Competitive Salaries for Head Hunted Cabinet Members

Singapore operates a meritocratic system where politicians' performance is rewarded, unlike that of Finland, Denmark and Switzerland where they are political coalitions by nature. Hence, it is no surprise that these ministers' pays are far less than ours. Putting the issue of values and sacrifice aside, a small and nimble country like ours needs to attract top talent to ensure that the economy continues to prosper and achieve high growth rate and hopefully to reach Swiss living standards.


I strongly support Prime Minister Lee Hsien Loong's decision to go talent hunting just like many multi-national corporations are doing in this business world.

Since many young Singaporeans are pragmatic and ambitious, unlike the past generation of able, dedicated Singaporeans who willingly stepped forward to serve in the public service, this serendipitous state of affairs will NOT continue unless they are paid salaries comparable to what their counterparts are earning in the private sector. In fact, they should be paid relatively higher as they make more sacrifices, in terms of the loss of privacy and time they could spend with friends and families. Hence, to benchmark their salaries to the top professionals is a wise decision to ensure sustainability of the nation's growth rate.

Comparisons in the light of PM Lee Hsien Loong’s disclosure on increasing top ministers’ salaries (related article)…

Annual salaries of heads of government:

1. Singapore Prime Minister US$1,100,000 (S$1,958,000) a year
2. United States of America President: US$200,000
3. United Kingdom Prime Minister: US$170,556
4. Australia Prime Minister: US$137,060

Annual salaries of Ministers of government:

1. Singapore Minister: US$819,124
2. UK Minister: US$146,2993
3. US Cabinet Secretary: US$157,000

Source: Asian Wall Street Journal 10 Jul 2000

See: The Cabinet Appointments (2007)

Posted by Ms Chin Chiew Fong

University Education - Whither More Subsidies

Economic reasons for subsidies

In many countries, including Singapore, public and private university education institutions exist side by side. However unlike in private universities, students in public universities pay fees that are heavily subsidized. This means that their course fees tend to be only a small fraction of the actual cost of running these programmes. Why are governments willing to subsidize fees in public universities?

The main reason behind this is that university education is deemed as a good where total social benefits from it are larger than the total private benefit. Social benefits include the private benefits enjoyed directly by the individual, such as the higher lifetime earnings from higher education. However, it also includes external benefits, that is, benefits that society derives from higher education over and above those enjoyed by the individuals. These include having more well-informed vote-casting citizens, a larger pool of capable businessmen and workers who can expand the economic pie and political leaders who can understand the local conditions and lead the economy in a fast changing world.

Given that an individual would not consider the external benefits but only his or her own private gains, there tend to be a situation where enrolments in university education is less than desired. Thus government subsidies come in handy in getting more people to enroll in such institutions to reap the full social benefits that such education brings. Of course, the ideal solution is a targeted subsidy that directs funds only at people for whom the subsidy makes a decisive difference. The difficulty lies in our imperfect ability to distinguish those for whom the subsidy is decisive and those who would opt to go for university education anyway. Due to this, subsidies tend to be across the board for public universities.

Competing uses of government funds

However, over time, as competition gets stronger with globalisation, people do recognize that university education is getting more important and their returns getting higher. In the case of Singapore, more students also qualify for university. If subsidies remain status quo, with the expansion of university places, the government will be forced to squeeze resources elsewhere from the economy to continue the heavy financing of university education. This may not be the best thing to do and I do agree that the Singapore government should control its expenditure on university education.

Government involvement in other aspects

The reasons for my stand is simple: The government needs to spend more on primary and secondary education to help the majority attain a standard of education which will allow them to find suitable jobs in this very competitive world. If we are successful in doing so, it will substantially reduce the burden on taxpayers having to assist the low-income earners in the future. In addition, there are also substantial medical and other social needs to be provided, especially for the poor, as well as the economic expenditure needed to ensure a sustained growth for the country. Our public funds may not be deep enough to spend lavishly on every item unless we keep adjusting our GST upwards.

Do not be mistaken; I am not advocating that the government should wash their hands off in making additional contribution to university education. Conversely, as mentioned above, there are great social benefits from university education and the government should be involved in ensuring high-quality, updated and relevant programmes for study. This is especially so as Singapore moves into a knowledge-based economy and many of our niche areas require highly-skilled personnel.

Conclusion

When limited government funds have many competing uses, there is really a need to prioritize. For those who are richly endowed with high intellectual capacities and moved on to the universities, perhaps they should pay a little more on their road to success. For those needy, there is always the availability of scholarship, bursary and interest free loans to assist them……..Don’t you think so?

