Friday, January 31, 2014

What's keeping blue-collar wages low?

Jan 02, 2014


By Davin Chor, For The Straits Times

To what extent have low blue-collar wages and rising inequality in Singapore been the result of foreign worker inflows?

THE link between foreign workers and local wages has been a hot-button topic. It is also clearly an issue in which many Singaporeans feel they have a stake. Rightly or wrongly, the slow growth in blue-collar wages and the accompanying rise in inequality over the past decade have been pinned on the influx of foreign workers.

This "conventional wisdom" was recently challenged in an article written by Professor Hoon Hian Teck - entitled Relook Link Between Low Wages And Foreign Workers - published in The Straits Times on Nov 27 last year.

His argument can be summarised as follows: The stagnation of wages at the low end of the income distribution began between 2000 and 2004. This was the result of the Singapore economy being hit by the bursting of the bubble and the Sars crisis.

However, the growth in the non-resident workforce only accelerated after 2005. Given this timing, it is argued, the influx of foreign workers could not have been the root cause of our blue-collar wage woes.

So did the presence of foreign workers not matter at all? Or is there still some truth to the conventional wisdom? The reality, I believe, lies somewhere in between.

I agree with Prof Hoon's view that there are deeper forces at play that are not fully appreciated in the ongoing debate on wages in Singapore. These issues have to do with the underlying economic restructuring that Singapore has to undergo to stay relevant in the global economy. As Prof Hoon points out, this is a process that has favoured growth in our services sector at the expense of manufacturing.

The stark reality is that these structural changes have also favoured skilled workers over their less skilled counterparts. Being "skilled" now means possessing computer literacy, or being able to use IT tools (such as e-mail and Microsoft Word) that drive any modern workplace. A worker with such capabilities would inevitably be more nimble in making a job transition between sectors than, for example, someone whose primary skill set was working on a specific production line machine.

Consequently, less skilled workers are now in a more vulnerable position. Even if we had hypothetically held constant the number of foreign workers in Singapore, our less skilled resident workers would still have had to play catch-up.

That said, one should not understate the effects of foreign workers on our local labour market. As the Singapore economy embarked on this restructuring, the upswing in the business cycle around 2005-2006 led to a rise in demand for labour. This demand was met by admitting larger numbers of foreign workers. But there were two key differences this time compared to past recovery episodes.

The first difference was that in the 1990s, our foreign worker policy could be described more as a "guest worker" policy. More workers would be permitted during the growth phase of a business cycle to accommodate the rise in labour demand. But these numbers would also be adjusted downward when recessions came.

For example, during the Asian financial crisis in the late 1990s and the Sars episode in 2003, the size of our non-resident workforce actually shrank. This helped to cushion the negative effects of these slowdowns on our resident workers, for example by sparing some of them from being laid off.

Since 2006, however, our non-resident workforce has grown through all phases of the business cycle, expanding even during the global financial crisis (although the rate of increase did moderate during those years). What this means is that the non-resident workforce is now a much more permanent part of the labour force landscape. It is therefore harder to ignore how non-resident and resident workers affect each other.

The second difference is that since 2006 we have also seen the entry of foreign workers into several non-tradable service sectors, such as cleaning, food and beverages, as well as the wholesale and retail sectors. These were industries that previously were staffed mainly by resident workers. But the pressing need for labour meant that foreign workers were eventually recruited too.

While wages did grow on average in Singapore after 2006, it is less clear that workers in all sectors benefited equally. More studies are needed to look at the detailed industry and occupational wage data to better understand how foreign workers affected the local workforce in these sectors. A natural hypothesis is that resident unskilled wages would have been even more adversely affected had government schemes such as the Workfare Income Supplement not been introduced.

If there is an underlying lesson in this, it is that there is a need to be careful and vigilant in the policies the Government adopts as the economy restructures. Foreign workers are an important complement to our workforce. But it makes sense to monitor their quantity - and quality - more judiciously to avoid unintended socio-economic consequences.

Equally important is the need to pursue policies designed to re-skill the resident workforce, so that low-wage Singaporeans will continue to play an active role in transforming our economy.

The writer is an associate professor in the Department of Economics, National University of Singapore.

[You may also wish to see point #4 of this article, which provides a perspective on low wages and unskilled workers. 

The problem is that low skilled workers will always be at a disadvantage. If you have no skills or the skills you need to carry out the work can easily be taught in an hour or a day, then why should anyone pay you more than what any other "no-skill" worker is willing to work for? No-skill workers are plentiful. And when there are a lot of them, why should they be paid a premium. Workers are "selling" their labour, and employers are "buying" their labour, but if the labour is unskilled, the employers want to get a good deal and get labour as cheaply as it can.

But is that exploitation?

Let's take cleaners at a hawker centre. The "market rate" for cleaners is about $800 - $1000. However, paying this rate will mean few takers, because most of the unskilled workers are older persons with lower stamina and energy. They are less likely to be able to take up "3D jobs" - difficult, dangerous, and dirty/demeaning jobs. Cleaning is a difficult job in terms of the need for energy and stamina. You may also consider it dirty, and even demeaning. The work environment is also likely to be uncomfortable. 

So the "younger" ones with the energy and stamina and the need to support the family will take up these jobs, even at the market rates. The older ones, with weak legs, and lower energy would never take up these jobs at whatever salary.

But what if you automate and mechanise?

Good question. Very few innovations have been introduce to the cleaning industry. The last one was probably the trolley for cleaners to clear the tables. But the solution is to approach the issue holistically. Trolleys are great ideas until you try to navigate the narrow spaces between chairs and tables. Automation and labour saving processes cannot be an afterthought. It has to be integrated into the system and infrastructure from the start.

BUT, here is the interesting contradiction: with scarce supply, prices should go up. There is a scarcity of low wage workers, particularly for cleaners. Employers have persistent vacancies. What have they NOT raise wages to attract more people into the sector? Is the supply of cleaners so inelastic? Is there some "ceiling" on what employers are willing to pay? Employers have said that they cannot raise salaries because then they can't make competitive bids, and they can't get contracts, and they go out of business. 

Rather, it is best to not be the first mover. Let their competitors bid high, lose contracts, go out of business, and reduce competition, free up their cleaning staff to be hired by other cleaning companies, who can then bid competitively and continue to survive in the business.

Prisoner's Dilemma for the cleaning companies.

Well, now the govt has set de factor minimum wage for cleaners. Let's see how that works. It would seem promising. On paper.]

Terrorism : An Imaginary War

Jan 31, 2014

Don't fall for a terrorist's bait

WHAT happened on Sept 11, 2001, when Al-Qaeda suicide terrorists crashed aircraft into New York's World Trade Centre, was tragic.

But the United States' response the following day created a new set of problems, says Professor Mark Juergensmeyer, an expert on religious violence.

That was the day the US described the attack as "an act of war".

"It bit the bait Osama bin Laden had laid for the US. I thought to myself, 'Why on earth are we promoting the ideology of Osama bin Laden?'.

"By going for the military solution, we validated bin Laden's view with our own rhetoric and actions," he says.

The US decision later to invade Afghanistan and Iraq gave more credibility to Osama's propaganda and he painted a picture of America as an enemy of Islam and a vile foe that tortured captured Muslim terrorists.

A better option would have been to fight the terrorists using non-military methods from civil jurisdictions.

The US should have used the police to hunt down the terrorists and brought the perpetrators before the courts, he believes.

"People like Osama bin Laden should not be given the credibility of a great statesman who can engage in a war against the US.

"Bin Laden should have been regarded as a petty little burglar and a vicious killer that he was. He should have been brought to justice in a court of his peers and shown to be the simple little egomaniac that he was," he says.

