Lee Kuan Yew is quoted less often since he ceased to be Singapore’s Minister Mentor after the parliamentary elections in May last year when the opposition won six seats for the first time. But he can still speak and write with such authority. I read his letter on ministers’ salaries which appeared in Today newspaper. Those who claim Singapore ministers are overpaid – Lee Kuan Yew’s son Prime Minister Lee Hsien Loong will be paid S$2.2 million ($1.7 million) a year and new ministers S$1.1 million after pay cuts – may not agree with the former Minister Mentor. But Lee Kuan is certainly right when he says:Continue Reading
Singapore is, by common consent, one of the most open economies in the world. Yet, more than 80 per cent of the Singaporeans live in public housing, the buses and trains are run by two government-linked companies, the mainstream media really state media – the television stations owned outright by a state investment firm, the print monopoly traditionally headed by former government ministers or officials – and many of the top local companies are also linked to the government.
And this economic model has worked very well for Singapore.
As I mentioned in an earlier post, Joseph Stiglitz says in his book, Freefall:
Government has played an especially large role in the highly successful economies of East Asia… Singapore, Korea, Malaysia, and a host of other countries followed and adapted Japan's (government-led growth) strategy and saw per capita incomes increase eightfold in a quarter century.
Singapore has the second highest income gap between the rich and the poor, as indicated by the Gini coefficient, among the 38 countries with very high human development, according to the 2009 United Nations Development Report. Only Hong Kong has a higher income gap. See the table on this web page. You can also build your own tables using various economic indicators by going to the statistics page and you can read the report here.
The UN report says: The Gini index lies between 0 and 100. A value of 0 represents absolute equality and 100 absolute inequality.
Singapore, according to the 2009 UN report, had a Gini coefficient of 42.5, exceeded only by Hong Kong (43.4) among the countries with very high human development.
Here we compare Singapore's Gini coefficient with the figures for the rest of the 10-member Association of Southeast Asean Nations (Asean) and other countries with which it has close links. The figure tends to be lower in European countries, as this chart shows. All the figures are from the UN report.
Robert Reich, who was US Labour Secretary under President Bill Clinton, thinks the growing income gap is unhealthy for society. Market forces are increasing the income gap, but the market is a creation of public policy, he adds in his foreword to the book, The Spirit Level: Why Greater Equality Makes Societies Stronger.
Agreeing with the book's British authors, Richard Wilkinson and Kate Pickett, he says in the foreword:
But if wide inequality is socially dysfunctional, then why are certain countries, such as the United States, becoming so unequal? Largely because of the increasing gains to be had by being just a bit better than other competitors in a system becoming ever more competitive.
Reich, professor of public policy at the University of California, Berkeley, shows the effect of globalization without using the word. He writes:
I was surprised to learn Singapore does not have a minimum wage for workers.
The late Singapore opposition politician JB Jeyaretnam's son, Kenneth Jeyaretnam, a British-educated hedge fund manager who has joined his father's Reform Party, made an important point to The Online Citizen.
“Generally I think that the government focuses too much on GDP growth for its own sake where it should be focussing on things like GDP growth per capita and the incomes of ordinary Singaporeans,” he told the Singapore blog.
Whether the government focuses too much on GDP per se is open to question.
But it's true GDP growth is not an accurate measure of people's wellbeing.
It's possible for a country to have high GDP and a large low-income group at the same time. China is the most obvious example, the third largest economy in the world, but with a per capita GDP of less than $6,000 in terms of purchasing power parity. Singapore's per capita GDP is nearly nine times more.
However, the income gap is increasing in Singapore, according to the official Statistics Singapore:
"The Gini coefficient, which is a summary measure of income inequality, increased from 0.472 in 2006 to 0.485 in 2007."
That means Singapore has a greater income gap than Britain and America, which have Gini coefficients of 0.35 and 0.45 respectively, leave alone Scandinavia, France, Germany, Switzerland, Belgium and Austria and the Netherlands – countries with Gini coefficients ranging between 0.25 and 0.3, according to a UN-Habitat report.
The Singapore government is trying to help the people cope with the recession. So are governments in other countries – and for a very good reason. A country's economy depends on all its people.
It's interesting what Kenneth Jeyaretnam had to say about "GDP growth per capita and the incomes of ordinary Singaporeans".
He may sound a bit like his father.
But President Barack Obama also expressed a similar view in his inaugural address:
The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on the ability to extend opportunity to every willing heart — not out of charity, but because it is the surest route to our common good.
As did the British historian Eric Hobsbawm in the Guardian two days ago: