Handling the Defence of Singapore in the 21st Century

(Note: Post backdated to date of original writing.)

Two articles were published on TOC in June, Conscription: Necessary Or Outdated? (Bryan Cheang, 20 June 2012) and Rethinking Singapore’s Defence Needs (Rajiv Chaudhry, 25 June 2012), which I found to be rather off the mark. Thankfully, soon after, another article which had, I feel, a more realistic perspective on things, Conscription: The Missing Perspective (Benjamin Cheah, 3 July 2012), was posted. I would like to comment on what has been said and add, what I hope is, a little more to the discussion.

A "New Normal"??
It is naive to think that "in this age of moderation" a "new normal" has emerged characterized by all manner of warm and fuzzy sounding buzz words. Rajiv Chaudhry and, to a lesser extent, Bryan Cheang seem to think that everyone else is good and just today. But look at the way children act when unsupervised, how often do you see bigger kids taking things away from the smaller ones. Similarly, big dogs steal food from smaller dogs. In fact, for most living X's, big X's steal food from small X's unless the small X's are able to secure protection for themselves. Similarly, defence solutions have to give tangible security guarantees.

It is notable that the United States has been rather consistent in offering assistance to victims of aggression only when its interests are at stake. Certainly, Singapore has substantial strategic value as a friend to the United States, however this value to the USA is positional and is the same even is Singapore becomes an island of bombed out ruins. In the grand scheme of things, our economy is of little value to the USA, and we should remember that. More generally, military alliances and pacts to offer assistance can be breached if they are not in the counter-party's interests to honour the terms. We have to be aware that military intervention involves real costs that have to be justified from the point of view of others.

Lee Kuan Yew has one thing right: the truth about inter-country relations is that we can be friends only if we respect each others' strength. If friendships between sentimental human beings can be ephemeral, how much more fleeting can "friendships" between unfeeling nations be? Presently, deterrence is the only real way to be sure that military capabilities that can otherwise be used as a means to expropriate our property and sovereignty are not.

The Need to Intelligently Provision for Defence
I am no big fan of the SAF and its (often sycophantic) "high potentials", but let us not kid ourselves. The SAF must be sufficiently provisioned to, at least, give the semblance of being a credible force with considerable sting. The sting must be sufficiently strong to skew the cost-benefit analysis of whether or not to infringe on our sovereignty towards a "no". However, this sting comes at a cost, and we have to obtain and sustain military capabilities cost effectively. Thus, it is important that senior officers in the SAF do not adopt a "don't ask me about money, I only train" attitude or a "I only need to manage my multi-year acquisition over my tenure of two years and look good before I post out" attitude. This is not a casual swipe at career soldiers, these attitudes are not uncommon and are highly costly to Singapore. Management of those managing the acquisition and operation of military systems needs to account for the prevailing incentives and structure remuneration and advancement in a manner that promotes military strength and cost effectiveness.

On the matter of manpower, I would argue that cutting the NS and reservist liabilities based on "what others are doing", as Rajiv Chaudhry suggests, is unthinking and silly. There are ways to do so intelligently but incrementally. Let me provide a simple example:

Consider having only 7 compulsory ICTs, the last of which is an ATEC assessment. If the reservist battalion passes, they are done with their reservist liability and will transition into the MINDEF Reserve. Otherwise they will come back for the 8th, 9th and perhaps 10th re-test sessions. This gives the incentive to build competence and also cuts the effective liability.

Granted, this is an incremental solution, but it is far better than blind copying and is likely to improve readiness as well. Similar principles can probably be applied to cutting the duration spent in full-time NS. A driven force is an effective force. It does not matter if "ORD" is what drives our NSFs to perform.

In the longer term, force structuring is the way forward to reducing ("right-sizing") the defence foot print. The ORBAT (Order of Battle) must be fluid, allowing reductions in some areas and increases in others. Capabilities will have to match the threat landscape, and capabilities that are less relevant have to be phased. Opposition to any reduction in command positions would reflect ego problems and rather than any substantive defence issue.

The Ability to Use Capabilities
The ability to effectively use equipment is crucial. The best soccer boots on an amateur team will not help them beat a barefoot Germany (because to use Brazil would simply be unfair). The man is more important than the machine.

