News Clips

Legend of Hang Tuah: fact or fiction?

2012-01-30T20:59:00.001+08:00

Jan 30, 2012

DEBATING MALAY HISTORY

By Salim Osman

SOME Malaysian roads have been named after him. Even a popular brand of coffee has his name. A medal for bravery was once created in his honour.

But legendary Malay warrior Hang Tuah never existed. He is just a myth. As were his four friends and Chinese princess Hang Li Po, who married the Sultan of Malacca in the 15th century.

'Hang Tuah, Hang Jebat and company were all mythical figures. There is no proof that they existed,' renowned historian, Emeritus Professor Khoo Kay Khim, told the Malaysian media two weeks ago.

The remarks were made during an interview on the country's history. It created quite a stir among Malaysians.

The tales of Hang Tuah are found in the Sejarah Melayu or Malay Annals, a semi-historical record of Malay history and the Hikayat Hang Tuah, regarded as a work of fiction of the 16th century.

The Sejarah Melayu was deliberately written on royal command with the intention of recording for future generations the accounts of the deeds and customs of the Malay rulers.

But the authors went a step further by portraying Malay kings as having divine origin and suggesting that Hang Tuah personified the undivided loyalty towards the ruler.

Hang Tuah, along with his four warrior friends Hang Jebat, Hang Kasturi, Hang Lekiu, and Hang Lekir served the Sultan of Malacca in the 15th century. Hang Li Po was the Chinese princess who became the fifth wife of the Sultan.

Many scholars believe that the character of Hang Li Po was created by the authors of Sejarah Melayu to glorify the Malacca sultan and his ties with the Chinese Emperor. There has been no record of her existence in the Ming Chronicles of the Ming Dynasty.

It is natural for those who learnt about the exploits of the warrior in schools in the 1970s and 1980s, to feel betrayed by the historian's remarks that Hang Tuah never existed. It leads Malaysians to wonder if there were other elements in Malaysian history which were myths too and had never existed.

Malaysians in general have been made to believe that the warrior was a historical figure during the height of the Malacca sultanate. Even the national museum in Kuala Lumpur has a bronze mural and other paraphernalia of Hang Tuah in its collection. Lending credence to the belief is the preservation of road names and a well said to have been built by Hang Tuah. There is even a grave said to be that of the warrior, and a village claiming to be his birth place in Malacca, where some villagers claim they are his descendants.

The legend of Hang Tuah has also been immortalised in films, as in the 1957 movie Hang Tuah with Malay entertainment icon P. Ramlee playing the title role, and in the 2004 Puteri Gunung Ledang with singer-songwriter M. Nasir as Hang Tuah.

Similar reverence has been shown in Indonesia where some roads, universities and a naval frigate were named after the famous warrior, as the character was also popular in classical Indonesian literature.

Whether or not Hang Tuah is a fact or fiction, the tales of the warrior are politically important for Umno, leader of the ruling Barisan Nasional, and other Malay rightwing groups today, as they have been in feudal societies of yore.

The stories of Hang Tuah and other tales in Malay history and literature have been used by Umno and other Malay nationalists as proof of the 'Malayness' of Malaysian history, buttressing their claim that the country is Malay.

Hang Tuah's famous quote 'Takkan Melayu hilang di dunia', or 'Malays will never vanish from the earth', has been the rallying cry of Umno to galvanise Malay support behind the party.

Malaysian academic Farish Noor, in his Facebook posting, observed that for decades the Hang Tuah myth was used 'as a vehicle for all sorts of nefarious and dubious ideological ends: as a testament to ethnic majoritarianism, as a primordial claim to land and belonging, as a means to proclaim ethnic dominance'.

The Hang Tuah story is also important because it runs deep in the national consciousness of many Malays who view the figure as a legendary warrior in Malay history.

The man and his friend Hang Jebat are seen as symbols of heroism and patriotism worth emulating by Malays today. Among royal circles, Hang Tuah represents Malay loyalty and deference to the rulers. Such loyalty strengthens the institution of Malay monarchy.

In a country where politics is always seen in racial terms, a seemingly innocuous suggestion that Hang Tuah is just a myth will be met by a spirited defence of the legend by Malay groups.

In fact, these groups had already been up in arms over a suggestion some years ago that the warrior could not have been Malay. Those casting doubt on his ancestry had pointed out that Hang Tuah shared the same surname as the Chinese princess, and that he practised a form of martial arts which Malays of his time had never seen before.

The suggestion was dismissed. This only shows one thing - the legend of Hang Tuah could well be more fiction than fact. But many Malays, including some academics, remain steadfast in their belief of their legend. For at stake is not only a historical fact; but notions of identity and nationality.

salim@sph.com.sg

Tuning out of radio waves as cancer cure

2012-01-29T22:00:00.001+08:00

Jan 28, 2012

DAEDALUS

By Andy Ho

AN EXCITED reader asked if it was possible to use radio waves to cure cancer, as reported in the British media.

A team of scientists led by Professor Boris Pasche of the University of Alabama at Birmingham in the United States says it has proof that low-intensity electromagnetic (EM) waves can cure cancer.

However, its findings, published in the British Journal of Cancer this month, are deemed amazingly implausible by experts. This is because EM waves carry too little energy to have any biological effect.

In 2009, the team published a study of 28 advanced cancer cases, six of whom responded to EM waves. Of these, one with metastatic breast cancer went into complete remission for 11 months while five with different cancers had partial remissions ranging from four to 34 months.

The EM gadget used to treat them looked like a bulky iPad with a coaxial cable coming out of it to terminate in a steel spoon the patient held in her mouth. Through that spoon was delivered low- intensity EM waves of specifiable frequencies for three hours thrice a day.

Last year, the team published another study of 41 patients with advanced liver cancer, of whom 14 had conditions which remained unchanged for six months, one had near-complete and three had partial remissions.

Now, the team has just demonstrated that EM waves can have actual biological effects on cells growing in a petri dish.

In the study just out, both healthy breast and liver cells, as well as breast and liver cancer cells, were subjected to EM waves at various frequencies.

The healthy liver and breast cells continued to grow undiminished but the growth of both types of cancer cells was significantly decreased by EM waves.

Specifically, in growth-suppressed liver cancer cells, genes called XCL2 and PLP2 were suppressed as well.

Interestingly, specific frequencies of EM waves appeared to be quite specific for specific cancers. Those that suppressed liver cancer cells did not impact breast cancer cells while those that suppressed breast cancer cells did not have any effect upon liver cancer cells.

However, these results threaten an article of faith in biophysics that the tiny amount of energy EM waves carry is not sufficient to break down the chemical bonds in DNA. Such breakdowns can lead to mutations, and thence perhaps cancer.

Since EM waves do not carry sufficient energy for such purposes, they cannot cause mutations and thus cancer. This is also why it is asserted that cellphones, all of which emit EM waves, are perfectly safe to use. By the same token, because they carry so little energy, EM waves cannot be used to cure cancer either. (By contrast, radioactive waves carry enough energy to cause mutations and thus cancer. Their energy, properly controlled, is used in radiotherapy to fight cancers.)

The Pasche claim is, in effect, that EM waves can have real biological effects however little energy they may carry. This is an extraordinary claim, which only extraordinary evidence can back up.

If this effect is not real, then possible explanations include scientific fraud and/or random chance effects.

Prof Pasche is already a well-published cancer biologist, so there is no reason for him to cook up data that jeopardises his reputation. But a junior team member might do so to make a name for himself. (Most of the grunt work in a lab is actually done and written up by subordinates, who are young PhDs.)

Here, one is reminded of Dr Jacques Benveniste (1935-2004), who published a 1988 paper in Nature about another hauntingly similar implausibility.

In some allergies, the antibody called anti-IgE causes some white blood cells called basophils to release histamine, which causes blocked or runny nose.

Then already a renowned immunologist, his lab supposedly showed that extremely dilute solutions of anti-IgE - so dilute it was pure water with no antibodies at all - could still make basophils release their histamine anyway.

His explanation was that water actually has memory, the very argument used to justify the practice called homeopathy. Nature published the article with the unusual disclaimer: 'Editorial reservation: Readers of this article may share the incredulity of the many referees... There is no physical basis for such an activity.'

Also, publication was conditioned on a Nature team being allowed to audit his lab and witness his experiments. Aided by Dr Benveniste's people, the Nature team also repeated his experiments under strict conditions in his own lab, but failed to replicate his astounding results.

Because he refused to retract his paper, Nature issued a report of its findings. The Benveniste lab had used inappropriate statistical methods while throwing out negative data. Moreover, contamination with anti-IgE had not been sufficiently prevented. That two co-authors were funded by a homeopathic manufacturer was unreported. His reputation in tatters, his lab eventually closed.

The lesson here is that contamination of experiments and selective use of favourable data, including random chance effects, can give researchers the results that look 'clean' enough for publication.

Thus, one has to be very sceptical of Prof Pasche's claims. Until his results are replicated at multiple centres, not too much hope may be placed on radio waves.

andyho@sph.com.sg

The creative power of one

2012-01-29T21:53:00.001+08:00

Jan 29, 2012

Introversion often fosters creativity by concentrating the mind on tasks in hand

By Susan Cain

Solitude is out of fashion. Our companies, our schools and our culture are in thrall to an idea I call the New Groupthink, which holds that creativity and achievement come from an oddly gregarious place. Most of us now work in teams, in offices without walls, for managers who prize people skills above all. Lone geniuses are out. Collaboration is in.

