Monday, 10 August 2015

Why I Support the PAP

This Article on Why I Support the PAP first appeared on Swinging Singapore

ge2015 why i support the pap
There is so much negativity about Singapore and our government, especially in the internet forums. So I decided to compile a list of debating points for the government supporters now that elections are in the air again.


Singaporeans are fond of complaining and they end up forgetting what a great country we have. Here is a list of all the great things that our country has achieved.

Singapore’s achievements under the PAP


1)We are the 3rd richest country in the world. The richest is Qatar which is heavily dependent on its oil wealth. (With oil price declining as a result of fracking, they may not remain on top for much longer.) It is quite an achievement for us to reach the 3rd place without any natural resources. 

2)Our education system is ranked 1st in the world by the OECD. 

3)The World Health Organization ranked Singapore’s health care as the 6th best in the world. Our health care is rated most efficient in the world by Bloomberg. This is in terms of getting value for money. We spend less on health care, but still live longer. In fact, our life expectancy is the second highest in the world at 83 years, exceeded only by the Japanese. 

4) The crime rate is low. How low? Since lesser crimes are sometimes not reported, it is best to compare the murder rate because murders are always reported. Singapore’s homicide rate is 0.2 per 100,000 people, making it the 3rd lowest in the world. 

5)What about corruption? Transparency International has ranked us as a 7th least corrupt country in the world. 

6)Another important measure of national well being is the unemployment rate. According to the CIA Factbook, Singapore has the 9th lowest unemployment rate at 1.9% for the year 2014. A complementary statistic is the Labor Force Participation Rate which measures the % of the population who holds jobs. We have the 10th highest Labor Force Participation Rate. 

This statistic is used by economists to rectify the limitations of the unemployment rate. The problem with the unemployment rate is that the discouraged unemployed person who has given up looking for work  is not counted. It only counts jobless people who are actively seeking jobs. 

7)Singapore’s taxes are low. The common perception is that our taxes are high because of COE, ERP and PARF. The public image is that of a greedy, grasping government out to take our hard earned dollars one way or another. This is totally false. Our taxes are in fact one of the lowest in the world. See this link comparing company, income and Good & Services (also known as Value Added) taxes around the world. 

I will just compare GST for a few countries. In Singapore our GST is just 7%. Value Added Tax (another name for GST) in the Sweden, Australia and China are 25%, 10% and 17% respectively. Admittedly, only Singapore has COE. So the best way to compare how much money our government takes from us is to look at tax revenue as % of GDP. 

Fortunately, someone has done the compilation for the entire world and we can easily compare. The Singapore government only takes 14.2% of our GDP. Let’s compare with other developed countries like the US, France and Japan. The respective figures (see link) are 26.9%, 44.6% and 28.3%. So our government takes very little money from us. 

Yet, the government is able to give us good health care, schools, safe streets, etc. that is better than most of the First World Countries. Despite spending less money, they have managed to save money and we have huge reserves. Compare this to the indebtedness of most First World governments. For example, the US government owes creditors $18 trillion! Greece is broke and other PIGS (portugal, Italy, Greece & Spain) are also in bad shape. 

All these statistics spell a good, competent government. Don’t just take my word for it. The World Bank also thinks so. Each year, it sends out a report card for each nation called the World Bank Governance Indicator. It rates each country according to six criteria:

1)Voice and Accountability

2)Political Stability and absence of violence

3)Government Effectiveness

4)Regulatory Quality

5)Rule of Law

6)Control of Corruption

We scored better than 95 percentile for 5 of 6 categories. It is only in ‘Voice and Accountability’ that we got a middling score of 52 percentile. This is like getting 5 ‘A’ and 1 ‘C’ in school. This is an excellent report card from the World Bank. 

Yet, I have heard ceaseless complaints over minor things like MRT breakdowns, too many foreigners, high ministers’ salaries and issues regarding the CPF. Such things are minor issues compared to what we have achieved under the PAP led government - a rich country with top notch schools, healthcare, low crime, low corruption, low unemployment etc. Most of the complaints are in fact non-issues. The unhappiness is due to sheer ignorance. I will go through all these hot topics one by one.