During periods of tension, the best that can be done is to call men back for re-orientation with their equipment. How can it be expected that we will be able to use our equipment well. If technology is a force-multiplier, the lack of expertise in the use of that equipment is a force-divider. The natural question that arises is whether that number resolves to something greater or lesser than unity. Having this as the best option available to us seems to reflect a lack of foresight on the part of senior MINDEF/SAF officials/officers.

As equipment requires increasing amounts of practice and knowledge of its workings to use properly, the dictum that we do not want to have too many Singaporeans of working age tied up in the regular force has to be called into question. Economic output may suffer somewhat, but more soldiers will have the time required to build up their ability in the use of our high-tech equipment. This old assumption will have to be re-examined.

Conclusion
As Benjamin Cheah notes, the geography of the region puts us at a distinct strategic and tactical disadvantage. We have to be smart about how we handle defence. We must provision intelligently and ensure that our men have the ability to leverage our expensively obtained capabilities.

If we were to return to the issue of NS which started all this, in my mind, it would be appropriate to have a larger regular force for skill-development along with variable length NSF and reservist periods (based on demonstrated effectiveness). It might well turn out, that increased economic participation and longer economic life of Singapore males due to effective reductions in their NS liabilities more than pays for the increase in the size of the regular force.

On Casino Entry: Lessons from Credit Card Approval Requirements

Earlier this month, Minister of State for Finance Josephine Teo revealed to Parliament that casino entry levy fees collected by the government in the past 18 months reached S$288 million. (A daily entry levy of S$100 and annual entry levy of S$2,000 is imposed on Singaporeans and permanent residents seeking to enter the casinos.)

It strikes me that while the casinos were advertised to be an additional draw in our tourism portfolio, with an "effective" barrier to locals frittering away their hard-earned (and low by international standards) salaries in the form of levies, they have nevertheless "been very effective at drawing locals".

I believe that this is undesirable and it is important that more effective barriers to entry be put up to prevent gambling-led destitution. One way to do this is hinted at by another, albeit more pleasant, route to ruinous debt: the credit card.

Under the Monetary Authority of Singapore (MAS) guidelines, to be eligible to apply for a credit card, one needs to be (i) at least 21 years old and (ii) earn an annual declared income of at least S$30,000 for citizens and S$45,000 for PRs. In addition to the minimum requirements set by the MAS, individual banks may impose additional requirements for card holding.

This regulation makes it more likely that card holders have the capacity to afford the easy spending that credit cards facilitate. Furthermore, ones monthly salary also goes into determining one's credit limit. Similar income based requirements would be more suitable than a flat S$100 daily levy.

Singapore Citizens and PRs who wish to gamble should first become "members" of the casino, with membership being granted on the basis of a minimum annual salary which should be checked on an annual basis (e.g. via CPF contributions). Furthermore, a "member's" annual salary should determine a monthly chip exchange limit.

This might let those between jobs slip through the cracks somewhat, but the regular CPF contribution checks should close the gap quickly enough.

At this point, I have no good answer for how to handle retirees. It may be too intrusive to look at entire CPF balances to determine chip exchange limits. However, annuity sizes might provide a guide for doing this.

I think we have to be smarter about dealing with the gambling problem. What we have is grossly insufficient.

Universal Healthcare: Its Importance to the Economy and Incentivising the Proper Uses of Funds

(Note: Post backdated to date of original writing.)

Those that feel that universal healthcare is a bad idea typically point to the high utilizations in some jurisdictions as "proof" that it would increase the incentive to go to the doctor unnecessarily and for doctors to overcharge. Their arguments typically end there.

It is unfortunate that those naysayers who oppose universal healthcare appear to be unable to or seem to not be bothered to think of a way to reduce healthcare finance risk for Singaporeans while ensuring that funds are not drained unnecessarily. This is why I am a fan of The SDP's Healthcare Plan. They have made an effort to create a comprehensive scheme for healthcare finance which precisely reduces the healthcare finance risk for Singaporeans. It can be improved a little though (which is the subject of the second part of this note).