But when the US fought him on his terms, it entered into war with him, turning the imaginary war in Osama's mind into a real one.

"The key lesson is not to buy into the terrorists' language and not bring the battle to their level.

"Once you do that, you lose," says Prof Juergensmeyer.

Jan 31, 2014

Battling cosmic wars in the minds of terrorists

By M. Nirmala

"MR MARK, you just don't get it. All of you are like sheep!

"There's a war going on, a battle between good and evil. You just don't see it. Your government will not let you see it."

It was 1997, and the speaker was red-haired Egyptian terrorist Mahmud Abouhalima.

Mahmud had been sentenced to 240 years in jail for his role in masterminding the February 1993 explosion at New York's World Trade Centre, which killed six people and injured about 1,000.

Surrounded by a dozen heavily armed prison officers, the unrepentant terrorist was being interviewed in the United States by Professor Mark Juergensmeyer, an American expert in the study of religious violence, who is now 72.

The soft-spoken, silver-haired professor had just asked Mahmud why he resorted to terrorism in the name of religion.

Mahmud then leaned over to the don, a move that prompted prison officers to dive in to protect the visitor.

Mahmud sneered: "Mr Mark, we need to make you see. We need to take you by the shoulders and shake you until you are awake."

The professor then asked if that was why terrorists carried out bombings.

The convict leaned back, and gave a blood-curdling reply: "Well, now you know, Mr Mark. Now you know."

Terrorists, Prof Juergensmeyer explained recently in an interview with The Straits Times, see themselves as soldiers in a cosmic war who use terror tactics, including blowing up buildings and people, to draw people into the battle.

The problem is that the war is an imaginary one.
It exists only in their minds.

This is why terrorists commit their acts: to make the war in their minds come real for others.

At the time of the interview, Mahmud was regarded as one of the most dangerous terrorists in the world.

He had also been linked to the plot to kill Egyptian leader Hosni Mubarak and the murder of the militant Zionist rabbi Meir Kahane.

"He has blood on his hands," says the academic.

An odd relationship

PROF Juergensmeyer, who is the director of the Orfalea Centre for Global and International Studies, has criss-crossed the world for over 30 years, studying religious violence.

His work combines sociology, politics and theology. He is also an affiliate professor of religious studies at the University of California, Santa Barbara.

Included in a long list of 20 books he has written is one titled Terror In The Mind Of God.

It contains interviews with Mahmud and others, including abortion clinic bombers in the United States.

The professor explains that in times of transition like today, people feel uneasy about issues such as who they are; who is responsible for the state of the world; and how safe they feel.

These issues of identity, security and accountability are the driving forces that propel a minority into terrorism.

The big change in people's lives now is globalisation, a development that has caused many people to ask questions about their own identity and responsibilities.

Such uneasiness provides fertile ground for religious extremists to plant their ideas about violence, says the professor.

A terrorist declares a cosmic war against those who stand in his way.

When his enemy fails to see his imaginary war, he goes berserk.

"It drives them nuts when we, and others from their own faith, do not see this war," Prof Juergensmeyer discloses.

Terrorists thus use terror attacks as a signal that the war they are waging has begun.

This happened when Japan's Aum Shinrikyo cult members launched a sarin gas attack on a Tokyo subway in 1995. Thirteen people died.

The attack rattled the Japanese public who had ignored warnings by the cult's leader that the world was coming to an end. It also signalled to cult members that they were heading towards Armageddon, says the don.

A vexing problem

PROF Juergensmeyer was in Singapore last week as a distinguished visiting fellow at a seminar on religious extremism and violence, organised by the Centre of Excellence for National Security (CENS).

The centre studies closely the growing number of religiously motivated incidents of violence in South-east Asia.

CENS chief Kumar Ramakrishna says religious extremist leaders like Myanmar's Wirathu and Indonesia's Abu Bakar Bashir also exploit nationalist sentiments to get their followers to commit violent acts.

For example, Wirathu has exploited the fear of Buddhists who believe that economically well-off Muslims, a minority group, will replace Buddhism with Islam in Myanmar.

"The case of Wirathu highlights the vexing nexus between non-violent extremist rhetoric and real-world violence," states Prof Kumar.

He says that some who study religious conflicts in the region downplay the role of religion in these struggles, in favour of placing more emphasis on what they see as essentially nationalist issues.

He argues that the issue of religion should be brought to the fore and dealt with by the authorities.

That is why the empirical findings of academics like himself on the issue are important, he says.

The visiting professor adds that terrorists who resort to violence are performing a form of street theatre, albeit a violent one.

"A good drama draws the audience into the play, and that is exactly what terrorists do each time," he says.

But one must never buy into their message, he warns.

Terror wars will end

THE professor, an optimist, predicts that the problem of terrorism will vanish one day.

Warriors in previous epic wars waged battle in the name of God to protect their land and people.

Since today's terror wars are imaginary ones, the battle can be won, provided countries do not play into the hands of terrorists, he cautions.

"Don't go for military solutions. Leave it to the police to hunt down the terrorists and the courts to pass judgment. When you don't exaggerate the problem, the problem will go away.

"Religiously motivated terrorism will one day dissipate as quickly as it was created, just like a summer storm.

"An image of cosmic war is like that. We must not get caught up in this imagined war," he says.


Wednesday, January 29, 2014

Avoid making meritocracy a dirty word, says Heng


29 Jan 2014

By Siau Ming En

SINGAPORE — Society must avoid making meritocracy a “dirty word”, said Education Minister Heng Swee Keat as he discussed the subject of social mobility at a conference yesterday.

The minister was responding to a question on how Singapore could build an open and compassionate meritocracy at the Singapore Perspectives conference, organised by the Institute of Policy Studies (IPS)

“I think it’s important that in Singapore, meritocracy does not become a dirty word,” said Mr Heng.

Whether in schools or in the workplace, he said maintaining a system of selection that was based on a person’s performance and ability was “the right thing to do”. Every effort, however, should be made to help everyone “ride the wave of globalisation” and assistance should be provided to those who needed it so no one gets left behind, said Mr Heng.

He also noted the “special place” that the national language of Malay has in society here.

“I think in many of our schools, for instance, quite a number of students now take conversational Malay in the schools. And what we need to do is find more opportunities for them to learn,” he said.

During the dialogue, IPS Senior Research Fellow Dr Gillian Koh asked if a good pre-school education or the use of education platforms would help Singapore keep a healthy rate of social mobility. Mr Heng said even a first-rate pre-school system was not the “magic bullet” to ensuring social mobility. Nevertheless, he said all areas of education could be enhanced, from pre-schools to higher institutes of learning.

“(We need) to recognise that there are broader forces of work for the economy that we need to take care of. And unless we continue to restructure the economy, unless we continue to create good jobs, a good education system by itself does not solve the problem,” he said.

The education minister also said he was considering introducing computer programming in schools, not to make everyone a “programming geek”, but to help Singapore harness the impact of technology. Looking forward, former Aljunied MP Zainul Abidin Rasheed also asked Mr Heng how Singapore could balance politics, contest and consensus in a way that would help it continue to be a success story in the next five to 10 years. Mr Heng said while a greater contest sharpened the ability to deliver policies, he noted that it does not necessarily lead to “better results” for the society.

“Being able to work together, being able to take the country forward should not be a matter of just contest among political parties. I think it should be a collective effort, it should not necessarily be (an) antagonistic contest, (so) that we are able to harness the creative energy of people to solve any challenges,” said the minister.

