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This post is inspired by the reader who blithely suggested that the bottom 5% of Singapore is better off than the bottom 5% in most other places.
Last week, the new Forbes Richest List was published. Although I was heartened to see my family still in the list, it got me thinking of the growing income disparity in Singapore.
Singapore's income disparity has been widening in recent years; this is the inexorable consequence of a meritocratic capitalist society. However, unlike in many Western countries, this is happening without the safety net of a welfare state. Even the United States, the paragon of capitalism, has some sort of welfarism, however flawed it may be.
In Singapore, the government believes that the family should be this safety net - witness the recent official stance on rental of HDB flats and the relentless search for kin or kith that can support the person before the government is willing to, ever so reluctantly, step in. My doctor friends tell me that in government hospitals, the state will in the same emotionless, relentless manner, pursue kith and kin for the settlement of any bills, to the extent of taking them to court, if the person proves unable to pay their bills.
I think that this is fundamentally flawed for two reasons.
Firstly, the ties that bind family - these blood ties - may not always be thicker than water. Family is a legacy of chance not of choice, and although the government and idealists may hope for the perfect 'Asian' loving, close-knit family, this may not always be the case. There is always a need, and a place for the love of the state, and of strangers.
Which brings me to my second point. The overemphasis on the family 'unit' is often at the detriment of cultivating compassion for strangers - charity. Philanthropy in Singapore, and amongst East Asians in general, is very weak compared to Western nations. This is especially pronounced amongst the wealthy who, because they place family above all else, dedicate themselves towards the creation and protection of an empire and family wealth. This means that they are a lot less likely to donate a large portion of their wealth to charity, and certainly would never consider the colossal acts of charity of the two wealthiest men in the US and the world, Bill Gates and Warren Buffet, who have pledged the majority of their wealth to charity after their deaths, rather than leave it to their children. This would be unimaginable to the tycoons of Asia who believe, like our government, that their loyalty and legacy should to their blood kin only since the family should rely on itself, as the state and strangers do not have an obligation to do so.
I think that this is damaging to society since the inevitable result would be that in the absence of a welfare state, a philanthropic elite, and redistributive taxes, the rich-poor gap will get increasingly larger. It is well-known that in Singapore, although we have the highest number of millionaires per capita, the poorest 10% of Singaporeans survive on less than $800 per month; my friends spend that amount on ONE meal on ONE person easily.
There are three ways to solve this problem. The first is for Singapore to have some minimal form of welfare state to lift the plight of the very poorest. This would involve the second way - higher taxes, including maybe even some form of inheritance tax (which is very low in Singapore) so as to finance the welfare state and/or help re-distribute some wealth.
These are however two sacred cows of Singapore financial government that are very unlikely to be slaughtered. In a way, this is for good reason since in order to attract talent and the ultra high net-worth people to Singapore, taxes have to be kept low.
Which leaves us with the third way - the cultivation of philanthropy amongst the elite of Singapore. I think there is hope yet for this. The rich elite of Singapore is - at least anecdotally - getting more aware of the need for charity, especially us children of the third generation.
There is a Chinese saying that fortune doesn't pass beyond three generations. Although this is usually taken to mean that the third generation fritters it all away, perhaps it may be because we may give it all away.
This in the end may not be a bad thing.
Monday, August 25, 2008
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56 comments:
Didn't they abolish the estate duty recently? Doesn't that mean there's no longer an inheritance tax to speak of, or are there other components which I've not factored in?
It might help if the rich, like yourself, who are able to help, were not so snobbish. Honestly, i don't think the poor here are half as bad as Indonesia in comparison.
Grow up, anon August 27 1:57 AM, have you REALLY seen snobbish rich people? The regular snobbish rich brat doesn't bother blogging about income disparity. How much do you know about Melissa or her expenses anyway?
Plus, everyone knows the poor here aren't as worse off as those in third world countries (DUH), but that would be an out-of-context comparison. Considering that our sovereign funds are on par with the richest nations in the world, our welfare system can definitely afford to be a lot more generous than it is now.
