Jun 5, 2007

So Is Life Rosy or Not?

One of my readers, Mr Han, requested that I comment on the following letter which was published in the Straits Times:

ST Forum, June 4, 2007
Future not so rosy for working-class S'poreans

MANY Singaporeans must be celebrating at the moment, with the buoyant economy, high employment, higher salaries and, for private home owners, skyrocketing property prices and 'en bloc' frenzy.

However, is the current state of the economy and future as rosy as it appears for most working-class Singaporeans?

According to data published in a report on the wealthiest cities in the world by PricewaterhouseCoopers (PWC) on March 11, Singapore ranks 36th out of 70 cities based on gross domestic product (GDP) in 2005.

A look at the rankings will reveal that, apart from Singapore, all the cities in the bottom half are in Second and Third World countries.

Singapore's GDP of US$129 billion (S$197 billion) pales beside other Asian cities such as Tokyo (US$1.19 trillion), Hong Kong (US$244 billion), Seoul (US$218 billion) and Shanghai (US$139 billion). In fact, we are only slightly ahead of Mumbai (US$123 billion).

These rankings are arrived at by using purchasing-power-parity exchange rates.

However, unlike Singapore, our Asian counterparts in Hong Kong seem to have more to look forward to. The projections for city wealth in the year 2020 show that Hong Kong is likely to rise to 14th position, while Singapore is likely to decline to 40th.

The study (taking into consideration deduction of taxes and social-security contributions) reveals that net salaries in Asian cities such as Tokyo, Dubai, Seoul and Taipei will surpass Singapore.

However, these sobering statistics apply only to the average Singaporean citizen. The top bracket of earners in professions such as medicine, law, banking and, of course, within the ranks of the Government, will earn as much, if not more, than some of their counterparts worldwide.

What do these figures tell Singaporeans? We can conclude that even though we pay a relatively low rate of personal income tax, the net amount of wages we take home leaves us in the bottom half of the 70 cities in the PWC report.

Edmund Khoo Kim Hock

I'm no economist, but this letter doesn't strike me as being particularly well-reasoned. In fact, it reminds me of Edmund Khoo's other recent letter to the Straits Times.

The same difficulty arises here - Edmund seem to form his conclusion first, and then only formulate arguments in favour of it. In the process, he loses objectivity and mangles the facts. Next time, try analysing the facts first, BEFORE forming a conclusion.

Here's one big mistake that Edmund makes:
Singapore's GDP of US$129 billion (S$197 billion) pales beside other Asian cities such as Tokyo (US$1.19 trillion), Hong Kong (US$244 billion), Seoul (US$218 billion) and Shanghai (US$139 billion). In fact, we are only slightly ahead of Mumbai (US$123 billion).

GDP can be used as an indicator of various things. However, if the intention is to use GDP as an indicator of the average citizen's standard of living (and that's clearly Edmund's intention), the least we could do is look at GDP on a per capita basis. That is, take the GDP and divide it by the size of the population.

That's because GDP is basically a measure of how big an economy is. A big city with a large population could have a GDP much higher than a small city with a small population. But on a per capita basis, we would realise that the average person in the big city isn't necessarily any richer, and in fact could be much poorer, than the average person in the small city.

The report that Edmund cites is based on a comparison of cities and GDP. In this report, Singapore is ranked 36th out of 151 cities , approximately in the same range as cities just as Shanghai (32nd), Melbourne (33rd), Mumbai (37th) and Rome (38th).

However, Shanghai and Mumbai are MUCH more populous than Singapore; while Melbourne has a slightly smaller population than Singapore; while Rome has a much smaller population than Singapore. If you go by a per capita approach, you'd probably see that the relative rankings of these cities would change quite a lot.

Now, if you compare countries based on GDP on a per capita basis, Singapore fares much better than 36th out of 151. Wikipedia tells us that Singapore would be ranked 25th out of 182 countries.

Of course, countries like Denmark, Sweden and Finland still rank far above us (8th, 10th and 12th). This is despite the fact that like Singapore, these countries are quite small, and not well-endowed with natural resources.

According to MM Lee Kuan Yew, the governments of these countries are even "mediocre", and therefore their ministers deserve to be paid much, much less than Singapore's PAP leaders.

An entirely believable claim, as long as you choose to disregard the facts.

35 comments:

hane said...

Mr Wang, do you read this blog?

http://singaporedissident.blogspot.com/
Can you give me your opinion on it? I find some of his words true but on the other hand its bordering on fanaticism against the government.
Anyhow, please give me your opinion.