Tuesday, January 28, 2014

Rethinking ways of dealing with inequality

Monday, January 27, 2014

Tight labour market continues to push up number of job vacancies

27 Jan 2014

SINGAPORE: The tight Singapore labour market continues to push up the number of job vacancies.

The latest Manpower Ministry figures show that vacancies stood at 61,900 in September 2013 -- 9.7 per cent more than a year before.

Consistent with prevailing trends, the services sector continued to generate the bulk of job openings, making up four in five of all vacancies in 2013.

Overall, there were openings across all occupational groups.

Adding diversity to the university scene

Jan 23, 2014

First there were two. Then the third came along in 2000. Today, there are six universities. With stiffer competition for students, each is now building up niche strengths, with some offering residential and overseas stints to all students.

By Sandra Davie Senior Education Correspondent

A-LEVEL school leavers and polytechnic graduates applying for a university place this year are faced with the difficult but happy problem of having to choose from a range of higher education options.

Parents are also struck by the myriad of choices available. Madam R. Saroja, an alumnus of National University of Singapore whose son is applying for a university place this year said: "When I applied to university in the 80s, it was just NUS or NTU (Nanyang Technological University), which was then Nanyang Technological Institute, and did only engineering.

"And since I wanted to do an arts degree, the only university I could go to was NUS.

"Compare that to my son who wants to do engineering or business, or combine both. He has six universities and 12 different degrees to choose from and all of them sound good. I wish I was back in university."

How to help the poor? Go figure

Jan 23, 2014

By Peter A. Coclanis For The Straits Times

QUESTIONS relating to poverty and rising levels of inequality are popping up with increasing frequency all over the developed world.

Concerns over poverty and inequality have roiled Singapore as well. Indeed, an increasingly lively public debate has arisen over these issues, their causes and concomitants. Few domestic issues are as important or potentially explosive as poverty and inequality. Few are also more difficult to get a handle on. It is extremely hard to reach a consensus on how to define, much less measure, poverty and inequality. It is even more difficult to understand the root causes and the most effective approaches to amelioration.

Whether one refers to minimum income thresholds, basic material needs, or civic inclusion and capabilities goes a long way in determining what proportion of a population will be considered impoverished. Then there is the question of whether to set a hard-and-fast poverty line or employ broader and more elastic concepts such as poverty ranges and bands in an attempt to include populations clustered around (above or below) some level of income or capability.

Even when there is agreement on the proper criteria to employ in calculating poverty levels, accurate measurement - and interpretation - of poverty figures will still depend a lot on demographic factors. Demography may not be destiny but the age structure of the population in question and the population in the denominator can make huge differences in poverty assessments.

In a country such as Singapore, household income figures would likely change significantly if households headed by retirees - currently about 6 per cent of the total number - were included.

Sunday, January 26, 2014

Minimum wage debate will go on

Jan 26, 2014

Advocates have reason to cheer Singapore taking small step forward by making a change for cleaners

By Han Fook Kwang Managing Editor

The debate over whether there should be a minimum wage in Singapore has just taken a new turn.

This, after the Government announced new laws it would be introducing that will ensure cleaners earn at least $1,000 a month.

It would be the first time in Singapore that employers will have to pay a minimum salary to workers backed by law.

Does it signal a change from the Government's previous position opposing the setting of any form of minimum wage?

When MPs' questions get coy answers

Jan 26, 2014

By Janice Heng

Parliament's Tuesday sitting saw some uncharacteristically assertive questioning of an office-holder by a PAP MP.

Senior Parliamentary Secretary for Education Hawazi Daipi had just replied to a parliamentary question from Mr Zainal Sapari (Pasir Ris-Punggol GRC). Unsatisfied, the latter rose to ask for "a specific response".

Replied Mr Hawazi: "I'd appreciate if the member is specific about what he wants to follow up with."

Mr Zainal, clearly nettled, began reading out the original question he had filed.

The point was clear: a parliamentary reply is not always a proper answer.

But in the absence of a Freedom of Information Act here, parliamentary questions are one of the better avenues for seeking official data. Withholding sensitive information is understandable, but it is a pity when relatively harmless questions do not get answers. This hurts both the questioner and the questioned, for a lack of information could instead lead people to believe the worst.

Mr Zainal had asked for:
  • The percentage of principals, vice-principals and heads of departments who are at the pay grade for their appointment;
  • The percentage of those who are still not at such a grade even after five years of holding the appointment; and
  • The percentage of school leaders who retired at a grade below their appointment.

He received none of these figures, though the Ministry of Education (MOE) did reveal that "a majority" of principals and vice-principals retire at a pay grade at or above their appointments.

Of course, this is not the only case of a parliamentary question being left unanswered.
One type of data in particular has long been off-limits: breakdowns of the non-citizen population by nationality, whether these are foreign workers or permanent residents.

But there, it is easy to see possible justifications. If the data shows a reliance on workers of a certain nationality, for instance, that could give that country political leverage over us.

Less clear are the possible dangers of shedding light on the promotion situation of principals.

The Education Ministry's coyness on the matter is even more perplexing when one looks at the questions that the Government is willing to answer.

Other questions filed for last Monday and Tuesday's sittings that received direct replies include:
  • How many Singaporean citizens have held foreign citizenship between 1980 and 2012;
  • How many applications for national service deferment were received from male artists, between 2003 and 2013; and
  • How many families have been identified as homeless and camping by the beach between 2010 and 2012.

These questions, touching on issues of citizenship, defence and social problems, could well be considered more "sensitive" than Mr Zainal's. The Government's willingness to answer them is a good thing, but makes its silence on other questions more pronounced.
In choosing to withhold information, ministries may also end up hurting the public's perception of the issue at hand.

When pressed by Mr Zainal last Tuesday, Mr Hawazi said: "We don't think it is useful to give the figures."

But at issue is a phenomenon that calls for explanation: not getting paid as much as your appointment should command.

Mr Hawazi did outline the principles of remuneration and appointment being based on performance. Yet without giving the figures Mr Zainal asked for - in other words, without revealing what the actual picture is - MOE has made impossible any assessment of the situation.

In the first place, is this even a widespread phenomenon?

And if it is, what does that suggest? Does it mean that school leaders are underperforming and hence not being paid at the substantive pay grade?

The ministry undoubtedly has its reasons for not revealing such data. But when information is withheld, a natural reaction - even if unwarranted - is to wonder what there is to hide.

MOE could have revealed the figures and given a clear explanation of what they mean. This would have taken the discussion forward, rather than leave it mired in doubt.

Friday, January 24, 2014

North Carolina: A Laboratory for Trickle-Down Economics

Annabel Park


During North Carolina's 2013 legislative session, a fierce debate took place over how to change the state tax code. Because Republicans had won a super majority in the General Assembly as well as the governor's race in 2012, the real tug-of-war centered around an aggressively conservative tax reform package championed by State Senator Bob Rucho, co-chair of the Senate Finance Committee. A less aggressive proposal was preferred by House Speaker Thom Tillis, who is likely to be the Republican nominee to challenge U.S. Senator Kay Hagan, a Democrat.

The differences were over to how to make up for the lost revenue caused by cuts in the income tax rate, corporate taxes and the estate tax. Should they expand sales taxes? Should they tax social security? Which tax exemptions should they eliminate?

Budget process needs to be more open and inclusive

Jan 24, 2014

By Vivienne Wee And Edwina Shaddick For The Straits Times

SINGAPOREANS increasingly want to be heard. An increasingly vocal population is far from antagonistic to good governance. This is especially so if the rising volume of voices is accompanied by an increasing awareness of the issues.

