Correcting Mr Stiglitz’s article “Singapore’s lessons for an unequal US”

Dear Mr Stiglitz,

I refer to your New York Times article “Singapore’s lessons for an unequal US” which was published by the Straits Times on 20 Mar 2013 [1].

Your assertion that Singapore has had the distinction of having prioritised social and economic equity over the past 30 years is not supported by facts. The diagram below charts the GINI coefficient of developed economies over 30 years [2]. As can be seen, three developed economies have always stood out above all others in inequality: Singapore, Hong Kong and the United States. It’s bewildering that you could consider Singapore to be a distinction of social and economic equity when it consistently features amongst the top three most unequal developed economies over three decades. Singapore’s high inequality over 30 years means it is unlikely that curbing inequalities was one of the many things Singapore championed.

30 year GINI chart developed nations

It is also incorrect to say that Singapore attained independence in 1963. Singapore switched from British sovereignty to Malaysian sovereignty that year. When Hong Kong was handed over from the British to the Chinese in 1997, did that result in Hong Kong gaining independence? Going from being a British dependent to being a Malaysian dependent doesn’t make us independent in 1963 [3].

It is not hard to believe that Singapore could come so far since 1963. Back in 1960, we already had the 3rd highest per capita income in Asia [4]. Furthermore, if we set aside nations that struck oil or diamond, the world’s fastest growing economies over the last four decades have all been East Asian economies [5]. Singapore is just one of the East Asian economies that have come far. What is surprising is not that Singapore has come far but the fact that without exception, the entire East Asia has come far.

Country Per capita GDP multiple from 1960 to 2010 Remarks
Equatorial Guinea 22.2 Struck oil
China Version 1 21.7 East Asian
Taiwan 17.3 East Asian
Korea, Republic of 15.9 East Asian
Botswana 14.2 Struck diamond
Singapore 12.7 East Asian
Hong Kong 11.8 East Asian
China Version 2 10 East Asian
Thailand 8.4 Southeast Asian
Malaysia 8.2 Southeast Asian

It was Dr Albert Winsemius who helped solve our then high unemployment problem by coming up with the industrialisation plan that we followed.

Your assertion that our government made sure wages at the bottom aren’t beaten down to exploitative levels is again without basis since even our government has recently acknowledged that we are a First World nation with Third World wages [6].

You’re mistaken that our CPF is adequate for healthcare, housing and retirement. According to the Mercer Global Pension Index [7], Singapore scored the second lowest in retirement income adequacy. It is ironic that you are holding up severely inadequate Singapore as the lesson for the much more adequate USA.

Country Retirement income adequacy (%)
Denmark 78.1
Netherlands 77
France 74.3
Canada 74.2
Australia 73.5
Brazil 71.5
Switzerland 71.3
UK 68.1
Sweden 68
Germany 65.2
Poland 63.6
USA 58.3
China 55.7
Chile 50.1
Japan 46.1
South Korea 45.1
Singapore 42
India 37.4

One HSBC survey shows that 4 in 10 Singaporeans have not set aside a single dollar for retirement because of high cost of living [8]. Another HSBC survey [9] shows that Singaporeans are worried about insufficient retirement funds.

High level of home ‘ownership’ also means high level of indebtedness as the average Singapore household’s debt-to-income ratio is higher than most developed countries [10]:

Country 2010 debt as percentage of income (%)
Singapore 208
UK 166.4
Canada 150.5
Japan 125.7
US 123.3
France 99.3
Germany 97.2
Italy 89.5

In return for the high price we pay for our housing, we get to keep it for 99 years after which our homes must be returned to the government. This is quite different from the concept of home ownership in the US which usually means owning the land on which the home is built in perpetuity.

Government schemes aren’t as progressive as they seem. Intervention of pre-tax income merely offsets the increase in Goods and Services tax felt by those at the bottom. The tilt towards those with less economic power is after many years of tilting away from them and also after the issue has been raised by countless Singaporeans.

