Mr Wang says:
On labour freedom, the study gives Singapore the world’s highest score, and makes the following comments:
“The non-salary cost of employing a worker is low, and dismissing a redundant employee is costless. Regulations on increasing or contracting the number of work hours are very flexible.”
What does this really mean?
Singapore is the easiest place in the world to pay a worker peanuts; make him work overtime; and then sack him without compensation.
Respectfully, I disagree with Mr Wang.
First, I will borrow the words of those more knowledgeable than me. Taken from the World Bank Doing Business report[PDF] that was referenced by the Heritage Foundation study cited by Mr Wang:
Next, an examination by The Economist on why Germany and France suffer from high levels of unemployment:
For the biggest failings in the euro area remain microeconomic, not macroeconomic. There is a reason why Denmark and the Netherlands have higher employment and lower unemployment than Germany and France: it is that the latter two have overly regulated labour markets, tougher hire-and-fire rules and high minimum wages. The evidence that excessive interference to “protect” people in work penalises those who are out of work has seldom been as clear as in Europe over the past five years.
And last, The Economist comments on the riots by ethnic minorities in France due to high levels of unemployment:
For all young people in France these days, proper jobs are scarce. As Mr de Villepin has acknowledged, 70% of all new contracts are now only temporary, and half of those last less than a month. For young people, the figure is four-fifths. The reason is what economists call an “insider-outsider” labour market: full-time permanent jobs are so protected by law that employers try not to create many, preferring instead temporary workers or interns whom they can shed more easily when times get tough. This suits the insiders, particularly those on sheltered public-sector contracts. But it leaves a whole swathe of youngsters with the very sensation of insecurity that the social system is designed to prevent.
I have provided links to further arguments as to why Mr Want is wrong at the bottom of this post, you could check it out.
Next, I take issue with Mr Wang’s reply to Gabriel’s comment to his post:
“I do not disagree with all you said, but inflexible labour markets are not a good idea either.”
—-
True, but when Singapore is world no. 1 for “labour freedom”, I think it’s obvious to see which is the direction in which we have gone too far.
The question then is, when is it “too far”? If the proposition is that Singapore has somehow “gone too far”, then where is the appropriate point of moderation? Until Mr Wang provides the answer to this question, his argument holds no water, because if he himself cannot identify a point which is not “too far”, then he has failed to prove that it is possible to legislate on labour markets and not go too far. In fact, the evidence is overwhelming that labour market regulations result in negative unintended consequences on the very people that those regulations are meant to protect.
The most important fact we must understand is this: Singapore does not suffer from a lack of regulation. In fact, the reverse is true. Singapore suffers from too much regulation, from the social, personal arena to areas such as media and information dissemination, the hand of the state controls what we can or cannot do. For Mr Wang to argue that the government should step in and regulate contracts made between individuals, is to subvert the most important right that individuals have in dealing with each other. It is to argue for a massive expansion of government into areas of our lives that are not already controlled by them. How can this make sense?
Some of the commentors have expressed sentiments that Mr Wang understands their plight. I highly doubt that this is the case. The problem with Singaporeans is not that the Government has not protected them, the problem is that there is no way for the Government to protect them from themselves. And sometimes, even worse, these people assist the government in sabotaging themselves.
For example, why do so many people find it difficult to find jobs or to make ends meet? They suffer because they had abdicated their own personal responsibility to make decisions for themselves, and instead slavishly obey the latest Government proclamations of manpower needs. How often do you hear people pursuing a path in life on the basis that “Gahmen say can make money, so we must do, because they are always right!”
Needless to say, when every mother’s son and daughter flocks to a particular area of study, the end result is grief. The laws of demand and supply are immutable, and even our self-proclaimed omniscient bureaucrats cannot predict nor control them. If you behave as the lemmings do and jump of the cliff of individuality, and opt to be a mere digit in the sea of supply, then you have no right to blame the government when the consequence is that you are treated as such. Your market power is directly commensurate with how rare and needed your skills are, not how well you obey the edicts of the state.
Mr Wang is wrong because the problem is not that the Government has not protected us. The problem is that we do not know how to think for ourselves, and shed the paternalism that the Government has foisted upon us.
Mr Wang Says So: No Cause for Celebration
Get Papers & Reports - Doing Business - The World Bank Group: 2006 Creating Jobs report here[PDF].
When Protecting Jobs Only Destroys Them: The Naked Economist - Yahoo! Finance
The Indian Economy Blog » Hard To Fire Is Hard To Hire
European economic reforms | Economist.com[subscription required]
An underclass rebellion | Economist.com[subscription required]
118 Comments
Han, with all due respect, I read Mr Wang’s post rather differently. My impression was that he was just pointing out how something that a state may celebrate may not be something that an individual worker would. MSM tendency to rar-rar everything about Singapore boleh.
On your point about ’slavishly obey the latest Government proclamations of manpower needs’, perhaps an alternative reading could be via the so-called ’social contract’: we’all listen to gahmen, we will have happy life. Flip side: If we don’t listen, we’re hectored for being indolent / lazy / useless / lacking in hunger etc. However if we do listen and things go tits up, then the gahmen can simply abandon the contract by citing your arguments, pat-pat backside and walk away.
I suppose a moral of a story is: Fool me once, shame on you. Fool me twice, shame on me.
On rereading my post, I cannot see a single sentence that is factually incorrect or not properly justified.
However, since Han, in his own post, has asked me to offer a definition of “gone too far”, I would propose this. “Too far” is:
(1) when the income of the bottom 30 percent of the population has fallen.
(2) the majority of Singaporeans in the middle class has only seen about a one percent increase in their nominal income in the last 5 years.
(3) economists from the Institute of Policy Studies are warning that middle class wage stagnation in S’pore is creating risk of social instability.
Would Han like to propose a definition of “not having gone far enough”?
Mr Wang:
The first question is, WHAT has gone too far? The absence of regulations with regards to specific aspects of the labour market is “going too far”? Is it your argument that the reverse should be done, which is that the government should actively intervene in the labour market?