MRT breakdowns

I don’t understand why some people think we got a bad government whenever our trains break down. Train breakdowns happen in all cities and people in other cities are less quick to complain. They seem to understand better than Singaporeans that all electro-mechanical devices break down once in a while. 

Trains break down in the London Underground. They also break down in New York. They also break down in Hong Kong. They also break down in Paris. I don’t think it is possible for something so complex as a train system not to ever have a breakdown. The key thing to ask is how often our MRT breaks down as compared to trains in other First World cities. 

The only statistic I could get was from the New York subway. According to the New York link above, there was a mechanical failure for every 153,382 miles in 2013. I don’t have comparable statistics of our MRT. What we should do is to learn from the best in the world and improve the reliability of our MRT. But expecting it never to break down is unrealistic. The people who appreciate our trains are the foreigners. One even said that the breakdowns are 100 times worse in London. 

I have not come across a study about the reliability of trains in all major cities so that we can tell where we stand. But judging from rankings of our health care system, education system, per capita income, my guess is that we would probably find ourselves again in the top ten best in the world. Following complaints about the train breakdowns, I am sure our government will get MRT to do something to make our trains more reliable.

But remember, reliability, like all good things in life, costs money. They have to install more backup systems which cost money. So expect the train tickets to increase in price and don’t complain when it does. Because you asked for it. 

Complaints about foreigners

The common complaint is that there are too many of them and they are taking away our jobs. The problem is that most people are like a rabbit on the ground while they should be a bird. A rabbit on the ground can only see a short distance ahead. His vision is blocked by nearby obstacles. So it cannot see that beyond a mound, there are fresh carrots growing. A bird in the sky can see the big picture, but not the rabbit. 

The big picture is that Singaporeans are not reproducing ourselves. The average birth rate per woman is 1.2. For Chinese Singaporeans it is even lower. We need to have 2.1 to maintain our population. 

This means that we need to ‘import’ 0.9 person per woman in order to maintain our population. Those with Employment Pass may apply for PR and later for citizenship. Of course, these 0.9 people per woman will compete with native born Singaporeans for jobs. But had this 0.9 person been born in Singapore, you still have to compete with him/her for the job. The point is that if Singapore does not have such a low fertility rate, we would not need so many foreigners but competition for jobs will be just as fierce.

If immigrants don’t come, our population will decline and our economy will suffer frequent recessions. You only have to look at Japan whose aging and declining population acts as a drag on their economy. Their economy stagnated since 1990. They too have low birth rate, but they are xenophobic and do not welcome foreigners. 

Some Singaporeans counter-argue that we can automate to lessen the need for foreign workers. Yes, automation can help to increase productivity, but there is a limit as to what it can do. Again, look to Japan. They are among the world leaders in robotics and they still cannot overcome their economic problems. 

There is one other point that the ‘rabbits’ on the ground cannot see. While foreign workers compete with Singaporeans for jobs, they also keep costs down. For example, our SBS buses are driven mostly by foreign workers. They are also repaired by foreign workers. That is why our bus tickets are cheap compared with other global cities. In London, a bus ride cost at least 2 British pounds or the equivalent of S$4. 

High Ministerial salaries

Yes, our ministers enjoy the highest salaries in the world. But they are probably among the poorer ministers in the world. The dirty secret is that politicians all over the world get rich one way or another. This is the big picture. 

I would love to know how rich our ministers are compared to those of the rest of the world. It is difficult for anyone to assess the wealth of all the world’s leaders. But every now and then, we get an inkling of how much money politicians make. Recently, the Wall Street Journal reported that the PM of Malaysia, Najib Razak received US$700 million in his personal bank account. This has sparked off a political crisis in Malaysia.