But there's a problem with this view. Research strongly suggests that people are more creative when they enjoy privacy and freedom from interruption. And the most spectacularly creative people in many fields are often introverted, according to studies by the psychologists Mihaly Csikszentmihalyi and Gregory Feist.

Such people are extroverted enough to exchange and advance ideas, but see themselves as independent and individualistic. They're not joiners by nature.

One explanation for these findings is that introverts are comfortable working alone - and solitude is a catalyst to innovation. As the influential psychologist Hans Eysenck observed, introversion fosters creativity by 'concentrating the mind on the tasks in hand, and preventing the dissipation of energy on social and sexual matters unrelated to work'.

In other words, a person sitting quietly under a tree in the backyard, while everyone else is clinking glasses on the patio, is more likely to have an apple land on his head.

(Newton was one of the world's great introverts: William Wordsworth described him as 'A mind for ever/ Voyaging through strange seas of Thought, alone.')

Solitude has long been associated with creativity and transcendence. 'Without great solitude, no serious work is possible,' Picasso said. A central narrative of many religions is the seeker - Moses, Jesus, Buddha - who goes off by himself and brings profound insights back to the community.

Culturally, we're often so dazzled by charisma that we overlook the quiet part of the creative process. Consider Apple. In the wake of founder Steve Jobs' death, we've seen a profusion of myths about the company's success. Most focus on Mr Jobs' supernatural magnetism and tend to ignore the other crucial figure in Apple's creation: a kindly, introverted engineering wizard, Mr Steve Wozniak, who toiled alone on a beloved invention, the personal computer.

Rewind to March 1975: Mr Wozniak believes the world would be a better place if everyone had a user- friendly computer. This seems a distant dream - most computers are still the size of minivans, and many times as pricey. But Mr Wozniak meets a simpatico band of engineers calling themselves the Homebrew Computer Club. The Homebrewers are excited about a primitive new machine called the Altair 8800.

Mr Wozniak is inspired, and immediately begins work on his own magical version of a computer. Three months later, he unveils his amazing creation for his friend, Steve. Mr Wozniak wants to give his invention away free, but Mr Jobs persuades him to co-found Apple Computer.

The story of Apple's origin speaks to the power of collaboration. Mr Wozniak wouldn't have been catalysed by the Altair but for the kindred spirits of Homebrew. And he'd never have started Apple without Mr Jobs.

But it's also a story of solo spirit. If you look at how Mr Wozniak got the work done - the sheer hard work of creating something from nothing - he did it alone. Late at night, all by himself.

Intentionally so. In his memoir, Mr Wozniak offers this guidance to aspiring inventors: 'Most inventors and engineers I've met are like me ... they live in their heads. They're almost like artists. In fact, the very best of them are artists. And artists work best alone... I'm going to give you some advice that might be hard to take. That advice is: Work alone... Not on a committee. Not on a team.'

And yet the New Groupthink has overtaken workplaces, schools and religious institutions. Anyone who has ever needed noise-cancelling headphones in her own office or marked an online calendar with a fake meeting in order to escape yet another real one knows what I'm talking about. Virtually all American workers now spend time on teams and some 70 per cent inhabit open-plan offices, in which no one has 'a room of one's own'.

Schools have also been transformed by the New Groupthink. Today, elementary school classrooms in the United States are commonly arranged in pods of desks, the better to foster group learning. Even subjects such as mathematics and creative writing are often taught as committee projects.

Some teamwork is fine and offers a fun, stimulating, useful way to exchange ideas, manage information and build trust.

But it's one thing to associate with a group in which each member works autonomously on his piece of the puzzle; it's another to be corralled into endless meetings or conference calls conducted in offices that afford no respite from the noise and gaze of co-workers.

Solitude can even help us learn. According to research on expert performance by the psychologist Anders Ericsson, the best way to master a field is to work on the task that's most demanding for you personally. And often the best way to do this is alone. Only then, Mr Ericsson told me, can you 'go directly to the part that's challenging to you. If you want to improve, you have to be the one who generates the move. Imagine a group class - you're the one generating the move only a small percentage of the time'.

Conversely, brainstorming sessions are one of the worst possible ways to stimulate creativity. The brainchild of a charismatic advertising executive named Alex Osborn who believed that groups produced better ideas than individuals, workplace brainstorming sessions came into vogue in the 1950s.

'The quantitative results of group brainstorming are beyond question,' Mr Osborn wrote. 'One group produced 45 suggestions for a home-appliance promotion, 56 ideas for a money-raising campaign, 124 ideas on how to sell more blankets.'

But decades of research show that individuals almost always perform better than groups in both quality and quantity, and group performance gets worse as group size grows. The 'evidence from science suggests that business people must be insane to use brainstorming groups', wrote the organisational psychologist Adrian Furnham.

'If you have talented and motivated people, they should be encouraged to work alone when creativity or efficiency is the highest priority,' he said.

The reasons brainstorming fails are instructive for other forms of group work, too. People in groups tend to sit back and let others do the work; they instinctively mimic others' opinions and lose sight of their own; and, often succumb to peer pressure.

The one important exception to this dismal record is electronic brainstorming, where large groups outperform individuals; and the larger the group the better. The protection of the screen mitigates many problems of group work. This is why the Internet has yielded such wondrous collective creations.

Marcel Proust called reading a 'miracle of communication in the midst of solitude', and that's what the Internet is, too. It's a place where we can be alone together - and this is precisely what gives it power.

Susan Cain is the author of the forthcoming book Quiet: The Power Of Introverts In A World That Can't Stop Talking.

The New York Times

5 myths about China's power

2012-01-29T21:52:00.001+08:00

Jan 28, 2012

By Minxin Pei

AS CHINA gains on the world's most advanced economies, the country excites fascination as well as fear, particularly in the United States, where many worry that China will supplant America as the 21st century's superpower. Many ask how China has grown so much so fast, whether the Communist Party can stay in power and what Beijing's expanding global influence means for the rest of us. To understand China's new role on the world stage, it helps to rethink misconceptions that dominate Western thinking.

China's rise is marginalising American influence in Asia

Just the opposite. Certainly, China's power in Asia is growing; its economy is now the biggest in the region, and the country is the largest trading partner for every Asian nation. And its military modernisation has made the People's Liberation Army a more lethal fighting force.

But instead of marginalising or supplanting US influence, China's expanding power is pushing most Asian countries closer to Washington and elevating America's status. Uncle Sam's presence is still welcome because it prevents a regional power from dominating its neighbours and promotes strategic balance. Today, the more power China gains, the more critical the US commitment to the region becomes, and the greater the influence Washington exercises.

No surprise, then, that when the Obama administration recently announced a strategic pivot towards Asia, China bristled while most countries in the region felt reassured and applauded quietly. Today, US security ties with key Asian nations such as India, Japan, South Korea and even Vietnam are better than ever.

China's massive foreign exchange reserves give it huge clout

China owns roughly US$2 trillion (S$2.5 trillion) in US Treasury and mortgage-backed debt and US$800 billion in European bonds. These massive holdings may cause anxiety in the West and give Beijing a lot of prestige and bragging rights, but they have not afforded China a lot of diplomatic sway.

The much-feared scenario of China dumping US sovereign debt on world markets to bend Washington to its will has not materialised, and probably won't. China's sovereign wealth fund, which invests part of those reserves, has favoured low-risk assets (such as a recent minority stake in a British water utility) and has sought to avoid geopolitical controversy. And in the European debt crisis, China has been conspicuously absent.

China's hard currency hoard adds little punch to its geopolitical power because its stockpile results from a growth strategy that relies on an undervalued currency to keep exports competitive. If China threatens to reduce its investment in US debt, it will either have to find alternative investments (not an easy task these days) or export less to the US (not a good idea for Chinese manufacturers). With so much invested in Western debt, China would suffer disastrous capital losses if it spooked financial markets.

The Communist Party has the Internet under control

In spite of its huge investments in technology and manpower, the Communist Party is having a hard time taming China's vibrant cyberspace. While China's Internet-filtering technology is more sophisticated and its regulations more onerous than those of other authoritarian regimes, the growth of the nation's online population (now surpassing 500 million) and technological advances (such as Twitter-style microblogs) have made censorship largely ineffective. The government constantly plays catch-up; its latest effort is to force microbloggers to register with real names. Such regulations often prove too costly to enforce, even for a one-party regime.

At most, the party can selectively censor what it deems 'sensitive' after the fact. Whenever there is breaking news, whether a corruption scandal, a serious public safety incident or a big anti-government demonstration, the Internet is quickly filled with coverage and searing criticisms of the government. By the time censors restore some control, the political damage is done.

China's regime has bought off the middle class

Hardly. Three decades of double-digit economic growth has elevated about 250 million to 300 million Chinese, mainly urban residents, to middle-class status. Since the regime crushed the Tiananmen democracy movement in 1989, the middle class has been busy pursuing wealth, not demanding political freedoms. But this does not mean this group has thrown its support behind the ruling party. There is a world of difference between political apathy and enduring loyalty.

At most, the Chinese middle class tolerates the status quo because it is a vast improvement over the totalitarian rule of the past, and because there is no practical or immediate alternative. But as the Arab Spring shows, a single event or a misstep by authoritarian rulers can transform apathetic middle-class citizens into radical revolutionaries.

That can happen even without a precipitating economic crisis. Today, China's middle class is becoming more dissatisfied with inequality, corruption, unaffordable housing, pollution and poor services.