Thanks!

MMM said...

Mr Wang,

Please don't wang MM Lee lah. He old already. His brain cannot remember figures already. Very soon going senile already. But I think even if senile, he would still be able to count the millions of dollars he had stashed up in his various residences. Don't you agree?

Anonymous said...

" ... form conclusion first, and then only formulate arguments in favour of it."

In my opinion, this represents the greatest threat to the viability of Singapore. Not globalisation, global warming, wars, etc.

It's the same thing that felled great civilisations.

Seems like history likes to repeat itself .... or that people like to repeat history ....

Anonymous said...

What best mearsure is what is in the pocket of the average Singaporeans. Last year speaking in Parliament LHL mentioned average wage to be about $2,000 per month. Could be more now.

Anonymous said...

Mr Wang,

You might have to explain why Denmark, Finland and Sweden are also not well-endowed in natural resources. To Singapore educated peasants like us, we have been convinced that Singapore is the most pathethic country in the world. (in terms of natural resources)

Don't they have at least more land than us?

Ballista said...

I would quibble about 'small'. Denmark (if you include Greenland) is pretty large; Sweden is quite a monster relative to Singapore. Finland isn't that small either.

As for natural resources, Sweden is a fairly large exporter of metals; in fact, Scandinavia as a whole is a source for rare earth metals which most people don't even think about.

And to reiterate a point, Denmark, Sweden and Finland have had a much stormier history than Singapore. The Swedes invented modern warfare, debateably; Denmark was occupied by Germans while the Finns had to rebuff the Soviet army.

All in all, I really think MM Lee could have chosen better examples of nations which have lost out through corrupt governance. Angola, which provides the largest share of China's oil imports and has a s---load of diamonds, for one.

Mr Wang Says So said...

Denmark (if you include Greenland) is pretty large;

LOL, lots of precious ice and snow there.

All in all, I really think MM Lee could have chosen better examples of nations which have lost out through corrupt governance.

??? Denmark, Finland, Sweden etc are equal or better than S'pore in the corruption-free rankings.

And they don't have to pay their ministers world-class salaries to achieve that.

Anonymous said...

Goes to show how credible his argument is.

But then he may be trying to convince some of the old ladies 65 years and older, whom he says totally support him.

simplesandra said...

Anon wrote: "Don't they have at least more land than us? "

They do. But they don't have deep reserves - like CPF contributions, for instance - to dip into. They also don't have a docile populace that accepts every "honest mistake" with a mere sigh and shake of the head.

Now how many nations on Earth would be envious of that? ;-)

simplesandra said...

ballista wrote: " Angola, which provides the largest share of China's oil imports and has a s---load of diamonds, for one."

Compare Singapre to a third world country? I don't think MM would like that. :-)

He picked the Scandanavian countries because they are the model of welfare states - and welfarism has replaced communism as his favourite whacking boy.

Anonymous said...

Mr Wang,

If you read carefully, what Edmund is talking about is the wealth of a CITY not necessary the inhabitant. So his used of the GDP measure seemed appropriate in the context of his discourse.

If you read carefully, it would appear that what his is suggesting is that given the size of the GDP, which appears not to be growing, this would spell misfortune for Singapore workers. I think by that his is implying that the GDP not growing so less "pie" to share around.

However, the use of the word "Wealth" maybe somewhat misleading and equating it to GDP may be somewhat lazy correlation. I supposed it would have been less ambiguous to talk about the size of the economy.

Tan Ah Kow

Mr Wang Says So said...

If you read carefully, what Edmund is talking about is the wealth of a CITY not necessary the inhabitant.

No lah. Read second paragraph again. Edmund is clearly talking about "working class Singaporeans".

Edmund has also mangled facts in other drastic ways - which I hadn't bothered to point out. Eg he says: "A look at the rankings will reveal that, apart from Singapore, all the cities in the bottom half are in Second and Third World countries."

This isn't true. Firstly, Singapore isn't ranked in the bottom half. Edmund says that Singapore was ranked 36th out of 70 countries, but actually, if you refer to the PWC report, Singapore was actually ranked 36th out of 151 countries.

Secondly, the bottom half of 151 countries means the 76th-ranked country onwards, and if you look at the study, you'll find more than a few First World cities in the bottom half.

Which shouldn't surprise anyone. As I said, if you don't use a per capita basis, then many small, rich cities are going to be ranked low. Like Zurich, Copenhagen etc.