In 2012, the New York Times reported that family members of former Chinese Prime Minister Wen Jiabao have billions of dollars of assets. How did his 90 year old mom, who was only a schoolteacher before her retirement became so rich, so fast? Of course, the Prime Minister is  not so stupid as to put the money into his own bank account. Only the Malaysian PM does that. 

Former President Hugo Chavez of Venezuela convinced (or is that conned?) his people that he was the champion of the poor and got elected. He sure got very rich being their champion. (His family has US$550 million in liquid assets besides owning 100,000 acres of land.) In the process, he ruined his country with his Socialist policies. There are shortages of nearly everything, including toilet paper. This is despite that fact that Venezuela is an oil rich country. (Promising people free things is the easiest way to win votes. But it will bankrupt the country some day. A corrupt, irresponsible leader does not care for he will be rich long before that happens. )

I think our Lee Hsien Loong is poor compared to these leaders. 

But it is not just in Third World countries that the politicians get rich. While there is less corruption in the First World, most politicians in the First World also get rich legally or illegally. See the book, ‘Throw them all out’, on how US politicians get rich.  

A good example is former President Bill Clinton. His net worth is estimated to be US$80 million. In the book, ‘Clinton Cash,’ the author connected the dots pointing to at least unethical and possibly corrupt ways Clinton made his wealth. His wife, Hillary Clinton was the former Secretary of State. As the Secretary of State, she had to approve the purchases of American companies by foreigners. 

A Russian company wanted to buy a  Canadian company which owned uranium mines in the US. The Clinton foundation received a big donation from the Canadian mining industry and Bill Clinton  was paid $500,000 to make a speech by a Russian bank. Hillary approved the deal. Was it a coincidence? Unlikely in my view. But proving corruption is difficult.

Notice that Clinton’s estimated wealth of $80 million is far lower than the estimated wealth of Wen Jiabao’s and Hugo Chavez’s families. The US is a clean country like Singapore. So the less corrupt the country is the poorer the leaders are. For your information, the US is ranked 17th least corrupt country by Transparency International as compared to 7th for Singapore. 

What politicians want the most is power. With power, gaining wealth legally or illegally becomes easy. Power and money also make the politicians attractive to girls, which is important to womanizers like Bill Clinton. They all say they want to serve the people, but most just want to gain power and wealth. 

By paying themselves high salaries, our politicians at least are honest enough to admit it. It is human nature to want to look after your own family and getting wealthy is the time honored way of doing it. 

What is important is the results. I prefer a well paid leader who did a good job than a lowly paid one who did a bad job. Better to pay them well over the table than for them to get money from under the table. Taking bribes mean making bad decisions that cost taxpayers far more money than paying them higher salaries. 

Ministers must not be overpaid, but their salaries must be competitive with what they can get in the private sector. After one term as a minister, they would have acquired  valuable experience and contacts that makes them highly sought after in the private sector. So if you don’t pay them well, the good ones will leave. 

Singapore’s leaders have done a good job and so let’s not begrudge them their salaries. With their high salaries, they are unlikely to be the poorest politicians in the world. But they are still among the poorer ones because politicians all over the world get rich - one way or another.  

Unhappiness about the CPF

There are two main complaints about the CPF:

a)The first complaint is that we no longer can withdraw all our CPF money at 55, as before. Unhappiness over this issue has led to all sorts of bizarre theories. This is all nonsense as a result of sheer ignorance. 

The reason is that we are all living longer. When the withdrawal age of 55 was first set in the 1950s, our expected life expectancy was 63 and so could retire at 55. Today it is about 83. So we all have to retire later. That is why we cannot retire and take out all our money at 55. Because many people unwisely spend their money, the government decided to give the money out slowly in the form of an annuity. 

One bizarre theory circulating on the internet is that the government has lost money investing our CPF money and thus have no money to repay. This is nonsense because the GIC and Temasek accounts have been profitable. These companies have been audited by reputable international accountants. 

