About your landlord…
Today the Department of Statistics issued a press release* stating that the median monthly income from work among resident households had increased by 3.1% in 2010. They state the real increase as being 0.3%. Similarly median monthly income from work for employed households was reported as having risen by 5.7% in nominal terms and by 2.8% in real terms.
I would like to point out that the Consumer Price Index (CPI) was 4.6% higher in December 2010 compared with December 2009 and that if this figure is used median monthly real income for all resident households actually FELL by 1.5% instead of rising as claimed. Also median income for employed households only rose some 1% in real terms instead of 2.8% as claimed.
In my article on inflation I pointed out that the CPI for average and lower income households may diverge considerably because of the greater proportion of the budgets of lower income groups taken up by food, transport and housing. In Singapore’s case the high level of income inequality means that average income is considerably higher than median income and thus the CPI may be failing to track the real erosion in their purchasing power.
So median real incomes for resident households actually fell during a year in which Singapore enjoyed record-breaking growth of 14.7%.
Two hundred years ago already an economist named David Ricardo ** produced a theory where he wrote about how increasing population pressure coupled with lack of technical progress in agriculture would lead to the increasing transfer of wealth to the owners of fixed factors of production, in particular land. This he warned would be at the expense of those who worked on the land who would suffer growing impoverishment. His theory gained much credit as indeed this turned out to be the situation in China and India and elsewhere for several centuries before industrialisation and land reform.
This government’s policies seem to be aimed at recreating the conditions and events that prompted Ricardo’s theory. Are we in fact living through some form of Ricardian experiment in modern day Singapore. We already have the increasing population pressure he spoke of and the lack of technical progress in agriculture is, in modern terms, our poor productivity. The only noticeable difference is that the principal landlord is the government.
These policies need to be reversed because they are clearly not in the interests of most Singaporeans
1992, CPF contribution was 40% capped at $6000.
2011, CPF contribution 36% capped at $5000
Shouldn’t the overall CPI increase of 2.8% for the year be used to compute real terms instead?
David Ricardo had a strong influence on the thinking of Karl Marx whose views continue to be felt to this day in communist and socialist societies.
Marx said that the source of profits under capitalism is value added by workers not paid out in wages. In the Singapore context, this is the surplus generated by the government, year after year, estimated by Tan Jee Say at $106 billion over the past five years and which, you have been pointing out, should be put to better uses or returned to the people. Marx called this “surplus labour” and said that this value rightfully belonged to the workers but was usually appropriated by the dominant classes in society.
Marx’s thoughts led to much disruption in the 20th century. Singapore’s policies need to change. Let us hope history does not repeat itself.
The key aspect I feel, is that we’ve ceased to be a strongly cohesive society since the 80s/90s. The problem lies in the reality that we are basically an overeducated WORKFORCE who have been crowded out by globalisation in our own small fishtank. Face it: we are increasingly mass producing quantity at the expense of Quality and it is COMPOUNDED BY INFLATION/THE COST OF LIVING which has priced us out of the market because we need high(er) wages merely to SURVIVE compared to our neighbouring countries/competition. It is no less “weakened” by a very bad habit we have of IMPORTING people we need swiftly and not nurturing the talents who remain “hidden” in our local populace. Both Excellent and average students elsewhere take FIVE years (O levels) and THREE years (A levels) to inculcate strong values and a lifelong love for learning in their would-be adults ~> not simply the rushed-through almost production-line like way we “educate” our young, and also the way we live our day in, day out lives here.
We are too constantly sprinting in what is, a marathon. The Marathoners elsewhere in HK, Sweden, etc, succeed because their societies BUILD intellectual + business stamina, Quality products WITH quantity.
The societal system we are currently in needs a revamp badly if we to thrive in the market. Just barely surviving and constantly importing to “make up for the shortfall” will eventually tear us apart as a people in our Home. Trust me rich landlords will liquidate their assets and skip town when price overheating worsens ~ > Profits are their main pull and with Asia opening up so dramatically in recent times….who wouldn’t?
……We need REFORM!
Thank you so much for the information and sources. I have to say that when I wrote the above I hadn’t realised that Ricardo had already been referenced. That was back in 1972 when even an old dud like me was not yet involved in politics.
Of course, when I say we are living in a Ricardian experiment I mean that we seem to be creating the conditions of 200 years ago that Ricardo warned against not living in the world he advocated. Goh Keng Swee is lauding Ricardo’s solutions and the free market principles of Adam Smith. It is no surprise that Goh Keng Swee held these views. It is a shame that in the subsequent 40 years ago the PAP lost sight of the original objectives.
The evidence can be found in the third paragraph of Goh Keng Swee’s speech at the Mandarin Hotel on 9 Sep 1972, ‘Town and Gown’, found in The Practice of Economic Growth (Singapore: Federal, 1977 and 1995), p. 241.
He says, “On economics, too, the third world can learn a lot from ancient teachings. I have said on several occasions that developing nations need not go beyond Adam Smith for guidance on their economic policies. Countries which have advanced somewhat, such as Singapore, can be more daring and adopt David Ricardo as their mentor. Anything later than Ricardo is of doubtful value.”
However, it should be noted that he was possibly speaking tongue-in-cheek, as he elsewhere (‘Some Unsolved Problems of Economic Growth, ibid., pp. 63-89) mentions Arthur Lewis and Nikolai Kondratieff as laudable influences on his economic perspective.