I dunno why the ST publishes such crappy letters.

Anonymous said...

Mr. Wang, do remember that the per capital GDP is a very crude way to measure the $ in the pockets of the average Singaporeans. GDP includes corp profits which in recent years have grown faster than the workers. It also does not take into consideration the income distribution.
U have to look at the Gini coefficient which scientifically measures the wealth distribution. In this regard, Singapore sits amongst the 3rd world. So even though Singapore's per capital GDP is not too bad, if you take into consideration the GC, the reality of the bottom 20% is glaring.

Anonymous said...

Perhaps the conclusion is the message, which would not come as a surprise considering the number of 'residents' that are flocking here. Nevermind the logic or lack of.

Singapore is a great place for businesses which are no longer shackled with a labor market demarcated by geographical boundaries.

Jimmy Mun said...

When US, UK and Germany was booming, they credit the "Protestant Work Ethic". Then Asian tigers rose, and they say it is the "Confucian Values".

The best performing economy in the world now is probably that of the Republic of Ireland. What are they going to call it now? "Catholic virtues?"

I didn't believe my eyes when I first saw it, but Ireland has a smaller population than Singapore: 4.1 million, and yet has one of the highest GDP per capita in the world, much much higher than that of Singapore, and higher than the Scandinavian countries. And yet the Irish people very nearly threw the pro-business party out of power in the recent elections.

But the MM is going to dismiss Ireland as yet another country that can afford to have monkeys running the country because it is in Europe. Apparently, there is no Albania or Romania in his map of Europe.

Anonymous said...

Here are another takes on the PCW report:

http://www.breitbart.com/article.php?id=070307134035.1vs93gxp&show_article=1
http://www.metacafe.com/watch/517894/10_worlds_richest_cities/

Tan Ah Kow

Anonymous said...

" ... form conclusion first, and then only formulate arguments in favour of it."

There is a convenient word for this: propaganda. A lot of surveys and 'research' operate by the same method.

Mr Wang Says So said...

"U have to look at the Gini coefficient which scientifically measures the wealth distribution. In this regard, Singapore sits amongst the 3rd world."

Yah I know, I previously blogged about the salary growth of Singaporeans (non-existent for the bottom 20% or 30%, over the past five years).

Just saying that Edmund's letter is not well-reasoned.

Anonymous said...

" ... form conclusion first, and then only formulate arguments in favour of it."


I thought this is the approach used to draw most of our policies?

The parliamentary sessions also like that wat?!

Clarence said...

hane, is there any need for reading of the blog? just look at the name of it, it's bound to have dissident views. and if you ask me, i read the first part of the top post and got pissed off reading anymore. i just hope u'r not here to publicize this blog.

i do believe we need a certain measure of balance in whatever we do or say.

Anonymous said...

hi mr wang,
i agree with you cos that's what's going on in my mind when i read that letter.

however, what really bothers me is that the editors of The Straits Times actually published it!

Regards,
Ms Wang (this is really my surname!)

Mr Wang Says So said...

Today, another writer to the Straits Times makes the same point as I did, about Edmund Khoo's post. Link.

leigh said...

I'm always a little skeptical about the power of the mind, cos it's too easily moulded. You can proactively mould it yourself...but so can others. And I'm always suspicious about inconspicuous conditions moulding my mind, like my living environment, what I watch on tv, what my parents' pet phrases are that i hear over and over again etc...

So how would you know what you are Meant to be? I'm gg to uni and am taking up journalism cos it's a path I feel inclined to since I was in primary school. By doing journo, I'm giving up Law. But I could very well be a lawyer if I were to back out from journo right now. Or I could be neither and do business.

I'm at a crossroad of life. I could be Anything. (not--Whatever..haha) I like it when people say "Live with passion! Do something where your passion lies in!", and they tell you to be what you're meant to be.

But where Is my passion really? and what am I Meant to be? And it's not that I can't sense where I'm going in life, but I could..you know, learn to love something else too.

The mind just SO mallaeble.

Anonymous said...

Mr Wang,

May I bring in an important factor in Singapore-the trenmendous growth of population.

If you check the figures by DOS,for the last 12 months the population growth was close to 4%,which I am super confident would be the highest in the world.

If the population grows by 30%,then you would need about 35% growth to sustain the economy,for example.

Mr Wang Says So said...

GDP's components include private spending. If population increases by 30% due to the intake of FTs, the private spending component of GDP will also go up, because FTs need to pay for rent; food; transport; clothes; furniture; utilities; entertainment etc etc.