Related Article: http://www.moe.gov.sg/parliamentary_replies/2005/pq28022005.htm

Posted by: Mrs Chua Siew Hong

An Earthquake in Singapore?

What is earthquake to Singaporeans? Will it 'reach' Singapore?

In known history, Singapore has not experienced an earthquake.

Singapore is located in an area sandwiched by the Java trench in the west and south, and the Philippine plate and trench in the east.Thus Singapore is located in a seismically stable zone, free from earthquakes.Most of the shallow and bigger earthquakes are in western Sumatra and Java because of the deep subduction zones to the west-east and south-north of the Java trench. Earthquakes that occur near Singapore are usually deep focus weak earthquakes. (Refer to Figure 1).

Figure 1

However on 6th March 2007, certain parts of Singapore including the Central Business District felt tremors that were the result of a Sumatran earthquake that measured 6.6 on the Richter Scale. Buildings in the affected areas swayed, not to mention the people in them.

Responses from Singaporeans taken from local blog sites include:

'tremors only ma.. don't think need to take any cover. Unless next time an earthquake strike Singapore'.

'I didn't feel anything. Xin Li Zhuo Yong (psychological effect)…'

'…The swaying was very obvious. I felt the work station was moving and I thought it was my colleague who was pushing the work station but when it started swinging back and forth slightly it was obvious that it wasn’t the workstation that was moving but it was the building…'

'…We were doing our work on our computer when the building started shaking. So we grabbed our bags and just evacuated by the normal fire evacuation procedures. Everyone was panicking. I think one of my colleagues was crying because she had never felt such effects before. And we were all rushing out of the building. But no fire alarm was sound. We took precaution and left the building ourselves…'

Although the responses varied and the blog site could not sustain this thread after just 2 days, some questions were asked on why Singapore experienced the tremors. This is because the next one may be nearer or more intense, yet I wonder how powerful it must be to seriously affect our people, to get them to sit up, pay more attention and awareness to it.

After all, how many Singaporeans know what to do or what not to do if Singapore is to experience an earthquake? For example, do we run to open space in the event of an earthquake? (The answer is no if you are surrounded by buildings but yes if you are not) We are just being lucky as we are 'shielded' by surrounding nations; remote from earthquake zone and tsunami 'walls' sheltered up by the Indonesian Archipelago in the west and south and the Philippines in the east. Yet there were inhumane calls from the public suggesting that we stop sending rescue teams to help these victims.

However, we seem to have some evidence that along the subduction zone of the coast of Sumatra do happen in phases. In the early nineteenth century there were a number of earthquakes in relatively quick succession and we are maybe entering a phase where we have a series of earthquakes where one earthquake triggers another one further along the fault line.

Sometimes when a large earthquake occurs on parts of the fault line, the stresses are transferred further up the fault line and that may then lead to a second earthquake. We saw this happening after the original tsunami earthquake in 2004. About three months later, there was a very strong earthquake a little bit further south.

'So what?' Some might ask but the issue is that mankind do not know enough of earthquakes such as predicting the next one. Moreover, not all the factors on how the magnitude of the earthquake itself affects the felt effect on earth's surface are known.

Of course, what we do know is that when two earthquakes have the same magnitude, the deeper earthquake will have less felt effects than the shallow one. However, there is another factor which is very important but under appreciated. It is the intensity of the felt effects which is the nature of the immediate sub strata of the place or building where that earthquake is felt.

In general, a solid rock will have less shaking potentially then an area built on unconsolidated material.

This is the potential danger where almost twenty percent of Singapore’s surface area is reclaimed land. Scores of buildings that include houses, factories and hotels are located there. In the event of an earthquake, buildings will be shaken up more violently as compared to those on non-reclaimed land, which is solid and will not be liquefied by the shake.

Worse, as seen from Figure 2, Singapore is an SIA (not the airline itself, but sedimentary rocks in the Jurong formation, igneous rocks in the central and old alluvium in the east). Hence, unconsolidated sediments, which are sediments which have accumulated in buried river channels, are more likely to amplify the seismic waves as they move through them. And we find these kinds of sediments in the Central Business District, in areas to the east of Singapore and along some of the main valleys. Not to mention the softer sedimentary rocks found in the Jurong formation.

Now, if an intraplate earthquake strikes Singapore (Intraplate earthquakes occur in the middle of presumably stable tectonic plates which scientists currently do not understand the cause of this rare hazard), I am not so sure how Singapore will take to it.

Figure 2

For interest sake, a quick summary on the geology of Singapore as taught by Mr Kenneth Lim from NIE:

Singapore rides on the Eurasian plate, and this is less dense than the Indo-Australian plate which is converging against it. The great heat and pressure caused results in part of the Indo-Australian plate margin melting, releasing magma which is forced up towards the crust.