Healthcare Risk and the Larger Economy
It is certainly good to reduce one's the healthcare finance risk. But to see how it is important and not simply a "good to have", compare the following two lotteries (which are equal in expectation):

1. 99% of the time you pay out $100, 1% of the time you pay out $100000
2. 99% of the time you pay out $1000, 1% of the time you pay out $10900

To most, the second lottery looks far better (or far less bad). Rather, the first lottery looks very undesirable. This is because the latter is far less risky than the former. One can play dice in cases where one gets many goes at it (which reduces the variance of the average case, by the way). But in life where one gets a single shot, it is far more prudent to act in a manner such that one can has a basis on which to plan one's life. This means certainty that when bad things happen, they can be managed. This means that will not be necessary to pour inordinate amounts of one's resources into protecting against downside risk. This means stability. This is the very reason why many MNCs have invested in Singapore: stability.

Supporting stability is one of the justifications that the Singapore government has given for all manner of political abuses. Yet while they wax lyrical about human resources being our most important resource, they hypocritically deny that resource the stability on which to build their lives. How then can a vibrant economy, based on enterprising Singaporeans, grow from the absence of personal stability?

Incentivising the Proper Use of Funds
Economic commentary aside, I would like to describe a simple framework for thinking about the usage of funds. I will acknowledge that uncontrolled availability of funds provides incentives to go the doctor unnecessarily and for doctors to overcharge. A fixed ratio co-payment scheme does not provide a complete answer as the co-payment is so small in some cases that unnecessary visits still occur (say, for the purposes of getting "medical leave"). The same fixed ratio may also result in an onerous payment should a necessary medical expense have a high base cost.

Now what is onerous and what is trivial depend on the size of the expense, its necessity and the income level of the one paying. If one earns less than $1000 a month, one would be careful not to waste $5 on an unnecessary medical co-payment (but would probably be willing to pay it out if actually sick). On the other hand, someone earning $5000 a month would gladly shell out the same $5 for a day of "medical leave". For the individual earning $1000 a month, a $2000 medical co-payment for a major procedure is extremely onerous. For the individual earning $5000 a month, it means forgoing a spa package: just a pinch. It is thus useful for co-payments to vary with (i) income levels and (ii) the size of the expense. I would add on to that set of criteria, (iii) the type of ailment being treated.

The why of (i) and (ii) should be clear. Small payments are not huge downsides that people have to be protected against. (And unnecessary trivialities are what the healthcare system should not be loaded with.) In contrast, large downsides have to be smoothed out.

On (iii), using the type of ailment as a criterion for determining the percentage of the co-payment can be explained based on the undesirability of various ailments. While NSFs have been known to eat toothpaste in the hope of contracting a "fever" to skive out of a 3-day outfield training exercise, I know of no one who willingly contracts diabetes or cancer. Co-payments should be lower for ailments which are "less likely to be abused". Notably, (iii) is far less important as a consideration than (i) and (ii), but it is included for "completeness".

An economist might call a scheme built using the above framework a "progressive incentive compatible co-payment scheme". These are nice sounding words: "progressive" refers to lower income individuals paying less for the same treatment and "incentive compatible" refers to the incentives to use the system only with necessary/the disincentives to use the system when unnecessary.

I will stop short of proposing co-payment percentages as it demands knowledge of how individuals at various income levels use their earnings, how serious various ailments are, as well as a number of other matters that I do not possess the relevant domain knowledge to comment on.

Summary
The level of healthcare finance risk is an important element determining individual economic stability. It is thus important to broadly reduce healthcare finance risk, as its reduction will give individuals more capacity to pursue ventures as opposed to locking money down to protect themselves against financial downsides associated with healthcare.

While cutting healthcare finance risk for individuals is important. It is important that state resources are used prudently. I have proposed a framework for developing co-payments that are progressive and "incentive compatible" to address this question. Comments on the framework are very much welcome.

Decent Procurement Processes are not Complicated

It bewilders me when I hear that Government procurement officers are not familiar with Government procurement rules. From para. 16 of this report to parliament in April this year:

... MOF attributed most of the procurement irregularities reported by the Auditor-General in the past five years to procurement officers' poor understanding of procurement principles and/or their lack of familiarity with procurement rules...