The party knows it cannot bank on middle-class support. Such insecurity lies behind its continuing harshness towards political dissent.

China's rapid economic growth shows no signs of slowing

The pace of growth is already cooling from above 10.3 per cent in 2010 to 9.2 per cent last year, and the downward shift will accelerate in future years.

The Chinese economy will encounter strong headwinds. The population is ageing; citizens aged 60 and older accounted for 12.5 per cent of the population in 2010 and are projected to reach 17 per cent in 2020. This will reduce savings and the supply of workers, and raise the costs of pensions and health care. If China wants to keep its high growth rate, it must graduate to making Chinese-designed high-tech and high-value-added products. It will need more innovation, which demands less government control and more intellectual freedom.

Most critically, the investment-driven and state-led economic model responsible for China's rapid growth must give way to a more efficient, consumption-driven, market-oriented model. Such a shift will be impossible without downsizing the state and making the party accountable to the Chinese people.

The writer is director of the Keck Centre for International and Strategic Studies at Claremont McKenna College.

WASHINGTON POST

'Inflation-proofing' CPF savings

2012-01-25T00:59:00.001+08:00

Jan 23, 2012

By Basant K. Kapur

THIS year's economic outlook is more uncertain than usual on account of global and regional imponderables.

The United States economy is improving, but whether it is sustainable is an open question. The euro zone debt problem has yet to be resolved, and the extent to which austerity measures will be imposed and their consequences remain to be seen. Japan's outlook is uncertain, China may get a soft landing, and India appears mired in political gridlock. Singapore has registered negative quarter-on-quarter growth in the last quarter of 2011. Whether there will be a technical recession this quarter, or economic restructuring and possible external improvements will 'carry us through', also remains to be seen.

Against this backdrop, policymakers should attend to three broad areas - one relatively short-term and the others somewhat longer-term. Flexibility and contingency planning are needed in this year's Budget. The economy may grow reasonably well in the coming quarters, or it might slip into recession. Infrastructural plans and other improvements should be formulated well in advance, and their implementation - whether to be brought forward or delayed - made contingent upon the economic situation, to the extent practicable. We should 'keep our powder dry', and be able to institute the requisite policy changes quickly in response to the unfolding situation.

Second, from a longer-term standpoint, a wide range of policy measures has been instituted (or reinforced) after last year's general election - in housing, health care, labour and immigration, the social safety net, and others - with more being contemplated.

These are very welcome developments, but the proof of the pudding is in the eating. We need to assess over time whether the measures are achieving the desired effects. Is housing actually becoming more affordable? Are our bottom 20 per cent actually getting better off, in both absolute and relative terms? Is the MRT system's congestion and overcrowding being mitigated? And so on. There is a need for continual monitoring and evaluation of policy initiatives and if they fall short, further measures will be needed.

Thirdly, the issue of inflation and the real returns (nominal returns minus the inflation rate) on Singaporeans' CPF savings. In recent years, there have been two sharp spikes in the consumer price index (CPI) inflation rate - 6.61 per cent in 2008, and 5.05 per cent in January-November 2011. [The Monetary Authority of Singapore's core inflation measure, which among other things excludes accommodation costs, appears less appropriate since significant amounts of Central Provident Fund (CPF) balances are utilised for housing purchases].

In those years, the real return on Ordinary Accounts (nominal return was 2.5 per cent) was negative, as indeed were the real returns on Special, Medisave and Retirement Accounts. If inflation returns to low levels relative to nominal interest on CPF balances, then the foregoing spikes are not a significant concern. However, in the current unsettled environment, low inflation cannot be ensured. What if inflation hovers between 3 per cent and 5 per cent, and nominal interest rates remain low, imposing negative real returns? Should we have contingency plans for such a scenario?

A related issue deserves a brief comment. Currently, the CPF Board invests mostly in Singapore government bonds, and the general understanding is that these funds form part of the Government of Singapore Investment Corporation's (GIC's) total financial resources, which are invested in a diversified portfolio of assets worldwide. In recent years, up to half of the net investment income (NII) earned from abroad by the Government (including presumably by the GIC) can be used in its annual budgetary outlays. Does the NII arise from the investment of the Government's total financial resources, including from the CPF? Transparency on this would be enlightening.

As mentioned before, the CPF Board invests largely in government bonds, with returns set in nominal terms. The Government should also consider issuing inflation-indexed bonds, as many countries such as the United States, the United Kingdom, Japan, Canada and France have done.

According to a factsheet issued by the CPF Board in October last year, the '10-year annualised real Ordinary Account rate' has averaged about 1.5 per cent over the post-1995 period, and this appears to be a reasonable rate at which to set the real interest rate on Ordinary Accounts (with that on Special, Medisave, and Retirement Accounts one percentage point higher). So if the CPF Board were to invest in inflation-indexed government bonds bearing these real rates of return, it could provide virtually the same real returns to its account-holders.

These would be non-marketed bonds, held to maturity by the CPF Board. The bonds' maturities should be chosen over time to match the likely schedule of net total withdrawals from the CPF by individuals. As such, fluctuations in the notional market prices of these bonds would not be of material consequence. 'Inflation-proofing' Singaporeans' CPF savings in this manner would be particularly beneficial if we face the prospect of negative real CPF interest rates for protracted periods under the current arrangements.

The 'inflation risk' would be transferred to the Government. But given the handsome long-term returns which the GIC, and possibly Temasek as well, had previously reported - an undue portion of which should not be used to finance budgetary outlays - such risk should be manageable. Inflation indexation is potentially highly beneficial and deserves to be considered further.

The writer is a professor and director of the Singapore Centre for Applied and Policy Economics, Department of Economics, National University of Singapore.

Romney reports tax bill of $7.9 million for 2010 and 2011

2012-01-25T00:31:00.002+08:00

Jan 24, 2012

TAMPA/WASHINGTON (REUTERS) - Republican presidential candidate Mitt Romney released tax records on Tuesday indicating he will pay US$6.2 million (S$7.85 million) in taxes on a total of $45.2 million in income over the years 2010 and 2011.

Bowing to increasing political pressure to provide more detail about his vast wealth, the former private equity executive released tax returns indicating he and his wife, Ann, paid an effective tax rate of 13.9 per cent in 2010. They expect to pay a 15.4 per cent rate when they file their returns for 2011.

Mr Romney's tax rate is below that of most wage-earning Americans because most of his income, as outlined in more than 500 pages of tax documents, flows from capital gains on investments.

Under the United States tax code, capital gains are taxed at 15 per cent, compared with a top tax rate of 35 per cent for wage earners.

Mr Romney released the tax returns after a week in which his chief rival for the Republican presidential nomination, former House of Representatives Speaker Newt Gingrich, questioned whether Mr Romney was hiding information about his finances and cast him as being out of touch with most Americans.

Mr Gingrich's attacks on Mr Romney helped him upset the former Massachusetts governor in the South Carolina primary on Saturday.

Since then, Mr Romney has vowed to be more aggressive in returning fire.

He has launched a series of attacks questioning Mr Gingrich's character, judgment and lucrative work as a Washington consultant, and released his tax returns to try to nullify Mr Gingrich's criticisms on that front.

The tax rates Mr Romney reported paying could add fuel to a national debate over the fairness of the tax code, and coincides with broader concerns about income inequality symbolised by the Occupy Wall Street movement.

Mr Romney's campaign officials stressed that his tax rate is based mostly on income from investments that are held in a blind trust. Mr Romney's holdings include an undisclosed amount in funds based in the Grand Cayman Islands and other overseas entities.

Mr Romney advisers stressed that the holdings in the Caymans - along with those in a Swiss bank account that was closed in 2010 after an investment adviser decided it could be politically embarrassing to Mr Romney - were reported on tax returns and were not vehicles to avoid taxes.

They also stressed that Mr Romney, whose holdings are in three blind trusts, makes no decisions as to how his money is invested.

Regardless, the emerging picture was of a man of great means who contributes mightily to charity. The documents showed he and his wife contributed US$7 million in charity over the two years, much of it going to his Mormon church.

Mr Romney, whose estimated net worth is between US$190 million and US$250 million, is among the wealthiest Americans ever to seek the presidency.

[The first thing to note is that if Romney is elected president, the US$400,000 a year salary is not the reason he is seeking the presidency.He neither needs the money or wants it. He pays more in taxes and gives more to charity than what he would earn as a president.

The second thing to note is that a flat tax on capital gains values wealth make with cash, than with effort. Capital gains tax should have a deductible for say the first $60k or $200k (depending on how generous you want to be, but after that, the tax rate should not be less than income from work.

Assuming a retiree has invested wisely, if he is able to generate $60k in annual capital gains, that can finance his retirement more than comfortably. Gains beyond that is wealth that should be taxed.

In comparison, Obama tax for 2010 was US$1.8m for his income of US$5.5m or about 33% tax rate. Most of his income is from book sales.]

New T-ray technology could help enable Star Trek-style “tricorders”

2012-01-24T22:03:00.001+08:00

By Darren Quick

From Gizmag

January 22, 2012

We recently looked at one of the potential contenders in the US$10 million Qualcomm Tricorder X PRIZE, which as the name suggests, was inspired by the medical tricorder of Star Trek fame. Now scientists have developed a new way of creating Terahertz (THz) or T-rays, which they say could help make handheld devices with tricorder-like capabilities a reality.