Very near the destructive boundary, the magma has enough energy to melt its way right through the Earth's crust, till it emerges as the volcanic islands of Java and Sumatra. Further away (about 400 kilometres) from the convergence zone, where Singapore presently is, the magma had lost most of its energy by the time it got near the surface because it had started from very deep within the mantle.

As a result, the magma was unable to melt its way completely through the crust and instead cooled and solidified midway. That is, the magma was intruded into the crust. The crust bulged up, forming what we now know as Bukit Timah hill. So now we know why Singapore will never experience any volcanic activity, at least in our lifetime, simply because we are too far away from all the action.

There is another main group of rocks which were being formed at around this time. Continued uplift of the batholiths beneath Peninsula Malaysia mountain range (Refer to figure 3) increased the potential energy of the overlying rocks. Their rate of erosion thus increased, and the eroded material was deposited in shallow freshwater and coastal basins. Over the years, they were compressed into sedimentary rocks called sandstones and mudstones, and in Singapore, they are termed the Jurong Formation.

Figure 3

The last main group of rocks we come across is known as the Old Alluvium (shown in peach in the east of figure 2).

The Old Alluvium consists of sand, pebbles and gravel. The average thickness of the Old Alluvium is generally believed to be about fifty metres. The deposits are believed to have been eroded from granitic rocks from south Johor. It was deposited when sea level in this part of the world fell due to global cooling.

As sea level began to rise back to its present day level, the Straits of Johor were flooded and Singapore became an island. Even today, the Straits east of the Causeway are about twelve metres deep, while some parts of that west of the Causeway are as shallow as five metres!)

Earthquakes have also been responsible for another kind of natural disaster, Tsunamis. The 2004 Indian Ocean Earthquake had its epicentre in the west coast of Sumatra. It triggered a series of devastating tsunamis that killed large numbers of people across South and South East Asia. During that period, there was a theory put forward that at some point Singapore could be affected by a tsunami in view of the shifting tectonic plates.

Now, the tsunami was generated by an earthquake which resulted in a sharp drop in the seafloor elevation. However, Singapore was not affected because Sumatra was blocking the direction of the tsunami.

But in terms of shifting plate boundaries, the plates that are formed on the earth’s surface have been moving for long periods of geological time. So the position of continents is changing over long periods of geological time. If we roll that forward, we would expect there to be a continuing shift of where the fault lines occur and where the volcanoes form and so on. Furthermore, simulations have suggested that in about fifty million years time, Australia will crash into South East Asia. We will then see volcanoes and earthquakes occurring in different positions. Singapore by then could possibly lie much nearer to the fault boundary where we might be prone to earthquakes and Bukit Timah hill erupting lava (Compare between Figure 4 which shows the current world and Figure 5 fifty million years later).

Figure 4

Figure 5

I would like to hear your views based on the two questions posed. Looking beyond the tremors and concerns, one can also draw a rather important lesson for mankind from earthquakes such as these. The world is not only connected or linked through communication channels such as the internet and mass media and modes of transportation such as air travel. We have been historically connected by something called geography (Basically how space/place changes over time). What happens in one area can have an impact on its neighbourhood.

Therefore, let us not be so ignorant just because we are in a 'peaceful' environment.

Posted by Mr Eric Goh

O tempora!

Where did the Weekend go?

Over the course of the so-called long Good Friday weekend, and constantly measuring the beat of the clock representing Time’s unstoppable march to inevitable Monday, one cannot help wondering the boon and curse that this accurate measure of Time entails. One cannot help comparing our fast paced, hectic lives today with the lazier, slower rhythm of the life in the olden days when minutes and seconds were immeasurable and Time consisted solely of the light of day and the dark of night. Maybe our ancestors were better off not chasing the clock. Well, as always, the Historian in me wonder … When did this whole obsession with time start and why was it so important to divide day and night down into hours, minutes and seconds? With a bit of research, I thus attempted to (with Darth Vader’s voice) Trace the History of Time. (Blare of trumpets in the background, please.)