Secondly, in your comments you raise observations that certain income classes are facing difficulties. That is not an issue, because I do not deny the existence of these problems. Your mistake however is in thinking that the cause of those problems are the LACK of government intervention in the labour market. Do you have evidence to show that there is causation between the lack of government intervention in the labour market, and the problems that have been observed by others?
Lastly, I inquired that, since you believe the government has “gone too far” in not intervening in the labour market, where do you think the appropriate amount of intervention is. That is a question you have not answered.
As it is, Singapore is scoring 99.3% on labour freedom. Add another 0.7% and we have a perfect score. And you think we haven’t gone far enough ….?
This is in contrast with the other indicators of economic freedom. Eg Singapore scores 90% on property rights; 50% on financial freedom; 80% on investment freedom; 80% on trade freedom etc etc.
Plenty of room for improvement, on those other indicators. But on labour freedom, we have already screwed the workforce so much that they can hardly be screwed any further. We’ve hit the limits of perfection.
“Do you have evidence to show that there is causation between the lack of government intervention in the labour market, and the problems that have been observed by others?”
—
Sure. “Dismissing a redundant employee is costless”. Many Singaporeans have been dismissed. This affects their overall income. Indeed, the predicted effect has taken place. “Income of the bottom 30 percent of the population has fallen”. “The majority of Singaporeans in the middle class has only seen about a one percent increase in their nominal income in the last 5 years.”
“The problem is that we do not know how to think for ourselves, and shed the paternalism that the Government has foisted upon us.”
O really? Why can’t i withdraw and manage my own CPF money? Paternalism is imposed on us, why make it sound like its our fault again?
Mr Wang, with due respect, I think you may have oversimplified the issue.
For example, if your dismissed redundant employee were able to find a new job with similar wages, the household income would not fall.
In the same vein, household income falls when new workers in the labour market cannot find a job, or when retrenched workers cannot re-enter the job market.
This may sound obvious, but it is an important issue.
Why is it important? As Shianux has mentioned, some countries have evolved an insider-outsider labour market. If you have a “permanent” job, you are secure. But this does nothing for new workers, who cannot break into this market because they are stuck with temp jobs.
Returning to your claim that “Dismissing a redundant employee is costless”: one should also ask what the cost of forcing companies to keep a redundant employee is. And the answer is that the cost is not borne by the government. The cost will fall upon the heads of those trying to get into the labour market: vulnerable groups like freshly qualified workers, or mothers who took time off to have a child.
I admit that there is no easy answer to these questions. But I believe you do your many readers a disservice when the issue is oversimplified.
Mr Wang:
Your argument is that because the index is almost 100%, therefore it is an objective indicator that the government as “gone too far”. Going by your reasoning, does this mean that an appropriate moderate point would be 50%? Or some other point you think? This is directly related to the question which you have yet to answer. What percentage of government intervention do you think is appropriate so that we are not “going too far”?
Secondly, I believe you have made a mistake with regards to the meaning of “cause”. Your mistake is twofold:
One, if your accusation is that the government has NOT intervened in the labour market to “help” these people, then surely they cannot be the cause of these problems. How can X be the cause of something if they have NOT done anything? As a matter of logic, your argument is flawed. The real causes are forces out of the government’s control, such as the free market and globalisation. Like I said in the post, a person’s market power is directly commensurate with how rare and needed their skills are.
Two, when you say that many Singaporeans have lost their jobs, or have lower income, or have seen only a marginal improvement in their nominal income, do you think it is actually possible for the government to regulate these issues? For example, make it harder for employers to sack workers? The unintended consequence would be employers would hire less workers, thus creating less jobs. What to do about nominal income? Legislate an increase? Keep in mind, legislating an increase in nominal income does nothing to raise real incomes, and could very well have an adverse effect. The minimum wage is merely a psychological crutch, and does nothing to raise the actual living standards of people.
Lastly, the real problem that Singaporeans face, is a psychological, emotional and physical dependency on the nanny state. To achieve true freedom, and true independence from authoritarian rule, requires one to exercise one’s mental faculties for oneself, and not be beholden to the whims of the rulers. Asking for, and expecting the powers that be, to make laws to “protect” you for “your own good” is nothing but an extension to their existing control over you, and only serves to deepen this unhealthy dependency. Why would you encourage something like that?
fund manager:
oh believe me, I have plenty of criticisms of the CPF system. That is offtopic to this post however, so I shall not elaborate.
Taking a look at the examples of France and Germany, I tend to take the view that it reinforces Mr Wang’s comment/view.
What the employers in France and Germany have done is to figure out a way to by-pass these laws that guarantee employment. The employers have created this huge temporary market, which appears to mimick the environment that the average singaporean finds himself in: i.e. pay him peanuts (and partly because he get absolutely no benefits); make him work overtime; and then sack him without compensation.
France and Germany appear to be examples of the type of legislation that is utterly ineffective.
I would agree more with what Mr Wang said. I Always felt that Singapore workers got rip off by the government. Legislations aside, look at the Unions, they are all control by the gov, what collective bargaining are we talking about? how are worker’s interest represented? its all a wayang.
“For Mr Wang to argue that the government should step in and regulate contracts made between individuals, is to subvert the most important right that individuals have in dealing with each other.”
Hmm, forgive me, but where did Mr Wang ever argue for government intervention in the labour market? Either I’m missing something big, or you’re putting words in Mr Wang’s mouth.
Forgive me, IMHO the whole issue has everything to do with what we expect of our politicians in the age of globalization.
To be really honest with you none of us have really questioned what they are supposed to do for us, let alone speculate on whether they should or should not intervene in the labor market.
Till this central theme is fleshed out and someone really questions what their role is, IMHO we will never be able to know for sure whether they have done too little or too much.
Han, you said “the problem is not that the Government has not protected us.” LOL, let me count the ways our beloved gahmen has protected us: by letting in xxx (yes, an obsenely enormous) number of foreigners at all levels…
c’mon, the facts SCREAM for themselves: income has fallen in lower and mid class. Period.
Hi!
Both fund manager and passerby are the most level headed commentators here because they havent rushed head long into the debate.
You cant place the cart before the horse and expect a intelligent and spirited debate.
They are right, we first need to ask the fundamental question what type of ethos or philosophy governs the decision making process when labor markets are tweaked.
