Singapore Democrats
The SDP's Alternative Economic Programme presented herein discusses the structure and present state of the Singapore economy. It provides an analysis of the problems that beset our economic system and, more importantly, makes concrete, workable, and realistic alternative proposals.
This report is divided into three main sections: a. Economic Growth And How It Affects You b. Rich Man, Poor Man c. The Trouble With Savings
These sections will be discussed in several parts with alternative proposals made at the end of each section. We begin with Part 1: The GDP, productivity and you.
Part 1: The GDP, productivity and you
The health of an economy is usually measured by the Gross Domestic Product, or GDP. The GDP is effectively the total amount or value of all the goods produced and services transacted within a country in a year. Obviously the more a population produces, the greater is the GDP and the higher is the standard of living. Or is it?
Gross Domestic Problem
The truth is that the GDP is not really a good measure of a country's economic well-being. Yes, it tells us how much is being produced but, beyond this, not much more. It says nothing about how that growth benefits the different strata of society. A rich teenager making a couple of thousand dollars from a stock market bull run and a single mother holding down two jobs to make the same amount of money both contribute toward the GDP. A company that pays handsome bonuses to its directors and another that doles out painful retrenchment benefits to its workers both do their part in boosting the GDP.
Furthermore, the GDP does not distinguish between economic transactions that enhance society’s well being and those that harm it. Fathers out entertaining their clients are looked on favourably as far as GDP growth is concerned, whereas those who stay home and read to their children are not. Clearly, the GDP is a very limited, even deceptive, indicator of how well an economy is doing.
Another problem with GDP is that it doesn't tell us how the wealth generated benefits the different segments of society. Income inequality can, and has shown to, increase even as the GDP rises. (The subject of income disparity will be discussed in detail later.) What Singapore needs is a more clinical approach when it comes to measuring the economic well-being of its people. An alternative means to doing this is discussed later.
Falling productivity
Another, and perhaps more sensitive, indicator of economic well-being is productivity. To a large extent how well an economy performs depends on the productivity of its workers. Productivity is the measure of how efficient a workforce is, that is, how much it produces with a given amount of input such as time, labour, capital, etc. In technical terms productivity is usually determined by the output of the labour process per unit input. Unit input is usually measured in time. Productivity is said to increase if composition output of labour increases while the amount of labour time needed for this increase remains either unchanged or decreases.
From this standpoint it is not difficult to see how the measure of productivity gives us an indication of the quality of life. If, for instance, worker Tom makes ten computers in one year and his friend Jerry makes the same number of computers in half that time because of superior technological know-how. This means that Jerry is more productive. More important he gets to have more time to do other things, including pursuing leisure activities. Jerry's quality of life is enhanced.
With this in mind, let's take a look at the productivity situation in Singapore. Our productivity level has been falling since 2005, registering a precipitous drop in 2008. This trend continued into 2009.

This is despite the long hours that Singaporeans spend working. An International Labour Organisation (ILO) report showed that among 12 countries surveyed in 2008, Singaporean workers clocked in the most number of hours.
According to the Department of Statistics, the average weekly hours that our workers put in is 46 hours (the standard weekly work hours is 44). Workers in the construction and manufacturing sectors clock in at 52 and 50 hours/week respectively, way over the standard.

But while Singaporeans work the longest hours, their real wages have declined. The ILO report found that while a majority of countries could maintain declining but positive wage growth in 2008, Singaporeans experienced “falling monthly wages in real terms” with real wages slipping one per cent.
This is like our friend Tom. Not only is the poor guy taking longer to produce the same number of computers than Jerry, but he also finds himself working overtime everyday. On top of this, he finds his pay reduced.
And so we have this picture of our economy: Productivity is sliding, Singaporeans are putting in longer hours at work and real wages are declining. This cannot, by any stretch of the economic imagination, be considered a successful economic strategy.
So what is the PAP's response to all this? Minister Mentor Lee Kuan Yew chided Singaporeans for getting soft:
We tell them, look, they have got to work harder or they’ll become stupid. It’s just that they don’t see the point of it. Why race when you can canter and save your energy and do other things? Art, ballet, sports whereas these new migrants, they spend all their time slogging away in the library or at home.
Art? Ballet? Sports? Already Singaporeans work the most hours compared to many other countries with real incomes falling. How is anyone supposed to have time for leisure? Even the elderly can't retire, the number of older Singaporean men working is at a record high. Is it any wonder then that in a survey conducted by Taylor Nelson Sofres (TNS) Singaporeans were found to more likely have suffered from depression, stress and fatigue than most of their Asian counterparts?
And to remove any doubt that he is completely tone-deaf when it comes to inspiring workers, Mr Lim Swee Say, minister in charge of the National Trades Union Congress, exhorts workers to work "faster, cheaper and better.”
All said, it is clear that the PAP's economic strategy, if you can call it a strategy, is to compel people to work longer and harder, and for less.
An old problem
The question of productivity did not just arise recently. The SDP raised this issue as early as 2005. We cited the questionable productive nature of our economy. In his book A Nation Cheated, Dr Chee Soon Juan wrote: "Singapore’s labour productivity...is notoriously mediocre." He went on to cite the influx of foreign workers which "expeditiously and artificially inflate[d] GDP figures." This, he added, was problematic especially in the absence of "a concomitant increase in labour productivity."