Sun, Sand and Water: Units of Time In The Good Old Days

The sundial was an early attempt to regulate the day, just in case people had an important meeting to go to but could not differentiate between 1 p.m. and 3 p.m. since it was almost impossible to distinguish these two hours by looking at the sky alone. It must be noted that the 24 hour day was already demarcated by the ancients of Babylonia and other great civilizations but in terms of actually tracking these hours, there were still great limitations to this technology; the first being the obvious need for the sun to be in the sky and the other being the fact that sundials only reflected local time. Thus, if Horse A left Town B at 2 p.m. and Chariot C left Town D at 4 p.m. traveling towards Town E, nobody in their right mind would have any clue what time they would meet, especially if it started to rain halfway. Other than making such Mathematical problem sums unsolvable, sundials were just too inadequate for any serious divisions of time. This was also the case for hourglasses that had sand pouring from one chamber into another. The problem was that if nobody remembered to turn the hourglass over when the sand ran out, they would lose track of time. Water clocks were cool devices that had mechanical gears and other shiny stuff but were so expensive that only emperors and the rich could afford them. Consequently, “before the clock, the central unit of time was the whole day and people drifted through it, accomplishing their tasks to the rhythm of light and dark.”[1]

St Benedictine and the Church: Doing Time In The Monasteries

In the olden days, monks in the monasteries practiced the St Benedictine Rule that required them to pray at specific intervals in the day. As such, there was a need to demarcate these points, leading to the invention of the early clock, which comes from the German word ‘glockke’, or bell, an important feature in the monasteries. Although these clocks employed simple mechanisms, they were relatively more sophisticated than earlier methods of measuring time. Other than the fact that there was now an increased reliance on technology to tell the time, the invention of these ancient clocks also allowed the monks to divide the night into intervals, finally conquering the previous limitations that earlier sundial faced. However, it can also be argued that the clergymen were not representative of society, bearing in mind that the regular schedule of the Benedictine monks did not necessarily reflect the schedules of the everyday townsman or farmer. Thus, despite this breakthrough in the measurement of time, the impact was more felt in the monasteries, rather than the town. What this meant was, monks aside, it remained a long weekend for the rest of us.

The Business Times: Of Public Clocks and Closing Hours

Over the ages, “the cyclical time of the Church was replaced by the linear, valuable time of the merchant.”[2] The needs of the merchants made it advantageous for them to promote time-consciousness among the masses. At the same time, technological improvements were made to the existing clocks, making them more accurate and reliable when compared to the earlier models (if you are old enough to remember this, imagine the difference between the Nokia ‘Banana Phone’ and the Nokia N95). During this period, somewhere in the 14th Century, merchants were keen to divide Time up for a variety of reasons. First, to let people know the opening and closing hours of their businesses; Second, to regulate the working hours of their employees and Third, to synchronize and coordinate the expanding commercial networks and transactions in the different towns and cities. Well, to achieve this, they spent money and installed large clocks in the middle of towns for the people, making Time more accessible to everyone who wanted to know when lunchtime was and what time the ancient equivalent of Takashimaya Shopping Centre would close. From this moment onwards, Time Became Money, setting the stage for the Industrial Revolution.

The Industrial Revolution: The Exploitation Of Time

At the time of the Industrial Revolution in the 18th Century, the humble clock and the accompanying concept of measured time have been taken to be an exploitative feature of the capitalist system. As such, the technological improvements of the clock to this point of time were seen to promote the political agenda of the industrialists. With this in mind, Engels (Karl Marx’s sidekick and the Second Comrade of Communism) exclaimed, “the factory clock as the means and symbol of industrial domination over people and of their exploitation.”[3] Time was measured, dissected and distributed to enhance worker productivity, on a scale much larger than the monasteries had ever attempted. In a way, it was the culmination of the earlier periods of emphasizing prayer intervals. Days became regularized, as society was re-organized with the efficient distribution of Time in mind. For example, bells were rung to signal the end of one interval in the factories so workers could move to another production task assigned to them. Sounds familiar? From that time onwards, more accurate clocks were invented and peoples’ lives became more regularized as societies shifted from rural areas to urban industrialized towns.

Conclusion: Tempus Fugit (Snooty Latin Expression, meaning Time Flies)

It seems we have come a long way from the sundials (that measured Day/Night) to the atomic clocks of today (that measures nanoseconds for reasons unknown). It is a timely reminder (pun unintended) of how technological changes over time (pun unintended again) can explain something as simple as why the school bell ringing is a sign that you have to go to another class and why MacDonald’s is always crowded between 12 p.m. to 2 p.m. It can also explain why in the ‘Good Old Days’ when Time was less regulated in the rural villages, your grandparents could do so many things in one day (insert adventures for example, swimming in the river, climbing trees, constructing homemade pellet launching wooden guns and still sleep at 8 p.m. while you are struggling to finish up your work by 2 a.m. so you can sleep and wake up at 6 a.m. and leave home at 6.45 a.m. to catch the 6.55 a.m. bus and reach school at 7.25 a.m. for assembly at 7.40 a.m. and feverishly copy your classmate’s tutorial answer before class starts at 8 a.m. sharp. Only time will tell (pun unintended, it’s the last one, I promise) whether there will be further divisions when Tomorrow comes. As with most things of Today, the answers can probably be traced to the events of Yesterday.