Unless this fundamental question is asked, its anyone’s guess whether the gahmen has either gone too far or fallen short of their expected role.
Its really like asking how long is a lenght of string?
InSpir3d,
The following are words from Mr Wang’s mouth, “Singapore is the easiest place in the world to pay a worker peanuts; make him work overtime; and then sack him without compensation“ [Emphasis Mr Wang's].
What’s wrong with this statement?
1. If we are talking about the Durai peanuts, it’s true that we have a lot of people who are paid those peanuts.
However, it is also true that when we pay peanuts, we get monkeys.
Mr Wang’s statement that “we can pay workers peanuts easily” is flawed because you cannot. Employers have to pay workers what is commensurate with their skills to retain them. Perhaps you can ask Mr Wang if he’s paid peanuts. By the laws of economics, if he is, he must be a monkey.
2. Mr Wang claims that we are the easiest place in the world to “make people work overtime”. From where does he find the evidence to prove this point?
3. Mr Wang claims that we are the easiest place in the world to “sack people without compensation”. Does Mr Wang realize that it is possible to sue for wrongful termination here in Singapore and it actually happens? Again, where does Mr Wang get his facts to prove this point?
Suppose you are right and Mr Wang is not arguing for Government intervention. What then is he saying? It’s the people’s own fault that they are “paid peanuts, have to work overtime and get sacked without compensation”?
passerby,
You have made an excellent point.
It turns out that the KTM for one has thought about the question of the role of the Government, though people may not agree with him.
Like LJ, the KTM believes that we should reduce Government intervention in all spheres of life and there shouldn’t be double standards.
KTM,
Perhaps Mr Wang is saying that Singapore possesses the Labour freedoms the Heritage Foundation speaks of. If they are from Mr Wang’s mouth, it is because he is paraphrasing (to a certain degree of success or failure) what the Heritage Foundation is saying. Taking the words out of context and attributing them purely to Mr Wang’s initiative is a falsehood.
As for your points against him perhaps the true target of your speech is the Heritage Foundation itself.
“On labour freedom, the study gives Singapore the world’s highest score, and makes the following comments:
“The non-salary cost of employing a worker is low, and dismissing a redundant employee is costless. Regulations on increasing or contracting the number of work hours are very flexible.”
What does this really mean?
Singapore is the easiest place in the world to pay a worker peanuts; make him work overtime; and then sack him without compensation.”
Hi:
You wrote:
And I respond thus:
It can make sense in the view that employers by and large have relied on the government on direction.
And given the government’s bulwark of (misguided) intentions, employers in general, are still by and large dependent on the government telling them just what they should do with regards to IR.
From the view of liberal economics, Mr. Wang’s argument will of course not make sense. But Singapore’s economy is only liberal in the ‘avenues of hiring/firing’ sense and very illiberal as to the justifications for hiring/firing.
By ‘avenues’, I mean to say that the law supports whatever they want to do. By ‘justifications’, I refer to how employers do not by and large know what sort of employee would make strategic sense to their businesses and thereby, do not understand the opportunity costs of willy-nilly hiring/firing.
However, I do think that for the government to ‘regulate’ employment contracts would be too heavy-handed.
That said, a lot of the strategic decisions in hiring/firing still remain largely uninformed and this is where the government should step in and ‘indicate’ a more liberal-minded direction whilst changing social mores at the same time.
(What has social cultures/trends have to do with labour? Oh, a LOT… The primary problem that Singapore has is its very closeted social mores and willingness to exile those who are different from the ‘masses’. This in turns affects societal values, which then in turn affects anything economic/political.)
kh
G:
Ok, so if you say that Germany and France provide examples of legislation which are ineffective, please provide instances of countries which have effective job protection legislation that does not harm the people that they are supposed to protect.
Good luck!
Chinaman:
Exactly! If you feel that the Government is ripping off the workers, then why are you so naive to expect the Government to actually do something to help you?
Why wait for them to do something to help you, when you should just ask them to fuck off and help yourself?
Anon:
I think you misunderstand what I’m saying. I’m not saying that the Government HAS protected us. I’m saying that whether they do or not is irrelevant, because at the end of the day, they are POWERLESS against the forces of globalisation and the free market. You think its a big deal that they’re letting foreigners in? They have no choice!
Despite what Ah Kong tells you, they are not as smart and powerful as you think they are. They cannot control the free market, they cannot control the global economy. You can ask them to stop foreigners from coming in, or ask them to prop up nominal wages, but at the end of the day, the one suffering will be you.
passerby:
I think Singaporeans would not be in this situation if they adopted the perspective of government that I have.
The Government is a parasite. They are not there to help you, nor to make life better for you. The only person who can do that is yourself. The sooner you get rid of the delusion that the government is there for your benefit, the sooner you will be able to figure out how to plan for your future.
I think the paradigm of a free market, well-informed agents in Singapore is something of a hogwash.
There are examples. We can discuss the realm of the union and its proper role. We might argue that the idea of keeping labour cost low in a high cost (rental) environment is slightly ludicrous. We can even talk about access to justice (civil lawsuits against employers are rather expensive to maintain). We might say that the workforce, while increasingly educated, might not be sophisticated enough to not enter in agreements with their blinkers on. And I think many people can give better, more concrete examples.
So I don’t see free agents contracting for such a state of affairs unless driven by policies (sound or otherwise) which either allow or encourage such a situation.
And have we gone too far? I think so.
Perhaps we have gone too far because we have no choice (rise of China and India and globalisation). I have no solution though and any solution that instinctively appears = more or less - is the free market one - reduce costs.
And isn’t that we built the casino in the first place?
If we look at the survey, we will probably learn that there are other ways to be competitive than flaming the very roots of social unrest.
ben:
I agree with you that Singaporeans are far from being rational or well-informed decision makers. That model is just that, a model, which cannot be directly applied to real life.
That is not the question however. The question is, despite the individual flaws of Singaporeans, would the intervention of the Government in the labour market result in BETTER outcomes?
I think this question has already been answered with a quick check on Singapore’s history. In fact, the answer is the very existence of the problems we have today.