Increased participation, coupled with the Government's willingness to engage, would enable more Singaporeans to feel that they have a stake in this country. But this can only happen if governmental processes are structured and communicated in a way which helps citizens to give useful feedback.

Consider the Budget. On Feb21, Minister for Finance Tharman Shanmugaratnam will announce the Government's proposed Budget for the fiscal year to come. Singaporeans can express their views through online platform Reach until Jan 29.

But are Singaporeans able to offer valuable feedback through this process?

As an advocacy group, the Association of Women for Action and Research (Aware) has been submitting recommendations for the Budget since 2011, usually through Reach. The period for consultation on the Budget opened on Nov 22 last year and closes on Jan 29.

A Budget cycle described on the Civil Service College website suggests that the Cabinet approves a consolidated Budget in late January. How feasible is it for a Budget approved in late January, and made public on Feb 21, to take into account views from public consultation that ends on Jan 29?

[Look, I think you have a point that the process needs to be more open. But I get irked by petty sniping. Yes, if the consultation is only during the month of January, you have a legitimate cause to wonder about the feasibility of taking into account views from the public. But the consultation STARTED ON NOV 22!!! There is the WHOLE of DECEMBER to make your views known. And even when consultation ends in Jan, there are still 3 weeks to the Budget announcement on Feb 21. ]

Consultation that takes place earlier and ends later will allow more of the public's inputs to be meaningfully absorbed into the Budget.

A look at the International Budget Partnership (IBP), an advocacy group partly funded by the Ford Foundation that promotes open budgeting by governments, shows Singapore lags behind global best practices in budget processes.

The IBP's Open Budget Index tracks 125 countries but not Singapore, for reasons we are unaware of.

The Open Budget Index, conducted once every two years, ranks countries on budget transparency, based on "whether the government provides the public with timely access to comprehensive information contained in eight key documents". Singapore does not comply with some of these practices.

For example, the Organisation for Economic Cooperation and Development (OECD) recommends that governments release a pre-budget statement at least a month before the budget is introduced to the legislature for debate, including projections of revenue, expenditure and policy goals, to give time for informed analysis and critique.

New Zealand meets this standard, as does South Africa, which releases this data four months before its budget. However, no such publication is expected in Singapore at any time before public consultation ends on Jan 29.

Furthermore, the Government can afford to provide more information about its expenditure.

In March 2010, opposition MP Low Thia Khiang said in Parliament that he used to be able to view specific details of how ministries spent their money in the Budget Book. But this was no longer the case as the figures had been consolidated. Mr Low argued that the consolidated figures were not helpful aids to understand a ministry's programmes, nor the changes in its expenditure. Then Second Minister for Finance Lim Hwee Hua stated that specific expenditure breakdowns can be found in the Expenditure Control Document available in the Parliament Library.

That may be so, but as this library can only be accessed by legislators and their assistants. What about citizens and civil society organisations interested in taking a more active part in the Budget process?

To be sure, some information may be deemed too sensitive for the public on security grounds, but more detailed discussion is needed to determine what falls within that category.

The Budget and its formulation process can be powerful tools of engagement for the public. The Budget governs how much citizens pay for the upkeep of government, and how much they receive in return.

Dr Noeleen Heyzer, a Singaporean who is undersecretary-general at the United Nations, describes budgeting as "no longer… an exclusive exercise" reserved only for ministries of finance, but rather "a process that entails aligning national development plans and goals and human rights commitments with budget policies in a transparent and coherent manner".

Budget formulation, Dr Heyzer argues, determines "people's access to services and resources" and so "discrimination can either be reinforced or eliminated by budget policies".

To be fair to the Ministry of Finance, it does consult the public pre-Budget, judging from its website and the Reach portal inviting views. But Singapore can move beyond a "wish list" style of consultation, in which the public states vague aspirations and the Ministry of Finance responds by enumerating policies already in place or new ones in the pipeline that meet those aspirations.

A more sophisticated engagement requires public access to information on the past performance of individual policies and programmes.

IBP best practices for example recommend year-end and in-year reviews of spending on programmes.

Also recommended is a "Citizen's Budget" - the Budget statement presented in an easy-to-understand manner for the public with a breakdown of allocations to achieve specific outputs and outcomes.

These are all ideas Singapore can look into.

Earlier and better-quality information on the Budget process can give citizens a greater stake in the nation and increase their sense of ownership and participation.

As stated by the Auditor-General's Office in its 2011 publication Public Accountability, "The citizens of Singapore are the ultimate owners of our nation's financial resources. It is important that they understand and support the processes and systems that ensure public accountability."

Dr Vivienne Wee, a sociology lecturer, is research and advocacy director at the Association of Women for Action and Research (Aware). Edwina Shaddick, a teacher in a private school, is a member of its Budget sub-committee.

[Yes. The budget process could be more transparent. Yes, most citizens are not going to be interested or able to scrutinise the data, but interest groups and those with the wherewithal to do so should be accorded the means to do so. ]

Making social support personal

Jan 24, 2014


THE Government's pledge of $250 million, to match donations to social service organisations dollar for dollar this year, underscores how partnership between the state and the public can expand the philanthropic horizon dramatically. A benefit of this pairing is that it helps to make such support more personal - individuals are more likely to give to their pet causes and charity in general if they know that the state takes their donations seriously enough to match them. And Singaporeans who participate in the scheme will do so in the knowledge that the value of their contributions will double - $500 million will be available to voluntary welfare organisations under the Care and Share Movement.

Social support may appear depersonalised under official schemes that dispense help to the needy and vulnerable as a matter of course. When linked to public generosity, it helps it to be viewed with a measure of gratitude instead of just entitlement.

A culture of giving, based on habits of the heart, is a characteristic of mature philanthropic societies. As Singapore approaches the 50th anniversary of its independence next year, citizens need to remember the pioneer generation which helped to make the nation's success possible, but itself missed out on the educational and other fruits of that success which subsequent generations take for granted. There are others, too, who find it difficult to thrive in a competitive society today and are deserving of compassion. How well a society treats its disadvantaged reveals its self-perception as a moral and caring community and not a flea market of atomised and self-seeking individuals.

A compassionate society also reduces demands for welfarism, which are difficult to ignore in a democracy. Any system to contain such demands can hold only so long as the public empathises with those genuinely in need and is prepared to step in. Finding ways to boost the public's efforts, like providing matching grants, is a never-ending task. Charities setting up their own businesses to raise funds display precisely the kind of inventiveness that is required to prevent compassion fatigue. Social enterprises are a promising avenue, although there are understandable concerns over business interests superseding charitable purpose, and even whether charities possess the skills to operate successful businesses. So long as integrity and accountability are preserved, imaginative ways of raising money enable charities to be self-sufficient and reduce the pressure on handouts. What is also heartening is the number of individuals and organisations that are devoting themselves to the cause of others. One has to just take this personally to make a difference.

No bubble in region - just a realistic outlook

Jan 24, 2014

2014 looks to be a landmark year for global growth and for emerging Asia

By David Mann

Now that quantitative easing (QE) is coming to an end in the US, some say the emerging markets growth story is over. At Standard Chartered Bank, we disagree. In fact, the reasons why QE is ending are good news for emerging markets, especially emerging Asia, the region of the world most open to trade.

QE refers to massive purchases of private sector financial assets by the US Federal Reserve in order to lower interest rates and increase the money supply.

This year is likely to be the first year of truly better growth for the world economy since the global financial crisis. We expect global gross domestic product to expand by 3.5 per cent, with growth of 6.6 per cent in emerging Asia, 1.3 per cent in Europe, 7.4 per cent in China and 2.4 per cent in the United States.