[1] Jo Ellen Barnett, “Time's Pendulum: The Quest to Capture Time-- From Sundials to Atomic Clocks”, (New York: Plenum Trade, c1998), p.31
[2]Gerhard Dohrn-van Rossum; translated by Thomas Dunlap, “History of The Hour: Clocks and Modern Temporal Orders”, (Chicago: University of Chicago Press, c1996), p.13
[3] Ibid, p.9

Ageing in Singapore – What’s the Problem?!

“Class, let’s talk about the ageing population problem today.”

This will usually be my starting line when I want to discuss about population problems. But, I really feel uncomfortable calling it a problem. Why is ageing a “problem”? For whom? How would the senior citizens feel about this? Come on, do you feel good if I should label you as a “problem”?

Why am I so interested in this issue? Well you see, both my parents are above 70 years old. I have a gut feel that there is something deeper to this issue. I don’t see my parents as being a “problem” or useless.

Enough of being an armchair photographer, I convinced my fun and wacky colleague, Ms Aw from the Economics Department to do a photo trail, chasing old folks in their daily routines in the Tiong Bahru and Bt. Ho Swee area. Ms Aw is a keen photographer. I have to thank her for sneaking up on old folks to take their photos, hiding behind walls. Mind you, we got chided by an uncle in the park for taking his photo. So, hope our sacrifice was worth it for you to continue on this exploratory trail with us. ;O)

We see old people around us every day. Have we ever paid any attention to them at all?

Try looking at these photographs of old folks and ask ourselves - Are our senior citizens leading a happy life?

“Who would Dine with Me?”

“I’ve got company for breakfast.”

Lonely Walk Home

Time is relative – Watching as Life Passes By

“We’re both on wheelchairs. Why are you so much more loved?”

The words on the T-shirt read, “We Deliver Wellness.” Elderly people folding origami after their exercise in the park.

These old folks seem to take good care of their health. But sometimes I wonder if they feel imprisoned in their weak bodies and situation too.

“Buddy, at least you can walk. I have to depend on my maid….”

Supported on the left and right - luckier than the others?

Old but not useless. Making a living with his bare hands.

Haggling for a discount. Old folks are still independent and many still have to take care of their family. But where are their children? Why aren’t they helping their elderly parents out with the marketing?

As we took photos of senior citizens, we kept telling ourselves that we should be objective. But we kept seeing old folks who are either handicapped, weak and with a perpetually vacant look. We felt their sadness, waiting for life to pass by and waiting…. waiting for death. Could you bear to live the last few years of your life wasting away? Brrrr.. I can feel the chill up my spine already.

The government looks upon the ageing phenomenon as a problem. According to the Census of Population, 7.3% of the population was above 64 years of age in the Year 2000, which translates to 237,626 elderly people walking amongst us. This figure is set to increase rapidly as people live longer. Demographers are interested in such statistics. They can then calculate the dependency ratio and caution the government as to what they should do to prepare for such demographic trends. But mind you. Never totally believe in this dependency ratio nonsense. They calculate it by using the number of young (0-14 yrs) and elderly dependents (more than 64 yrs) over the economically active population (15-64 yrs). This calculation is flawed as it assumes that people within a certain age group are either gainfully employed or not.

Despite this, the government is already taking steps to solve this “problem”. “Lifelong learning, work even when you are in your eighties…” These were some messages that the government has been driving through in recent years in order to ensure that old folks can remain financially independent for a longer period of time and that Singapore’s competitiveness will not be eroded by an ageing workforce.

Preparing for an ageing population also means providing adequate and affordable housing for them. A notable trend has been the emerging trend of elderly people living alone, which comprises about 6.6% of the total number of the elderly population. The government had stopped building two- and three-room flats from the 1980s. In order to meet the demands for small housing, it is now building these flats and converting unsold flats in Sengkang and Jurong West.

As more elderly people live alone, however, it has become increasingly common to find more of them dying alone in their apartments, without anyone’s knowledge. The recent case about skeletal remains of one of the reclusive elderly sisters found in an Upper Thomson terrace house highlights the problem that Singapore will increasingly face. Isn’t it ironic that people die unknowingly in a prosperous First World City like Singapore? Nobody cares enough for these people to even visit them or knock on the door when piles of letters and litter gather outside their door. Should we allow old folks to retreat behind their closed doors? In order to draw elderly people out to lead a more purposeful and enjoyable life, the government has set up 40 senior activity centres or neighbourhood links across the island. These centres hope to bring these older folk together for exercise, karaoke sessions, computer classes, group games, counseling and financial advice.

