Archive for June, 2011

As thick as… millionaires in S’pore

June 5, 2011

Dear readers,

I refer to the 2 Jun 2011 Straits Times report of Singapore topping the world in the number of millionaire households. According to the Boston Consulting Group, 15.5% of Singapore households own more than a million US dollars in assets, higher than Switzerland and oil rich Gulf States like Qatar. It was also reported that the number of millionaire households in Singapore rose by 33% last year after jumping by 35% the year before. We know that a huge chunk of Singaporean assets is in property so it is no coincidence that the sharp rise in number of millionaire households coincided with the sharp rise in property prices in recent years.

But before we celebrate, we need to understand that property price rise is a zero sum game. There is no wealth created, only wealth transferred from future buyers of property to property owners. In that case, having the highest percentage of millionaire households will also mean having the highest percentage of future households enslaved to servicing high housing mortgage loans. Contrast this with places where housing prices have been more stable and where wealth increase has been more real and more sustainable.


‘Slower growth means fewer job opportunit​ies’

June 5, 2011

Dear Minister Khaw,

I refer to the 30 May 2011 Straits Times report of your comments at the Sembawang GRC Youth Executive Committee’s policy forum.

You said the government thought it was important to bring wages to people’s pockets in order for the country to grow and catch up with other countries. While the country has indeed grown and caught up with other countries in terms of GDP, it didn’t translate to wages in people’s pockets. The record GDP growth last year didn’t translate to record wage growth.

You also said the government got the message that the people do not want so much growth. The government got the wrong message. Growth can come from three areas – labour, capital and productivity. We do not want growth that is nearly entirely fueled by labour growth. We want productivity growth which will allow wages to grow.

You said accepting slower growth means starting pay also comes down. Not necessary. Even if labour growth slows, as long as productivity growth increases, wages will grow and so will starting pay. Over the past four years, starting pay hardly went up while flat prices went up by one, two hundred thousand dollars, the direct consequence of growing labour without growing productivity. If sacrificing one, two hundred dollars of starting pay allows housing prices to come down by one, two hundred thousand dollars, I think young people wouldn’t mind the trade-off.

To think only in terms of labour growth and nothing else is to tell Singaporeans that the government is bereft of ideas to grow the economy except to pile on more people.

Open-door policy vital to S’pore

June 5, 2011

Dear Straits Times,

I refer to the 1 Jun 2011 letter by Mr Kevin Kwek. Mr Kwek reminds Singaporeans of the danger of a ‘closed to foreigners’ view and urges Singapore to remain attractive to foreign talent and to offer incentives for foreigners to call Singapore home. But the issue has never been about Singaporeans being ‘closed to foreigners’. The issue has always been about Singapore being too open to foreigners. There is a big difference between the two. Just because one enjoys hosting guests in one’s flat doesn’t mean one enjoys putting up with 50 of them in the same small flat.

He says our small size means that we can never hope to have the right balance and number of talent. But there are so many small sized countries that have no trouble finding the right balance – Switzerland, New Zealand, Denmark, Finland, Norway.

He asks without them to drive growth, how do we drive prosperity? But Switzerland, New Zealand, Denmark and Finland do not need to resort to mass import of foreigners to drive prosperity. Therefore, high immigration rate is not necessary to drive prosperity.