Welfarism is bad but good

May 17, 2012
Singapore Democrats

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Singapore Democrats

Talk of economic measures to level up society is often met by derision from proponents of market fundamentalism that economic aid for workers will make them lose their work ethic and destroy the incentive to strive for prosperity. 

Such arguments are often leveled against calls for making the economic system fairer by introducing minimum wage and retrenchment benefits for poorer workers.

In Singapore, we have been brought up to believe that the harder we work, the richer and more prosperous we will get. Mr Lee Kuan Yew tells us that there is no such thing as a free lunch. Diligence pays. 

This is true – for most of us anyway. We work hard for the couple of thousand dollars that we get as monthly salary. But if hardwork is commensurate with wealth, then Warren Buffet must achieve super-human feats to make thousands of dollars in an hour instead of a month. 

No, it is not true. The rich, especially the super-rch, do not work extra hard to obtain their riches. They have something else: The government. (In Singapore, the opulent are also the government. Ministers draw huge salaries and bonuses, some doing so even as they claim their already bloated pensions). 

But these wealthy ministers, never tiring of pointing out the need to ensure that workers’ wages remain ‘competitive’, often develop a blind spot when it comes to welfarism for the rich. 

How often have we heard of grown-up children of ultra-rich families becoming indulgent and refusing to work because they have everything that they can possibly want? They get waited on hand-and-foot, thinking that the world around them consists only of Bentleys and bungalows. 

Where’s the incentive to work when one knows that one is going to inherit dad’s or mum’s fortunes and that the gift will just continue to give? 

Did Winston Churchill not say that the inheritance tax was “a certain corrective against the development of a race of idle rich”?

And yet when society calls for inheritance taxes and estate duty to be levied, there is much wailing and gnashing of teeth. But when it comes to legislating retrenchment benefits and minimum wage for workers, these same critics predict that the sky will fall. Welfarism, it seems, is only bad for the poor. 

In Singapore, the PAP has made taxes for the rich a thing of the past. In 2008, for example, it abruptly and inexplicably abolished the estate duty. It has ensured that there is no capital gains tax and inheritance tax. Corporate tax is one of the lowest in the world. 

The party sees no inequity when the wealthy investor is exempt from paying 7 percent GST when he buys investment-grade gold while the struggling mother pays the same tax to buy a loaf of bread.

The truth is that the much of the wealth of the richest one percent did not come just by hard work. It came also from the rewriting and abolishing of laws, policies and regulations. 

It is time that Singaporeans call out the hypocrisy.