A burning question which I wanted an answer to is why does the government see ageing as a problem? It is getting worried because unlike a welfare state, it believes that the responsibility of taking care of old folks should be the old folks themselves and their children. It blames the breakdown of traditional values such as filial piety and the emergence of nuclear families for the increasing trend of old folks living by themselves.

I would like to find fault with this argument. While some have been abandoned by their children, many have made a conscious choice to live alone. As mentioned, both my parents are above 70 years old. A few years ago, when my housing estate was under en bloc development, my eldest brother offered to buy a bigger flat and let my parents move in with his family. He and his wife have three kids and a maid. My parents agreed but they were very worried about such a living arrangement as they felt that they would lose their independence. More importantly, they felt insecure when their roles changed from being the head of the household to one who lives under their sons’ roof. They were insecure about what would happen if they could not get along with their daughter-in-law. In the end, my brother changed his mind and got a unit near our flat. My parents were so relieved.

The need for independence stems from the need for a person’s dignity. In a Straits Times report dated 20 March 2007, a wheelchair-bound bachelor who was a former seaman insisted on living alone although he had relatives as he did not want to burden others. My mother’s friend also insisted on living alone with a maid although her children asked her to live with them. So, just as young people are changing in their attitudes and value system, elderly people are changing in their mindset as well. People crave for greater independence and space. The finger should not only be pointed at the younger generation.

To me, ageing itself is not a problem. Like birth, life and death, it is a phenomenon. It becomes a problem when the society and the aged themselves are unprepared for the onslaught of time. Why do we see such unhappy faces on wrinkled faces? Financial independence might give one some semblance of dignity. However, are our elderly people prepared? Have they saved enough? How much is enough? Unlike in the previous generation of old folks, people nowadays are living longer, with more health problems and medical costs. When you do not know when you would die and there is no steady stream of income coming in, life can become very depressing.

Our challenge as a society, which also includes you, is how to prepare ourselves for old age. Being prepared would involve providing financial planning and management, establishing strong social support systems, convincing the elderly to take care of their health, giving the elderly people a sense of purpose and remain relevant in the lives of their children and grandchildren, as well as remain socially active. If I could have a wish, I would wish that there would come a day when I could see more happy, laughing old people, ageing gracefully and living healthily. Like us, they should enjoy and embrace life rather then wait frantically for it to end. In time to come, your grandparents, your parents and eventually you will grow old. What kind of life do you want them and yourself to lead depends on how we are preparing for it now.

- Written by Ms Melanie Lum
- Photographs by Ms Aw Hwee Ling

Another Taxing Issue

What is GST?

At the core of this year's budget debate is the Goods and Services Tax (GST) hike. What exactly is a GST? A common understanding is that when you, as the consumer, purchase things, you pay the GST together with the price of the purchased products. This is a misconception. GST is in fact the responsibility of the seller. The seller is entitled to pass on the costs of GST to the consumers. But there are exceptions. Some businesses, for instance like NTUC Fairprice, opt to absorb the GST. Thus, when a consumer buys things, the consumer pay the agreed fee for the goods and services, the seller provides the goods and services for the agreed amount. The seller then pays the GST out of that agreed price to the tax authority.

Issues of the Heart

The GST issue is a highly emotive one. In HK, many protests against the implementation of GST had caused thousands to throng the streets with signs reading "NO to GST!". In Singapore, our reaction, if any, is far less dramatic. Feedbacks range from rumblings on the blogs, kopitiam talks to occasional sighing. But what exactly is the issue?

Not only because all of us are consumers in one way or another. GST hike is especially debatable because it involves more than just facts and figures. It affects consumption pattern, business decisions and ultimately quality of living. Questions like these are commonly heard: Is the GST hike fair for the poor? Are we robbing the poor to pay the poor? Are there better ways of raising government revenue? Economics students would call these issues that appeal to our value-system (not just rationality) - Normative issues. They are issues of the heart, not just the mind.

The Heart of the Issue

To resolve normative issues mentioned is really beyond the scope of this blog. There are simply too many interest groups and complex repercussions involved. But, one good way to go to the heart of the issue is to understand the regressive nature of the GST.

When we say that the GST is a 'regressive tax', what it means is that when such a tax is imposed on all goods, a larger proportion of the income of the poor is taxed through their consumption of necessities, as compared to the rich. The real 'tax burden' (who actually pays for the tax) is thus greater on the poor than on the rich.

Thus, one of the key highlights of the ongoing budget debate is how the GST hike can be made less regressive for the poor, using the GST offset package and other income assistance measures. According to the budget speech, average households will receive seven times the extra GST they will have to pay each year. In other words, seven years' of offset. The statistics looks impressive.