T-rays are electromagnetic waves in the far infrared part of the spectrum that have a wavelength hundreds of times longer than visible light. With their ability to penetrate fabrics and plastics, T-rays are already used in full-body security scanners at many airports to detect weapons, drugs and explosives. But with T-rays being non-ionizing - unlike X-rays - and every molecule having its own signature in the THz range, it is their potential for medical and other applications that have the researchers excited.

Not only can THz waves detect biological phenomena, such as increased blood flow around tumorous growths, but they can also sense molecules such as those present in cancerous tumors and living DNA. Additionally, T-rays can also be used in gas pollution monitoring and non-destructive testing of semiconductor integrated circuit chips.

While we've seen compact T-ray spectrometers before, researchers from the Institute of Materials Research and Engineering (IMRE) at the Agency for Science, Technology and Research (A*STAR) in Singapore and Imperial College London in the UK say they have developed a way to produce stronger and more efficient T-rays at room temperature conditions in a much stronger directional beam than was previously thought possible. It is this breakthrough they claim will allow future T-ray systems to be smaller, more portable, easier to operate, and much cheaper.

The team produced a strong beam of T-rays by shining light of differing wavelengths on a pair of electrodes, which took the form of two pointed strips of metal separated by a 100 nanometer gap placed on top of a semiconductor wafer. This tip-to-tip nano-sized gap electrode structure acts like a nano-antenna to significantly enhance the THz field and amplify the THz wave generated. The researchers say that arrays of their new nano-antennas can generate a power output that is 100 times higher than the output of commonly used THz sources, which provides T-ray imaging devices with more power and higher resolution. As the wavelength of the T-rays can be tuned, the researchers are able to create a beam that is useable in the scanning technology.

"T-rays promise to revolutionize medical scanning to make it faster and more convenient, potentially relieving patients from the inconvenience of complicated diagnostic procedures and the stress of waiting for accurate results," said study co-author, Stefan Maier. "Thanks to modern nanotechnology and nanofabrication, we have made a real breakthrough in the generation of T-rays that takes us a step closer to these new scanning devices. With the introduction of a gap of only 0.1 micrometers into the electrodes, we have been able to make amplified waves at the key wavelength of 1000 micrometers that can be used in such real world applications."

The team's paper, "Greatly enhanced continuous-wave terahertz emission by nano-electrodes in a photoconductive photomixer," is published in the journal Nature Photonics.

How Taiwan's Democracy Threatens China

2012-01-24T01:04:00.001+08:00

Jan 21, 2012

Commentary

Add another B to the 'Taiwan threat'
Ballots, that is. Smooth election on island raises tough questions in China

By Peh Shing Huei

BEIJING: For more than 60 years, the ruling Chinese Communist Party (CCP) has viewed Taiwan as the source of two major threats to the mainland. Pithily put, they are: bullets and break-up.

In the early decades after the end of the Chinese civil war, bullets were the chief concern as the communists feared a military invasion by Generalissimo Chiang Kai-shek's Nationalist troops with the help of the Americans. To 'retake the mainland' (fan gong da lu) was the defeated Kuomintang leader's war cry as he and his defeated forces retreated to the island of Taiwan in 1949.

But as Taiwan broke free of the shackles of martial law in the 1980s, the mainland was confronted with the second feared B: break-up, as pro-independence leanings grew on the island, which Beijing regards as a breakaway province.

Most recently a third B has emerged in Taiwan to join the list : ballots. Specifically, it has to do with the outcome of the Taiwanese presidential election last weekend and its significance for China.

The election - the island's fifth successive one - exhibited many signs of a maturing democracy. It was a sharp contrast, a challenge even, to the authoritarian controls on the mainland.

The vigour of the contest, with its noisy campaigns, televised debates and rousing rallies, was witnessed by millions of Chinese across the strait. Many took note too of how it concluded after all the sound and fury. As a Chinese netizen asked: 'The textbooks teach us (Western) democracy is not suitable for China, but isn't Taiwan part of China?'

That observation highlighted a striking contradiction in the Communist Party's propaganda, placing two of its key tenets at odds with each other. On the one hand, the CCP has insisted that China is not suited for Western-style democracy. But on the other hand, it has maintained that Taiwan is a part of China.

As the island's democracy matures, the CCP will have to find a way of getting out of the corner in which it has painted itself ideologically.

In the recent past, Beijing could point to the messiness of Taiwanese democracy as a good example of why it is folly to go down the Western route of voting for one's leaders.

But last Saturday's polls have shown that chaos, and violence even, are not in-built traits of democracy on the island.

Both the incumbent, Mr Ma Ying-jeou, and opposition leader Tsai Ing-wen steered clear of personal attacks, focusing instead on which side is better equipped to build up Taiwan's economy and improve the people's lot.

Compared to elections past, negative campaigning on the ground was much reduced. Thankfully too, voters were spared histrionic last-gasp tactics of kneeling for votes and public sobbing.

Widespread fears of another shooting incident, which roiled the 2004 polls and sparked much controversy over its role in Mr Chen Shui-bian's election, were also not realised. What Taiwan got instead was a calm and dignified conclusion to a hard-fought contest.

Ms Tsai, who lost, conceded quickly and graciously when it became clear the results were not in her favour. 'I know a lot of supporters will feel heartbroken by what I have to say. But we still have to congratulate President Ma,' she said. 'We hope that in the next four years, he will listen to the voices of the people, govern with his utmost effort and treat every single citizen fairly. Please do not let the people down.'

No protests, no spiteful comments. The people of Taiwan have spoken and the candidates respected their choice. Ms Tsai took responsibility for her defeat by resigning as the chairman of the Democratic Progressive Party. Mr Ma was similarly gracious in victory, promising to hold semi-annual meetings with opposition leaders.

These developments did not go unnoticed by the mainland's 500 million-strong netizens. Millions watched the election online, marvelling at the real-time reporting of the vote count and how smoothly and safely the contest went. It was inevitable that comparisons were drawn with China's politics.

An online user by the nickname of Brother Xiang Times pointed not just to the fact that the Taiwanese had the ballot and mainland Chinese none, but also to other aspects of the relationship between the leaders and the led: 'Mr Ma had his whole family come out, with everyone under the spotlight working their butts off, begging for votes. On this side (of the strait), any information about the family members of President Hu (Jintao) is considered 'state secret'; if one uploads a photo of his daughter, it would be immediately deleted.'

The online clamour in support of the Taiwan model grew so loud that the state media stepped in, with the Global Times dismissing the validity of the comparisons. 'The systems designed for modern countries are not exactly suitable for gigantic countries like China,' it said in its editorial on Tuesday. In short, China is too big for democracy.

But Taiwan's presidential election has shown that democracy is not some alien and incompatible Western import, and that is leading many mainlanders to raise discomforting questions for their leaders.

One Chinese netizen asked pointedly: 'The Taiwanese people already govern their own country, how long do the Chinese people have to wait?'

The 'China exceptionalism' argument against holding free and fair elections is consistent with the CCP's views on politics. But with Taiwan as a counter-example, it will be increasingly tricky for Beijing to convince its people that what is practised and celebrated on the island is somehow not appropriate for the mainland.

Short of saying Taiwan is fundamentally different - which would then raise the even more unacceptable issue of secession - Beijing has to consider political reforms if it wants to realise its dreams of a grand reunion with the island.

shpeh@sph.com.sg

[Interesting commentary and analysis. Taiwan may "win" by spreading democratic ideals to the mainland, and the Communist Party on the mainland will either have to explain or adapt. Adapt might be easier. Again, they may turn to Singapore for inspiration as to how to implement their ideas. Or not.]

Boom, bust or a slow burn?

2012-01-17T23:34:00.000+08:00

Nov 1, 2011

Commentary

Slower growth could be tougher to manage than a short, sharp recession

By Robin Chan

HERE'S something to ponder: Could a bout of slow growth possibly be more painful than the boom and bust of a severe recession?

That question has arisen as the Singapore economy faces a period of slowing growth. The Monetary Authority of Singapore last week said the economy would likely 'stall' for several quarters before picking up late next year.

It predicted that next year, Singapore would grow below its potential rate of 3 per cent to 5 per cent. If so, this would be the third time in five years Singapore fails to hit its growth potential of 3 per cent to 5 per cent.

A slowdown from 5 per cent to less than 3 per cent is nothing like the sharp, deep contraction in 2009. That was when the economy was slated to shrink by more than 6 per cent in the first half of the year, but eventually fell just 0.8 per cent for the full year.

While some economists would argue that a gradual slowdown is less painful than a recession, others like economist Irvin Seah from DBS Bank say it is like choosing between a heart attack and a slow death.

They warn that this round of slower growth may prove as painful as the previous recession for two reasons. First, the effects will be felt across the board as fewer jobs are created, unemployment creeps up, and inflation persists.

Second, it will last a whole lot longer. As Prime Minister Lee Hsien Loong put it starkly over the weekend, Singapore is past its 'adolescent' phase of shooting up 5 per cent to 7 per cent each year. In this different mature phase, hitting 3 per cent to 4 per cent is 'not bad'.

Like it or not, a new era of slow growth is now upon Singapore. Economists warn that the effect of this will be longer and more widespread than the short, sharp recession of 2009 when job growth plunged and unemployment rose.

This time, while the local economy is not quite flatlining, the anaemic growth next year could see unemployment creep up from the 2 per cent rate at the year end, to hover around 2.3 per cent for a while, said CIMB economist Song Seng Wun.

Mr Song has slashed his job creation forecast next year by 20,000 jobs to between 60,000 and 65,000 new jobs. This is compared with an estimated 95,000 new jobs that will be created this year.