Thursday, January 23, 2014

China cannot lead in innovation without freedom and dissent

Jan 23, 2014

By Stephen L. Sass

WILL China achieve technological dominance over the United States, surpassing it in scientific and engineering innovation? A lot of people seem to think so. China's recent landing of an unmanned spacecraft on the moon, its advances in renewable energies and high-speed rail, its increasing number of patent filings and its vast spending on research and development have contributed to a perception - held across much of the world, according to a Pew Research Centre poll conducted last summer - that China is poised to overtake America as the world's leading power, if it has not already done so.

3 possible scenarios for political crisis in Thailand

Jan 23, 2014

Neither an election nor delay of polls will resolve situation, say analysts

By Nirmal Ghosh In Bangkok

THAILAND'S beleaguered ruling party is banking on snap polls on Feb 2 to renew its mandate.

But hope is fast fading that an election - if indeed it happens - will resolve the country's bitter political stand-off.

There is massive pressure on the government - from protesters in the streets of Bangkok, and from the Election Commission itself - to delay the Feb 2 polls over fears of an inadequate result.

The commission has petitioned the Constitutional Court for an opinion on who has the authority to postpone the election.

Analysts say that in reality, neither an election nor a delay will resolve the volatile political crisis.

"This round of crisis will run for weeks and months," said Professor Thitinan Pongsudhirak, director of Chulalongkorn University's Institute for Security and International Studies.

Here are three possible scenarios.

The price of intervention


21 January 2014

The market for cleaners is highly competitive. On the demand side, the cleaning companies compete for contracts using low prices, thus reducing the benefits of the contracts. Hence, the demand for cleaners is low.

On the supply side, there is literally no barrier to entry as the job does not require much skill or physical strength. Hence, the supply is high, especially among older and less-educated people.

Friday, January 17, 2014

Who lost Thailand?


17 Jan 2014

Thailand, South-east Asia’s most developed and sophisticated economy, is teetering on the edge of the political abyss.

Yet, most of the rest of Asia appears to be averting its eyes from the country’s ongoing and increasingly anarchic unrest. That indifference is not only foolish; it is dangerous.

Asia’s democracies now risk confronting the same harsh question that the United States faced when Mao Zedong marched into Beijing and again when Ayatollah Ruhollah Khomeini ousted the Shah in Iran. Who, they will have to ask, lost Thailand?

Bernanke’s global legacy

17 Jan 2014

The world is still struggling to digest Mr Alan Greenspan’s mixed legacy as Chairman of the United States Federal Reserve Board from 1987 to 2006.

So, it is too soon to assess whether his departing successor Ben Bernanke is headed for history’s chopping block or its pedestal. But the crucial international role that Mr Bernanke and the Fed played during his tenure — a time when domestic economic weakness translated into relatively ineffective American global leadership — should not be overlooked.

Driving under the influence.. of smog

Jan 16, 2014

By Kor Kian Beng

In my nearly two years of living in the smog-filled Chinese capital, a misled sense of good luck and invincibility led me to rarely wear a mask in the open or switch on my air purifier at home.

Beijing’s notorious air pollution is known to be a slow killer by planting seeds of lung cancer, but what you don’t see won’t hurt you, I thought. Also, not everyone, definitely not me, will succumb to the disease, right?
But a near-accident on a Beijing highway this Wednesday, due to a bout of heavy smog in the capital and the poor visibility it caused, has shown me how China’s air pollution can be deadly in other ways – and instantly too.

Thursday, January 16, 2014

When Fortress S'pore lost its aura

Dec 30, 2013

Opinion Editor The Straits Times

IF THERE is one word to sum up Singapore's experience this year, it would be Vulnerability.

2013 is the year the People's Action Party (PAP) lost whatever it might have retained of the lustre of invincibility.

Wage Ladder? Has minimum wage come to Singapore?

Is the progressive tiered-wage model a form of 'minimum wage'?

Jan 16, 2014

THE Government calls it a progressive wage model, or a "wage-skill ladder". But economists say the way the new wage scheme for cleaning companies works, it is a form of legislated minimum wage - albeit for a specific sector.

Tuesday, January 14, 2014

Terminally ill? It needn't be a fight to the death

Jan 14, 2014

The New York Times

MS LISA Bonchek Adams has spent the last seven years in a fierce and very public cage fight with death.

Since a mammogram detected the first toxic seeds of cancer in her left breast when she was 37, she has blogged and tweeted copiously about her contest with the advancing disease.

In the last month or two, her broadcasts have changed in tone slightly; her optimism has become a little less unassailable.

At the end of last year, the cancer that had colonised her lymph nodes, liver, lungs and bones established a beachhead in her spine, the pathway to her (so far tumour-free) brain.

Colorado's marijuana policy a real pot shot

Jan 13, 2014

By Andy Ho Senior Writer

FROM this month, adults in Colorado have been able to get "joints", or marijuana cigarettes, as easily as regular tobacco smokes.

The American state has begun licensing retailers to sell marijuana smokes for recreational use.

People who smoke joints habitually are prone to develop the same respiratory illnesses as tobacco smokers. However, opponents tend to be more concerned about how legalisation will impact the young and impressionable.

Supporters tout the Dutch experience as proof that legalisation of recreational cannabis will not lead to cannabis addiction with its attendant social ills.

However, there are lessons from the Dutch experiment that its fans may not highlight. A closer look at that experience - especially when contrasted with the new Colorado law - shows clearly that the latter is very bad drug policy that no other government should imitate.

Monday, January 13, 2014

Lots of room for improvement at 'retirement resort'

Jan 12, 2014

By Radha Basu, Senior Correspondent

Interest in Singapore's lukewarm property market heated up in the New Year as showflats of what is being billed as the first "retirement resort" opened for previews last weekend.

First off the block after a 20-year debate on whether Singapore should have retirement communities, The Hillford in Upper Bukit Timah comes with plenty of promise.

Developer World Class Land says the 281 units will have elder-friendly features such as emergency alarm systems in bedrooms and bathrooms linked to a 24-hour concierge service counter. A full-time "resort manager" will coordinate activities such as yoga and art or enrichment classes for residents.

It promises a staggering list of more than 30 recreational facilities and spaces, including swimming pools, a reading lounge, fitness corner, gym and theatrette. Residents will also have access to clinics, restaurants and an eldercare centre.

The development is likely to go on sale next weekend.

But before opening their chequebooks, older buyers must carefully consider the details about this project that may well be glossed over by the sharp-suited men and women hired to sell this golden retirement dream.

For starters, although The Hillford bills itself as "Singapore's first retirement resort", it has no age restrictions on ownership or occupancy. In Europe, Australia and the United States, most such developments tend to be restricted to seniors above a certain age.

Asked about this, the developer told The Sunday Times it would give potential buyers "flexibility" and it was "only natural - given our Asian context - for families to want to stay together".

Indeed, there are a small number of two-bedroom "dual key" units which will enable parents to live with their adult children.

Older folk like Ms Cecilia Ng, who is in her late 50s, say in that case, The Hillford should at least have had a provision for the majority of occupants to be seniors. "With no age bars, the very purpose of a retirement village is in danger of being compromised," said the retired school principal, who has visited an age-restricted community for seniors in the US.

Retirement housing remains a niche development overseas, with only 10 per cent to 15 per cent of older adults interested in living in them. Residents tend to be single or widowed, or to not have or to not want their children to live with them.

So it could be argued that the real reason there is no age restriction at The Hillford is to enable the developer to sell units as fast as possible and offset what have been seen as early sticking points: the price of the units and the fact that the development has a 60-year lease. Other private properties here are freehold or come with a 99-year lease.