Universal education is universally practised by all developed nations as the UN gross enrolment rate below shows [11]:

Country Primary (%) Secondary (%) Tertiary (%)
France 111 113 54.5
Netherlands 108 120 62.7
Ireland 108 117 61
Spain 107 119 73.2
United Kingdom 106 102 58.5
Liechtenstein 106 70 34.4
Belgium 105 111 67.5
Australia 104 129 75.9
Korea (Republic of) 104 97 103.9
Japan 103 102 59
Italy 103 99 66
Germany 102 103 ..
United States 102 96 94.8
Switzerland 102 95 51.5
Hong Kong, China (SAR) 102 83 59.7
Singapore 101.8 106.9 71
New Zealand 101 119 82.6
Sweden 100 100 70.8
Austria 100 100 60.2
Luxembourg 100 98 10.5
Denmark 99 117 74.4
Norway 99 110 73.8
Finland 99 108 91.6
Canada 99 101 60

The notion that all citizens are given access to the best education should be tempered by purported education inequality that has prompted ruling party MPs to suggest nationalising pre-school education to level the playing field [12].

Contrary to what you said, the current successor to Mr Lee Kuan Yew, PM Lee has been charged by none other than his own parliamentary colleague from the same constituency, Mr Inderjit Singh of having pursued growth at all costs resulting in the overheating of the economy, rising costs and higher inflation [13], [14]. It was only after setbacks in the last election did the government finally concede to the wider needs of our society. Singapore’s higher growth rate vis-a-vis the US since 1980 is the result of us starting from a lower base. Our growth rate is not impressive when compared to fellow East Asian nations.

Retention of green spaces is due to the need for water security, a fact that all Singaporeans understand when the British surrendered at Fort Canning after running out of water, not a peculiarly PAP wisdom.

Singapore’s recent push for green roofs comes five decades after those in Germany which began in the 1960s and was partly triggered by the problem of flooding.

Institution of housing programmes for our ageing population is only quite recent and we still have a long way to go.

While Singapore is not the kind of nanny state that takes care of your needs, it is the kind of nanny state that pokes into your personal life, dictating when you should have two children and when you should have more.

Our cohesiveness as a society is increasingly frayed by tensions arising out of government policies. Our so-called dynamism is highly dependent on the continued reliance on foreign investments which seem less like dynamism and more like reliance.

Singapore’s life expectancy is nothing out of the ordinary compared to fellow First World nations. Taking Japan and Hong Kong as the benchmark for 100%, all First World nations score close to 100% in life expectancy [15].

Country Name 2010 life expectancy As percentage of highest life expectancy
Japan 82.9 100%
Hong Kong SAR, China 82.9 100%
Switzerland 82.2 99%
Italy 81.7 99%
Australia 81.7 99%
Singapore 81.6 98%
Spain 81.6 98%
Sweden 81.5 98%
France 81.4 98%
Norway 81 98%
Canada 80.8 97%
Korea, Rep. 80.8 97%
Netherlands 80.7 97%
New Zealand 80.7 97%
United Kingdom 80.4 97%
Austria 80.4 97%
Ireland 80.3 97%
Luxembourg 80.1 97%
Germany 80 96%
Belgium 79.9 96%
Finland 79.9 96%
Denmark 79.1 95%
United States 78.2 94%

The US’ lower life expectancy is commonly attributed to causes other than healthcare including gun violence, obesity, smoking and other non-healthcare reasons [16].

Our high mathematics, science and reading test scores merely reflect the high scores of East Asian nations / economies which occupy 6 out of 9 top positions in the PISA ranking [17].

Rank Country / economy Average of reading, math and science Overall reading Mathematics Science
1 Shanghai-China 577 556 600 575
2 Hong Kong-China 546 533 555 549
3 Finland 543 536 541 554
4 Singapore 543 526 562 542
5 Korea-South 541 539 546 538
6 Japan 529 520 529 539
7 Canada 527 524 527 529
8 New Zealand 524 521 519 532
9 Chinese Taipei 520 495 543 520

Singaporeans have been pointing out problems for the longest time but the government has denied them all along and explained them away with unconvincing arguments like the ones you have used here. It took the loss of a GRC (mega-constituency) during the last election for the government to finally engage in so-called ‘lively’ conversation.

While it has been fashionable for the government to blame problems on adverse global trends, research has shown that some of these problems aren’t due to inadvertent global trends [18].

It’s strange that while you celebrate the Nordic nations’ achievements in Human Development Index (HDI), you forgot to consider Singapore, the cardinal example you want the US to learn from. Singapore’s HDI score of 0.895 is lower than the US’ 0.937 and since Singapore experiences greater inequality than the US, our inequality adjusted HDI would be even lower. It’s amazing you could mention Singapore in the same breath as Scandinavia as having ensured growth with equity even though our HDI score is nowhere near Scandinavia’s and is in fact lower than that of the US’. Although the US’ HDI ranking sinks from 3 to 16 when inequality is factored in, the slide from 98% to 92% is not significant.

