If you look at the history of Singapore, I think the first generation of leaders started out with policies that were much more socialist. But along the way, free market theories started dominating the thinking of the PAP and they started shifting in the direction of the free market, whether its public healthcare, public housing or transport, all of which have seen a shift towards privatisation and profit-making entities and a shift away from them being more social entities. So I think there has to be that correction. Many economists have pointed out that increasing inequality is not just bad for the poor. It’s bad for society in general because as society becomes more unequal and wealth becomes more concentrated in the hands of a few, it can constrain economic growth because overall consumption is lower and consequently, overall growth is lower. More redistributive policies could potentially help to increase growth, not constrain growth. Of course there has to be a balance between personal responsibility and collective responsibility. We cannot swing to either extreme. What we need to move towards is the Government and society taking on more responsibilities for the less fortunate, not just leaving it to the free market to sort out the problems. Government spending is a means of income redistribution as well. The richest in Singapore pay a marginal tax rate that is one of the lowest in the world. Our corporate tax rates are also very low. The Government is allowed to use just half of the Net Investment Returns from our reserves. We’re just touching half of the income generated from our reserves. There is a lot more room for Government spending. There are areas in which we dont seem to have a problem spending on. We can spend billions of dollars buying new submarines and new fighter aircraft but when it comes to a few million dollars here and there for assistance to the poor, we become so tight-fisted. Why? The more well-off in society also need to realise that they have benefited from the system that exists right now and they owe it to the rest of society to give back. They should not begrudge the taxes they have to pay. With a more equal society, you also have a more peaceful society. The most unequal cities in the world also have the highest crime rates, so levelling up society benefits not just the poor but also the rich.
Posted on: Mon, 03 Feb 2014 06:35:41 +0000
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