Sunday, August 22, 2010

Fairness is what we strive for. But equality may turn out to be a really bad idea.

Well I think the GE fever will be upon us very soon. I just want to spend a short amount of time to talk about two concepts which tend to confuse voters and get them to support the wrong causes.

First of all, if I'm reading my fellow citizens right, Singaporeans want to be treated fairly. Singaporeans want to be hired for jobs which they are qualified for and given a days fair wages in return for a day of hard work. Fairness means that you get paid for your contribution and folks who who contribute less should get less. The mechanism to price your labor should be the free markets. It's not a perfect system, but if one works towards adding value to others, it's not going to be hard to get 3 meals a day here.

I'm personally all for fairness.

I'm a little upset at how liberals in Singapore want some more equality. Equality is a more disturbing concept. There are overtones that people will get something no matter how much contribution you make. I don't think Singaporeans want the hardworking nurse or the taxi driver to be paid equally as the poet who write poems about fornicating dead cats ( Unless this poet is a Lady Gaga like figure who attracts hordes of tourists who like seeing him fornicate dead cats at the Esplanade ).

While I want more opposition parties to gain headway I'm very disturbed that some of the more left leaning parties want more equality and the best way of doing this is by minimum wages and welfare.

Make no mistake, minimum wages will push business to create fewer jobs and if unemployment goes up, we'll lose our rock solid stability. Welfare is not going to come out from minister salaries, it will come from taxation. You either pay for welfare with a larger GST or higher income taxes.

Just want to remind readers once again to keep your eye on the government if you're not happy with them. But don't declare war on your fellow citizens. Some local people like this place because it allows them to raise decent families with low taxation.

Once again I appeal to the opposition to create a good framework for Singaporeans to draw their CPF out in difficult times rather than resort to taxation and welfare schemes. It's populist and the low road towards prosperity. It's also high time Singaporeans get to do more with that CPF-OA instead of being stuck with investing only 35%.

3 comments:

hyom said...

Hi Christopher,

I stumbled upon your blog by accident and read most of it at one go. It attracted me as we seem to have two interests in common - a shared engineering background plus the love of managing our own money. Maybe the difference is that you probably do better in both fields because I have no financial certificates and a lousy engineering degree.

Looking forward to reading more from you.

Christopher Ng Wai Chung said...

Hi Hyom,

That is not true. The markets are cruel and does not recognize paper qualifications.

My dad trades on my stock recommendations and he does way better than me because he monitors the market and makes buy/sell decisions on the fly.

Regards

hyom said...

Yes, it is indeed true that paper qualifications enjoy no advantage in the financial markets. This is why I love the market. It does not discriminate based on race, religion, gender, sexual orientation, first-class or third-class honours.

Your comments on minimum wage set me thinking.

The minimum wage has lofty goals of helping the poor. Prominent highly respected public figures like Tan Kin Lian has voiced their public support on this policy. I am sure these people have the kindest of intentions. However, it is highly questionable whether the effect of the minimum wage is really beneficial to the poor.

If the minimum wage is set too high, it will create unemployment to people whose value to the labour market is worth less than the minimum wage. No employer (unless he is your father) will pay a worker more than what he thinks the worker is worth. Anything more will be charity. It is not fair to expect charity from bosses because they set up companies to make money, not give away money. In a capitalistic economy, a minimum wage which is set too high will lead to unemployment of the young and old. The young will be hit because they still have not accumulate enough work experience to be worth more than the minimum wage. The old will be hit because their market value has depreciated below the minimum wage over the years. The most seriously hit will be the poor because they are the group with the most number of people whose market value fall below minimum wage. Instead of helping the poor, the minimum wage may end up raising unemployment among the poor.

If the minimum wage is set too low, one might as well not have this rule in the first place. Why scare off investors and businessmen unnecessarily?

Because it is so hard to set the optimum minimum wage, I think we should leave wages to be set by the invisible hand of the free market than the well-intentioned but clumsy hand of bureaucrats.