Country Unadjusted HDI As percentage of highest Country Inequality adjusted HDI As percentage of highest
Norway 0.955 100% Norway 0.894 100%
Australia 0.938 98% Australia 0.864 97%
United States 0.937 98% Sweden 0.859 96%
Netherlands 0.921 96% Netherlands 0.857 96%
Germany 0.92 96% Germany 0.856 96%
New Zealand 0.919 96% Ireland 0.85 95%
Ireland 0.916 96% Switzerland 0.849 95%
Sweden 0.916 96% Iceland 0.848 95%
Switzerland 0.913 96% Denmark 0.845 95%
Japan 0.912 95% Slovenia 0.84 94%
Canada 0.911 95% Finland 0.839 94%
Korea 0.909 95% Austria 0.837 94%
Iceland 0.906 95% Canada 0.832 93%
Hong Kong 0.906 95% Czech Republic 0.826 92%
Denmark 0.901 94% Belgium 0.825 92%
Israel 0.9 94% United States 0.821 92%
Belgium 0.897 94% Luxembourg 0.813 91%
Austria 0.895 94% France 0.812 91%
Singapore 0.895 94% United Kingdom 0.802 90%
France 0.893 93% Spain 0.796 89%
Finland 0.892 93% Israel 0.79 88%
Slovenia 0.892 93% Slovakia 0.788 88%
Spain 0.885 93% Malta 0.778 87%
Liechtenstein 0.883 92% Italy 0.776 87%
Italy 0.881 92% Estonia 0.77 86%
Luxembourg 0.875 92% Hungary 0.769 86%
United Kingdom 0.875 92% Greece 0.76 85%
Czech Republic 0.873 91% Korea 0.758 85%
Greece 0.86 90% Cyprus 0.751 84%
Brunei Darussalam 0.855 90% Poland 0.74 83%
Cyprus 0.848 89% Portugal 0.729 81%
Malta 0.847 89% Lithuania 0.727 81%
Andorra 0.846 89% Latvia 0.726 81%
Estonia 0.846 89% Croatia 0.683 76%
Slovakia 0.84 88% Chile 0.664 74%
Qatar 0.834 87% Argentina 0.653 73%
Hungary 0.831 87%
Barbados 0.825 86%
Poland 0.821 86%
Chile 0.819 86%
United Arab Emirates 0.818 86%
Lithuania 0.818 86%
Portugal 0.816 85%
Latvia 0.814 85%
Argentina 0.811 85%
Seychelles 0.806 84%
Croatia 0.805 84%

Your description of how economic inequality leads to political elites running the country for their own interests and where the voice of the ordinary citizens may not be fairly represented is astute. The problem is, your good example of Singapore has higher inequality than the US and should by your definition experience worse woes than those in the US you are trying to highlight.

While you lament the 23.1% poor children in the US compared to only 7.3% in Sweden, don’t forget that the corresponding number for Singapore is an estimated 35.1% [19].

Alternative models such as Singapore’s are shunned by Americans not because of pride but because they are wrongly held up as being better when international statistics show they are worse in nearly all the areas mentioned by you.

Income stagnation is similarly felt by Singaporeans from the lower deciles.

While you quibble over the US’ 13% foreign born population vis-a-vis Britain’s and Sweden’s 11% and 14% respectively, don’t forget that the corresponding figure for Singapore is a staggering 39% foreign born [20].

Country Name Percentage international migrant stock
Hong Kong SAR, China 38.80%
Singapore 38.70%
Luxembourg 34.20%
Switzerland 22.50%
New Zealand 22.00%
Australia 21.10%
Canada 21.10%
Ireland 20.10%
Austria 15.60%
Sweden 13.90%
Spain 13.80%
United States 13.80%
Germany 13.20%
Netherlands 10.50%
United Kingdom 10.40%
France 10.30%
Norway 9.90%
Belgium 8.90%
Denmark 8.70%
Italy 7.40%
Finland 4.20%
Japan 1.70%
Korea, Rep. 1.10%

America’s resolve to achieve a more equal society should not start with lessons from an even more unequal Singapore. Your article is so chock full of factual errors, unsubstantiated claims and selective comparison it’s hard to believe it came from a Nobel laureate.