Why do so many Singaporeans possess skills which are not needed in a modern economy? Why do so many Singaporeans find it hard to find jobs? Why do so many Singaporeans find that their wages are not increasing? The answer lies in the meddling of the Government.
How often have you heard of government campaigns to push people into particular sectors of employment? First it was the IT debacle, after that it was the life sciences glut. The government constantly meddles and tinkers with the numbers of graduates from our universities, setting quotas and numbers based on their own (very much flawed) predictions of manpower requirements.
And now Mr Wang is arguing for MORE intervention? That’s just ridiculous! The present problems are the RESULT of intervention and meddling, and the solution is to meddle even more?
Further, the very fact that Singaporeans are not always rational and often ill-informed is the basis for my argument that we should, as far as possible, AVOID having the government interfere. How will Singaporeans ever learn to think for themselves, stand on their own 2 feet and ask the gahmen to fuck off, if all they can do is whine and complain about how the gahmen is not helping them?
There IS one other way to compete against lower costs, which the Americans and the Europeans (some, not the French or German lols) have done. That is to do things which low cost countries cannot do. The theory of comparative advantage might just be a theory, but it is powerfully illustrated by real world examples.
As much as people from India and China can do work for lower wages, there will always be some things which other people can do better. The question is, WHAT can Singaporeans do better?
interesting posts by all. I am new to this post, but if I am to read Han’s point, does he also agree that Govt should shove off the GST increase, do not meddle in trying to help by workfare or increasing R and D infrastructure and let the ‘market’ decide?
Thanks.
Off point, but anyway Mr Wang IS factually wrong.
There IS another country which scores higher on the Heritage Foundation’s 2007 labor freedom list. Georgia scores an insane 99.9! Go check it out.
From Han’s January 19, 2007 @ 7:10 pm:
I’d proffer Design (not just in terms of the popular conceptions of what is design).
Just that I’m pretty sure some people might shoot me for it.
btw hor… are you still in melb?
kh
Hi Han,
I think both you and Mr Wang have valid points, however, sharing different perspective on labour freedom and laws.
Mr Wang is stating the labour situation in singapore, whereas you are proposing that an individual shouldn’t be apathetic to his own rights, future.
Without the existence of true labour unions representing workers’ rights, any regulations made by the ministry go uncontested. This create an unfair situation for employees whose only right is to resign from the company.
And with the increasing difficult standard of living in singapore, which is affecting the middle and lower classes, the need for protection of the employee is even more pressing for the lost of job is the lost of income.
Of course, when the employee has lost the job, he/she should find means to survive. However, the irony is that he/she is alone in this island when the government is voted in by this average singaporean.
Partly (or mainly, YMMV) because as you’ve bespoke: There’re all those funny campaigns.
I know a girl I met at RMIT who wanted to be a marine biologist and was pushed into digital media by her parents because of the govt’s campaigns.
I also know a guy from NUS who wanted to do Literature but was pushed into the Life Sciences; failing his lab classes all the way, because of the govt’s campaigns.
And that when I applied to do graphic design at TP, my interviewers told me that I was the third applicant with a NUS degree they had seen that day.
The model of economics where the govt develops campaigns to push people into certain sectors is a model that is based on developmental economics.
At the dawn of independence when we obviously had no economy to call of; when there were social and hygiene amenities lacking, that model was a definite sure-win.
By and by however, as Singapore grew to become the city it is today, with material security available for most people, the strategy should have been to shift the economic model to that of a more liberal kind.
Unfortunately, yes, as Han does say, the government continued to interfere with the social complexity system that was there, au naturale; in the networks that we term collectively as, ’society’.
In addition, kids with more or less of their survival needs met, needed something other than pure survival to look up to; to hope for. And that, was just not present.
Yet they were still pushed into places where they did not want to go; they were pushed into sectors as they were taught to believe that following the government’s direction, was right.
They had failed, in that sense, to learn to think by themselves, as well as, for themselves.
So as the mechanics of the globalisation churned; as the invisible hand showed its cards; as kids went in and out and up and down in both hopes and in fears, they couldn’t find their footing.
And they couldn’t find their footing not because they weren’t as individuals good at a certain something.
They couldn’t find their footing because they didn’t find themselves. They couldn’t: they were misaligned as individuals born with certain faculties suited to certain possibilities, of which those possibilities just. wasn’t. anything. they. were. or. have. been. told. was. ‘good’.
Paul Graham wrote in his essay, ‘What you wish you’d known in high school’ something like you do well in what you like.
But a critical re-looking at that truism is also true: You like what you do well in.
Because it gives you a sense of purpose; it gives you a sense of self-worth: ‘I may not be a doctor, I may not be a mathematician, not an engineer or a lawyer but this is one thing that I can do and I am going to do it very, very well.’
kh
Of course people may object and then say: ‘But we’re talking about the economy as a whole, not about individuals!’
Yes, but the individual is the basic unit of an economy.
If your faculties aren’t suited to your vocation, you wouldn’t really be able to see the possibilities and opportunities in your sector, ain’t it?
kh
Hi Han
I don recall asking the Gahman to help me cos I’ve already asked them to fuck off. BTW, I am going MY WAY for good in the very near future.
kwokheng:
well said.
Your differences with the Mr Wang, seem obvious upon an elaboration of your views in these replies (esp the rant at 7.10pm), to be one of ideology.
Mr Wang bemoans the fact that Singapore’s is one of the highest on the list of labor freedoms and hence the employee is more vulnerable compared to other countries.
Upon rereading Mr Wang’s post and replies twice, i have found no mention of any literal message for the implementation of anything akin to either French or German labour policies.
Legal Janitor on the other hand, as evinced by his views, is a strident adherent of opinions not too far removed from that of free-market libertarian. (I hesitate to label in too constrictive a manner.) Indeed in what may be a rather hair-trigger approach, Han sees Mr Wang’s statement to be a polemic against free-market economics. (He may not be wrong to extrapolate more socialistic ideas, but once again, Mr Wang never states anything explicitly in support of them in his post). The argument takes the usual polemical routes of American conservatism: the decay of europe and its social problems.
