Ex-ST writer is not the world’s most wise

I refer to the 9 Mar 2014 TR Emeritus article “Ex-ST writer: SG is not the world’s most expensive city” by Mr Andy Mukherjee.

Mr Mukherjee claims that Singapore will obviously have higher US dollar prices due to Singapore’s appreciating exchange rate over the past decade. That is not true for goods imported from the US or for international commodities denominated in USD like oil.

When the Singapore currency strengthens, a 1 USD imported item will still cost 1 USD even though it can be bought for less SGD. For example, if the exchange rate was 1 USD = 1 SGD, a 1 USD item will cost 1 USD or 1 SGD. When the exchange rate improves in our favour to 1 USD = 0.5 SGD for example, the 1 USD item will still cost 1 USD but will now cost 0.5 SGD. Thus, the USD price didn’t change while the SGD price became lower.

An imported item will only become pricier in USD if the currency of the country from which the item was imported strengthens against the USD. For example, a 1 Euro item from Europe will cost 1 USD when the exchange rate was 1 USD = 1 Euro. When the Euro strengthens relative to USD to 1 USD = 0.2 Euro, the 1 Euro item will now cost 5 USD. The USD price of non-USD denominated imports depends not on SGD-USD exchange rate but on the respective currencies’ exchange rate with USD.

Only local products and services will cost more in USD when the Singapore currency strengthens. However, since the Singapore economic model is based on low wage workers, labourers, waiters, cooks and so on, Singapore services should still be cheaper than services in other developed economies despite the strengthening of the Singapore dollar.

Mr Mukherjee claims that cars in Singapore have little utility beyond the dating scene. But many friends have expressed appreciation for the convenience that a vehicle brings to a family with little children.

Mr Mukherjee suggests that safe drinking water can be quite expensive in Mumbai. But if Mumbai has no cheap access to safe drinking water, wouldn’t most Mumbai people have died of thirst within a few weeks? Mumbai residents boiling water to make drinking water safe is no different from Singaporeans boiling water to make drinking water safe.

Mr Mukherjee points out the issue of nationality specific spending patterns like kimchi refrigerators for the Koreans or cheap cricket channels for the Pakistanis. But don’t Koreans and Pakistanis wear Western style underwear, T-shirt, shoes, socks, eat McDonalds hamburger, drink Coca Cola, use toothpaste, toothbrush, drive automobiles, ride bicycles, watch television, use the computer, connect to the Internet and so on? Should one, two differences in nationality specific spending patterns invalidate the comparison of a whole multitude of products and services commonly consumed across cultures and throughout humanity?

Mr Mukherjee claims that the EIU study fails the simple test of people revealing their preferences by their decisions because employers that used the EIU study to tone down Mumbai’s wage expectations would have caused a beeline of Mumbai people rushing to find jobs in Singapore. It is Mr Mukherjee who has failed the test of his own logic. We can always turn the question around and ask what if employers did not adjust wages to account for differences in cost of living? Wouldn’t the Indians in Singapore be making a beeline for low cost Mumbai since wages are the same? Since that hasn’t happened, by Mr Mukherjee’s logic, employers should have adjusted wages here to account for higher cost of living so that expatriates here do not make a beeline for Mumbai. As for Mr Mukherjee’s original logic, he should realise that it is not just Mumbai people but many Third World nation people have always been making a beeline for jobs in Singapore which is why international surveys have always revealed Singapore to be one of the top destinations for Third World citizens.

In conclusion, there is nothing in Mr Mukherjee’s essay that proves that Singapore is not the world’s most expensive city.

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One Response to “Ex-ST writer is not the world’s most wise”

  1. Lone Guy Says:

    Actually he sounds like a dumb shit from Mumbai.

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