain ought to be with the state rather than against it. The historical narrative should not be prepossessed of any natural grain for or against the state or for that matter any other historical figure. It should simply be the most reasonable truth supported by facts.

You refer to an alternative history as though it is an alternative truth. But there can only be one and only one truth and any alternative from that truth is simply not true. Just because newly uncovered truths happen to challenge the state narrative doesn’t mean that there is a trend towards challenging the state narrative. We can’t manufacture new truths just because we want to. New truths are simply truths that have been existing all this while waiting to be uncovered. Therefore, to rein in these so called ‘alternative histories’ would be in fact to rein in newly uncovered truths.

If we leave the state to be the gatekeeper of any historical issue, we may end up like Japan where the atrocities committed by the Japanese during World War II are simply whitewashed. The conviction of David Irving for trivialising the Holocaust goes to show that history freely studied by all can and will be scrutinised and corrected by all. If the state sponsored white washing of Japanese war time atrocities is similarly free for debate and criticism by all Japanese, generations of post war Japanese state historians would have been similarly hauled to court instead of continuing their gross misrepresentations of the truth.

Move beyond left-right debate

September 27, 2010

Dear Mr Tharman,

I refer to the 25 Sept 2010 Straits Times report of your speech at the Singapore Global Dialogue dinner.

We should not blindly apply the flexible labour market rhetoric for every situation. Businesses such as coffee shops, supermarkets and department stores serve the local market primarily and do not compete globally. The argument that flexible labour markets help them compete with the world is not valid. Therefore, the strategies of the left still hold for the local segment of the economy. Only industries which manufacture goods for the world compete directly with the world and benefit from flexible labour markets.

Lowering the cost of living through flexible labour markets is also pointless if it means lowering our salaries as well. The gain by our consumers comes at a cost to our workers. Ultimately, labour market flexibility is nothing more than a cost containment strategy that can only bring us so far. To go really far, we need to focus on raising the value of our output, which can only come about through the creation of winning brands and products that are highly sought after all over the world.

Laissez-faire is a term that applies to the economy. It does not absolve the state from providing basic services such as clean running water and social services. One good example is laissez-faire Hong Kong which has recently passed the minimum wage law to achieve social equality. Thus, the governing model you propose is not something new but is already exemplified by Hong Kong.

While it may seem like we are promoting self-reliance through workfare, in reality, we are merely making up for our workers whose salaries have been undercut by the mass influx of cheap foreign labour.

Europe’s woes are commonly seen as the consequence of the welfare state. It is not. The problem is the great number of baby boomers who are retiring now. Removing the welfare state will not remove the need for these old folks to be taken care of which will sap the economy one way or another. Our turn will come and we are already facing increasing pressure for social welfare even though we are not a welfare state.

Similarly, it is easy to blame US unemployment on politicking but it is not something that can be easily resolved even if there is no politicking. It is simply so much more difficult to find jobs for Americans compared to Singaporeans because there are so many more of them compared to us.

Singapore democracy

September 27, 2010

Dear Straits Times,

I refer to the letter by Dr Yik Keng Yeong dated 25 Sept 2010.

Dr Yik’s description of rigged elections, apathetic and bribe-able electorate, sinning politicians, inefficient administration, intimidated judiciary and gonzo journalism befits the situation in the most dire of third world countries. They hardly describe first world democracies, which have shown themselves to represent the highest political ideals even if they aren’t perfect.

Dr Yik deems the leadership’s lofty goals as being well considered. Would Dr Yik consider the policy of growing at all costs well considered?

An American view of Singapore democracy

September 26, 2010

Dear Straits Times,

I refer to the letter by Mr Mark Topolski dated 25 Sept 2010.

Mr Topolski claims to have observed the Singapore democracy for more than ten years now. But according to his own posting http://comment.straitstimes.com/showthread.php?t=13816 under the ST forum thread “What will make race a hit: Visitor” dated 27 Sept 2008, Mr Topolski wrote under the psuedonym of zheren:

zheren

September 27, 2008 Saturday, 08:45 AM
——————————————————————————–
Actually, my Wife and I flew it from the USA. We come to Singapore 2 to 3 times a year. When in Singapore, we stay with family in a HDB flat. We currently live in the mountains of North Carolina. I was born in the USA, however, my Wife is Singaporean Chinese. Other than the ST error of where we flew in from, this letter is accurate.

Thus, Mr Topolski is no more than a tourist observer of Singapore, visiting Singapore only two to three times a year but never staying on a permanent basis. How can Mr Topolski possibly feel let alone understand the daily grind and crush we Singaporeans experience day in day out when he is only here for short periods and for reasons closer to that of a tourist’s? How can he possibly understand the anxiety of sky rocketing home prices when houses are so much cheaper back in North Carolina and a ready flat awaits them whenever they come to Singapore?