Telling the old auntie cleaning hawker tables that she is so lucky compared to the african beggar isn't helping her one bit.
then help.
to anon at 1:57
nah, the poor in indonesia is just lazy... while the poor in singapore is just stuck. Those beggar in Jakarta are given option to go back to rural areas and live as a farmer. And being farmer is hard work. What did they say? "Erm, I rather be a beggar then". Do you ever think why 80% of richest people in indonesia are made of chinese race?
well said Lady melissa! Excuse me for going off topic a little bit. I ever spare a thought of choosing singapore as my home. But, in singapore, the local people are second class citizen, while the expats enjoy everything. Why making many golf courses in such a tiny island where housing price going up sharply? why building casino while the public vote has revealed otherwise? of course, to entice expats to come and spend. For one thing, I know that singapore economy is highly depend on international investment. But for other thing, that what makes it unpleasant to stay.... if you are not an expat, or a lady.
To be fair, the AVERAGE Singaporean's ( the median ) quality of life is relatively high. Our public infrastructure is one of the best in the world, so is our public housing. We should be more worried about the BOTTOM 10% who are forgotten.
First of all, Estate Duty was recently abolished and I don't see the government going down that route again.
Personally, I am opposed to Estate Duty. Why should my children pay tax on money that I have already paid tax on, in the form of income tax.
Furthermore, Estate Duty impacts NOT the ultra rich people like yourself, Lady Melissa, but more the less-sophisticated middle-income people. The reason being the Ultra-Rich have already figured out how to structure their wealth into various trusts/vehicles so that the actual Estate Duty paid is little or nil. The middle income people don't have access to private bankers who can provide such services and often end up paying such taxes.
I also disagree with the notion of *increasing* taxes with the idea of redistributing wealth to the poor. I'm not opposed to taxation, i just think that presently we are all taxed enough. (Note the large budget surpluses generated every year) Increasing taxes to fund welfarism raises these issues: (1) Which segment of society do you tax more? Who bears the burden of higher taxation and how would you identify these people? (2) How do you identify the people you want to provide welfare to? What is a proper means test?
I think that if truly, we wanted to have a more caring soceity, then "cultivation of philantropy" is a better way to do this. And your examples of Bill Gates and Warren Buffet are very good examples.
OK i have to stop now although I have more to say on this, mainly because I am a lowly Peasant and I need to get some work done.
I grew up partially on welfare. I remember days when there were no electricity/water and eating plain porridge.
There is help but it's too difficult for the poorest of the poor to get it. you have to go through rounds and rounds of interviews(so you must be poor and VERY thick-skinned)And I think people won't know about this 'help' unless you do some research, read newspapers, ask around (must be thick-skinned)
The poorest of the lot aren't very educated, and their offsprings have a high chance of turning like them unless some help is given to them to stop the vicious cycle.
I think CDAC and its kind should do more to reach out to the bottom 10%. Go out to those poor 1-room/2-room flat neighbourhoods.
But as (average)individuals, what can we do?
lilliana i'd love to just give u a smack. just because they are non-chinese doesn't mean they are lazy.
It's like me saying the majority 80% of the rich are chinese because the chinese are scheming and brutal.
Top line (con people, sell soul sell body to increase revenue) - costs (exploit poor people/resources to cut costs)= FAT bottom line.
[of course this is just rubbish to SOME extent]
without the peasants the rich are nothing. it benefits the small percentage of the rich that the majority of the people are poor and not smart.
hi,
we are from the blogtv programme team at channel newsasia.
we are filming an episode, tomorrow, to follow up on PM Lee's rally speech comments about marriage amongst youths.
having read your entry on the Singaporean peasant boy and girl, we would love to have your perspective on our show.
please contact us at jacquelineseng@mediacorp.com.sg or 6350 3074.
thank you. and we hope to hear from you as soon as possible.
- jac
A good post, I hope that your Lady Melissa would work on what you stand for as you are given the privilege of being in an influential position.
If more of your friends would share the same view, there could be a change in Singapore where the "richer get richer, while the poorer get poorer".
Dear Mediacorp.
You already have me perspective. I don't do interviews. Thanks anyway :)
my god! melissa, you have created a fan base for yourself, i think. all my friends who read your blog thinks you are very smart and i think the real melissa is not snobbish at all. in fact, she actually CARES. :)
melissa i hope you never stop blogging. one day, you are going to influence many people positively with your writings! :)
on a sidenote, believe me, you have won many over to dawn's side. my friends are now converts; from supporting XX to supporting DY.