However one sees Han truly in his element, not in the initial but in the more firey 2nd argument and in the later replies (with a sligthly more liberal use of expletives). Attacking the government and the Singapore people by turns, Han first locates the issue in the fact that there is too much government intervention. But that just masks the real problem: The Singapore govt for all its apparent omnipresence cannot protect Singaporeans from their own omnipotent stupidity.
The argument as Han has placed it is:
“The problem with Singaporeans is not that the Government has not protected them, the problem is that there is no way for the Government to protect them from themselves. And sometimes, even worse, these people assist the government in sabotaging themselves.
….(Singaporeans) suffer because they had abdicated their own personal responsibility to make decisions for themselves, and instead slavishly obey the latest Government proclamations of manpower needs.”
The sheperd cannot help a flock so stupid, and its stupidity is that is continues to follow the sheperd
(which ironically is a circular argument). Only the self possessed indiviudual can truly survive the inexorable advance of global free markets. And hence end argument with the usual chest-thumping proclamations of the power of the critical individualism.
Which misses the whole point of the Heritage Foundations views (rightly or wrongly is a separate concern) - that Singapore is well positioned to survive the global free markets. The World bank’s report and the Heritage Foundation laud Singapore’s competitive and business-friendly policy approach in dealing with labour. In a way, they would agree with Han in principle about free-markets but disagree vehemently about Singapore in particular. Which is ironic too since the Heritage foundation would find Han’s arguments compelling as they belong to the same views on the individual and economics - yet i wouldnt be suprised, in my opinion, that they secretly hoped that Republicans during their tenure in Congress would have gone down the same policy route as the Singaporean government on labour. And that Americans were a little less like Mr Wang and a little more flexible like the Singaporean worker.
0apjiyukk9:
Thank you for your analysis and summary. I would just like to mention that small-government libertarians in the US are like a much abused stepchild of the Republican Party: useful to have around but make sure they shut the hell up and nobody sees them.
Since the Heritage Foundation belongs more to the “conservative” faction (which nowadays appear no different from big government Democrats) rather than the “libertarian” faction, I would not be surprised either if they hold the Singapore model as one for the Republicans to consider.
I agree with you on the face of the facts that Singapore as a country is well positioned to survive the global free markets. The problem is whether individual Singaporeans can do the same. Like you said, Singaporean workers are “flexible”. An alternative perspective is that Singaporeans are pliant and have no minds of their own. Such deficencies are critical flaws for an individual to possess when situated within the global economy.
So many of these disadvantaged Singaporeans are calling for the Government to help them, when in reality there is little that the Government can do (they seriously oversold their own capabilities). They fail to see that what they really need to do is to look in the mirror and ask themselves, “What can I do for myself?”
Han,
Excellent and concise reply
I would daresay that the Heritage Foundation would find it deeply disturbing to be named with the Democratic party in the same sentence much less be considered the same kind of party. Perhaps the Libertarians looking forth from the fringe may feel that the wider conservative movement may have lost its way, but nonetheless the gulf between the American Left and the American Right are self-evident and remain as large as ever.
Given perhaps the numerous (but not all-out mortal hostility) between conservatives ( in all their varied ilk) as well as libertarians. Do you then disagree with the notion that Singapore, in the eyes of a conservative think-thank, deserves such high rankings for its labour freedoms? Given that you think the government already intervenes too much (eg. quotas and campaigns etc etc)
0apjiyukk9,
Well said.
You are right to say that Mr Wang is merely paraphrasing Heritage Foundation (’cos he just said so himself in his latest comments, and we have to give him some credit).
The question is: what is the sublimal message behind Mr Wang’s paraphrasing of the Heritage Foundation? It is possible that Mr Wang will come forth and explain himself again (or he might not), but regardless, what he has successfully accomplished is to stir up a lot of unhappiness and sentiments that the Government has not done enough to protect the workers. Perhaps this is all unintentional, but perception is sometimes reality.
Haha KTM, you surely delve in the nether-realms of the apparent and the noumenal.
In the spirit of the libertarianism of this site, I must kindly defer to Mr Wang’s own right of expressing his opinions (as accurate or inaccurate as they may be) and also the public’s right to misapprehend and misinteprete at their own leisure. Afterall if the public cannot survive Mr Wang, it probably cannot survive the government either.
Easy “Hire and Fire” mentality works on both the employer and the employee.
Many local companies have high turnover rates. Many employees have a very short term view of such jobs.
That is why the ideal worker for “Hire and Fire” jobs (ie. the bulk of new jobs created) is the foreign worker.
A foreign worker is tied by the W-Pass, S-Pass regulations to that position.
Jobs tailored to a “Hire and Fire” strategy is usually unattractive to the Singaporean, who has the flexibility to “move” around.
Thus as an employer, the ideal worker is a foreign worker. Who cares if he/she doenst have the skill yet. We can “Hire and Fire” until we find the right one.
As for the Singaporean, the role he will play in the Singapore economy will be different. The Singapoream does not make up the main workforce. S/he is the supplementary workforce. We are the spares to fill in the excess capacity of the economy.
For a Singaporean to be successful in Singapore, it is important that a Singaporean finds a role that allow him/her to thrive for the longer term.
0apjiyukk9:
Honestly, no, I do not believe that the Singapore government deserves such a high ranking for labour freedoms.
From what I can tell, the metrics used by the World Bank report, which the Heritage Foundation paper depends on, actually considers only “hard” intervention, such as actual regulations and legislation. It does not take into account “soft” interventions, such as quotas to universities and campaigns to influence culture.
Perhaps this might be due to the difficulty in assessing the impact of “soft” intervention, but in a population of individuals lacking their own minds, I argue that “soft” intervention could very well be more distortionary than “hard” intervention.
Actually, I don’t see where Mr. Wang is wrong in the statement:
Singapore is the easiest place in the world to pay a worker peanuts; make him work overtime; and then sack him without compensation.
It’s pretty much true in spirit if not in letter. The question as always is: “What is so wrong with that?”
Under most circumstances, I’d say ‘nothing wrong’, being a little bit of a libertarian myself. I tend to hesitate when I consider the Singaporean context, where power is disproportionately skewed towards employers, and in a sense has gone ‘too far’. Employees have inadequate protection of their legal rights. To use a public example, I have a sneaking suspicion that the Sporting Afrique saga is something that does not happen (or at least will happen differently) in a place where labour freedom has not gone ‘too far’.
