S’pore chose the right road

Dear Straits Times,

I refer to the 21 Jul 2012 letter by Mr Bobby Jayaraman.

To show that the government had chosen the right path in actively pursuing growth, Mr Jayaraman contrasted the years 2001 to 2005 when the economy grew slowly, property prices fell and median household income fell from $4,363 to $4,270 to last year when the median household income was $6,307.

Firstly, judging from the HDB resale price index, it is more accurate to say that property prices were relatively flat from 2001 to 2005 than to say that property prices fell. Secondly, the economy grew slowly in this period because of the double whammy of Sept 11 and SARs occurring almost one after the other.

Mr Jayaranman’s household income comparison is also inadequate for the following reasons:

  • If Mr Jayaraman had considered 2000 to 2005 instead of 2001 to 2005, the result would be an increase in median household income from $4,000 to $4,270 instead.
  • There are four years’ of growth between 2001 and 2005 compared to six years’ of growth between 2005 and last year.
  • There were two economic recessions in the period 2001 to 2005 compared to just one between 2005 and 2011.
  • Mr Jayaraman did not adjust his numbers for inflation. The median household income last year when adjusted for inflation is only $5,153, 18% lower than Mr Jayaraman’s figure.
  • Also, since the CPI doesn’t fully capture the steep spike in housing prices in recent years, for new households, it would be better to compare household income increase to housing price increase instead. HDB resale price index went from 106.7 in 2005 Q1 to 190.4 in 2011 Q4 or a 78.4% increase compared to a 47.7% increase in household income from $4,270 to $6,307. Therefore, for new households, increase in household income lagged behind increase in housing prices significantly.

    Singapore was already a busy trading centre since colonial times. Going from trade to finance is not too far a leap and not too unnatural a step for the people of Singapore to make with or without the government. The integrated resorts are part of the tourism industry which accounts for only about 3% of our GDP, a percentage too small to be to be the driving force of our economy. In any case, casino betting taxes of $0.9 billion in 2010 is small compared to the government operating revenue of $44.5 billion [1] that year.

    Mr Jayaraman asked whether empty buses and trains or secure, well-paying jobs are more important. Perhaps for Mr Jayaraman, an empty brain is most important. No one ever demanded for empty buses and trains, only comfortable buses and trains. Prior to the recent population explosion, were buses and trains ever empty? They weren’t empty, neither were they overcrowded, just the way they should be.

    Mr Jayaraman argues that secure, well-paying jobs are possible only if the economy grows at a ‘healthy’ pace. Referring to the table [2] below, many First World nations can provide job security to its people with much less growth than us.

    Average unemployment 2005 – 2010 Inflation adjusted per capita GDP growth 2005 to 2010
    Norway 3.3 3.2%
    Korea, Rep. 3.5 0.2%
    Netherlands 3.8 1.9%
    Switzerland 3.9 5.2%
    Japan 4.4 3.8%
    Austria 4.5 1.9%
    Hong Kong SAR, China 4.6 2.0%
    Luxembourg 4.6 2.9%
    New Zealand 4.7 0.6%
    Singapore 4.8 5.5%
    Australia 4.9 5.2%
    Denmark 4.9 1.4%
    United Kingdom 6.0 -3.3%
    United States 6.5 -0.7%
    Italy 7.2 0.1%
    Sweden 7.3 2.3%
    Finland 7.6 1.6%
    Belgium 7.9 1.3%
    France 8.6 1.4%
    Germany 8.7 1.8%

    Quality of life is not just correlated to any kind of growth but to quality growth rather than to growth in numbers. It is unfortunate that Singapore cannot achieve quality growth and have to resort to massive growth in numbers instead.

    The Arab Spring happened for reasons such as income inequality, lack of transparency and lack of democracy, the same ills plaguing our country. US unemployment isn’t representative of First World unemployment as over half of the First World economies in the table above have similar or better unemployment figures than us.

    Life in Russia isn’t necessarily happier after the collapse of communism. Net migration has increased from 906,615 in 1990 to 1,135,737 in 2010 [2]. Referring to the table [2] below, Russian per capita GDP has been increasing at snail’s pace over the last twenty years.

    Indicator Name 1989 2010 % annual increase
    GDP per person employed (constant 1990 PPP $) 15,703 18,259 0.7%
    GDP per capita (constant 2000 US$) 2,693 2,927 0.4%
    GDP per capita, PPP (constant 2005 international $) 13,066 14,199 0.4%

    Referring to the table [2] below, income share of the poorest has fallen and GINI index has nearly doubled.

    1988 2009
    Income share held by lowest 10% 4.22 2.75
    Income share held by lowest 20% 10.01 6.46
    GINI index 23.8 40.11

    There is even a video to show how miserable life in Russia is after the fall of communism [3].

    No one is blaming the government, just stating the fact that growing numbers has many problems and that it is better to grow in quality instead. We don’t just choose the pace we run, we also choose how we run.

    [1] Yearbook of Statistics Singapore 2011

    [2] Derived from World Bank data

    [3] http://www.documentarystream.com/death-of-a-nation-russia-after-the-collapse-of-the-soviet-union/

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    One Response to “S’pore chose the right road”

    1. AttCch Says:

      Jayaraman failed to learn from Mah Bow Tan. Both are caught using the same trick of choosing a base year to spin their agenda. MAH Bow Tan wanted to show that HDB flats remain affordable and that prices have not outstripped income growth. He was caught for his lie. Jayaraman follows in the exact same footsteps. He must be daft to think that Singaporeans are daft.

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