Lady Melissa, can you please confirm if they are refering to Dawn Yang? We patiently await your answer.
http://thegutterpost.blogspot.com/
Wow, if that sex tape is about Dawn, more people would get sued. Now it is not about anything else but violation of a private kind. Guess the person who send the tape would be in serious trouble.
rie: The Estate Duty law (b4 it was abolished this year) has no impact on the middle income folks. This is bcos the first $5 million of your assets is not taxable under the abolished law.
Taxing the rich for the benefit of the poor is an essential feature of a capitalist economy as the Lady has alluded to. The idea is to provide for everyone in the society to ensure stability. Welfarism (in a mature capitalist economy) is not a dirty word.
Estate Duty -- I thought it was residential property up to S$9m was tax exempt BUT non-resi property above S$600,000 is subject to estate duty. (under the abolished law).
Duh!
The lady in the sex tape which theglutterpost is referring to is Tila Tequila, the infamous star of Big Brother in US.
Her parents migrated from Vietnam to Singapore and she was born in Singapore. They later moved to US.
So there you go, a "Singapore" girl involved in a sex scandal.
Hmm...thought Glutterpost had already disclosed who the girl was.
A lot of American billionaires/millionaires still choose to pass down their wealth and family fortune to their family, mind you. This is not an asian trait or thinking at all! It is very interesting to read your views on Singapore and see how your mind works (your adamance in concealing yourself behind the name ladymelissa tells me much). You seem to have an ideal as to how Singapore's citizens should behave or should lead their lives. Good for you. In America, if you're serious about your people's welfare and at the same time enjoy the power of influence over people, you get into politics and run for office, not just set up a blog. You should perhaps get onto a more serious platform where your opinions will be heard and suggestions carried out. I'm not sure how it works in Singapore. It is a very stifling place full of hypocrisy and half-educated people trying very hard to "share" their observations about people and act like they are the authority.
Gini Coefficient for Singapore (before adjusting for "benefits and taxes") is 0.472 in 2006 to 0.485 in 2007. (source: SingStat)
Gini coefficient (despite having the usual measurement flaws - which statistical measurement doesn't?) is a widely used measurement to measure income inequality. The higher the number (from 0 to 1) the greater the inequality.
A quick google search would reveal that Singapore's Gini coefficient is right about where the African nations are.
I believe that the Singapore government is a firm non-believer of this statistic anyway - they rather not talk about it. Conversations with civil service friends about this would get them rather defensive.
We need more educated discussions like this. So, Melissa, thank you. This is my favorite post of yours so far. I do have a comment regarding your 3rd suggestion - philanthropy - love it. Will expound on it another day.
They try of course but it is well-known that philanthropy is more developed in the West.
That said America is a country full of donkeys who participate in money-politics. You can't run a proper political campaign in America if you do not have big funding. Wake up.
There is no more hyprocritcal place on this planet than America. This is the country that decided that the Olympic medal tables should rank according to TOTAL number of medals won instead of gold medals when they realised they have lost to China.
This is the same country that condemns the unilateral declaration of independence of South Ossetia and Abkhazia whilst supporting the same declaration by Kosovo. The same country that invaded a seoverign country. The same country where racists are targetting their first black Presidential candidate.
Don't get me started on the cesspool of sin that is America. Maybe in a future blogpost.
The SG government believes that the Gini Coefficient is a bad indicator of income inequality in Singapore because it does not take into account subsidised public housing.
Although there is some truth in this because our poorest are less likely to be homeless than the poor of say the US or UK, this should not be used as a coverall excuse.
Incidentally, Hong Kong's Gini Coefficient is even higher than Singapore's.
Yupe. HK, US and SG are some of the anomalies -- horribly rich developed countries with horrible Gini coefficients.
That's why SG tries it's best to 'adjust' its Gini Coefficient. Granted, subsidized public housing and education, one-off Progress Package, etc should be accounted for.