Just because Mr.Wang cannot specifically define an optimum point (or range), doesn’t mean it does not exist, and there are very good reasons not to define such a point (same reason psychiatrists never specifically define ’sanity’). However, we can identify signs if something (or someone) has gone out of whack. Not that I trust the government to remedy such a situation, assuming it exists, though.
Libertarianism only works perfectly in a free market with (sufficiently) perfect information and assuming that everyone is rational (in the economic sense). Clearly, Singapore is none of the above. Also, pure libertarianism will only work in the short-run economics (or if information travels sufficiently fast and the reaction has effects instantaneously, or if time has no effect on the economy). In the very long-run, we are all dead– trust Keynes on this one.
In the meantime, I’ll just have figure out how to make do in the world as it is, not how I wish it to be.
If you assume that markets clear, you’re going to conclude that government intervention is bad. Further, libertarians only look at government’s failings, but not at what it has done right. If the government has done more harm than good, why is our unemployment rate 3.4%? If I use an axe to break down a door to save a little girl who’s trapped by a fire, pouncing on me for destroying the door is ridiculous.
If Employers and Employees were equal, minimal labour regulation would be good. However, the problem is that Employers are better informed than Employees about the law and their rights.
If you know the direction in which you should improve, that’s all you need to make a start. No one is proposing we need Continental European levels of labour protection. And by the way, the Netherlands has a respectable unemployment rate of 6%. It’s just like the reserves: we’re all told the country will collapse the moment they are touched, but any sensible person knows this is not the case.
Mr Wang merely gave his intepretation which mirrors the study in a straightforward manner. Had I been anyone of the people delivering the comments here, I don’t see the flaw. Or have the media created confusion?
Regarding the World Bank, the group has always been criticised for policies which are promoted in the name of self-interest. So it’s best to give them the benefit of a doubt when it has a subtle hint of “free market”. It may have the reverse effect of benefiting the employers, not the employees. What’s more - the Heritage Foundation is “Really Screwing with America”. (http://www.amazon.com/People-Who-Really-Screwing-America/dp/1560258756)
LJ, by bringing up the studies, you have given more material to support the stance that a free and unregulated job market fails when it comes to a people-powered economy - like Singapore. We have the jobs, and we just don’t take it. So that gap has to be filled by the expatraites, regardless if they are Ang Mohs or Indian Workers.
Brennan:
I don’t think citing a book that lists the 101st person as “the obnoxiously loud and constant cell phone user” is very helpful. Even the Amazon reviews from the link you provided don’t have much good to say about that book.
Secondly, which studies are you referring to, and how do they support the argument that a free and unregulated job market fails in Singapore? And in case you really think that Singapore has a free and unregulated labour market, please refer back to my earlier comments.
Thirdly, I think you make a big mistake when you claim that Singapore is a “people-powered economy”. Do you realise that when you make this claim, you are falling into the very trap that the Gahmen uses to justify central planning of “manpower requirements”? Here is the most important and mind-blowing point you must understand: ALL economies are people-powered. There is no other type of economy.
Han,
If the Singapore government, and all its apparently nefarious tendrils were to slowly dissolve for whatever reason. Would the average Singaporean citizen, now naked and free viewing the growing maelstrom of the global markets be better prepared for its onslaught? In your opinion, will he or she be more likely to embrace the libertarian ideology or will they seek to sheild themselves tbehind whatever authority remains? Does the absence of a government a libertarian make?
0apjiyukk9:
I am a minarchist, not an anarchist, so I am not advocating NO government, merely MINIMAL government.
Unfortunately, if the scenario you described were to materialise, I doubt the present situation would change very much. The elites would still survive and prosper, and the rest would either just manage to float, or sink completely.
The problem is, as much as I try to be optimistic, I cannot, because my observations of Singaporeans lead me to the opposite conclusion. Just looking at the comments in Mr Wang’s post, and some of the comments here, one can’t help but feel that these people have no idea at all what the reality is.
They refuse to think for themselves, they refuse to understand that there is nothing the government can do for them that would result in better outcomes than if they did it for themselves, and they refuse to understand that the problem with government is not a matter of who is in charge, because the problem is systemic: put any person in a position where they can coerce others to act against their will, and there will always be abuses of power.
Small government libertarians have always been in the minority. Human beings love to use the coercive powers of government to fulfil their own agendas. Social conservatives like to legislate morality, left wingers like to increase government intervention in the economy. So the answer to your question is, no, I doubt that people will embrace libertarianism even if there is an absence of government.
Furthermore, there can be terrible consequences when governments disappear. It is a fact of life that there will always be an authority of some sort. If its not a democratically elected government, or a monarch, or a junta, it will be some other petty dictator or warlord vying for power. The Soviet Union provides an illustrative example of what can happen when a brutal regime suddenly disappears.
The resulting anarchy is far from a libertarian utopia, and where there is no legitimate centralised power, there will be illegitimate centralised power (a la criminal syndicates). Where there is no state provision of security over property rights, there will only be private provision of such. And since the poor cannot afford private security, the result is only the wealthy will prevail (e.g. the Russian oligarchs, Red Mafia etc).
So I wish to make clear, I am not an anarchist, I am a minarchist. A government has clearly defined, and limited roles, which should not extend into the manipulation of an individual’s autonomy. That said, if you compare Singapore and the former Soviet Union, you will also realise why Singaporeans will never understand the essence of libertarianism:
They simply have it too good. Our present rulers manipulate with a velvet touch, nothing of the sort you’d find from the Kremlin. And despite that, the most of their manipulations are done with the honest belief that it is done for the good of the people. At the end of the day, the sheep will always want to return to the shepherd, because they don’t know where to go by themselves.
On the theme of minarchist—a word which was never mentioned when I did PS at NUS, by the way—I’d like to ask if you agree with Kenichi Ohmae in his Foreword to The Mind of the Strategist: The Art of Japanese Business, (McGraw-Hill, 1982), p. xii, thus:
An idealistic charged young man.