[1] Straits Times, Singapore’s lessons for an unequal US, 20 Mar 2013

[2] http://www.developmentdata.org, World Income Inequality Database

[3] Although there was a two-week gap between the so-called date of ‘independence’ from the British and date of joining Malaysia, this so-called ‘independence’ was for the purpose of becoming a state in Malaysia. In other words, it was a transfer of sovereignty from Britain to Malaya, not outright independence.

[3-1] Tai Wei Tan and Lee Chin Chew, Political pragmatism and citizenship training in Singapore, Citizenship Curriculum in Asia and the Pacific, page 147
She was granted independence from Britain as a state within the newly constituted Federation of Malaysia in August 1963

[3-2] Soo Ann Lee, Singapore: from place to nation, page 123
The PAP also could not have made Singapore independent without having first joined Malaysia in 1963.

[4] Penn World Table, 1960 real per capita GDP (purchasing power parity adjusted)
1. Japan $6,101
2. Iran $4,420
3. Singapore $4,307
4. Hong Kong $3,346

[5] Penn World Table

[6] Straits Times, Prices and service levels will change with restructuring, 11 Mar 2013
Minister Tan Chuan-Jin said that although Singaporeans “live in a fairly First World developed economy, sometimes in certain sectors we are paying Third World wages”.

[7] Melbourne Mercer Global Pension Index 2012, Australian Centre for Financial Studies, page 7, adequacy sub-index.

[8] Straits Times, 4 in 10 Singaporeans not saving for retirement, blames high cost of living, 21 Mar 2013
MORE than four in 10 Singaporeans say they have not set aside a single dollar for retirement – that was a startling finding from a new survey.
The HSBC survey also learnt that people were not saving mainly because of the high cost of living.
Retirement planning has been a major headache for many Singaporeans, who continue to rely on their Central Provident Fund savings as their basic nest egg, a reliance many financial advisers say is outdated.

[9] Business Times, More Singaporeans want to save for a rainy day: survey, 23 Jan 2010
Only 30 per cent of Singaporeans said they have enough savings. 60 per cent feel they are not saving enough while 11 per cent said that they have no savings.
When asked about uncertainties that could threaten their finances, unexpected medical expenses emerged as the biggest threat for people here – 69 per cent
Insufficient funds for retirement ranked third in Singaporeans’ list of financial worries (42 per cent).
The survey also found that most Singaporeans may now have to work harder for their retirement plans.
Some 26 per cent also say that they will find it difficult to build their retirement fund and expect to delay retirement.

[10]
Data for Singapore estimated from Chart 2.4.10 Household Debt and Income, page 42, MAS Financial Stablity Review 2011

Data for the other countries obtained from OECD Economic Outlook No. 92

[11] UN Human Development Index, Gross enrolment rate 2002 to 2011

[12] Budget 2013 debate, 17 mar 2013, MP Christopher De Souza: “Quality pre-school education should not be the privilege of the well off in society but should be made available to all. We must consider the broad way in nationalising pre-school education altogether, level the playing field, that should be our focus.”

[13] Channel News Asia, MP Inderjit Singh says govt policies may have contributed to inflation, 25 Feb 2008

[14] Inderjit Singh’s speech on Population White Paper on 5 Feb 2013:

“We missed the mark the last 10 years, and are already paying a high price for that mistake. I did not agree with the rate of growth pursued and we know the consequences and the hardship Singaporeans faced as a result of the rapid growth, Instant trees cannot grow strong roots and can be uprooted in difficult times.”

[15] World Bank, Life expectancy at Birth

[16]

• Low Life Expectancy in the United States: Is the Health Care System at Fault?
http://www.nber.org/papers/w15213

• U.S. has lower life expectancy than any other wealthy nation because high murder rate and ‘too many guns stored unsafely at home’

http://www.dailymail.co.uk/news/article-2259763/U-S-lower-life-expectancy-wealthy-nation-high-murder-rate-guns-stored-unsafely-home.html

• Warning shot: Gun violence lands US lowest life expectancy among rich nations

http://rt.com/usa/guns-report-739/

• Why do Americans die younger than Britons?

http://www.bbc.co.uk/news/world-us-canada-14070090

[17] OECD PISA ranking
All except one East Asian nation / economy in top 10 with Macau taking 18th position.

[18] Straits Times, Completing the wage revolution, 17 Jan 2012

Mr Ho Kwong Ping explained an IPS study which showed that our construction workers earned one tenth of what our doctors earned compared to one third on average for countries like the USA, UK, Germany, Australia, Japan, Hong Kong, Taiwan and South Korea.