Current prices start at $388,000 for a one-bedroom 398 sq ft unit, which, given the limited lease period, is considered steep by many retirees.

But young buyers, some of whom have been priced out of the condo market after curbs on shoebox units, may find the price attractive and buy a unit, given its rental and investment potential and proximity to good schools. Indeed, potential buyers in their early 30s with young children in tow have appeared on national television extolling the virtues of having good schools nearby.

A second issue is that there is no guarantee that all the senior-friendly services being advertised now will indeed see the light of day.

In the West and in Australia, retirement villages are often operated by aged care companies. The Hillford is being built by a property developer, albeit with input from an experienced Australian retirement housing expert.

Traditionally, aged care companies have care staff who work with residents long-term to meet their evolving physical and emotional needs. Some of these companies even buy back units or help heirs to sell them when the resident dies.

Property developers, on the other hand, tend to build, sell and get out.
So as with any other condominium in Singapore, The Hillford's management will eventually be handed over to a management corporation strata title (MCST) committee. Comprising residents, it will have veto power over services and facilities in the condominium. In theory, if the majority of buyers are young, they could nix support services for the old.

The developer says the property has been positioned for active, independent seniors aged 50 and above, and that a "substantial proportion" of those interested in buying comes from this target segment. A spokesman said it "does not expect the MCST to make any drastic changes to the property".

Still, there are no guarantees. In countries such as Australia and New Zealand, retirement village developments are legally bound to continue providing the core benefits and services promised to the elderly resident in his occupation agreement.

So if a developer promises a 24-hour concierge service, for instance, this cannot be done away with simply because a majority of the younger residents do not want to pay for it.

Finally, there is also some apprehension over the fact that The Hillford aims to cater to "independent and active" seniors. Indeed, the design of the showflats is not in sync with the safety needs of frail elderly. The marble living room floor, for instance, is a slipping hazard.

There are some obstacles for wheelchair-users too, such as the small step to enter the bathroom, the lack of a shower bench and no grab bars - although the latter can be added on request. The shower area has a glass panel, blocking wheelchair access.

As a journalist covering ageing issues, I have visited more than a dozen retirement communities in Europe and the United States and spoken to those who run similar developments in Australia.

The latest trends in retirement housing lean towards communities which cater not just to an older person when he is independent, but also as he becomes frail and infirm.

Residents can continue living in the same unit even when they lose mobility, if cared for by trained care staff. There are no such provisions here. These are issues developers of retirement villages here will need to consider.

But these shortcomings of The Hillford cannot take away from the fact that its developers have dared to go where none has gone before despite the growing clamour for more retirement housing options.

Imperfect it may be but it is a start to fulfilling a demand that was first voiced nearly two decades ago.

[The conclusion seems like a cop-out. If it is a bad idea for developers to try to set up a "retirement village", then call it what it is - an attempt by developers to "suggest" a "solution" while selling their development for the best price they can get. 

A true "retirement village" development will require age limits or at least some way of ensuring that most of the buyer/residents are of a minimum age (say 50 or 55).  Of course, that would by definition limit the take-up, and limit the success of the launch.

Another solution may be to require that the MCST c'tee members to be of a minimum age. Or require that all resolutions that attempt to do away with some "core retirement village elements" require assent by an MCST "Senior Senate" made up of members who are senior citizens.

All these suggest one thing: retirement village, if they are to function truly as retirement villages, are not the money-makers that developers will want to develop. They will be unable to recoup their investment with comparable returns, because a) the target market of older, independent, active retirees is rather small, b) as retirees, the potential buyers will not have the future income to finance a heavy long-term investment. ]

Thursday, January 9, 2014

Slow growth and short tails in 2014


9 Jan 2014


By Nouriel Roubini -

The global economy had another difficult year in 2013. The advanced economies’ below-trend growth continued, with output rising at an average annual rate of about 1 per cent, while many emerging markets experienced a slowdown to below-trend 4.8 per cent growth.

After a year of subpar 2.9 per cent global growth, what does 2014 hold in store for the world economy?

Wednesday, January 8, 2014

Singapore must ease ‘bandwidth tax’ on the poor



08 JANUARY, 2014

The debate on poverty in Singapore has tended to focus on how much help the Government —and society at large — should extend to the poor.

Advocates for doing more argue that given Singapore’s prosperity and its claims to be a first-world country, the little that the Government spends on welfare, compared with other developed economies, is unconscionable.

The Government, however, contends there is no shortage of help schemes for the poor. In November last year, Minister for Social and Family Development Chan Chun Sing defended Singapore’s kueh lapis approach for helping low-income Singaporeans as being more targeted and flexible in meeting their needs than a single poverty line. Poor households need only to apply for the various social assistance programmes that subsidise housing, childcare, healthcare and eldercare.

On other occasions, the Government has argued that providing generous and poorly targeted aid would undermine work incentives and encourage more to rely on state welfare.

Tuesday, January 7, 2014

The remains of the day

Jan 04, 2014

60 something

The ageing bachelor soldiers on alone as the end of my working life looms when I turn 65

By Richard Lim

I retire in June, when I turn 65.

I joined the newspapers when I was 25, so it's 40 years in the trade. They have been enjoyable years, and there is a lot to look back on. But I can't afford to sit back and reminisce. With the assurance of a monthly pay cheque no longer there, I will have to seek work as a freelance writer and editor.

Sixty-five is actually old. Recently, I re-read the biographies of PolishAmerican writer Jerzy Kosinski, whose books are romances of terror, and Alan Watts, who was instrumental in spreading Zen Buddhism in the West.

Kosinski committed suicide when he was 52, and Watts drank himself to death at age 58. Yet, they lived such abundant lives, making me feel if I deserve to be 65.

At my age, I wish finally to have a woman by my side. As the veteran British correspondent tells the earnest but naive American officer in Graham Greene's The Quiet American (1955): "I've reached the age when sex isn't the problem so much as old age and death. I wake up with these in mind and not a woman's body.

"I just don't want to be alone in my last decade, that's all. I wouldn't know what to think about all day long. I'd sooner have a woman in the same room - even one I didn't love...

"Wait until you're afraid of living 10 years alone with no companion and a nursing home at the end of it. Then you'll start running in any direction... to find someone, anyone, who will last until you are through."

But it is rather late in the day for me to go running around finding someone. And I must admit I would still prefer a young lass, someone like Phuong in The Quiet American, the Vietnamese mistress of the correspondent Fowler who lights his opium pipe every night.

I had women in my life, but I just could not commit. What French actress Catherine Deneuve said in a Vanity Fair magazine interview years ago resonated with me: "When I see a couple who relate only to each other, it strikes me as rather strange - too limiting. I can understand the concept of spending your whole life with one person, but I don't think you can do without relationships with others. I cannot take on the whole job; I cannot be the woman a man can't live without."

And I had always lived by a quote by Milan Kundera from The Unbearable Lightness Of Being (1984): "He understood he was not born to live side by side with one woman and could be fully himself only as a bachelor."

But now the ageing bachelor has no one to last him through.

So I shall soldier on alone. It is not easy, given that my interests have narrowed. I don't go to the cinema anymore because the movies are almost all geared towards kids and arrested adolescents.

Once in a rare while comes a film like Ilo Ilo, but then it came and went before I could catch it. I will have to wait for the DVD. Television does not provide stimulation either, with its plethora of so-called reality shows.

I must count on my friends. Fortunately, I still have some close ones, and I do not have to have their company all the time. Like the poet Philip Larkin, "I find the idea of always being in company rather oppressive; I see life more as an affair of solitude diversified by company than an affair of company diversified by solitude".