Decent procurement processes are not very complicated. Consider the following:

1. Establish business requirements.
2. Do a market survey to establish if requirements are achievable within budget or cost effectively. Go to (1), and iterate until satisfied.
3. Whether one holds a public tender or asks for quotations from a few sources, it is important to clarify offers and negotiate. In the process of negotiation, it is important not to reveal other offers, but to get the best offer the bidder has to give. In this process, it is important to understand market norms such as typical bulk discounts.
4. Award to the bidder that meets the business requirements and promises the best value for money.

Granted it can be onerous when procurement is not one's only responsibility. But it is not a very complicated process to comprehend, is it? If one's workload is too heavy, it is up to one to talk to one's supervisor about what can be done (the important bits) and get him/her to give the ok for anything omitted, or get the ok for letting the schedule side a bit.

Long story short, all procurement officers have to understand is that they have to get the best value for money in a manner that is fair and uncorrupt. The latter, procurement officers are quite familiar with. The former, probably not so. Value for money means knowing what one's budget can buy and trying to stretch the public dollar. It is that simple.

Finally, a simple guideline. If a typical member of the public can get a better deal on a smaller or similar sized purchase, something is wrong.

Conceptual Learning vs Skills

I am convinced of the need for comprehensive conceptual learning in schools as a pre-requisite for skill acquisition of good quality. Conceptual learning opens up the mind to possibilities and is more mentally intensive due to the need to tear-down and re-build internalized conceptions of how the world works or should work.

It is typically very difficult to successfully facilitate conceptual learning in a 5 day course unless it is particularly intensive or students are particularly open intellectually. Thus, in order for students to eventually develop updated skills, it appears that current and cutting edge thought should be imparted to them at schools. In that way, by the time cutting edge transits from "experimental prototype" to "advanced technology", students would have the proper intellectual structures to grasp the skills needed to use the said technology. Given today's rapid transition from research to industry, this is not entirely unreasonable as students will not be taught skills they cannot for the next 10 years.

There is a clear tension between the long term and the short term. Focusing on skills and neglecting newer paradigms leads to structural problems in the economy in the long term. Focusing on concepts and neglecting skills leads to workers that have a longer lead time to doing useful work.

Naturally, conceptual learning and skills are complements that reinforce each other. Concepts present an intellectual frame which helps in the understanding of skills. Skills can be inductively mined for concepts. However the relationship is not symmetric. The former is far easier and more comprehensive than the latter.

Thus, I believe that the balance should tilt towards the conceptual and the skills imparted should be those that best facilitate the learning of advanced concepts. A lead time reduction in one's early career of a few months is not sufficient to outweigh a decade or so of facility in picking up new skills.

Adverse Incentives in Universities and the Impact on our National Competency Build Up

Today, I was at lunch with an older gentleman. Older in the sense of, was-sent-off-to-NS-in-a-3-tonner and ate-food-cooked-by-fellow-NSFs. He mentioned that he took an AI course at NUS Computer Science and had an extremely negative experience where lecturers did not care about students and were unable to express ideas well. He contrasted this with the good treatment he received at NUS's Institute of Systems Science (a centre for professional learning) where the instructors "want you to succeed".

He surmised that the failings of the former were due to the overriding importance placed on publishing, and that teaching was seen as a chore to be quickly finished so one might get back to doing things that affect their KPIs.

Now, in the course of that interaction, he came across as a knowledgeable and experienced IT professional with a very balanced personality, so I am inclined towards the view that he arrived at his position on his AI lecturer(s) at NUS Computer Science in a fair and balanced manner.

It is thus disturbing that professionals seeking to extend their skill sets can come away with little or nothing after a few days away from work and having their employers pay a pretty penny (a neat double whammy). This is not to say that all university instructors for professional development courses are unable to help their students extend their knowledge and skills. The point is that we should be seeking guarantees for a minimum service level for professional development. Otherwise, any initiatives with the objective of "raising productivity" through professional education will inherit the lack of a "minimum service level".

