Monday, July 26, 2021

Should we learn a thing or two from Communist China?


The past few days have been quite shocking for political observers who saw some massive moves to mess up education providers and tuition centres in China. The fallout has been very unpleasant for folks who have been harping about Chinese Tech firms for the past year. Starting from today, those voices will soon be silent. Like the US Tech and Cryptocurrency flex bros, everyone will be going back to lick their wounds. 

I have to admit, I'm really enjoying all this. 

While I lost a bit of money here and there, but with over 98% in local stocks and being told repeatedly that Singapore markets sucks, I'm just trying to enjoy this short moment of triumph, but I can't go too far because I was "in the barrel" on March 2020. 

How do we analyse China's move? The willingness to throw their most entrepreneurial and innovative citizens under the bus should be shocking even for the best political analysts. 

There are some signals in hindsight. Lowering birth rates and an ageing population is clearly measurable. I also suspect that the pandemic is creating more inequality and penalises a lot of rural Chinese. The third is a cultural revolution that the CCP is ill-equipped to handle, young Chinese "lying down" in the midst of an involution. 

So cock-blocking tuition centres is a very good move. Parents will always be competitive and want the best for their kids, but if tuition can only take place at specific times of the week, kids can develop their own interests and personalities. Also, middle-class parents do not have to fight a reluctant arms race against upper-crust families. 

I think if Singapore is not careful, we'll have our own brand of involution and instead of "lying flat", many Singaporeans will become Australians. 

Some measures may make sense :

a) Tuition can be reined in without affecting a tutor's livelihood

I delved into household expenditure surveys of 2018 and found that we spend about 5% of our total expenses on education services, which is not so bad so there is no need for a blanket policy to block kids from having tuition. 

But why should we accept 5%?  One possibility would be to block Sundays for tuition centres to cover core subjects and progressively tighten. 

b) Tighten FA licensing requirements

If we are on the topic of current costs for the middle class, might as well analyse my favourite bunch of so-called "professionals". Unfortunately, personal care services and insurance is bundled in the same category but it covers almost 3 times that of education services, so I doubt any heavy firepower will be levelled against FAs over the short term. 

  • But does it make any sense to label what is effectively a sales effort advisory work? 
  • Does it make sense to award titles like MDRT to advisors based on sale volume and not from effective advice?

I don't think we can evolve into a fee-based regime yet, but not insisting on a degree ( in fact a local degree ) to get a license to advise on something so important as money and personal finance is a policy failure on the Government's part! 

This may be a precursor to a fee-based regime in the future. 

c) HDB to function as an exchange to buy and sell the property. 

If you analyse the expenditure of a median household member in Singapore, even I have to admit that the big bad is not the FA but folks in the real estate business. Imputed rental of owner-occupied units is 50% more than the Miscellaneous good category where insurance resides.  

This means that aggressively interfering with real estate markets can move the needle substantially for middle-income Singaporeans and make life better. 

Maybe the government can draw the line that BTOs beyond a particular year has to be bought and sold through HDB via fixed prices. This allows Singaporeans access to cheap housing and prevents excess profits to be earned. Real estate speculation will still be possible for the few elites who can afford private housing. 

The upside is that it's easier to raise families, the downside is that locals can no longer sit on a treasure chest and grow rich purely based on luck. ( We can grow rich on investments rather than property )

If this kills off a few real estate agents so I get less junk mail, all the better.

At the end of the day, I'm just a keyboard warrior running this blog, there are smarter guys looking out for this country. 

Fact is, if a policy intervention tackles tuition, financial planning woes, and real estate simultaneously, the upside is huge for the pockets of the median Singaporean. 

It is also psychologically healthier, parents do not get subject to all that fear regarding their children's future, folks don't get harassed so often walking in malls by FAs handing out LED balloons to their kids, and we will get less junk mail from those pesky real estate agents.

Come to think of it, I can base an entire political manifesto around these three issues. 



  1. Just my thoughts. More regulations etc will not resolve the issue. Crux of the matter is what is Singapore's education churning out ? Have we been taught to think critically / independently for ourselves? If tcommon sense prevail and our people are sufficiently educated to think critically - is there a need for so much regulations. Your insight is rather short sighted for someone who has clearly demonstrated an apt to learn.

  2. Do my suggestions hurt your wallet ?

  3. Good that youre enjoying it!

  4. This may be a good time to nibble a bit of China if you have a 10-20 year timeframe.

    A bounce today, but probably a dead cat bounce. Likely scenario will be prices going nowhere for the next few months, with trading in a tight range.

    US markets much more predictable & can expect continuous all time highs into next year.

    As for your 3 suggestions, unlikely any one of time will pan out anytime soon.

    a) S'pore situation barely 5% of China's, and "improving" year-by-year. By "improving" I mean education is getting simpler & less stressful in S'pore.

    The most stressful period in S'pore education was probably in the 1980s & 1990s. Streaming madness then & stratification/classification of students starting from 9 yrs old was seen as the norm.

    b) 2 words: kiam siap.

    S'poreans are not willing to pay for financial advice. Even HNWIs are willing to pay 2% on $1M worth of financial products but unwilling to fork out $5K or $10K for analysis & advice.

    Research in UK indicated that the middle-income & lower-income ended up worse off in terms of lack of financial advice when their financial industry went to fee-only mode. But probably quality improved for those who could pay.

    c) 1 word: Votes.

    S'pore is semi-strong authoritarian democracy, not totalitarian. Can't put the genie back in the bottle without doing a govt change.

    Still rely on cooling measures (for general property market) & sale/ownership conditions (for HDB and EC).

    E.g. implementing 15-yr MOP and/or 20% capital gains tax for HDB in CCR or RCR areas.