With slower growth and an easing jobs market, wage growth will also cool, which will affect many workers.

Another painful side effect for Singaporeans: Inflation may be trickier to beat in a slowdown compared with a recession.

In 2009, the global recession saw record high inflation finally come off, as companies reduced production sharply and consumers cut back on spending, causing prices to fall quickly. Inflation fell from 6.6 per cent in 2008 to 0.6 per cent in 2009.

But slow growth can ironically sustain inflationary pressures. Companies continue to produce and households continue to consume, keeping up demand and hence prices, even though growth is already slowing.

Bank of America-Merrill Lynch's Dr Chua Hak Bin has forecast inflation to average 5.2 per cent this year and 3.9 per cent next year, above the long-term average inflation rate of about 2 per cent.

An inflation rate that refuses to go down when growth slows makes it more challenging for Singapore's central bankers to manage monetary policy as they have to watch both inflation and growth.

This was demonstrated by the Monetary Authority of Singapore's recent decision to keep the Singdollar on an appreciation path, albeit a more gradual one. A strong Singapore dollar makes imports cheaper and helps bring down price levels. But it also makes exports more expensive and less competitive, hurting firms and hence growth.

If wage growth is slow and prices take a long time to fall, the purchasing power of Singaporeans may also be eroded.

Is there a way out of the slow growth conundrum? Unfortunately, economists say that looking ahead, there will be no 'easy growth' for Singapore.

There appears to be no spark, as there was in 2009 with the opening of the two integrated resorts, to jumpstart the economy. Those contributed more than half of the $7.9 billion in value-added to the economy last year from tourism. A shift in policy to tighten the tap on foreign workers may also constrain growth.

Nor can Singapore rely on the electronics upcycle, which last year fuelled an exceptional boom in manufacturing. The electronics upswing has run its course and the sector is contracting.

The drugs sector which expanded early last year, is also notoriously volatile.

Trade-dependent Singapore is not getting much of a helping hand from the major economies either. The green shoots of recovery from the global recession never really blossomed into anything sustainable, and the major economies are slowing down, including China.

Growth going forward will therefore be more difficult and will have to come from productivity enhancements, supported by government initiatives to retrain workers and subsidise technology investments, say economists.

And while there will be continued investments in promising sectors such as clean energy and aerospace, these will take time to realise their full potential.

In such an environment, policymakers have to make sure that a period of slow growth does not translate to the country just 'muddling through' - accepting slow growth as the inevitable reality of a maturing economy and the current global uncertainty, and not taking active steps to boost the economy and the living standards of Singaporeans in the long run.

As PM Lee said on Sunday: 'When you're an adolescent, you grow and shoot up inches every year; but when you're mature, you hope to grow, not necessarily taller, but wiser and better. We have to make that change of gear.'

Singapore not only needs to work harder to sustain a slowing rate of growth. It will also have to ensure that growth is of good quality - broad-based, and helping workers move up the value chain.

In short, slow growth may not sound quite as daunting as a recession for now.

But in the medium term, the challenges - and the adjustment and pain of change - will be no less difficult.

chanckr@sph.com.sg

Slow growth comes with its own perils

2012-01-08T23:47:00.002+08:00

Dec 27, 2011

SOME experts have opined that slow growth may not be bad, especially if it allows the Government to tackle some of the nation's woes ('The slow and steady way to grow'; Dec 16).

However, a drop in economic growth from 6 per cent to 3 per cent or 4 per cent would mean zero or negative growth for many companies. Employees of these companies may suffer a pay freeze or retrenchment.

Low growth would cause a multiplier effect in subsequent years. Future investments may be put on hold or trimmed.

When growth slows, there would be less government revenue for welfare services or for subsidising workers' training. One economist said some Western countries grow only at around 2 per cent and yet have good welfare systems. We can have that too, but are we prepared to pay higher taxes?

Also, unlike those countries, we have no natural resources.

A labour leader said that when the economy slows down, workers would have more time to go for training. If the setback the companies face is not a temporary one, would the companies still sponsor the training, and what purpose would the training serve?

An economist said that slow growth may not be bad if it helps narrow the wage gap. A manager with a $10,000 salary, who used to get a $500 salary increase, may now get only $200 because of the slowdown. But the tea lady who earns $800 is unlikely to get a similar increase. The income gap would still widen but perhaps at a slower pace.

Another expert opined that inflationary pressures could ease with slower growth. But when our economy slows down, our export earnings would drop and our exchange rate would suffer, causing imported goods to be dearer. The relationship between growth and inflation is not that straightforward.

It is unrealistic to expect the high growth of 8 per cent to 10 per cent to repeat in the future. On the other hand, slow growth of 3 per cent or lower over the long term would bring about new problems and constraints.

The most serious consequence is: Singapore would slowly lose its international standing and attractiveness as a modern city.

It would be a grave mistake if we voluntarily opted for slow growth when other regional cities might be striving for a growth of 8 per cent or higher. We could lag behind them, but must not be too far off.

Ng Ya Ken

Ben Bernanke spoke on the Economics of Happiness too. While GDP isn't everything, like money it may not buy you happiness, but it helps.

SATURDAY SPECIAL REPORT: Faces of 2012

2012-01-08T20:22:00.001+08:00

Dec 31, 2011

Chen Show Mao - Opposition pugilist

Like a silent but lethal pugilist in a wuxia film, he swept into the political arena and swiftly became one of the opposition's biggest stars.

The buzz around Workers' Party MP Chen Show Mao, 50, began in March when word went around that the party had netted a 'star catch'. It turned out to be the top corporate lawyer with a string of degrees from Oxford, Harvard and Stanford universities.

His donning of WP colours was a milestone, showing the opposition too can boast candidates as qualified as those from the People's Action Party. Alongside party leaders Low Thia Khiang and Sylvia Lim, he went on to make history as part of the WP team that in May won Aljunied GRC, the first GRC to be snared by the opposition.

His celebrity aura still lingers. A deft user of social media, Mr Chen's each post on his Facebook page gets hundreds of 'likes' and comments. But 2012 will be a test of his mettle as the glow from his team's election victory fades and the WP MPs get used to the routine of parliamentary sittings and running a GRC from day to day.

Thus far, Mr Chen, who quit his job at international law firm Davis Polk & Wardwell in July, has shown himself to be an astute politician. He has tapped into a vein of discontent against the ruling party and its policies, inspiring many who think Singapore's political system can and should have more alternative voices.

He also delivered a soaring maiden speech when Parliament opened in October, laying out a vision of the WP role in the House.

Still, Mr Chen has mainly spoken of his political aspirations in broad strokes, and has remained cautious in offering specific policy ideas. All eyes will thus be on him next year when he delves into policies in Parliament speeches and tends to residents in his ward.

Offering a hint of his aspirations, he says in an e-mail: 'I hope that in 2012 I will learn to serve better both precinct and Parliament.

'My new year wish for Singapore is: inclusive Growth + growing Inclusiveness. For Singaporeans, peace of mind. For all, peace on Earth.'

ANDREA ONG

Chan Chun Sing - Next PM?

From a young age, Mr Chan Chun Sing has been a high-flier. A President's Scholar at 18, he became Chief of Army at 40. Now, at 42, he is one of the youngest ministers to be appointed to the Cabinet.

This has fuelled talk that the Acting Minister for Community Development, Youth and Sports (MCYS) is a front-runner to become the next prime minister. Prime Minister Lee Hsien Loong aims to step down by 2020.

While these are early days, observers concur that his performance has been promising. They hail recent MCYS plans - such as more resources to support services for the elderly, initiatives to help the disabled and improving the childcare sector - for delivering welcome government aid. Those who have worked with the Cambridge economics graduate speak of his sharpness in analysing issues.

His portfolio gains special significance next year as a slowdown looms and demand for social aid increases. Mr Chan says he wants to make the social service sector more effective, and to achieve economies of scale while maintaining its 'personal touch'.

Meanwhile, the challenge of winning the support of more critical younger Singaporeans continues. He is making some headway, engaging young Singaporeans and bloggers in informal dialogues to discuss issues ranging from problem gambling to the role of the media.

The year has not been without missteps. An 'army-style' speech, peppered with Hokkien and Malay phrases, at a People's Action Party (PAP) event in April drew derision from netizens. The self-professed introvert says he has had to work at public communications.

Asked about talk that he could be the next prime minister, he demurs. 'Times or circumstances change and you never know what sort of leaders you need. The PAP's job is to groom a group of leaders that is cohesive and when the times change, you have one of them with the necessary skill set and the rest are there to support,' he says. 'No point anointing a crown prince and the rest of the team are not there.'

CAI HAOXIANG

Insight: What price a minister? 42 years of controversy

2012-01-08T20:15:00.003+08:00

Straits Times, Jan 6, 2012

Insight looks through records of parliamentary debates to find out when ministerial pay first became a contentious issue, and how the debate has shifted over the years

By Andrea Ong

1970

MINISTERS' salaries are raised for the first time in independent Singapore, from $2,500 a month to $4,500.

Their wages were previously frozen to set an example of wage restraint for other Singaporeans in the young country.

Prime Minister Lee Kuan Yew tells Parliament that the salaries are being raised because he wants to appoint newly elected MP Hon Sui Sen, who used to head the Development Bank of Singapore, as the Finance Minister.

Earlier that year, Law Minister E.W. Barker had asked to leave politics as he could not afford his mortgage, which was based on his former income as a lawyer.