The incentives in universities that place little value on teaching are well known. Unfortunately, they are tremendously damaging. The question that tax payers should be asking themselves is what exactly they are funding. If the role of Singapore's universities is to break new ground in the physical sciences, medicine, technology and social sciences, can we say we are succeeding? If the role of Singapore's universities is to impart knowledge and skills to students prior to their entry to the workforce, are we succeeding? On both counts, we are not very successful.

One of the most cynical views I have come across is that a small number of exceptional individuals around the world appear to be justifying the contemplative life for many others. There is some truth to it. Some people do love to learn, but are not as keen on the grind of breaking new ground. These people tend to love to teach, but there is no suitable incentive scheme that enables them to build a rewarding career (those few new "teaching schemes" considered).

The trouble with adjusting the incentive framework for university faculty is that it will put us out of joint with international practice, possibly making Singapore an unattractive place to be a faculty member unless one does not want to ever work at a university outside of Singapore.

However, without effective incentives, we have to rely on the "milk of human goodness: to generate good professional development results, and history has shown us that said milk is not exactly reliable.

It is necessary to take a "calibrated" approach to incentives in university faculty. Ground breaking research is great to have, but unless we are in a technological arms race, it has the lowest priority among the three major roles of university faculty which are, highest priority first, (i) imparting knowledge and skills effectively, (ii) inspiring students, and (iii) doing high quality research.

Lies and the Lying Liars ("Pastors") that Tell Them

In one of Alex Au's recent posts, he wrote about City Harvest Church. In that post, he featured one of Kong Hee's sermons which explained that "Jesus was rich" but He had deliberately become poor (and submitted to death on the cross) to save the souls of man.



The crux of the first part of that (second part of a) sermon was this semi-summary statement by Kong Hee that:

Even on his way to the cross, Jesus wore good clothes. So good, His enemies were fighting over it.

Alex notes that:

In fact, it was a pain sitting through its entire length. It was logically flawed and empty of meaning. Most crucially, for something in a religious setting, it addressed nothing about the human condition or the peace of spirituality.

But it was a wee bit interesting nonetheless in his clever use of argument. He first began by asserting that Jesus was a rich man, but who gave up his riches when he died on the cross, so that the riches might be bestowed onto his believers. Thus, the argument goes, if one believed in this now much-embellished character and what he represented, one would have one’s own riches multiplied.

In fact, Kong Hee's "clever argument" that Jesus was rich rests on omission of what happened just before the Roman soldiers cast lots for the "expensive robe" Jesus had on him. A little bit of Bible knowledge goes a long way to fending off the convincing prose of the false prophet. In this case, the Bible gives the crucial back story to this episode (and even gives details like the colour of said robe).

From John 19 (New International Version):

¹ Then Pilate took Jesus and had him flogged. ² The soldiers twisted together a crown of thorns and put it on his head. They clothed him in a purple robe ³ and went up to him again and again, saying, “Hail, king of the Jews!” And they slapped him in the face.⁴ Once more Pilate came out and said to the Jews gathered there, “Look, I am bringing him out to you to let you know that I find no basis for a charge against him.” ⁵ When Jesus came out wearing the crown of thorns and the purple robe, Pilate said to them, “Here is the man!” ⁶ As soon as the chief priests and their officials saw him, they shouted, “Crucify! Crucify!” But Pilate answered, “You take him and crucify him. As for me, I find no basis for a charge against him.”

These verses precede those Kong Hee quoted in the video (John 19:23-24) and were precisely the ones omitted.

So it is clear to see that based on this account, Kong Hee omitted the crucial information on the provenance of said expensive robe that was "so good".

(Interestingly, Matthew 27 and Mark 15 contains a different account where the Romans take back the purple robe and put Jesus own clothes back on and there is no mention of the division of clothing. We can say what we may about John and whether he massaged events to match one of the inspired poems of King David in Psalm 22. In particular, Psalm 22:18.)

I have no doubt that Jesus was relatively well off. He had an education. His "father", Joseph, was a carpenter, which would have been the equivalent of an engineer in the days where only good students earn engineering degrees. That would have been a far more honest argument. But not as clever.

To deceive in order to sound clever. Horrid, horrid, horrid.