If you insist every other theories or opinions are wrong, are you so sure you are right?
Theories are very different from the real world.
amatu: Bland assertion does not an argument make. You should substantiate just how his theories do not work in the real world.
“We know now from a lot of history that the human spirit is invincible in the face of adversity. But I’ve decided that the human spirit is defenseless in the grip of wealth… This is the most advanced totalitarian state in the world,” he said. “I see it as a cartoon of a man in a cage with the key around his neck. But he will not use it.”
amatu:
the greatest irony is that when these people I’m arguing against try to convince the Government to pass laws setting minimum wages, restrict the number of foreign workers, “protect” jobs for locals, the Government will be telling them exactly what you are telling me now.
“It’s very idealistic to think minimum wages/job protection/restricting foreign workers can work, but they are only theories, and theories are very different from the real world.”
And here I am, arguing that they are wrong in expecting the Government to do all these for them. Who is the one being idealistic now?
Amatu,
All ideologies require their enthusiastic vanguards but Reality only requires indifferent prisoners. Theories possess the power to make us enthusiastic about that dismal reality we live in. The primary function is that of control of reality and not necessarily the truth of reality. Hence it is imperative that theories and their adherents lock in mortal combat about their countervailing truths, for what is at stake is the meaning of their lives. To question truth, is to ask for the battlefield. To ask for tolerance, is perchance to ask for death.
Meanwhile,I must apologize to Han in describing an anarcho-capitalistic utopia rather than the utopia of the restrained night watchman. Granted that I had not wish to completely remove government completely but rather the current Singapore government in particular (Hypothetically of course)for the thought experiment.
I ask only of course, to discover whether you felt that the government, with its alleged nefarious dependence on soft and not hard force, had a monopoly on that kind of “velvet” intervention. And also if the practical way forward towards a libertarian state of your description is truly the disappearance of the non-minimalistic state or is it truly the appearance of libertarian population in lieu of the Singaporean one.
0apjiyukk9:
No worries, I wasn’t entirely clear either about the extent of minimal-ness of government I advocate.
Amatu:
another irony: to be accused of being “idealistic” when I say this?
I’ve been accused of being extremely skeptical, and even cynical, but never idealistic.
No problem Han, as Oscar Wilde said the truth is rarely pure and never simple. The minarchist state is little different.
Sorry to bring back an issue that appears to have been dropped, but as Gab says, will the market clear? Or when will it clear?
I remember writing an application essay to EDB arguing that the tripartite system has failed and in particular the permanent wages and income policy offers little but grief in terms of actually doing anything but constant tweaking and praying for the best.
I’m generally for labour freedom but that may well be because I arguably have transferable skills and am mobile. In that sense, labour freedom works in my favour because I can up and leave for a better job. But conversely, I’m massively sympathetic to those who aren’t in a similar position. Does this mean that the governmental intervention and regulation will help? Nope, but I think that it CAN help. Are we at that point? I have absolutely no idea.
Libertarians are idealistic in the same sense in which Neo-Conservatives are idealistic. Their beliefs may run counter to most other idealists, but the pure quality of idealism itself remains.
noself:
Markets will never clear as long as changes occurs at a rate greater than the rate information travels. They will never clear as long as the consequences of actions have unintentional effects. They will never clear as long as information or consequences are ’sticky’.
So sit back and enjoy the chaos. The usual disclaimer: I am no economist and I am just making this stuff up.
On the topic of idealism:
For all their flaws, liberal policies are at least grounded by observations of reality (e.g. observations of discrimination). Unlike the conservatives, who base policies on some fantasy of a romantic past; or the libertarians who base their policies on the fantasy of classical economic theory and its unrealistic assumptions.
RSE:
Interesting how you note that actions have unintended effects, and then next claim that “liberal” policies are grounded by observations of reality.
If you closely examine the reason why libertarians think the way they do, then you will realise that they are against many left-wing policies precisely because they observe the reality that there are always harmful unintended consequences that result from those policies.
Libertarians also observe that when you hand over more power to the government to interfere in people’s lives, that power will always eventually be abused. Do you not think it is a fantasy to assume that governments will always act in the best interest of the people? Is that not an unrealistic assumption?
The greatest irony is that you can actually claim that “liberal” policies are grounded by observations of reality, when you live in Singapore. Do not forget the political origins of the ruling party. Observe the reality that is Singapore, and re-examine your beliefs in the goodness of government interference.
On January 21, 2007 @ 6:48 pm, amatu inscribed upon an electronic papyrus thus:
But… Exactly!
Reality’s hardly logical. So what makes you so sure that it won’t happen?
kh
wah you all, all very chim…
i think i better stick to my margaret atwood.
“The greatest irony is that you can actually claim that “liberal” policies are grounded by observations of reality, when you live in Singapore. Do not forget the political origins of the ruling party. Observe the reality that is Singapore, and re-examine your beliefs in the goodness of government interference.”
Just for the sake of clarification, was not the political origins of the PAP that of a position much more left of traditional Liberal Democracies. An even after the purge of the Communists from the party, the party chose to reject a “western liberal-democratic” model? Even the element of welfare policies were reversed in 1991, removing one of the key similarities between Singaporean “democracy” to Western style “democracies”.
kwok heng
Regardless whether i agree or do not agree with your statement, one should hold any theory that claims applicability to reality to a higher level than just the fact that something akin to its prediction may occur.
A methodology of falsification (like that of Karl Popper) or one of verifactionism (the older hypothetico-deductive model - Hempel and Oppenheim) should at the very least be considered. In Modern Economics, even the methodologies on the testing of the robustenss of economic theories leads to cogent debate on whether they can be universal or descriptive (eg. Kuhn, Lakatos, Feyerabend). Despite the voracious passion with which political enthusiast defend their points with economic data, no single economic theory can rightly claim to be beyond methodological reproof. Indeed politics is a far older area of institutional huiman inquiry than economics. It is ironic to note that Adam Smith taught political economics (a nascent subset of politics) and not economics itself.
What welfare was removed in 1991?
It was ‘political economy’, not ‘political economics’.
Dear 0apjiyukk9:
I do not buy knowledge production in terms of Mode-1.