It is 'not fair' and 'unrealistic' to ask ministers to earn a wage 'out of all proportion to what they were earning outside the Government and whose family needs are also pressing', says Mr Lee in Parliament.

Also, it will be impossible to attract men of integrity and ability to become ministers with the existing pay once the current ministers leave office.

His own pay will, however, remain at $3,500 to demonstrate his commitment to the policy of no wage increases without productivity growth, he says.

1972

The National Wages Council (NWC) is formed and recommends the payment of the Annual Wage Supplement - the '13th month bonus'. It is adopted by the civil service and political appointment holders. One reason cited is to reduce the gap between public and private sector pay.

1973

First substantial wage increase for ministers and civil servants. Mr Lee's monthly pay goes from $3,500 to $9,500, while ministers' monthly pay rises from $4,500 to $7,000.

This kicks off a series of periodic pay increases for ministers and civil servants in subsequent years.

1981

By March this year, ministers' monthly pay has increased to $11,500. Mr Lee's pay is now $16,500.

Mr Lee notes in Parliament that times have changed since the 'revolutionary conditions' of the 1950s and 1960s, when people were more willing to sacrifice for their ideals and ministers could be recruited from both Singapore and Malaya.

Said Mr Lee: 'Now, our selection is confined only to Singaporeans. This makes it all the more crucial that some six to 10 of the best in the professions, from banking, and from industry, be recruited into the political leadership. Otherwise the Cabinet will simply not be equal to the more complex tasks of government.'

1985

During an extensive debate on ministerial salaries, Mr Lee introduces another reason for paying ministers a reasonably high sum: to keep Singapore's political leaders clean and corruption-free.

He was responding to Workers' Party (WP) MP J.B. Jeyaretnam's charge that ministers here were paid much more than their counterparts in Malaysia, Australia and Britain.

Mr Lee argues that ministers do not get hidden perks, unlike those in other countries. The clean wage paid to them helps preserve Singapore's 'most precious asset': an administration that is corruption-free.

Says Mr Lee: 'I am probably the highest paid in the Commonwealth if you go by official salary. But I am probably one of the poorest in the Commonwealth... I am one of the best paid and probably one of the poorest of the Third World prime ministers.'

Mr Lee says he has been a 'kept man' all his years in public service, with his wife and three brothers in the private sector all earning more than he does.

Mr Lee also challenges Mr Jeyaretnam, who earlier called for ministers to have a sense of proportion, to say by how much he would cut the total ministerial wage bill of $4.66 million.

To the reply of at least a third, Mr Lee retorts: 'So it will go down to $3.1 million... And then we all become honour-able men who have suddenly sacrificed ourselves for duty and public service. Let us have a sense of proportion.'

1989

Ministers' pay rises to a gross monthly sum of $28,644. The prime minister's gross monthly pay is $49,608. Variable bonus is raised by half a month. A performance bonus of up to two months' pay is introduced for the first time.

Also for the first time, the Government introduces 'make-up pay' to attract talent from the private sector. When such people join as new ministers, they can be paid up to 90 per cent of the difference from their old wage for up to two terms of office. This draws much criticism from MPs.

The policy has never been applied.

1993

An impending pay rise for ministers is announced in December.

Prime Minister Goh Chok Tong tells Parliament that while he cannot pay ministers what they would earn in the private sector, the pay must still be such that the younger generation would consider it worth sacrificing their previous comforts and privacy for.

He is already finding it increasingly difficult to persuade talented individuals to become ministers, he says.

While acknowledging the political cost of the pay increase, Mr Goh said: 'If we do not pay ministers adequately, we will get inadequate ministers. If you pay peanuts, you will get monkeys for your ministers. The people will suffer, not the monkeys.'

1994

After the pay increase kicks in, ministers' gross monthly pay is $64,000, and Mr Goh's, $96,000.

In January, Senior Minister Lee Kuan Yew proposes a formula to peg ministers' pay to private sector incomes. Such a formula removes the need to justify pay revisions every few years as adjustments based on income tax figures could be made automatically each year.

'Ministers' pay will then go up or down with the private sector, and never get seriously out of line,' said Mr Lee.

In October, a White Paper on 'Competitive salaries for competent and honest government' is presented to Parliament.

It proposes a benchmark which sets a junior minister's pay at two-thirds the average principal income of the top four earners in six professions: bankers, accountants, engineers, lawyers, local manufacturing companies and multinational companies.

The one-third discount would be a 'visible demonstration of the sacrifice involved in becoming a minister'.

Three days of intense debate follow. Many backbenchers, including People's Action Party (PAP) MPs Wang Kai Yuen and Tan Cheng Bock and opposition MP Ling How Doong, express discomfort with putting a price to public service as ministers are not the same as top private sector earners.

Opposition MP Chiam See Tong and Nominated MP Walter Woon argue that ministers should be paid enough to lead a comfortable lifestyle but should not compete with top earners. Mr Chiam suggests a monthly pay of $50,000 for ministers.

1995

In January, an independent panel sets the prime minister's pay at twice that of the most junior minister - a rule of thumb still in place today. Mr Goh, who earns $1.15 million a year, would see his pay increase to $1.6 million.

He also decides to forgo any salary increase for himself for five years.

In October, Dr Tony Tan returns to Cabinet as deputy prime minister and labour minister after having left in 1991 for OCBC Bank. He declines Mr Goh's offer of make-up pay, saying: 'I think that there has to be a financial sacrifice when one goes into the Government. I don't think that it is conscionable for me to expect the Government to pay me what I'm now getting at the bank.'

1997-1999

Asian financial crisis. Ministers' pay is frozen even though the benchmark rises. They take an extra pay cut in 1997 when employers' Central Provident Fund (CPF) contribution is slashed from 20 to 10 per cent to keep the economy competitive.

2000

Extensive revision of the salary structure for ministers and civil servants. Junior ministers' pay lags behind at just 10 per cent of the benchmark. The benchmark itself is found to be too narrow and unrepresentative.

The benchmark for a junior minister's pay is changed to two-thirds of the median income of the top eight earners in six professions.

The new formula considers a broader sample - the top 48 earners instead of the previous 24. And to avoid being skewed upwards by a few extremely high earners, it uses median instead of average income and only considers half of the stock options awarded to the top earners.

The previous fixed salary points for ministers are converted to salary ranges. Junior ministers are now appointed at the MR4 range, a system still in place today.

The variable component of ministers' pay is increased from 30 to 40 per cent. This way, a larger part of a minister's pay will depend on his performance and the state of the economy, said Deputy Prime Minister Lee Hsien Loong.

For the first time, a new gross domestic product-related bonus of up to two months is introduced under the ministers' variable pay. It will later range from zero to six months.

The performance bonus of ministers also rises to five months' pay, from an average of four months' pay.

However, the President, Prime Minister and Senior Minister remain at fixed salary points and receive fixed bonuses.

After the revision, the Prime minister receives a yearly pay of $1.94 million and a junior minister, $968,000.

Again, the topic is hotly debated in the House. Many MPs criticise the timing of the raise, which comes after a transport fare hike and when workers' CPF cuts have not been restored.

Mr Chiam repeats his 1994 call for moderation and a monthly salary of $50,000 for ministers - enough to pay for a bungalow, servants, two cars, annual holidays and their children's education.

2001-2006

Ministers' salaries are cut twice, once in November 2001 after the 9/11 terrorist attacks, and once in July 2003 after the Sars outbreak. They are restored in 2004 and 2005.

2007

Another salary revision. Ministers' pay now stands at only 55 per cent of the benchmark, and the Government moves to raise it to 73 per cent by the year end.

The variable portion of ministers' annual pay rises to 47 per cent - nearly half of their annual package.

The traditional car allowance is scrapped, but performance bonus is increased to a typical seven months, up from five months before.

The GDP bonus is also raised. It can now range from zero to eight months.

An acrimonious debate ensues in the House. Some PAP MPs say the raise is only pragmatic, while others like Ms Denise Phua and Mr Lim Biow Chuan argue in favour of the spirit of public service.

WP Non-Constituency MP Sylvia Lim says the average worker's monthly wage would be earned by ministers in two to three hours.

WP MP Low Thia Khiang argues that other countries like Finland and Denmark pay their ministers much less but do just as well as Singapore.

Minister Mentor Lee Kuan Yew rises for the first time in two years to rebut, saying that Mr Low's comparisons are not valid. Singapore's transformation from the 1960s to now 'requires an extraordinary government with extraordinary government officers to support it'.

And if Singapore did not believe in investing in top talent for its ministers, it might have ended in tatters: 'Your apartment will be worth a fraction of what it is. Your jobs will be in peril, your security will be at risk and our women will become maids in other people's countries.'

After the revision, junior ministers earn $1.59 million. The Prime Minister earns $3.09 million, up from $2.46 million. However, Prime Minister Lee Hsien Loong declares that he will donate the increase to charity for the next five years.

2011

Ministers' pay in 2010 stood at 67 per cent of the benchmark after planned increments were deferred due to the 2009 financial crisis.

About 40 per cent of their pay is variable. Performance bonus can range from zero to 14 months, while GDP bonus varies from zero to eight months.

The issue of political salaries is a contentious one in the May general election and even in the August presidential election, when two of the four candidates pledge to donate part of their pay to charity if elected.

On May 21, PM Lee Hsien Loong announces that he has appointed a committee to review political salaries.

This week, the committee, headed by Mr Gerard Ee, releases its recommendations in a report titled 'Salaries for a capable and committed government'.