[19]

Mr Stiglitz’s child poverty figures came from the UNICEF’s “Measuring Child Poverty” 2012 report which covers 29 advanced nations for the year 2009 but which doesn’t cover Singapore. So the figure for Singapore has to be calculated separately which Mr Stiglitz could have done but didn’t.

UNICEF defines child poverty as the percentage of children aged 0 to 17 living in a household with per capita income less than 50% of the nation’s median income. All data has to be for 2009 in order to be comparable with UNICEF’s data.

Singapore’s median income (without employer CPF) for 2009 is $2,600 (Ministry of Manpower website). Half that amount is $1,300. The result would have been worse if median income (with employer CPF) had been used.

Steps taken to obtain the table below:

• The distribution of children in various dwelling types is taken from Singapore Statistics’ “Population Trends 2009” page 26. The number of children aged between 15 and 17 is proportioned from the number of children aged between 15 and 19.

• The median household income for each dwelling type is taken from Singapore Statistics’ “Key household income trends, 2009”, page 3, Table 4.

• The median per capita household income is found by dividing the median household income by average household size. Average household size is found by dividing the population for each dwelling type by the number of households for each dwelling type. Population for each dwelling type is taken from Population Trends 2009. Number of households for each dwelling type is found by multiplying the percentage of households for each dwelling type by the total number of households in 2009. Percentage of households for each dwelling type is taken from Population Trends 2009. Total number of households in 2009 can be obtained from Population Trends 2010 (reported as 1.12 million by AsiaOne news, 30 Sept 2010, “Number of resident households in S’pore stands at 1.12 million”). This is probably the best that can be done in the absence of more specific data in public domain.

• The mid-point cumulative percentage of children for each dwelling type is found so as to correspond with the median income for each dwelling type.

• By interpolation, we find that $1,300 corresponds to the 35.1% cumulative children.

Age group 1 and 2 rm HDB 3-rm HDB 4-rm and above HDB Condominium and Landed
Children (‘000) 16.2 104 557.5 140.4
Percentage children 2.00% 12.70% 68.10% 17.20%
Cumulative percentage children 2.00% 14.70% 82.80% 100.00%
Mid-point cumulative percentage children 1.00% 8.30% 48.80% 91.40%
Population (‘000) 106.1 632.9 2341.5 599.8
Median monthly household income $650 $2,660 $5,272 $11,331
% households 4.40% 20.20% 58.60% 15.90%
Number households (‘000) 49 226 656 178
Average household size 2.2 2.8 3.6 3.4
Median monthly per capita household income $302 $951 $1,478 $3,364

[20] Migration and Remittances Factbook 2011

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5 Responses to “Correcting Mr Stiglitz’s article “Singapore’s lessons for an unequal US””

  1. SM Goh Says:

    Good kick in the balls! You should find his email address and send this to him. Nobel laureate my foot!

  2. Zen Says:

    Thank you.

    Stiglitz should quietly go and commit hara kiri.
    I suppose making an international fool of yourself
    can be considered the equivalent.

    I hope you sent your piece to the US newspaper
    which ran his article. If you haven’t, plse do.

  3. Apu Garnesh Says:

    Thanks for this lovely pwnage of yet another guy thinking that because he won an Economics Nobel, he is an expert about everything, including how Singapore tackles inequality.

    I do have one pedantic correction to make: technically speaking, Singapore *did* become independent briefly in 1963. Malaysia Day was scheduled as August 31, 1963, and the Brits scheduled to leave on that day. However because of Konfrontasi, Malaysia Day was postponed to September 16, 1963. The Brits left on schedule anyway. Hence very briefly for a little over two weeks, Singapore was, in 1963, independent, belonging to neither the British Empire nor Malaysia.

    • trulysingapore Says:

      This point is noted in the footnote. Referring to the footnote, it is clear that the whole deal requires that Singapore join Malaysia. So the two weeks’ gap is merely temporary. Singapore at that point in time did not enjoy permanent independence. Temporary independence is not real independence.

  4. streetdirectory Says:

    You’re so cool! I don’t think I’ve truly read through anything like that before. So nice to find someone with a few genuine thoughts on this topic. Seriously.. many thanks for starting this up. This site is one thing that is required on the internet, someone with some originality!streetdirectory

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