Yet sadly, post-adjustments, SG's Gini Coefficient is isn't that great either (basing on SingStat's adjustment of "taxes and benefits" - I assume "benefits" do include those mentioned above - I could be wrong here. :)
I really don't see the richest man in Singapore Ng Teng Fong giving away all his wealth to charity. If only :)
Gosh. Why do people associate philanthropy as giving ALL his/her wealth away?
Philanthropy has to be SUSTAINABLE, across time and one's lifetime. It isn't as simple as giving one's entire wealth away.
Good examples are Ford Foundation, Henry Luce Foundation.
Closer to home, you have the Lee (Kong Chien) Foundation, Lien Foundation, Tan Kah Kee Foundation. While one can criticize that such Singapore based foundations are nowhere near the leagues of US Foundations, at least they are there. I agree more could be and should be done, especially in area of education.
It's heartening that the 3rd generation old-money rich (Granted, I'm only using Melissa as a reference point) have such a mentality. After all, this is perfect avenue to ensure one's legacy live beyond one's life time.
Hahaha! Thanks for your reply! It is so typical (to the point of amusement!) of you to start attacking others when criticized :). I have met many beautiful Singaporean girls but none argues as passionately as you, albeit that slightly annoying typo! On the South Ossetia and Abkhazia subject, it is hard for me to keep track of ALL little shitty countries consisting of 10 farms and a church. As far as I know, the United States isn't the only country to condemn their independence, the only country that has recognized this independence is Russia. Maybe you should do a little bit of homework and explain to me why the string of countries is condemning Russia's decision for recognizing this independence? You are a great debater and that's very sexy in an asian woman especially since this is not her native language, so please do not ever let your habitual name-calling discredit your good talent.
According to you, we're a cesspool of sins and the most hypocrital place on earth, strangely that has no effect on the fact that we are the economic engine of the world for the past 60 yrs and on the number of immigrants applying for green cards here in the US to persue the American Dream :)(and American DreamBoats like me).
I have witnessed how my Chinese friends in Singapore treat the non-Chinese, I have come to understand their general opinions of the rest of the population that aren't Chinese or Eurasians. But am I gonna type some offensive remark about the Chinese population in Singapore or Singaporeans in general? No. We can go on and on attacking one another and our countries but I'm sure that's not what you are trying to do on your blog. Then again, I am not sure what your purpose is for writing this blog. What are you trying to say or do with this blog?
PAST 60 years indeed. The US is the past. Asia is the future. And English is as native to me as gibberish is to you.
Excuse me Lady Melissa, your native language should be Singlish.
Anon@ 917 pm.
Being a bit presumptuous aren't u?
I believe (Just like my hero Maggie, we have that in common) that people should be helped only to help themselves - charity is for the helpless - few in society should ever truly fall under the helpless category.
There are less well off people here but less well off is not the same as destitute as you will find in many countries.
In my home town people starve to death, people freeze to death. Admittedly many of them have mental issues so fall under a different category.
The risk of a welfare state is that it can promote laziness in those that are not truly helpless. (See UK mid 70s-80s)
Its not uncommon for people to live off of welfare knowing that should their situation change for the better (get a job) they can in some cases be financially worse off.
In the UK I knew a guy who under welfare had a house and a good income to support himself his wife and the three kids they decided to have (despite having no job) He didn't want a job as he would be financially worse off. I worked full time to pay for my part time studies yet he always had more money than me to spend on non essentials.
Of course there are always those who do deserve and need welfare - but the government should be the very last resort after
1) helping themselves (if able)
2) friends or family
3) Charity
The Chinese mentality of the children being an investment in their future is a very good one and from what I have seen works very well. I only hope generations of children remain filial.
I can see how the government wouldn't wish to do anything to encourage the erosion of that
I always find it most interesting that the people lining up to buy lottery tickets around the world are rarely those that can afford to waste the money or time doing so.....
I am talking about those wo can't help themselves, those without a loving family, or unfillial children.
No system is perfect but honestly, if for every 1 person who really needs help I get cheated by a lazy person, it may even be worth it...
Americandreamboat:
I wasn't aware that one is only allowed to discuss welfare and social changes on ones own blog, if one is running for office.
Great thanks for the heads up
America has a huge number of very poor people - you just cant compare. Nor can you compare American business, sorry I meant American politics and that of Singapore. I know who I trust more to act selfless and with dignity.