I only buy, Mode-2.
kh
Hi Han,
The reason of idealism on you is because of your ideas what the economy should be. However, your ideas can only be materialize if 1)accepted by the society, 2)implemented through authority, 3)agreement by the government. Right now, your ideal are nothing but an idea. Nothing more or nothing less. Just a thought.
You have good intention but too fast in concluding. The purpose of a parliament is to ensure that the right decisions are made for the country and thoroughly examined before being passed; exchanged of ideas, views, and opinions are very important, to understand the subject. It’s definitely easier and faster to pass decision by an individual but not a group. But isnt it what liberal democracies about? Freedom and respect.
What Mr Wang says is for the government to provide a safety net for the average singaporeans, employees of the nation. Shouldnt it the responsibility of a government to protect her citizens? It’s the very basic responsibility of a government to take care of her children.
I certainly agree with your intention but how can an average singaporean have an impact in the policy making?
Lastly, im no expert in economics. Please do not take my views seriously.
Cheers
Hi Agagooga,
Any theory will work so long as there are people in position with authority who want it to be implemented. Of course, it cannot to be of such preposterous and ludicrious, have to be reasonable.
Kwok Heng,
Mode 2 knowledge is a method of knowledge production and not a methodology of science. Modes of knowlegde production concern themselves with how knowledge is produced. A methodology of science is not concerned at all with whether an idea is produced through induction, deduction or through an SRP like that of Lakatos. What it is concerned with is the testing of a theory once that knowledge has been produced (by a scientist using inference from statistics or an economist working from a priori assumptions on the economy). If you read my passage closely you do not see me prescibe any form of knowledge production or even the means to test the veracity or applicability of the theory. However I do say such a test at the very least is needed.
Afterall i do not buy Mode 1 or Mode 2 merely because it is theory
But that it is a theory that can be applicable to reality itself (afterall even Mode 2 knowledge prizes problem solving) what use is it if, the problem cannot be said to be solved or unsolved?
Agagooga,
I refer you to http://nt2.fas.nus.edu.sg/ecs/pub/wp/wp0120.pdf
Not to its conclusions but to the suggestion that policies touching on the area were changes. Perhaps you will find I make the statements not as a proposition but to clarify whether even if we could take Singapore’s policies to be more ‘liberal’ at that period, that such ‘liberal’ policies have been removed. I made no statement as to the effect that the policies were ‘liberal’ themselves.
As for the use of the term ‘political economics’, I can only ask to refer to the introduction of the Wealth of Nations (Courier Dover Edition 2003)in which the word political economics is used to describe both Hutcheson’s and Smith’s lectures. To be fair, I cannot remember Adam Smith using the term ‘political economics’ specifically, however i do not think using the term is in anyway misleading. Given that Adam Smith’s main cause of inquiry was into how governmental policy influences the economic well-being of the nation, the use political economy/economics conveys the idea of policy and its ramification on the economy. Futhermore the term ‘political economics’ continues to be used to this very day by those who sek to udnerstand the eoconomy form a more interdisciplinary way - specifically involving certain assumptions about politics and policy. You will find them using the term political economy and political economics interchangeably. I think a quick google search will illustrate the point.
My apologies once again to Agagooga,
On re-reading my statement, I must conclude I was in error esp on the point of stating that the element of welfare policies has been removed in 1991. I retract my entire statement unreservedly. However I still believe clarification is needed on the same point.
The welfare policies such as CPF, workfare, medical accounts that are present in Singapore belong to an “East Asian Welfare Model” which is substansively different from that of a liberal welfare system. In that it is low expenditure and consists of early introduction emphasizing voluntarism.
The NUS study still proves that since 1991 what can be said is that welfare policies moved away from that of equitable distribution but still retained a high level for overall progress and I do leave you with what Lee Kuan Yew said in 1992:
“Through Hong Kong watching, I concluded that state welfare and subsidies blunted the individual’s drive to succeed. I watched with amazement the ease with which Hong Kong workers adjusted their salaries upwards in boom times and downwards in recessions. I resolved to reverse course on the welfare policies which my party had inherited or copied from British Labour Party policies.”
I find it hard to hold that Singapore’s welfare policies bear any strong resemblance to those of liberal-democracies - they are not so much concerned with income equity as they are concerned with overall welfare. This was what I meant when I said:
“Even the element of welfare policies were reversed in 1991, removing one of the key similarities between Singaporean “democracy” to Western style “democracies”.”
Dear 0apjiyukk9,
Let me just say, that I was never one to put things across in a manner that befits philosophical thought nor dialectic.
I view everything through the lenses of art and design.
Like here.
I consider theories and such, as manners of explicating certain ideals or tendencies or as some would call, “powers”.
I read them as much as I can and do think and consider them at length.
So they are used in the manner of ‘considerations’ when doing up a project or coming up with a solution.
Which is also to say, I cannot and would find it very difficult to define myself as “X”, following like Han’s self-image as a minarchist.
Which is why I said: “Wah you all, all very chim.”
I use theories for what they’re worth, ie. as ‘considerations’.
But which theories I agree with, would rest solely on the situation at hand, ie. Like in Design or Art: What are all the factors? What theories are there related to those factors, and hence what considerations are there in that situation? And then I need to think of a strategy of resolving the conflicting tendencies within the situation.
Which is why I leave the more “chim” things, to people like you.
I am very, very bad at sequential logic. I think in pictures, not words.
kh
‘But that it is a theory that can be applicable to reality itself (afterall even Mode 2 knowledge prizes problem solving) what use is it if, the problem cannot be said to be solved or unsolved?’
Actually, I suspect we’re not that dissimilar on this point.
Just that I don’t think I have the linguistic ability to profess it so:
I like theories, but only as ways to re-look assumptions that we have of the ‘context’ (”re-frame the mindset”); to see what other possibilities we can squeeze out of the situation.
But if people expect theory-theory from me, then that’s not possible.
Which is why I said that no doubt govt intervention in the current situation may seem to run contrary to what should be the ‘ideal’ in Han’s erm, ‘ideology’, it may still be fully necessary given the present mindsets.
Did I pass?
kh