I like a quiet evening with a friend or a small group of them, lingering over a three- or four-course dinner, with wine and good conversation. I meet my Raffles Institution mates once or twice a year, often over fish-head curry at the coffeeshop on the corner of Purvis Street, and our gatherings have never been less than boisterous.

Literature keeps me going. I re-read old books, and find new ones recommended by Michiko Kakutani of The New York Times, such as The Golden Finch by Donna Tartt, a Dickensian story with two interesting protagonists and an assortment of characters, and The Empty Chair, two dovetailing novellas that explore the world of Buddhists, gurus and pilgrims who can be as guilty of hubris and egomania. I have yet to read the second novella, but have ordered it from Books Kinokuniya.

And oh yes, I have gone back to swimming, though not during the recent festive period when it rained almost every day. I go to a hotel pool near my home and swim for half an hour before lunch two or three times a week. There are few hotel guests around at that time of the day, and if there are any, they are usually sunbathing on the deck chairs rather than exerting themselves in the water. So I often have the pool to myself.

The size of the pool - about 20m in length - and my swimming alone in it, remind me of my time in the second condominium that I bought in the early 1990s.

My third-floor unit overlooked the pool, and it was my dream come true - to live in a condominium apartment looking down on a swimming pool. And I usually swam alone in it after work.

Several years after I had moved out of the apartment - but what possessed me to do it? - the condominium was sold en bloc. It may not be polite to say this, but I could have made a respectable bundle and not have to worry about working after I retire. But as they say, no rest for the wicked.

Monday, January 6, 2014

Dousing the JI fire with water

Jan 03, 2014


By M. Nirmala Senior Writer

THE month of December in 2001 is etched in the mind of Muslim cleric Mohamed Ali.

Filled with shock, dismay and pain, it was a period when Singapore learnt that Al-Qaeda's terror tentacles had gripped Singapore.

He had just started work as the manager of the Khadijah Mosque in Geylang Road after returning with an arts degree in Islamic jurisprudence from Egypt's Al-Azhar University.

One day in late December that year, his father, Ustaz Ali Mohamed, stumbled into the mosque, looking visibly distraught.

Ustaz Ali, a respected Muslim leader and chairman of the Khadijah Mosque, told his son what he had just learnt from the Internal Security Department (ISD): Between Dec 9 and 24, it had arrested 15 people under the Internal Security Act for their involvement in terrorism-related activities. They belonged to a militant group, Jemaah Islamiah (JI), linked to Al-Qaeda.

The JI planned to bomb several targets in Singapore. Some among its members had trained in Al-Qaeda terrorist camps in Afghanistan.

"My father kept repeating: 'This has happened to our country. We must do something.'

Politics keeping the euro alive

Jan 06, 2014


Political rather than economic realities will determine the fate of the EU's common currency
PUNDITS - including, occasionally, this author - have an annoying habit of boasting about any of their predictions which turn out to be correct, but simply ignore those which prove to be wide off the mark.
That's precisely what happened with most of the financial experts trying to guess the fate of the euro. Some remained optimistic about the future of Europe's common currency, but the majority predicted that the euro would not survive the global financial crisis, that it would break up with an almighty bang.
Not only did this not happen, but the euro was also one of the best-performing currencies last year. And, far from shrinking in size as some predicted, the number of countries using the currency increased: Latvia, a small republic on northern Europe's Baltic shores, ditched its national bank- notes in favour of the euro at the start of this year.
How could armies of erudite academics, financial specialists and media commentators get it so spectacularly wrong? Largely because they failed to realise that the euro's biggest flaw - the fact that it is a currency driven by politics rather than economic realities - is ironically also the euro's most durable asset. The euro remains under threat but it is Europe's political map, rather than complicated indexes of sovereign debt and money supply, which will decide the currency's fate.
Those who invented the currency two decades ago were careful to speak the language of economic necessity. The euro, they claimed, would spur cross-border investments, encourage competition and make it easier to travel and work across frontiers. But the reality was that the euro was a largely political enterprise designed to prevent a reunified Germany from translating its economic might into continental domination by depriving all nation states of one of their most important instruments of statehood: their currency. As a result, the purely economic criteria for managing the euro were largely ignored.
The outcome is, by now, well known. European countries whose finances were in shambles for decades borrowed cheaply in euros until their debts became unsustainable and drove some of them to the brink of bankruptcy.
Failures of project
YET less familiar although equally important are the other failures of the euro project. It did not spur cross-European investment: European corporations switched their production lines to Asia instead. It did not prompt a boom in financial services: London, the British capital resolutely outside the euro zone, increased its domination in these fields. And because individual countries continued to apply their own separate taxes and trade regulations, the euro did not reduce retail prices either. Seldom has any project failed in so many of its stated objectives and in such a comprehensive manner.
Given all these considerations, the smartest course when the financial crisis struck would have been for nearly bankrupt countries such as Greece or Portugal to leave the euro zone. And, if they refused, the equally logical response would have been for a country like Germany - which ultimately bankrolls every European project - to kick them out.
But nothing of the kind happened. About ¤1 trillion (S$1.7 trillion) was lent by Germany and other rich EU countries to bail out their poorer cousins. And the bankrupt states implemented draconian austerity measures of the kind nations contemplate only in wartime. Greece's gross domestic product, for instance, cumulatively dropped by a quarter during the past four years, equivalent to about 15 average European economic recessions all rolled into one.
One explanation why so many Europeans tolerated this massive exercise in self-flagellation is that the act of joining the euro was similar to that of jumping into the deep end of a pool without knowing how to swim: The only options available are either to somehow paddle along, or to drown. The Greeks could have exited the euro, but only at the cost of pulverising the bank savings of their population. And the Germans could have refused to pay for the Greek bailout, but the result would have been a default among German banks holding bad Greek bonds.
Coin with identical sides
HOWEVER, the chief reason that countries were prepared to bear the pain of austerity was political: the fear that, once out of the euro zone, they would be ejected out of Europe altogether.
That fear may seem odd for the British who never wanted the currency, but not for those who actually faced the danger of losing the euro. If Greece had been evicted from the euro zone, it would have been destined to play second fiddle to Turkey, its perennial rival and far bigger neighbour. An Ireland out of the euro would have meant its return to the British economic sphere of influence which the Irish spent a century trying to escape from. Running away from an unhappy past is also the logic which prompted Latvia to join the euro zone now: It's the only way to avoid the clutches of Russia.
And the countries which bankrolled the bailouts had their own equally powerful political incentives to throw good money after bad. The disintegration of the currency would have confronted France with its biggest foreign policy defeat since World War II: It would have meant that all the French attempts to tie Germany in as many political knots as possible had failed. And for the Germans, the demise of the euro would have spelt the end of the country's post-war policies of anchoring their nation in a peaceful, prosperous Europe.
In short, precisely the political elements which prompted Europe's financial crisis also provided the glue which held the currency together. The euro resembles a coin with two identical sides, a currency doomed to prevail regardless of how one tosses it: Heads I lose, tails you win.
Given all this, does it mean that the possibility of the euro's demise is now completely discounted? The short-term omens are good. Ireland has already exited its bailout programme. Spain no longer needs cash. Speculators worldwide continue to be deterred by the warning from European Central Bank presidentMario Draghi to do "whatever it takes to preserve the euro". And German Chancellor Angela Merkel, only recently re-elected, continues to believe that "if the euro collapses, Europe collapses", so she will pay for any mishap.
Long-term prospects
STILL, the euro's long-term future remains murky, for Europe is sitting on a ticking economic and social time bomb which can explode at any moment. The EU's current approach - cutting deficits to lower debt and enacting "structural reforms" to generate growth - has not done much to either cut debt or change Europe's economic structure.
According to a recently published paper from US economists Kenneth Rogoff and Carmen Reinhart, Europe's "debt overhang" can be resolved only by either "restructuring", a polite term which means that those who lent EU governments the cash will not get back all their money, inflation which reduces the overall value of the debt, or what the authors term "financial repression", namely forcing banks to provide cheap cash to the economy.
Encouraging inflation is out of the question since the Germans won't hear of it. Forcing banks to cough up cash is not realistic either until there is a debt relief for households that owe huge amounts to the same banks. So, the only viable solution is the further restructuring of debts, something which European governments have sworn they will not consider. Either way, the dangerous work of straightening Europe's finances has barely begun; much more pain is in the offing, at least until the end of the decade.
Identity crisis
BUT the far bigger problem is that what began as a financial and banking crisis has now turned into a crisis of European identity, for the euro, which was meant to bring Europe closer together, is tearing the continent apart. Northern Europe is doing well; Germany is bristling with optimism. But southern Europe is a disaster area, where half of those aged under 25 have never earned a salary in their lives and countries turn into ghoulish theme parks. In the Portuguese city of Porto, an architectural jewel and the capital of the region producing the port sweet red wine, the chief attraction now is the "austerity tours" which take visitors around the city's 70,000 derelict houses.
Those who still find Europe an object of desire are either Ukrainians demanding to be let in or African illegal migrants who risk their lives crossing the Mediterranean Sea; in Europe itself, a record 60 per cent of respondents no longer trust the EU to handle any of their aspirations.
The euro won't die because Europe's economics are wrong; it will only when its politics go awry. That has not happened yet but it may happen this year, when elections for the EU Parliament could result in a rise of anti-European parties and a continent-wide backlash against austerity.
Which is one reason why many of those pundits who predicted the currency's demise are still not ready to admit they were wrong.