Mr Topolski simply doesn’t have the credentials to truly appreciate Singapore’s ‘democracy’. If he did, he probably wouldn’t even label Singapore as a democracy. His admiration is only for what Singapore appears on the surface. Likewise, his impression that the government seems to really have the people’s good and well being at heart reflects a superficial understanding of what really goes on here. Singaporeans have lamented for more than three years now on sky high property prices but our pleas have always gone on deaf ears. It is only recently that the government finally did something about the situation. But its ‘action’ comes suspiciously close to election time which makes us wonder if they’re really doing this for us or for themselves.

What matters is a democracy that works

September 26, 2010

Dear Straits Times,

I refer to the letter by Mr Theodore Yeo dated 25 Sept 2010.

Mr Yeo wrongly accuses Mr Gerald Giam of describing democracy as being an auto-pilot to success. Mr Giam described the fundamental principles of democracy that we should work towards, not cruise towards on auto-pilot.

Mr Yeo also wrongly accuses Mr Gerald Giam of dreaming of a democratic process devoid of partisan interest. Mr Giam speaks of a democratic process where in spite of partisan interest, citizens can still choose wisely in an atmosphere of openness, transparency, freedom of speech, objective and fair mass media and government criticism.

Mr Yeo thinks it is paradoxical that vigorous political competition can yield a strong independent government. But that is exactly what the United States stands for. Their vigorous presidential elections threw up a strong government led by Barrack Obama who successfully steered his country and the world away from the global financial crisis.

Mr Yeo thinks that the United States is being stymied by its own democracy because the president needs approval by both the House and the Senate which are at odds with each other. But those odds didn’t prevent the president from ultimately achieving his aims. The amendment or the abandonment of bills does not mean that the country is therefore worse off. We ourselves have had so many policies implemented without so much as being passed which eventually led to even greater problems, policies such as “growth-at-all-costs” and our previous policy of over-relying on the electronics industry.

Mr Yeo blames the loss of American jobs to China and the accompanying falling of American wages on US politicking. But American jobs are also being lost to India, the world’s foremost IT outsourcing destination. Yet, India has so much more politicking than the US. If jobs are lost from one politicking country to another politicking country, surely politicking is not the reason why those jobs are being lost or gained? Those jobs are being lost because of the huge discrepancy in wage levels between the US on the one hand and third world nations on the other.

The outstanding leader that is Barrack Obama shows that the US democracy works. Despite partisan agendas, healthcare reforms were passed nonetheless. Mr Yeo used this example to ask if Singaporeans would like to wait long, long should MediShield require fixing one day. But in just a few months, the monumental healthcare reforms were passed which goes to prove that Singaporeans don’t have to wait long, long should Singapore ever come under a truly democratic system.

Mr Yeo refers to our government’s swift action in a crisis like the one when manufacturing jobs were lost to China. But that swiftness took a few years during which many Singaporeans who lost their jobs suffered immensely. Contrast this with the swiftness with which the US democracy dealt with the much bigger and more acute global financial crisis. US reaction was no less swift and no less decisive than Singapore’s.

Wages: Workfare’s the long-term answer

September 25, 2010

Dear Ministry of Manpower,

I refer to your Straits Times letter dated 22 Sept 2010.

There is a sizeable segment of our small and open economy that does not compete globally. The coffee shop, the supermarket and the food court are examples of businesses that compete locally, not globally. The argument that the labour market must be flexible for them to stay competitive is thus not valid.

A minimum wage can better reflect the value of the workers’ contribution. For example, let’s say a job used to pay $10 an hour before there were cheap foreign workers. So the work is valued at $10 an hour. Let’s say cheap foreign workers are now available to do the work for as low as $5 per hour. The prevailing wage rate has now gone down to $5 per hour even though the value of the work remains at $10 per hour. In this case, a minimum wage of $10 per hour will help reflect the true value of the workers’ contribution.

So it is not that workers are contributing less than the minimum wage. It is the abundance of cheap foreign workers that is suppressing wages below the value of our workers’ contributions. Rather than worry about our workers being denied jobs that pay lower than the value of their contributions, we should instead worry about ensuring that jobs pay the right wage for the right value.

The threat that companies may move out of Singapore only applies to those which compete globally, not locally. If a coffee shop chooses to move out of Singapore, other coffee shops will take its place. As long as the customer base is local, as long as there are people who wants to drink coffee, there is no risk that a void is left behind and jobs will be lost.

Therefore, in the case of local enterprises, a minimum wage will not lead to a lose-lose-lose situation. It will instead lead to a fair-fair situation. Local companies will have to pay fair wages rather than dirt cheap wages while workers will receive a fair wage for a fair contribution.