Interestingly enough America is just like Singapore in one way. They both have a lot of people with village mentality there. Many Americans knowledge of the world doesn't go beyond her borders or sound bites of places they have 'liberated' such as Eye-Rack (a place where in a recent nationwide survey very few Americans could even point to on a map)
I believe people should make all efforts to look after themselves and not be a burden to society. If that is not possible then the family should provide support. Where that's not possible then those people need to be able to turn to the charities and/or government welfare.
I suggest that you will have more funds and be better able to TRULY help the TRULY needy if welfare efforts isn't 'wasted' on those who are not without other options.
I am not against welfare - quite the opposite.
Although it sounds contradictory I'm not for making access to welfare easier.
I believe the truly needy should be able to get it only when its proven that they truly need it (same with charities which I can tell you waste millions) that doing so will discourage a welfare state mentality encourage more families to support themselves, will leave more funds and focus available for the truly needy, and will encourage more people to donate to charities.
i'm not gonna say too much about singapore's lack of welfare, i think we can see the beginnings of a move towards more assistance to the low-income via the state and i'm sure this will emerge more visibly over time.
i do, however, think you perhaps missed the target on our poorest 5% being better off than the poorest 5% of other countries. this claim may or may not be true but it is perhaps less relevant than the fact that our middle 90% of the population are better off than the middle 90% of the population of other countries.
ultimately the poorest 5% of any country need external assistance because it really doesn't matter how much you earn if you don't have enough for standard of living in your country of residence. but it would be a mistake for any of us to fail to recognize the large middle-class that we're lucky enough to have.
I think a good society needs to judge itself not only by its median citizen but also its poorest citizen.
Melissa
There is a 4th way, which is having more social enterprises.
Michael
Social enterprises also rely on charitable donations?
Micheal:
Nail on the head. It is really, IHMO, the best way out of the poverty cycle for the underprivileged here.
"Give a man a fish, feed him for one day. Teach him how to fish, feed him for a lifetime." - Lao Tzu
besides, it is probably one of the safest ways to prevent charity malpractice.
After NKF, Renzi and other unsavory examples, that the rich in singapore will adopt philanthropic mindset are IMHPO, as slim as singapore hosting the Olympics.
Besides, why should the rich people be penalized for the poverty of low income families?
- inex
melissa - frankly I feel that social enterprise is more of a government responsbility.
surely some of the unnecessary expenditure (hiring consultants to rename Marina Bay to.. erm Marina Bay) can be put to better use.
- inex
Melissa
Social enterprises does not rely on donations. It is a business with the objectives close to creating life supporting wealth.
You may like to read about something I am helping a friend with at:
http://jupilier.blogspot.com/2008/01/social-enterprise-2.html
Thanks
Mic
Read it. Think it's an inefficient roundabout way.
Why sell cows to poor people cheaply when a rich enough person could perhaps give them cows instead?
Or sell cows to rich people and then donate some cows to poor people?
I really don't see the point...
Maybe you can explain.
Dear inex
By definition, when governments start something for the people's welfare it is a socialist initiative. Few of them, if at all are profit making enterprises that does not rely on more tax payers' money.
Besides, I wouldn't want to rely on government. Why do you want to rely on government so much? Although I don't agree with everything the government is doing, I must say they have also done alot for the people. But a crunch mentality does not help with progress.
Melissa
Giving away cows is more efficient to bring temporary benefits to the poor, but it may not be effective to alleviate people from poverty. Here, we are trying to teach them how to rear cows productively and keep the profits for themselves. That means, the villagers will have to learn a skill and work for their money.
More efficient doesn't always mean better. This 'roundabout way' is a more sustainable and dignified way to distribute wealth. In helping people, we must remember not to take their dignity away and make them recipients of charity - ie. if that can be done.
Teaching them how to rear cows and selling them cows at a low price are 2 different things.
We can still donate cows and then teach them how to rear and breed them.
Melissa
Yes, we can give them the cows and teach them how to rear cows, but this would be charity. Nothing wrong with that, and it may work too.
I think most people, even the poor, would not like to feel like recipients of charity. I think it is more dignified to be assisted to run your own enterprises, then to be treated as welfare recipients.