It proposes changing the benchmark formula for a junior minister to 60 per cent of the median income of the top 1,000 earners who are Singapore citizens.

The discount and sample size are bigger, and foreigners and PRs are excluded from the benchmarking sample.

The variable component in pay has been slashed to prevent large swings from year to year. The performance bonus is now smaller - up to six months instead of up to 14 months.

The GDP bonus has been scrapped. In its place is a National Bonus of up to six months which considers four indicators - economic growth, real income growth rates for average and poor Singaporeans, and unemployment.

The Prime Minister's salary has been slashed by 36 per cent to $2.2 million, while a junior minister's pay has been cut by 37 per cent to $1.1 million.

The report will be published as a White Paper and debated in Parliament on Jan 16.

andreao@sph.com.sg

ATTRACTING TALENT

In 1970, then Prime Minister Lee Kuan Yew told Parliament ministers' salaries were being increased because he wanted to appoint newly elected MP and ex-Development Bank of Singapore head Hon Sui Sen as the Finance Minister. It was the first time since 1955 that ministers' salaries were raised.

'If we do not pay ministers adequately, we will get inadequate ministers. If you pay peanuts, you will get monkeys for your ministers. The people will suffer, not the monkeys.'

Then Prime Minister Goh Chok Tong (left) addressing Parliament in 1993, when a pay rise for ministers was announced

KEEPING SINGAPORE CORRUPTION-FREE

'I am probably the highest paid in the Commonwealth if you go by official salary. But I am probably one of the poorest in the Commonwealth... I am one of the best paid and probably one of the poorest of the Third World prime ministers.'

Then PM Lee Kuan Yew (right) said this in 1985 in response to Workers' Party MP J.B. Jeyaretnam, who had charged that ministers here were paid much more than their counterparts in other countries like Malaysia, Australia and Britain. Mr Lee said Singapore ministers did not get hidden perks, unlike those in other countries, and the clean wages paid to them helped keep the administration corruption-free

BIGGER VARIABLE

In 2000, the variable component of ministers' pay went up from 30 to 40 per cent. This way, said then Deputy Prime Minister Lee Hsien Loong, a larger part of a minister's pay would depend on his performance and the state of the economy.

CALL FOR FIXED PAY

In 2000, opposition politician Chiam See Tong (right) called for a monthly salary of $50,000 for ministers - enough to pay for a bungalow, servants, two cars, annual holidays and their children's education.

What price political leadership?
ST Editorial

SEVENTEEN years after the 1994 White Paper on ministerial salaries, a new committee has taken another stab at a perennially tricky issue that has exercised the best minds here and elsewhere: What price political leadership? It should be commended for its efforts, given that the very matter of determining salaries of political office-holders is a sensitive issue that cuts close to the hearts of many Singaporeans. In its long-awaited report, the committee's recommendations included salary cuts of slightly more than a third for the Prime Minister and entry-level ministers. In so doing, it has tried to balance two contending schools of thought - pragmatism (the need to offer top dollar for top talent) and the philosophy of public service and sacrifice.

This wasn't an easy exercise. But the eight-member team didn't have to start from scratch. Singapore has had 17 years of trying out a formula and various permutations of it in its search for a workable system of rewarding political leaders. There have been two clear lessons from this experience. First, even the most elegant and logical formula is useless if it cannot be applied in practice. That was the case with the existing method. Because the benchmark salaries pegged to the top 48 persons in the selected professions raced so far ahead of the general population, they could not be implemented without creating a public uproar. By 2000, for example, actual ministerial salaries were only at 70 per cent of the benchmark.

This leads us to the second lesson - whatever the formulae, and no matter whether they achieved their desired objectives of attracting the most suitable candidates, they have to be acceptable by the majority of the people. The current benchmarks were clearly not, and had to go.

Is the new formula more acceptable? It is hard to say, given the emotional nature of this issue. Also, acceptability is not an unchanging condition. New circumstances, and a changing electorate, might make what is politically acceptable today, less so in the future. Hence, the committee's recommendation to have a new group look at the issue every five years.

All things considered, the changes recommended should remove some - but not all - of the unhappiness. However it turns out, one truism will not change: Singapore's success as a nation is critically dependent on having the island's best to lead - men and women who are committed to serving the people and have the intellect and the wherewithal to continue to make its success as long-lasting as possible. That, lest anyone forgets amid all the number-crunching, is the object of the exercise. Singaporeans have to be clear about this, or remain forever vexed by how much to pay their leaders.

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Time for leaders to find the 'fire' again?

By Andrea Ong

ON WEDNESDAY, a committee commissioned by Prime Minister Lee Hsien Loong to review ministerial pay issued a report recommending a raft of changes to how salaries should be calculated.

This is the second major report since the White Paper in 1994 that brought about the system of pegging ministers' pay to the private sector.

What has changed since 1994 and 1970, when ministers got their first raise? Insight looks at four burning questions over the years.

Does high pay = the best ministers?
ONE key principle behind paying ministers wages that are competitive with the private sector is the need to get the very best of Singaporeans to form the Government.

This principle has not budged over the years. Singapore's three prime ministers have emphasised repeatedly that good government - the nation's most precious asset - did not come about by chance.

It came about by getting capable and committed people to become ministers, a job more challenging and complex than being a CEO or doctor.

The Government believes that the opportunity cost for such talent to enter politics should not be too high. Besides sacrificing privacy and family life, they should not have to suffer financially too.

And as ministers need time to grow in their jobs, they must cross over to politics in their prime.

The review committee headed by Mr Gerard Ee emphasises this point in its report. 'While money should never be the motivation for anyone becoming a politician, the financial sacrifice should not be so large that it discourages outstanding and committed Singaporeans from devoting the best part of their lives to political office,' says the report.

However, detractors over the years have argued that the pay was just too high. Writer Catherine Lim argued in 2007 that the high pay contributed to the 'affective divide' between the People's Action Party (PAP) government and the people.

Others have warned that the idea of paying for the best to join politics may encourage people to join for the 'wrong' reasons, as PAP backbencher Denise Phua argued passionately in 2007.

'The lure of personal prestige and monetary gain can produce a dangerously intelligent and self-interested class of political elites who will readily compromise the national interest to satisfy their own needs,' said Associate Professor Kenneth Paul Tan from the Lee Kuan Yew School of Public Policy in a 2008 article.

However, then-Deputy Prime Minister Goh Chok Tong made it clear in 1989 that men who are in it for the money are unfit to be ministers. 'If you think that the salary is so attractive that you want to be a minister because of the salaries, you are unlikely to pass our screening test.'

Government leaders have also argued for 'a sense of proportion' by comparing ministers' pay to the size of the national economy that they are in charge of.

Does high pay prevent corruption?

ANOTHER reason for competitive ministerial pay is to prevent corruption and maintain transparency.

The committee's report highlights the need to pay ministers a 'clean wage' with no hidden perks.

While other countries may pay their ministers less, the ministers may in fact get much more under the table in benefits.

This argument has been used by government leaders to counter those who compare Singaporean ministers' salaries with those of their foreign counterparts.

A commonly cited example is the US President, who earns less than PM Lee on paper but whose expenses, including housing and his own plane, are borne by taxpayers.

In 2000, then Senior Minister Lee Kuan Yew said that only 'constant vigilance' had allowed Singapore to escape the corruption, collusion and nepotism problems which have plagued the region.

'Our market-based pay and allowances will give no excuse for any slippage,' he said of Singapore's good track record.

However, in a 2010 book on Singapore's public administration, political scientist Jon Quah points out that the PAP government had put in place stringent anti-corruption laws even before it began raising pay for ministers.

Former Potong Pasir MP Chiam See Tong argued on several occasions that high pay would not satisfy a minister bent on being corrupt. It would 'make him only more greedy for more money', said the opposition MP in 1994, citing the late minister Teh Cheang Wan who committed suicide in 1986 after being investigated for accepting bribes.

Should ministers' pay be benchmarked to private sector?
THE decision in 1994 to peg ministerial pay to the top income earners in Singapore has been one of the most controversial aspects of the debate over the years.

MPs have argued that the benchmark is unfair as the top earners in the private sector change every year, while ministers stay put in their jobs for years. The formula could also be skewed upwards as many of the top earners are extreme outliers.

Opposition parties have suggested pegging ministers' pay to the income of the poorest 20 per cent instead.

Other MPs, however, accept that pegging ministers' pay to the private sector is part of the 'market reality'.

The committee's report goes some way in addressing these concerns. It has widened the sample size of top income earners from 48 to 1,000.

Another point of disagreement is how much variable pay ministers should get.

A high variable component means larger swings in salary from year to year.
In line with private sector practice, the variable component of a minister's annual package increased from 30 per cent in 2000 to 47 per cent in 2007.
However, the committee has recommended cutting it.

A 'GDP bonus' introduced in 2000 was seen as an inducement to ministers to focus on economic growth at all costs. The committee now wants to replace the GDP bonus with a National Bonus which includes additional indicators like real income growth of the poorest 20 per cent.

What do we look for in our ministers?
THE debate over ministerial pay boils down, ultimately, to what Mr Lee Hsien Loong asked in 1993: 'What sort of men do you want to hold this job?'

On one side are those in favour of the spirit of public service and moral authority - two commonly used terms. Serving the people should not be about dollars and cents but about being honourable and sacrificing for the nation.

In the other camp are the more pragmatic PAP leaders, who question if it is realistic to expect to get a dream team of ministers without paying them more competitive rates.

