Monday, October 11, 2021

Coffee shop talk and trade-offs


Just the other day I was at a kopitiam at Bishan, I overheard two heartland uncles having a whingeing session about the Singapore government. The louder guy has slightly more white hair than me, but my guess is that he is also Generation X. 

At first glance, he sounds fairly intelligent. After some time, I realise that he's just very entertaining.

He argued that there are three types of citizens in Singapore.
  • Those who are slaves and voluntarily subject themselves to slavery.
  • Those who are slaves and actively rebel against slavery.
  • Those who are slaves but do not know that they are slaves.
I could help but suppress a chuckle because you can't have slaves unless there are masters, but I had to suppress my urge to correct him. On social media, I get a lot of half-fucked commentators who contradict themselves all the time. The two uncles went on to say even more ridiculous things like how NTUC Union Membership will take away a perk once the perk was found out to be too good to be true. 

A lot of my disagreeableness comes from becoming quite old myself. Even Millenials who are a generation below me are hitting their 40s and suffering from being part of the sandwiched generation.

Political questions can be much better argued if there is a baseline understanding of key issues facing us. For example, CPF can be used for housing and retirement - if you opt for bigger housing, you will wind up with a lower income replacement rate when CPF Life comes live at age 65. 

If we do not have a reference book to understand the trade-offs policy makers face, we will fall to simple narratives such as those espoused by left-winged academics like Teo You Yenn and our discussion will forever be trapped at the rhetorical level where the government will always "give you a chicken wing but take away the whole chicken" 

As such Refreshing The Singapore System by Terence Ho, is the best book that I can find that sets the minimum benchmark for intelligent conversation to take place. The book highlights the major trade-offs that the government has to deal with and all its attempts to resolve these dilemmas.  
I'm going to highlight a few useful points I picked from the book which is not too obvious to me :
  • After adjusting for income transfers, Singapore's GINI index while high is actually still lower than the United Kingdom. And yet Tories still get re-elected.
  • Singapore wages are not really high compared to our GDP per capita, but once we factor in CPF contributions and the high taxes in other countries that are levied on their middle class, we beat the USA and Finland. So we're paid well not because we are good, but because our government is very lean.
  • A study in 2014 concluded that CPF returns are broadly similar to a 60:40 equity:bond fund but with a lower downside risk due to our high credit rating. There were only three periods where returns fell below the inflation rate. Those morons who think that the Malaysian EPF is better are free to get out of this country. 
Even as I deeply enjoyed reading this book for leisure, I can feel a tinge of sadness because one thing that jumps out at you is that most Singaporeans will never be able to appreciate the trade-offs the government has to make every day. In my view, Opposition parties with bite-sized zingers and simpler narratives are guaranteed to gain more ground in Singapore.

Even the author of the book is aware of this, our government has made our programmes so complicated and have fine-tuned our systems so much, even a basic degree may not be enough to understand all these issues. I know of friends who worked in MAS who has queries on the intricacies of CPF Life. I'm not surprised if CPF employees have the same questions as well. 

This book is a difficult read and it would be rare that a citizen will buy it so that he can more productively engage in political discussion. 

Nevertheless, I expect my readers to be a cut above the rest. 

Buy this book and keep it as a handy reference. Worse case you can give a social justice warrior a nasty concussion on the head as it is also a fairly hefty volume. 


  1. That 0.375 after-transfers Gini is at a cost of massive deficit spending plus $50+B drawdown of reserves, not sustainable. Of course I don't mind heheh. And the woke will be clamouring for more, much more in the future.

    UK's Gini is 0.363 as of Mar 2020. Their FY2021 number not out yet -- typical slow angmohs. UK has one of the highest Gini among developed countries, so no big deal comparing with them.

    The other thing about Gini is that S'pore doesn't measure Gini among retirees. For UK retiree households, the Gini is 0.307. I suspect that for S'pore, the Gini for retirees will be sky high, especially for current 65 & above.

    Our salaries are probably average, on a purchasing power parity basis. It's not that PAP govt is lean, it's that retirement sufficiency & responsibility is largely pushed to the individual & family members (pros & cons here).

    Anybody who has worked in S'pore govt for a few years will know there's plenty of bloat & privileges, especially for middle & upper mgmt.

    If you consider CPF-SA & Medisave as being similar to other countries' deductions for pensions & medical welfare, then the net effect would be similar.

    CPF blended interests being similar to 60:40 might be true pre-2000. But since S'pore entered into the savers' repression era in the last 2 decades, Terence must be smoking something exotic to still exert CPF interests = 60:40.

    I'm all for poking the wokes & socialist progressives. But I also won't stand for PAP apologists putting up strawman arguments & excuses. The truth is somewhere between Teo You Yenn and Terence Ho.

    As an owner of capital assets, I'm no bleeding heart & would love to have exploitative high Gini to continue enjoying cheap services & pumped lifestyle. I mean, come on, how many countries where below-average families can afford to gorge on daily outside-prepared meals & have full-time servants at their beck and call??

  2. I was laughing about your comment on Terence Ho smoking something.