Workfare doesn’t solve the problem at its roots, which is the easy availablity of cheap foreign workers. To give an analogy, it’s like instead of plugging the hole through which water is leaking, we try instead to top up the water to make up for the loss through the leak. We end up losing water still. Instead of solving the problem, we may end up creating the adverse effect of employers deliberately lowering wages to get the government to top up.

There is no need to redesign a job to increase its value if it pays the right wage for the right value in the first place. Job redesign should focus instead on work-life balance to ensure that family commitments can be met without compromise to business requirements. One way is to break up jobs into smaller portions to entice more people to take them up. Two 12-hour shifts can be broken into three 8-hour shifts or four 6-hour shifts. There is no loss in productivity as far as output per man hour is concerned. Yet, the shorter hours means that those with family commitments can also consider taking up the job.

MM gets top coverage in Ukraine media

September 25, 2010

Dear Ukraine Ministry of Foreign Affairs,

I refer to the 24 Sept 2010 Straits Times report of the statements made by Mr Alexander Gorin during the visit of Minister Mentor Lee Kuan Yew to Ukraine.

Mr Gorin reportedly said that MM Lee is a thinker, philosopher and practitioner who created a state and guided it from Third World to First. There are many misconceptions in his statement that needs clarification. Mr Gorin needs to understand that:

1. Singapore wasn’t created by MM Lee in 1965. It was founded in 1819 by Sir Stamford Raffles. It was Raffles who saw the potential of our strategic maritime location. Raffles proved to be correct and Singapore quickly became an important international port of call which led to a thriving entrepot trade.

2. Singapore has been thriving for nearly 150 years before MM Lee took over in 1959. Even at independence in 1965, our per capita GDP was already the fourth highest in Asia behind Japan, Hong Kong and Brunei.

3. Singapore joined Malaysia in 1963 and was booted out in 1965. If there was anyone who created the state of Singapore, it was Malaysia’s prime minister Tungku Abdul Rahman since he was the one who booted Singapore out and thereby ‘created’ the state of Singapore.

4. The supposed Singapore success formula of foreign investment led export industrialisation wasn’t the brainchild of MM Lee. It was the brainchild of Dr Albert Winsemius, a Dutch economist sent by the United Nations to Singapore in 1960 to help Singapore industrialise. Singapore went from Third World to First following Dr Winsemius’ plan rather than MM Lee’s.

5. Between 1961 and 1965, Singapore did not pursue export industrialisation but pursued import substitution instead. Only with our separation from Malaysia in 1965 which rendered import substitution untenable did Singapore finally embark on Dr Winsemius’ formula. Thus, MM Lee didn’t act on Dr Winsemius’ recommendations immediately and only adopted it when faced with no other choice. It seems therefore that our split from Malaysia in 1965 was the key factor that led Singapore to adopt export industrialisation rather than some conscious decision by MM Lee.

6. Singapore is not the only success story but is just one of four East Asian economic miracles alongside Hong Kong, Taiwan and South Korea. You will not find a similar statesman extraordinaire responsible for the other three economic miracles. This shows that you don’t need a statesman extraordinaire for a country to succeed. If we were to ask ourselves what is so special about these four economies, there is only one obvious answer, they are all East Asian societies. Not only that, China too has been rising rapidly over the last twenty years. The Singapore success is very much an East Asian success rather than the success of any one man.

YOG was positive in many ways

September 24, 2010

Dear Straits Times,

I refer to the letter by Mr Joshua Loh dated 24 Sept 2010.

Mr Loh explains the many positive effects of the YOG as being the chance for thousands of volunteers and athletes to participate, to learn and to be enriched. While athletes from all over the world benefitted from this golden opportunity to meet and to compete, it’s difficult to see their learning as being our responsibility. As for our own volunteers, we need to ask ourselves what exactly have they learnt? While Mr Loh describes his experience as a volunteer interpreter as being wholesome and interesting, it’s hard to see this as being overarchingly important. Since Mr Loh admits that it is difficult to quantify the educational benefits of his experience, it would also not be appropriate for him to overstate its educational value. Furthermore, Mr Loh’s experience is not something that cannot be realised in other contexts. He could have taken part in a student exchange or sought internship in a foreign country or visited a foreign country school in Singapore to experience the same interactions with foreigners.

Mr Loh says that a hundred years hence, the YOG flag will fly the Singapore name. It will not. The centennial Olympic Games held in Atlanta in 1996 carried the Atlanta name, not the name of Greece. Recognition, respect and admiration is associated with the current host nation, not the host nation a hundred years ago.

Mr Loh accepts the government’s ‘inexperience’ explanation as being reasonable. Does Mr Loh think that the current Commonwealth games fiasco in India can be reasonably attributed to inexperience?