Wednesday, June 21, 2023

When will we admit that Singapore Millenials are doing very well?

I've not been active because I'm super busy with my new product launch. The next round is where I will actually conduct one sample lesson for my ERM alumni on Saturday without a dry run just to see the kind of feedback I will get on the lesson. 

But one question weighs heavily on my mind since my last article. A very sharp reader pointed out that I can be wrong about Malaysian property not just because Malaysia straightens itself out - I can also be wrong when Singapore reverts to the mean. What are the conditions for Singapore to revert to the mean, other words become as unexceptional as our ASEAN neighbours?

This is something worth looking at. 

I'm going to digress before trying to answer this question. I attempted to do through some of Mr Loo's 1M65 videos to see what he's talking about, but without completing some of his very lengthy productions, I can only say that even if he's right about many Singaporeans being asset rich-cash poor, Malaysian property may not be the right answer. 

And I speak from experience. 

I lived in landed property almost all my life (I'm not proud of it), and my dad's Malaysian property paid my way through my first degree. Even though this was a very successful investment by Malaysian standards, the price and rentals were stagnant for the past 30 years and my dad should have extracted the capital and placed it in REITs / DBS instead. 

But don't ask me, ask the guys who got hammered by CLOB. 

Ask the folks who paid for Forest City which was backed by the Sultan of Johor.

JB is littered with the corpses of crypto-like investment ideas pitched at Singaporeans - Danga Bay, Best World Shopping Centre, etc...

I have great respect for the work of 1M65, but as he places that dollop of wonderful Nasi Lemak that he claims to be better than Selera Rasa in Adam Road which deeply affected me and made me hungry, but I invite him to predict the next election results of the six Malaysia states coming up next. 

Beyond political stability, top universities, and the usual things our Government likes to brag about, there are some features that can be quite unique to Singapore that if lost, could mean our destruction.

  • MAS's unique method of using the $NEER to control exchange rates has given us lower inflation compared to other OECD countries. This was the brainchild of Goh Keng Swee.
  • As pointed out by Leslie Yee in BT, Singapore is small but can produce more residential housing per unit of time because we don't have too much red tape to repurpose land from one use to another. We just invoke the laws on land acquisition. Places like NZ has so much land but actually lack decent housing.    
  • The Economist credits our success during the Pandemic because we are kinda utilitarian and amoral and only Miami was able to beat us in performance. In other words, fuck your feelings. This is the Singapore I love. 

Amazing, this blog threw up some answers to the question. Link:

Reversion to the mean can take place if Singapore feels expensive to foreigners and we end up in a current account deficit. There are two conditions for this to happen.

In this case, the whining Millenials are right. We are objectively expensive. But we've been on a current surplus so far, so I'm not duly concerned about reversion to the mean.

As you read the literature on various social sciences coming out from the States, Singaporean Millenials have all the advantages of a better education compared to those in the US, but none of the disadvantages like crippling study loans, or fentanyl abuse. Houses are not cheap in Singapore, but some Millenials are already sitting on property that has already been appreciated.

So why Millenials on social media cannot admit that they are doing fine?

  • The first reason is that the benefits almost all accrue to local degree holders, with private degree holders quite distant away.
  • The second reason is the envy arising from social media. You know you're not supposed to enjoy Naomi Neo's Instagram by gawking at her sports car or house. If you get envious of that, you're doing it wrong!

I'll tell you what I'm concerned about. 

PM-elect Lawrence Wong believes that the solution to our problems is to broadly flatten the incomes between the top and the bottom - to reduce inequality. Just remember that talented local grads can easily find jobs in places like HK and UK which is also rolling out the red carpet for foreigners. We need to do this without triggering a budget deficit and a flight of human capital. Inequality is bad in theory, but if solving it means $15 for a plate of char kway teow or $500 for someone to fix your pipes, we may have an insurrection on our hands. 

Then we will revert to the mean. 

Of course, at the end of the day, the devil is in the details. I shall leave it to the high CEP panjandrums to decide how to meet policy objectives.


1 comment:

  1. I agree with your views that Sg Millenials are actually doing much better in life. Mr Loo likes to paint they are a suffering generation. On Msia property, I guess its fine if u have excess idle cash and buy for own weekend or vacation stay. It should never be an investment. I think this is what Mr Loo advocates too.