Sunday, January 5, 2014

It's okay to compete but have a heart

Jan 04, 2014


A compassionate meritocracy seeks to close the distance between the haves and the have-nots

By Lydia Lim Political Editor

IT WAS nearing 5am on Dec 1 and Orchard Road was abuzz with the anticipation of thousands of runners waiting for the Standard Chartered marathon flag-off.

Amid this throng was a very small group of elite athletes who got the go-ahead to start running ahead of everyone else.

There were only two Singaporeans in the group - Dr Mok Ying Ren, 25, the eventual winner in the local category, and Mr Wang Zhiyong, also in his 20s.

More remarkably, they were also the two who chose to forgo the 50-second head start handed to them by the race organisers. Instead, they slowed down in the middle of Orchard Road and waited for their fellow local elite marathoners to catch up with them.

It was an odd thing to do as this was a race, and one they had prepared arduously for.

It was a decision that local sports reporting website Red Sports celebrated as "an act of sportsmanship".

These two young men's spirit of fair play is worth emulating beyond sports circles, and provides an inspiring example of how competition can exist alongside concern for others and a sense of solidarity with one's peers and rivals.

It also sheds light on what a compassionate meritocracy might look like, the building of which is a worthy new year challenge for a society known for being kiasu, or scared to lose, in Hokkein.

A compassionate meritocracy is an essential element of the new way forward that Prime Minister Lee Hsien Loong first charted in his National Day Rally speech last August.

Elaborating on this, Mr Lee spoke of building "an open and compassionate meritocracy" in his PAP convention speech last month. It is a meritocracy in the sense that jobs, school places, top honours and other rewards are decided on the basis of merit, but an open and compassionate one that maximises equality of opportunity while moderating inequality of outcomes.

The goal, Mr Lee said, must be to ensure success is not determined by one's social background or family circumstances - through measures to help those born with less get to a good starting point, provide diverse pathways of success and keep social mobility going so that anyone can rise regardless of background.

There is also a need to "moderate inequality of outcomes", Mr Lee added, by giving more help to those who are struggling and encouraging those who do well to give back to society by helping others to succeed.

In any competitive society, whether in the East or West, it is natural for those with more to exploit the advantages they enjoy, to secure for themselves and their loved ones sought-after goods such as plum jobs and scarce spots in brand-name schools and universities.

Who can blame Singapore parents for buying well-located homes, or the best tuition they can afford, or making use of their school alumni links to secure their children coveted places in popular, over-subscribed primary and secondary schools?

But such advantages widen the distance between a small, select group and the rest of the field, much like that 50-second head start did for some privileged marathoners.

A meritocracy that allows the distance between the haves and have-nots to keep widening is one that risks, over time, becoming seen by the majority as unfair and unjust. By contrast, a compassionate meritocracy is one that seeks to close that distance, as Dr Mok and Mr Wang chose to do.

Compassion counters the instinct to go all out to snag victory for oneself. It is concern for another's welfare, and turns one's attention outward and inspires a desire to help and do right by another.

To set the stage for a compassionate meritocracy, Singapore society must first recognise and acknowledge the excesses of its current competitive system.

Education Minister Heng Swee Keat was among the first politicians to do so explicitly, in a speech he delivered just before PM Lee's National Day Rally of 2012. He warned against an excessive focus on grades and achievements, at the expense of a holistic education, a happier childhood and quality time with parents.

"Extreme meritocracy and competition can lead to a winner- take-all society, with the winners thinking little of others," he said, adding that "we need to restore a balance to hard-nosed material pragmatism".

Indeed, when British politician Michael Young first coined the term meritocracy in 1958, he did so to satirise a system where "merit is equated with intelligence- plus-effort, its possessors are identified at an early age and selected for appropriate intensive education, and there is an obsession with quantification, test-scoring and qualifications".

Singapore is not alone in critiquing its meritocracy.

Last year, a book - Twilight Of The Elites: America After Meritocracy - made waves in the United States by highlighting the excesses and inequalities resulting from unbridled competition, ostensibly on the basis of merit.

Among the examples its author Christopher Hayes cites is the "Cult of Smartness" which he says has taken hold in American life. He describes it as a pathology characterised by the mistaken assumption that intelligence is an ordinal quality - that it is possible for observers to accurately rank intelligent people in order from most to least smart, and that the right person for a job is always the one deemed smartest.

"While smartness is necessary for competent elites," he writes, "it is far from sufficient: wisdom, judgment, empathy and ethical rigour are all as important, even if those traits are far less valued."

Beyond a frank critique of the status quo, society also needs to cultivate compassion, and that I think is a challenge we should set ourselves in this new year.

We can start by internalising the belief that compassion can and does complement good, clean competition.

The call to build a compassionate meritocracy is not a call to compromise on excellence, or to knock down success, and it would be a disaster for Singapore if it were misunderstood as such.

As a society, we must still strive for excellence and compete against each other but not by exploiting advantages which, if we were less privileged, we would deem to be arbitrary and unfair.

Compassion at its root - from the Latin com (with) and passio (suffer), meaning to suffer with - springs from a recognition that we are all more alike than different. That, in turn, gives rise to a desire to be with one another and share in each other's joys and hopes, griefs and fears.

That is why compassion can inspire us to forsake the head start some of us may enjoy over others, in order that we may run together in the marathon of life.

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Friday, January 3, 2014

Are greying population worries overblown?


By John MacInnes and Jeroen Spijker -

02 January 2014

A century ago, children outnumbered the elderly by as much as 10 to one in most European countries. Today, there are as many people over the age of 65 as there are under the age of 16.

In the United Kingdom, roughly one in six people is 65 or older, compared with one in eight Americans and one in four Japanese.