Many can still question the adequacy and effectiveness the GST offset package and other income assistance schemes. But in my view, one fundamental question is yet to be addressed - the issue of state-reliance versus self-reliance.

The GST hike should be seen in the wider context of our shift from direct taxation (taxing income) to indirect taxation (taxing consumption). It is very likely that GST would be repeatedly revised upwards in the years ahead as taxes on income (personal and corporate taxes) are cut further to maintain competitiveness. Given this trend, more handouts would need to be given to help the poor.

While the move towards indirect taxes gives the general population greater freedom in deciding how much they can be taxed by choosing how much to consume (or save), it may cause the poor to have greater reliance on the government's help. It may reduce work incentive, which is the very thing the government tried to avoid by moving from direct to indirect taxation. (It is believed that people are more motivated to work if they get to keep more of their personal income. That is why income tax has been reduced in recent years.)

There lies the dilemma in this year's budget - Managing the psyche of state-reliance versus self-reliance. The government seems to be grappling with this issue. While giving more handouts to the poor, the government has also given Workfare a permanent status. Workfare seeks to supplement the incomes of low-wage workers based on the principle that the best way to help people is to help them to help themselves, i.e. help the poor to find work and stay in work. Given the forces of globalisation that demand greater resilience and resourcefulness from our workforce, I would think that promoting self-reliance is the way. Workfare is thus a good start. However, the psyche of state-reliance does not put us in a good position to compete in a globalised economy. This is another taxing issue to resolve.

Link: to http://www.singaporebudget.gov.sg/budget_2007/index.html

History Shapes The Way You Look

Recently, this advertisement has been shown quite frequently on Channel 5.



At first glance, it is one of those painfully clichéd advertisements designed to make the viewer feel good about themselves. Afterall in 44 short seconds, it showed the girls heart-wrenchingly triumph over their own insecurities. The advertisement is part of the Dove's campaign to promote increased self esteem among girls in the age, where the idea of beauty invades the lives of young impressionable girls in various mediums.

The campaign which hit Singapore recently, come on the tails of reports of Brazilian model Ana Carolina Reston and Uruguayan model Luisel Ramos' death due to anorexia. In the last few months of her life, Ana Carolina Reston, ate only tomatoes and apples. While it is easy to view these examples as far removed from our realities, you would only need to take a few seconds to look around you.

How pressured are you to live to society's perception of beauty?How pressured are you to dye your hair?Go to the gym, to lose weight, gain muscles? Simply because your friends are?

We all have heard that during the Tang Dynasty, the ideal beauty was Ms Yang Guifei, a favorite, plump concubine of the Emperor Xuanzong. It was allegedly because of her that Tang beauties were depicted as round, plump women in contrast to the earlier Tang period where the ideal beauty were women with slender figures. We have also heard of 1950's Hollywood icon, Miss Norma Jean aka Marilyn Monroe who on her official website, was described as "personified Hollywood glamour with an unparalleled glow and energy that enamored the world. Although she was an alluring beauty with voluptuous curves".

What caused this change? When did the skinny woman become the beauty of our society?

One of the most prominent actresses that changed the conception of style and beauty was Audrey Hepburn who was the complete opposite of her contemporaries Marilyn Monroe and Elizabeth Taylor. By 50's standards, Audrey Hepburn seemed too tall and too skinny. However, Hepburn captivated the audiences with her slender figure, perfect posture, graceful movements and aristocratic manners, presenting the public with a new ideal of woman. In fact, she would come to represent not only a new look but also a new femininity.

Cecil Beaton, an English fashion and portrait photographer wrote that "Audrey Hepburn's appearance succeeds because it embodies the spirit of today. She had … the striking personality that best exemplifies our new Zeitgeist. Nobody ever looked like her before World War II; it is doubtful if anybody ever did. Yet we recognize the rightness of this appearance in relation to our historical needs. And the proof is that thousands of imitations have appeared."

What was this "historical need" that he mentioned? At what point of history did Hepburn emerge and what did the different image she portrays signify for women?

The World Wars were important turning points in history, not only in terms of politics but also in the social cultural realm, particularly the Second World War. Hepburn, herself was the product of poverty and malnutrition, while living in the Nazi occupied Holland during the Second World War.

Before the war few women followed careers. Most jobs for women were ‘traditional’ roles such as nursing, secretarial or caring jobs. However, with millions of men joining the armed forces, more workers were needed to fill their places in the factories. This changed the traditional views of women. Job opportunities in ammunitions factories for working-class women allowed them to earn a much higher wage than before. Women became machinists, lumberjacks, dockers and railway engineers. Attitudes changed – people supported these changes. In the United States alone, saw the number of women employed in the shipbuilding increased from 39 to 200,000 by 1943.

