Thursday, July 8, 2010

Future generations will pay for the sins of PAP

By Ng E-Jay, July 5 2010
Source: The Online Citizen

I wish I could come up with a more optimistic pronouncement. But this is the most honest assessment I can make: Future generations of Singaporeans will have to pay for the sins of the PAP if something is not done about the present situation.

Let me state quite frankly that I do not deny that Singapore has made huge economic progress over the decades under the PAP’s watch. As some of my friends would point out, however, much of the growth could have come about not because of, but in spite of, PAP’s policies.

Singapore is situated in a very favourable geographical location, and even though advancements in transportation technology over the decades have eroded our geographical advantage slightly, it cannot be denied that our prime location at the southern tip of the Malaysian peninsula has afforded us enormous leverage as far as trade is concerned.

When the PAP came into power in 1959, Singapore was already a bustling metropolis, not a sleepy fishing village like National Education textbooks like to put it.

When we achieved complete independence and sovereignty in 1965, the foundations for our future economic success had already been laid. Investments were already pouring in and our industries were already being rapidly developed, despite the racial turmoil and the communist threat that existed at that time. All this was happening at a time when the then Prime Minister Lee Kuan Yew was occupied in a power struggle with the Tunku.

I do not know whether the PAP made things significantly better after 1965, but I do know the PAP managed to make things significantly worse at some point in its reign.

The PAP’s first major policy blunder was its “Stop At 2″ policy which it introduced in 1969 in an attempt to curb Singapore’s rapidly expanding population, which was then seen as a serious threat to Singapore’s long term growth potential. Sterilization policies were progressively liberalized from 1969 to 1974. By 1977, 21 per cent of women of child-bearing age in Singapore had been sterilized. [1]

The PAP’s error in this policy was in going overboard with it. The repercussions would later come back to haunt future generations of Singaporeans.

The pro-eugenics policies of the PAP culminated in the Graduate Mother Scheme which was implemented in 1984. Graduate couples were provided with considerable financial incentives to have more children, the rationale being that children from graduate couples were more likely to be intelligent and would grow up to be more economically productive. However the scheme was scrapped after a few years when the horribly discriminatory implications of the policy gradually dawned on the electorate.

By then, of course, the damage had been done.

All developed economies eventually enter a phase when their birth rates start to decline due to evolving social attitudes and a higher standard of living.

In Singapore’s case however, the policies of the PAP greatly accelerated the process and made the inevitable come much sooner than would have been the case had the PAP not gone overboard.

A decade after the demise of the Graduate Mother Scheme, Singapore’s Total Fertility Rate had plunged to a mere 1.3, far below the replacement level of 2.1 that demographers insist is needed for a population to sustain itself.

This prompted the PAP Government to open the floodgates to foreigners to shore up our population base. Of course, a sustainable population base was not the only reason given by the PAP for doing so. The PAP told the electorate that foreigners were needed because they brought skills and expertise that Singaporeans lack, and their numbers were needed for continued economic growth. For every job which went to them, we were told, more jobs would be created for us citizens.

In more recent times, the electorate was told that Singapore would go the way of the dodo if foreigners were not imported in large numbers, and that Singaporeans should accept this because we are less hard-driving and hard-striving than foreigners. [2]

However, because PAP’s policies have led to an indiscriminate and uncontrolled import of foreigners, some of whom do not seem to bring in new expertise or skill sets over and above what we already have, wages at the lower end of the spectrum have been suppressed, bringing hardship to the lower income. This indirectly leads to suppression of aggregate demand from one segment of the population, which in turn depresses overall economic activity.

It should be noted that unlike countries like Hong Kong and Taiwan, Singapore did not quite have a roaring comeback after the previous two recessions. Perhaps part of the reason lies therein.

The rapid import of foreigners has also created strain on the fabric of our society, with more than a few openly voicing their concern whether the newcomers will make a serious effort at integrating into our society and embracing local social norms.

The larger malaise confronting us, however, is not just the rapid influx of foreigners, which the government has realized only this year must be more tightly controlled.

The economy is being systematically hollowed out, milked for what it is worth. The economic path we have embarked on is unsustainable. Our future growth potential is rapidly being drawn down in a misguided attempt at boosting our GDP figures and justifying ever increasing public sector and Ministerial salaries.

How is the economy being hollowed out?

  • By the entrenchment of unproductive Government-Linked Corporations (GLCs) and the crowding out of smaller players that could have made the economic landscape more competitive and vibrant had they been given a fair chance at the economic pie.
  • By the overly liberal import of foreigners which is causing an artificial population expansion and which is putting an enormous strain on our nation’s resources and infrastructure.
  • By the government “picking favorites” amongst industry players and in so doing, creating mis-allocation and wastage of resources.
  • By the government micro-managing and interfering excessively with the free market economy.
  • By the government trying to attract foreign capital at all costs, which leads to very volatile liquidity flows and periodic asset bubbles.

Singapore will probably see several years more of good growth and perhaps even rising incomes in the middle and upper classes.

But the distortions in the economy created by PAP’s policies will also lead to periodic asset bubbles, especially in housing. Asset bubbles are very bad for a country, and even worse for a small country like Singapore.

Not only do asset bubbles lead to mis-allocation of capital, when they inevitably come crashing down, many people get hurt badly in the process.

We see this each and every time the property market here takes off and goes to the stratosphere, only to come down to reality several years later, leaving in its wake hordes of homeless citizens who have been chased out of their flats because they are unable to service their mortgages.

After the PAP has milked the Singapore system for what it is worth, I fear that future generations of Singaporeans will be faced with a hollowed out economy and slow growth rates that will not match their expectations. I fear that many people, especially those just embarking on their careers, will not be able to afford to retire peacefully when they grow old. They will be faced with an overcrowded city, lack of job opportunities, rising inflation, and poor economic prospects.

I am very tempted to try to alter my prognosis so that it does not sound so pessimistic. But to do so would not be honest. In my sincere assessment, if Singapore citizens do not stand up and take charge of the situation now, future generations will have to pay a heavy price for the sins of the PAP.

__________________________________

References:

[1] SG Democrats, “Creating a ’superior’ race in Singapore“, 12 June 2005 (first posted on Sg Review).

[2] The Online Citizen’s transcript of MM Lee Kuan Yew’s interview with Mark Jacobson from National Geographic Magazine on 6 July 2009.

6 comments:

Anonymous said...

We have wished he COULD come to rule our bolehland !!

Anonymous said...

Ya please take him. Enjoy the strong arm of Lee's dictatorship.

Kim said...

Well I'm a Malaysian and I strongly disagree with the first commentor. If LKY ruled Bolehland the Malays would be oppressed instead of the Chinese - and that is still unjust.

The abuse of ISA for all kinds of political purposes would not be spared either.

Now at least our judiciary and bar association have a little independence. If LKY was ruling Malaysia, the court would be nothing more than his playground!

PUI! Lee Kuan Yew get away from Malaysia!

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Anonymous said...

Hi Anon 12.41,

By all means, buy one and get five (his wife, two sons, a daughter in law and a daughter)free...

Good luck...

Anonymous said...

Thank you for this post. I do wish that more people will come to realise this. The problem is that the upper class are content with what they have. And they don't care about how the lower class/lower-middle class are living day by day.

It's literally a struggle. I wish more singaporeans will come to realise it soon.