On "Economic Flexibility"

Being pinned down is no fun. It can be tremendously suffocating knowing that you are trapped and there is no way out. This is really the situation that many Singaporeans find themselves in. Young Singaporeans find themselves in low income jobs (as benchmarked to comparable work overseas). The necessity of a roof over their heads leads into expensive mortgages for houses whose title deeds their names are not on. It is a rut. A sad, sad rut.

The financial burden often deals a death blow to any enterprise that would entail risk. Aspirations are killed and with them, the possibility of a stronger, more vibrant, more productive economy. This may seem to be quite a logical leap, but it most assuredly does follow.

We are in need of new enterprises that generate real-value to rejuvenate our economy. The Singapore government knows this and is already gambling on what might generate, in public service lingo, the next S-curve. These businesses we need are certainly not the “safe” businesses that exploit the socio-politico-economic system to extract rents (or isomorphically, protection money). The desirable businesses will create goods and services that add-value to the lives of people or facilitate the conduct of people’s lives or businesses. Barring the most brilliant insights into consumer needs, almost all value-adding businesses will carry considerable financial risk as they will have to be operational before they can be revenue generating. The founders will have to raise capital by debt or (in the fortunate but rarer cases) issuing equity while running the risk of failure.

Many young people leave school with a different perspective on how things might be done. They have learnt about possibly new ways of doing things in school and after a year or two of hands-on work, they are ready to combine the updated perspective from the academy with their knowledge of current practices into a business. Unfortunately, the vicissitudes of the Singapore system catch up with them. Already a few hundred thousand in debt after paying for the lease of a HDB flat, the capacity to take on the additional risks of starting a business is lost.

What I hope for Singaporeans is Economic Flexibility. It is being released from the economic coercion of debt and financial risk and being able to pursue experiences and/or enterprises. While there is something primordially irreducible in start-up costs for businesses, we can do something about the financial burden that young Singaporeans are forced to shoulder. Possible angles of attack for this problem, which might yield huge dividends, are the cost of housing and the financial outcomes associated with the risk of medical disaster.

The SDP has published a proposal for a national healthcare insurance system and it looks good. In fact, I’m told that a number of doctors thanked the authors of the proposal for bringing up that important issue. Should that proposal or a variant of it be implemented, perhaps 90% of Singaporeans will have a substantial fraction of the financial risk associated with medical issues reduced.

From the housing angle, the first question to be asked is whether public housing has to cost so much. It turns out that construction costs are not as outrageous as HDB flat prices are. This is because flat prices consist of the construction cost, cost of overheads, and the cost of land. Based on the fact that flat prices have essentially doubled since 2005, while construction costs cannot be said to have increased by much, it then follows that land costs, which reflect market prices, must make up a large fraction of HDB flat prices. I’ve written about how we can create a public housing system that better meets the needs of Singaporeans without destabilizing the present housing market. (Tentatively, the reader may ignore the pricing recommendation. I've had a lot of push-back from people on the matter of pricing with auctions so it may detract from the point I'm trying to make here. The auction is for allocative efficiency and represents pure consumption of households. The article may be read as if a fixed price were recommended.) I’ve also written about how land pricing can be done on a rational basis which will enable shorter lease (hence, cheaper) flats to become attractive (LINK). In a nutshell, it is possible to quickly reduce the financial burden associated with housing costs without destabilizing the housing market.

Dealing with both healthcare and housing would certainly unshackle Singaporeans who will then be free to venture into business, invest, or pursue experiences. Economic flexibility is not just about money, it is about having flexibility in living life. This is a compelling vision for the future and I hope that we, as a nation, can get there.

We the Citizens: A Call for the Articulation of a Clear National Direction

Singapore seems to have been, for the past decade, floundering with no well defined heading. Granted, there have been some great new initiatives such as NParks' work in building a greener and more pleasant environment, as well as forrays into large scale event management (with mixed results), but it appears that the only truly concerted movement has been increasing the population, as seen in extensions of the rail network to and relatively rapid building of housing in the northeast. Most lists of Singapore's major achievements do not contain anything post-2000. This leads to the question of whether our leadership thinks we are "there" and only minor incremental moves are necessary. I would most certainly disagree with that proposition, pointing to clear quality of life issues that are widespread.

As a national direction, I would propose something familiar. As a statement of objectives, it reads: to build a democratic society, based on justice and eqaulity, so as to achieve happiness, prosperity and progress for our nation. (Nostalgically: 建设公正平等的民主社会，并为实现国家之幸福、繁荣与进步.) That definitely sounds good and agreeable to most, though it need not be the direction for our nation as articulated by the government, but there are compelling historical reasons for it.

We need a direction to tack to and it should be clearly articulated. It will serve as a set of principles and objectives to verify all legislation and initiatives against. Conversely, such a direction may be used to design and formulate legislation and initiatives.

With apologies for the abstractness, this call for an articulated direction is basically an appeal for a statement of mission, vision and values, on which strategic thrusts and the crafting of initiatives may be based. We need this, or, like corporate entities without one, be destined to flounder and envying the increasing success of others with clarity of purpose and alignment to that purpose.

I propose that the formulation of a clear direction be done in Parliament. The pledge could be the basis of one. It should be bourne in mind that goals like "ensuring security" and "promoting growth" are of a strategic nature (supporting the mission and vision, respecting the values). Let's do this right and get Singapore on the road to success upon success. Is any MP up to the task of raising a motion on this matter?