Stanford University economist Lawrence Lau explained that a more accurate picture of an economy’s performance can be obtained by studying the differential between all the resources that go into increasing economic output (including capital investment and education) and the GDP. He worked out a mathematical model to test his assumptions. When he applied his calculations to Asian economies, he found that some Asian countries produced high economic growth without showing corresponding increases in qualitative output in productivity. Singapore, in particular, stood out.[1]
An economist from the Massachusetts Institute of Technology, Alwyn Young, went a step further and compared capital investment against worker efficiency in Singapore’s economic growth patterns. He found that increased levels of capital investment could account for all of Singapore’s growth. In fact, through the most part of the 1960s, 70s and 80s, the output share of capital investment in Singapore increased from 11 percent of GDP in 1960 to more than 40 percent. But what is alarming is that very little, if any, growth is due to increased worker efficiency—that is, to the quality output of workers.[2]
This compares rather unfavourably to countries like the United States. Economists have estimated that approximately 80 percent of the rise in per capita income in America stems mainly from the productivity and efficiency of the workers themselves. Capital investment accounts for only the remaining 20 percent. Even the Japanese show a much higher rate of labour-efficiency growth. Singapore’s labour productivity, as pointed out, is notoriously mediocre. For example, in the retail industry, it is estimated that Singapore’s productivity is only 50 percent of its economy, compared to 70 percent in Japan and 80 percent in the United States.[3]
Another study pointed out that compared with workers from India, Taiwan, and the Philippines, Singaporean workers are rated as lacking imagination and adaptability.[4]
Young says compared to Hong Kong our overall economic performance has not grown any faster. Yet Singapore has spent much more of its resources in propping up that growth, a clear indication that the PAP Government has not invested the island-republic’s capital very efficiently through the decades. Young noted:
While the Hong Kong government has emphasised a policy of laissez faire, the Singaporean government has, since the early 1960s, pursued the accumulation of physical capital via forced national savings and the solicitation of a veritable deluge of foreign investment…Singapore has one of the lowest returns to physical capital in the world. The days in which Singapore can continue to sustain accumulation driven growth are clearly numbered.[5]
Another telling statistic is our public debt as a percentage of GDP. According to the latest estimates for 2009 from the CIA World Factbook, the figure for Singapore is 117.6 percent, making us one of the highest in the world – ranking sixth out of 126 countries surveyed. Hong Kong, on the other hand, ranks near the bottom at 110 with only a public debt of only 18.1 percent of GDP. This is a clue as to how Singapore derives its wealth which is primarily through the myriad of tax and savings schemes. Hong Kong, on the other hand, thrives on the energy and enterprise of its people.
Furthermore, a PriceWaterHouseCoopers report in 2006 found that the "average Singapore household is one of the most indebted in the world." At 174 percent of the personal disposable income, the household debt in Singapore surpasses that of even Britain (116 percent), Japan (100 percent) and the United States (90 percent).[6] As a percentage of GDP, Singapore's total household-sector financial liabilities stands at, according to the Monetary Authority of Singapore, 85 percent in 2004. This compares with 60 percent in Hong Kong. Much of this debt can be attributed to the ballooning of HDB loans. With the skyrocketing of HDB prices in recent months, the household debt of Singaporeans would no doubt escalate as well.
Analyst Dan Fineman also questions the wisdom of Singapore’s economic strategy. He points out that Singaporeans are deprived of disposable income by numerous (hidden) taxes, fees and expenses as can be observed by the fact that they consistently consume a share of GDP 10-20 percentage points below that of their counterparts in Hong Kong.[7]
Economist and Nobel Laureate Paul Krugman said of Singapore's economic system: “One can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to the past.” This is because when quantitative accounting is performed, an “astonishing result emerges: all of Singapore’s growth can be explained by increases in measure inputs. There is no sign at all of increased efficiency.”[8]
Further confirmation of Singapore's economic predicament comes from a comparison of the rates at which emerging markets approximate the productivity of the industrialised countries. Among Asia's Tiger economies, Singapore ranks the lowest.[9]
Hong Kong 2.0 Taiwan 0.8 Thailand 0.1 Korea -0.2 Indonesia -1.2 Malaysia -1.8 Singapore -3.5
In a nutshell, the way that Singapore has gotten rich is not through efficient use of our resources and innovative production. Rather it has been through squeezing more and more out from a limited resource, that is, the people. But like the sugarcane-juice seller, as the cane is passed through the crusher less and less juice comes out with each squeeze. There comes a time when all that is left is pulp.
Read also Introduction: SDP's alternative economic programme
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It reported that WP plans to respond during the budget debate in parliament, and SPP may also do likewise.
While being critical of some aspects of the ESC report, RP and NSP offered some suggestions (even if most are not too original). Notable was the fact that RP was even ready with a media statement – an indication of its preparedness, and readiness to serve the media so that they can serve the party.
However, SDP's contribution (or rather, lack of) was again prominently pointed out. It was relegated in the article to a “meanwhile”. It's thrust was distinctly negative and monotonous - that the report was simply “old wine in a new skin”.
Although there was mention of the impending alternative proposals by SDP in the next few days and weeks, the media opportunity would have already passed it by. WP and SPP may still get some media airtime on when both MPs make their views heard in parliament in March. But nobody in the MSM will be quoting SDP's rather extended (and late) study into our economic and social problems when it is eventually published. Yet another opportunity has passed it by.
Of course, its supporters here will remind us that the party can't be bothered with the MSM because the latter will never put the party in any good light. At last, this is probably what people call a self-fulfilling prophecy.
http://www.todayonline.com/Singapore/EDC100204-0000136/Opposition-parties-weigh-in