Because of the changing social and economic role of women, the way women presented themselves (i.e.: the way they dressed) went through a radical change. The First World War (1914-1918) had a pronounced effect on women's fashion in the Western world, particularly hemlines. Hems rose to mid calf length by 1916. Large numbers of women were recruited into military organizations on all sides, and put into a variety of uniforms, which also influenced the shape of fashionable dress. Women were literally, as well as figuratively, wearing the trousers.

During the inter-war years, trousers for women became acceptable for the upper classes. When the Second World War broke out, women and utility trousers became inseparable. Women's clothing went through the greatest changes in, both due to shortages, and due to large numbers of women engaging in work outside the home during the war. In fact, men's suits were re-cut into women's suits, complete with the tailored details and shoulder padding previously found in the male garments.

Thus perhaps, when the war ended, the need to move away from the traditional physical conception of beauty saw the shift of an "ideal woman" move away from Marilyn to Audrey. However it should be kept in mind that in contrast to the emancipated models of today, Hepburn looked the way she did due to circumstance, and not design.

The Economics Of Prostitution

Economists are proving to be quite a controversial lot indeed..

Two well-respected economists Lena Edlund (Columbia University) and Evelyn Korn (Eberhard-Karls-Universitat Tubingen) have created a minor stir in academic circles by publishing "A Theory of Prostitution" in the Journal of Political Economics (a major journal of the field).

Three noteworthy points about their theory:

- Wives and whores can be considered competing economic "goods" that can be substituted for each other (i.e. men buy, women sell). However, spouses and prostitutes aren't exactly alike. Wives, in truth, are superior to whores in the economist's sense of being a good for whose consumption increases as income rises--like fine wine. Prostitutes, on the other hand, are more like "inferior goods"(i.e. income rises, demand falls).. One reason suggested was that wives can produce children that are socially recognised as coming from the father.. And Edlund and Korn quite successfully back it up with data that shows that prostitution tends to be less common in wealthier countries.

- Another point brought up by the model is that the primary reason for the high income earned through prostitution, a seemingly low-skilled but high-pay profession is not with the risks associated with the practice of prostitution but rather that prostitutes greatly diminish their chances for marriage by virtue of their occupation. Men generally don't want to marry (ex)prostitutes, and so women must be relatively well-compensated in order to forgo the opportunity to marry... in fact, the model goes further to postulate that seen from the flip side, "the only downside of marriage for a woman is the forgone opportunity for prostitution"! umm..

- One last prediction the model makes is that the income differential paid to prostitutes will rise with the status the culture accords wives. That is, if wives are valued highly, would-be prostitutes are giving up a lot by becoming prostitutes and will require more money to do so. And if wives have few privileges, would-be prostitutes aren't giving up much to become prostitutes and thus need less inducement to do so.

Is real life really so simple?

Wives or whores? Are our options really so limited?

As with all Economic models, simplifying the real world is necessary for us to better understand the workings of the world around us but in this case, I find the whole scenario rather bleak! what about the third category of women, namely women who work in regular jobs but choose not to marry? According to all the latest global statistics, this is a growing class of ordinary citizens in every developed country.. (in US for example 50% of women remain single!).. clearly this model needs some serious reworking… for one, i can't quite imagine that's the path many of my friends are considering taking just because they're unmarried! :O

And what about the role of love and companionship in marriage? Don't these factor when we're making one of the most major decisions in our life like whether to get married?

Of course marriage always comes with certain opportunity costs (ask the men who surely will agree!), but i'm not quite sure that many women will think along the lines of lost income from such a stigmatised trade when the time comes to consider whether to marry.. Alas how bleak life will be if we just looked at opportunity costs in dollars and cents! Or am I just being naïve... after all, the model did further make a point that for most women (even my mother, for instance!), being a wife proves to be the largest source of income..

As to the point of why prostitution pays so well, i suppose this is something i don't have a particularly good alternative explanation.. if i have to guess, it is probably a demand and supply thing .. if men stop wanting it so much, i'm sure prices will fall.. but then again, it may still boil down to the high "cost" women pay in terms of social stigmatisation if they choose to venture into this trade.. compensating differentials, if one may put it more formally..

Which to me means the best way any government should try to address the issue of prostitution is not to impose legal penalties against it but rather to try to improve the economic prospects for women in terms of other trades and perhaps also that of men as well so they'll end up "demanding" less of the "inferior" good (i.e. prostitutes)..

Well, that's certainly something to think about..