Even if it is true, our government can always raise money by taxing or printing more money. So there is no possibility that they cannot pay our CPF money.

b)The CPF interest rates are too low. Some people noticed that Temasek Holdings have been earning a rate of return of 16% per year since it started. So why are we paid between 2.5% to 5% interest rate by the CPF. But this argument falls, because CPF money is risk free. On average, CPF is paying us about 4% interest rate. This is higher than the risk free rate which means they have been generous. 

I challenge you to find a risk free investment that gives you 4% interest rate in Singapore. The highest yielding risk free investment is the 30 year Singapore government bond. It gives a yield of about 3% p.a. and you have to wait 30 years to achieve this 3% p.a. return. 

You cannot compare the return with what Temasek is earning because Temasek’s investments are risky. They can and do lose money.

19 comments:

  1. Great article πŸ‘πŸΌ. You should also do a fare comparison between MRT and subways in the developed nations. The fares for NY subway and London tube for example is madness.

    ReplyDelete
    Replies
    1. There is a daily cap for fares paid in London's public transport, is there such a cap for Singapore?

      Delete
    2. I studied as an undergraduate in the UK for four years. Never have I ever managed to hit the cap for fares paid in London's public transport.

      Delete
    3. And the cap in UK is 10 pounds which is abt 20-21 SGD. Do you spend 20 dollars on the MRTs and buses in a single day?

      Delete
    4. I think there is a cap in Singapore. Even without a cap there are concessions such as taking a bus after taking the mrt.

      Delete
  2. Well written. If only everyone in Singapore is rational and reasonable. I would rather pay a Prime Minister a couple of millions than to have one that is cheap to have but rob the country of billions.

    ReplyDelete
  3. I have no issue with paying higher ministerial salaries. But the way you presented makes it sound like if we don't pay the ministers higher salary, they will be corrupted. Should the rest of the work force who are payed highly be corrupted then? We have laws to punish and deter corruption, not by paying more. As a minister, they are serving the nations as part of a civil duty. Monetary reward should not be the goal. If they want to make more money, they should join the financial sector. I prefer to think of paying more to the minister as a motivation and reward for them to do a good job (provided they are doing a good job).

    ReplyDelete
  4. Great article. Sensible and factually correct.

    ReplyDelete
  5. Agree with all, except the tax portion and CPF interest rate. Nonetheless, nicely written..

    ReplyDelete
  6. The hyperlink to swinging singapore is missing a "w" in front.

    ReplyDelete
  7. Good points highlighted and arguments put forth. The issue is winning the people's hearts and mind is more than intellect. What is missing is the "soul" of the nation which was in our founding forefathers and those who strive in the early years. We need people who can serve with their hearts and not just their minds.

    ReplyDelete
  8. Not to forget that as much as ppl complain we have no freedom of expression, we are likely to be witnessing the first time a transport minister stepping down because of all the political ruckus and social media cacaphony.

    ReplyDelete
  9. Fantastic! i'l toast to that.
    Just to add, managing SWF is tough, earn too much via taking risk, people complain CPF low return.
    Earn too little or lose money everybody wack.
    A big thank you for consolidating all these data. It remind people that PAP supporters are not based on blind faith.

    ReplyDelete
  10. Yet so many Singaporeans are still so ignorant and unappreciative.

    ReplyDelete
  11. Well written article. Pls amend heading to read GE 2015 and not GE 2016. I once saw a poster (a bit crude) that said "hold a man by his balls, and his whole heart and soul will follow" - meant to show the effectiveness of management by fear (or/and pain). We are lucky not to have a government that practise this to win our souls.

    ReplyDelete
  12. I think it's erroneous, even dangerous, to think that paying millions to our ministers will stem out the possibility of corruption. Like power, greed feeds on greed: the more you have, the more you want.

    Rather, what we need is a leader of great integrity, a leader who genuinely loves his country and its people, a leader who is first and foremost a humble servant at heart, and a leader who has wisdom and foresight.

    ReplyDelete
  13. Well written. Thank you for sharing.

    ReplyDelete