It is also more sustainable if we don't have to rely on charitable donations. The social enterprise is one that self actuates.
Jup:
Because we have one of the most well-paid government in the world?
Since charity organizations have proven themselves to be corruptible and our government not so - I suppose I trust our efficient government to do a better job then what stand alone non-profit organizations are doing?
Speaking from personal experience in NPOs, lets just say things aren't the way most people thought they should be. Charity organizations can be exploited, and you'll be amaze what donor's money goes into and how difficult it is to exercise corporate governance in an NPO, especially when it gets bigger and more reknowned.
I second what you reply to Melissa at 7.09pm.
- inex
I think that it is wrong that people should make the poor less able to rear their own cows. It's probably true that charities are like that. But large corporations, by destroying their competition and downsizing themselves are also like large cow farms which take cows away from the smaller farmers.
And Melissa pointed out that we need to lower taxes to lure foreigners and foreign companies here. Another way of putting it is that the government is giving charity to these people. Stiglitz called this "corporate welfare".
I guess it's not easy to maintain a balance between making our economy competitive and being able to provide for our poor but we shouldn't totally ignore the latter. Most of the poor today are poor because it's hard to make money when you don't have money.
Which is why I say the best solution is to cultivate a spirit of charity in the rich. How many millions do we need anyway?
Melissa
I second that.
My friend from US (a country that donates a lot of money to charity) told me that most donations comes from the middle class people. Somehow, the rich tend to keep their money and are tight fisted. He said that the likes of Gates and Buffet are exceptions among the rich.
Sure we can tax the richest 10% and then re-distribute that amount to the bottom 10%. If I'm at the receiving end, it's really money for nothing with no strings attached. I get all my basic needs plus a little extra maybe, what's not to dislike?
Well, a couple of things wrong though:
1. We are solving the material and comfort needs, but not solving the root causes of the poverty. Why is the recipient at the bottom 10% of the income level? How can we help him and his family break out of the poverty cycle?
2. Everyone should be encourage to donate generously, not just the rich. This can be in the form of money or volunteering your time and services for free. Even the poor can make themselves useful if they try.
3. Pride is a strange thing. It can make you reject charity or not seek help until it's too late. Our gov has exploited this weakness pretty well, eg means testing, workfare, etc.
Personally, I think social enterprise and CSR activities are more effective than outright charity. I believe if given a choice, the bottom 10% would rather work for extra money than to receive outright donations which will further diminish their already downtrodden spirit.
I believe that donating to charity depends on the state of the mind, not the size of the wallet.
Basically people are poor because they have a poor mind, inherited from family and surroundings. I know this may infuriate some people, but I believe that is true.
Most of us are not taught how to be rich. Here being 'rich' means having money and with a heart and a life. Some people appear to be rich, but they are just people with money, with no heart and no life.
If a person can be taught to think rich, he will be rich.
Jupilier. Totally. It's all in the mind.
In a sense, a measure of how great a society is, and how strong its foundations are, lie in the social mobility of its peoples.
The Straits Times frequently reports on such incidence of hard luck stories made good. But by inference, if this makes the news, it must be special or odd -- paradoxically. Maybe it's looking at the world with shattered glasses, maybe it's just the pervasive anti-discourse we have with our mass media in Singapore.
Lady Melissa raises the point about a family-centric (basic unit of society=family) weltanschauung being at odds with a viewpoint of philanthropy to the rest of society.
I have to disagree with that point. It is not family-centric thinking which causes societal apathy. Rather it is apathy to society which causes THIS FORM OF family-centric thinking. If the importance of family was one borne out of genuine love for humanity (since obviously family does play an important role in the development of a child and hence a people and its thinking), how can there be any way one can say that it leads to the noblesse losing their oblige.
You raise the point about Billy Gates and his giving away of his fortune, and Warren Buffet. But surely that is not the case of argument as it is not because of a lack of family "values" (i cringe at the term). They have extremely strong familial bonds with members of their families.
To sum, unless I see a real methodological study on social mobility in Singapore, I am going to assume it is a dead fish.
And love for family and society are not exclusive, and in fact complementary.
Yixman,
Good, well-reasoned, intelligent post. We shall agree to disagree. :)
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