That is why I say it is more meaningful to look at GDP on a per capita basis.

To say that a city has a GDP of $x billion dollars will tell us nothing about the standard of living of the people ...... unless we know how many people live in that city.

Anonymous said...

well,Mr Wang,

The famed MS sacked economist Andy Xiu claimed that the per capita GDP of Spore had been stagnant for the last 10 years,in USD term,I think

Anonymous said...

Simplesandra's comment:

"He picked the Scandanavian countries because they are the model of welfare states - and welfarism has replaced communism as his favourite whacking boy."

Sorry to tell you this but the Scandanavian welfare model is currently falling apart.

FrauP.

Anonymous said...

Mr. Wang : "Just saying that Edmund's letter is not well-reasoned."

D telling D- : " U r no good."

Anonymous said...

Another writer wrote a response to Edmund Khoo's letter and mentioned about the 2007 Quality of Living survey where Singapore faired very well. However, in another report by that very same company, Singapore was ranked the 17TH MOST COSTLY CITY TO LIVE IN.

The PWC report already considered the deduction of taxes and social security constributions so shouldnt this account for something at least?

Also important to note is that all the reports mentioned in the Straits Times and those in reply to Mr Wang's blog have not taken into consideration the 7% rise in GST from next month onwards. And now, with the imminent increase in cost for using a 'basic' payment mode - NETS - i wouldnt be surprise if Singapore's cost of living rises even further.

FrauP.

Anonymous said...

Mr. Wang : "That is why I say it is more meaningful to look at GDP on a per capita basis."

This is still not good enuf. U must look at how the wealth is distributed.

Anonymous said...

Sandra,

"They do. But they don't have deep reserves - like CPF contributions, for instance - to dip into. They also don't have a docile populace that accepts every "honest mistake" with a mere sigh and shake of the head."

If you want to talk about advantages of Singapore over the other 2, even natural ones, bet we can list even more factors than what you've listed. How about a deep harbour at a strategic location?

But I'm still wondering if Denmark, Sweden, and Finland have an edge over us that we haven't considered. How about climate? An attactive natural environment that encourages quality immigration, or at least keeps citizens from emigrating away?

Anon

Anonymous said...

Singapore is an artificial construct. Comparisons with other 'real countries' tend to breed contention as no other country is dealt a similar hand.

What is relevant however, is how Singapore fits into the scheme of things
- for the citizen
- for the resident
- for the world economy
- for itself

Mr Wang Says So said...

This is still not good enuf. U must look at how the wealth is distributed.

Actually it's neater just to consider the rate of wage growth across Singaporeans in different classes.

I mentioned the relevant statistics, in a post of mine back in January: here.

You have to understand that PWC's intention was not to compare people's wealth or standards of living or salaries. But Edmund hijacked that PWC report for such a purpose. That's why Edmund's letter looks warped.

Anonymous said...

Anon's comments:

"But I'm still wondering if Denmark, Sweden, and Finland have an edge over us that we haven't considered. How about climate? An attactive natural environment that encourages quality immigration, or at least keeps citizens from emigrating away?"

Denmark, Sweden, Finland (and even Ireland) belong to the European Union (EU). Citizens of EU countries have the right of free movement within ALL EU countries and are allowed to look for work in whichever EU country they choose to go to. Therefore, immigration is not a big factor in the same sense like immigrants to Singapore (or vice versa).

Then there is the social welfare and pension contributions, which is tied to the citizen's country of origin (which by itself is a complicated procedure).

As for keeping the citizens from emmigrating away...i would think that if a Danish, Swedish, Finnish or Irish were to consider this, it would be difficult to find the same quality of life which these Scandinavian countries (and Ireland) provide anywhere else in the world. Scandinavian countries are famed for being highly modern and clean, with extremely high quality of life.

However, i'm not so sure about their futures because their social welfare systems are beginning to show serious cracks and is starting to threaten their economies.

However, Ireland is the exception to this. Their serious efforts in the last 4 years to tighten the social handouts have started to improve things for them tremendously (hence the boom in Ireland).

FrauP.

simplesandra said...

Anon wrote: "How about climate? An attactive natural environment that encourages quality immigration, or at least keeps citizens from emigrating away?"

Well, Scandinavians suffer quite a bit from seasonal affective disorder....

Do think their landscape's kind of bleak too, if in a majestic, beautiful sort of way (that, or I'm listening to too much Sibelius). :-)