The three prime ministers have all dwelt on the changing aspirations and nature of Singaporeans since the 1950s.

In those 'tumultuous times', Mr Lee Kuan Yew once said: 'Asia was in ferment: the shape of our lives was being altered irrevocably. In that revolutionary ferment, any man with any courage, any fire in him, would respond to the challenge.'

Times and the people have changed since. As PM Lee reiterated in 2007, the Government cannot expect everyone to be like that.

Still, the benchmark for ministers' pay has always included a discount from the private sector to signify the personal sacrifice involved in public service. The committee has now recommended increasing the discount from a third to 40 per cent.

Under the terms of reference given by PM Lee, ministers' pay has been reviewed and cut independently of that of the elite Administrative Service for the first time - a signal that elected political leaders should have a calling of their own.

The titles of the 1994 White Paper and the new report are also telling. Where the former emphasised 'competitive, competent and honest' government, the latter speaks of a 'capable and committed' one.

Perhaps it is time for Singapore's political leaders to find that 'fire' in them to shape Singaporeans' lives once more, as the Old Guard ministers did.

Additional reporting by Janice Heng

Vision of welfare spawned a monster

2012-01-08T19:49:00.001+08:00

Jan 8, 2012

Post-war Beveridge Report in Britain led to system that is now widely abused

By Jonathan Eyal

London - Exactly 70 years ago at the height of World War II, a report was presented to the British Parliament. It was bound in a brownish cover, and bore a tedious title: Social Insurance And Allied Services. And it was authored by William Beveridge, a little-known academic.

Since this was the moment when ordinary Britons were struggling just to survive as German bombs rained down on their capital, nobody expected the paper to attract much attention.

Yet it did, and how. People queued to buy the publication, and the Beveridge Report went down as one of the most important political documents in modern history. It laid the foundation for all government welfare projects which followed - public housing, unemployment benefits and health care. And it inspired similar programmes around the world, including Singapore's own Central Provident Fund scheme.

However, last week's anniversary of this seminal report went almost unnoticed. The Conservatives in the coalition government want to dismantle much of Beveridge's inheritance, and even the opposition Labour Party admits that the Britain he envisaged 'is now a very different country'.

The reason for Beveridge falling out of favour is that the welfare system for which he is held responsible has grown into an unaffordable monster which is widely abused, discourages personal responsibility, and also fails to eradicate poverty.

Just a few figures should suffice. Under Britain's laws, the local authorities are obliged to provide a roof for every homeless person, even if the person is a foreigner. The total bill for this alone is £20 billion (S$40billion) a year. Claimants carry no personal responsibility; the more children they have, the bigger the property to which they are entitled.

The central government spends another S$212 billion yearly on welfare. But because this is divided among 27 different types of benefits and is often distributed regardless of personal circumstances, individual payments are too small to treat real poverty.

Unemployment benefits often mean that people have no incentive to find work. And health-care spending, which devours an additional S$250billion a year, is still not sufficient, so cancer patients suffer agonising delays when seeking treatment. The result is that Britain has one of the most comprehensive cradle-to-grave welfare provisions, but also one of the biggest wealth disparities in the industrialised world. The critics claim that everything goes back to Beveridge.

But the accusations are unfair. Contrary to the prevailing opinion, Beveridge was neither a socialist nor an advocate of limitless welfare payments. He wanted to put an end to what he called the 'five giants' - poverty, disease, ignorance, squalor and unemployment - but he believed that people should contribute as much as they claim back from their state.

Beveridge's centrepiece was the creation of a state-run system of compulsory insurance into which every worker was expected to pay, and from which every citizen could draw benefits when sick, unemployed or retired.

Alongside this provision, Beveridge proposed universal access to education and health services, all financed from taxes. The beauty of the scheme is that it created a bond, a new contract between citizens: payments were not charity, but an entitlement, paid for by its beneficiaries.

Beveridge's answer to the problem of people who just milk the system was simple: 'Unemployment benefit after a certain period,' he wrote, should be 'conditional upon attendance at a work or training centre.'

And, although his supporters now prefer to forget this detail, Beveridge initially suggested that those who could not or would not work should be deprived of the ability to vote.

So, it was not Beveridge who is responsible for Britain's perverse welfare system, but subsequent generations of the country's politicians, who used his concepts in order to invent schemes which were ultimately unaffordable.

The rot set in right from the start. Beveridge's initial suggestion was that ordinary Britons would only start enjoying protection 20 years after his insurance scheme was first established. But the Labour Party which came to power at the end of the World War II decreed that benefits were to be made available immediately. Politicians always found it easier to offer welfare entitlements, but much more difficult to tax people in order to finance them.

That game could work only as long as Britain's economy and its population were growing, and only as long as it remained an industrial powerhouse. It never occurred to Beveridge, who was born in India to a family of colonial administrators, that Asia would become an economic competitor. Nor did it ever occur to him that labour markets would be freed, so that British citizens would have to compete for jobs at home.

But over the past decade alone, about a million people from other European Union countries have come to Britain, often better-educated and more willing to work than some of the natives. And roughly half of Britain's children are now born to broken families, a phenomenon which was virtually unheard of when Beveridge presented his ideas in 1942.

In short, the world which Beveridge envisaged, one of regulated markets and of Western dominance, has gone. It's not so much that he was wrong, but that he was right for an age which no longer exists. Britons can still argue about how they should divide their economic cake. But it's a much smaller cake, and one which is increasingly half-baked.

That is accepted by all of Britain's politicians. Even Labour, which created the system, is vowing to reform it. Mr Liam Byrne, its spokesman on welfare, promised last week to 'reclaim Beveridge's vision', a polite way of saying that matters cannot continue as before.

His comment sparked off predictable outrage from those who still treat Beveridge as religion: 'An insult to his memory' was how The Guardian summed up the debate.

But Beveridge himself would have probably taken the criticism in his stride. For his last words in 1963 were an admission of his fallibility: 'I have a thousand things to do,' he complained on his deathbed.

That task is now left to his successors. And they still don't know what to do with the scheme which the great man inspired.

Jonathan.eyal@gmail.com

The man who loved Singapore

2012-01-08T19:48:00.001+08:00

Jan 8, 2012

By Tommy Koh

On June 18, 1930, a Dutchman died in the city of Haarlem (now part of Amsterdam), in the Netherlands. In his will, he left his whole estate to Singapore. Who was this man?

His name was Karel Willem Benjamin van Kleef. He was born on Nov20, 1856, in Batavia (now Jakarta). His father was Salomon Benjamin van Kleef, a gynaecologist. His mother was Geetruida van Hogezand. Both Salomon and Geetruida were Jewish. They had met and married in Batavia on Nov25, 1850.

Dr and Mrs van Kleef had four children. The first child, Maria Elizabeth, was born in 1851. Karel was the second child. The third child, Wilhem Samuel, was born in 1856 and died a year later and was buried in a cemetery in Jakarta. The fourth child, Herman, was born in 1863 in Amsterdam.

We know nothing about Karel's childhood and education. All that I have been able to find in the Dutch National Archives and Dutch National Genealogical Centre is a certificate (undated), certifying that he was an expert in drilling in the mining industry.

Karel had worked in the mining industry in Indonesia. At some point in his adult life, Karel left Indonesia and relocated to Singapore. We are not sure what he did for a living in Singapore, but we know that he was successful and became prosperous. He left Singapore and retired in Haarlem, the Netherlands, where he died.

How much money did Karel van Kleef leave to Singapore? He left the sum of $160,000, which, in today's dollars, would be equivalent to $8.985 million.

Why did Karel van Kleef leave his entire estate to Singapore? We do not know why he chose to do so. He could have bequeathed his estate to his older sister, Maria, or her children. He could have chosen to benefit the land of his origin, the Netherlands, or the land of his birth, Indonesia. Instead, he chose to bequeath his entire fortune to Singapore. This is why I call him 'the man who loved Singapore'. I know of no other person, Singaporean or non-Singaporean, who has bequeathed his entire fortune to Singapore.

What did Singapore do with the money? In 1931, the municipal government set up a committee to make recommendations on the best way to use the money. The committee considered three options: a landscaped garden, an aquarium and a zoological garden. In 1933, it was decided to build an aquarium and to name it the Van Kleef Aquarium. However, the construction was delayed by the difficult situation in Europe and the outbreak of World War II.

The Van Kleef Aquarium was finally opened in 1955, 25 years after the benefactor's death. The aquarium was a great success and attracted 166,000 visitors in its first four months of operation. The annual visitorship climbed steadily from about 200,000 to a peak of 400,000.

The aquarium was closed in 1991 because it was unable to compete with the new Underwater World in Sentosa. It was privatised and re-opened as the World of Aquarium. It failed after two years. It changed hands again and re-opened as the Fort Canning Aquarium in 1993. In December 1996, the aquarium was closed for the final time. Two years later, in 1998, the building was demolished and, with it, the name of our benefactor, Karel van Kleef.

Singapore should not allow the name of the only person who loved us so much that he bequeathed his entire estate to our country to disappear from our collective memory. I cannot help comparing him with an Englishman, James Smithson, who made a similar bequest to America. The US Congress accepted the bequest with gratitude and established the Smithsonian Institution in his memory. The Smithsonian Institution is today one of the great cultural institutions of America and of the world. Let us think of an appropriate way to perpetuate the memory of Karel van Kleef.

The writer is special adviser to the Institute of Policy Studies.

Hawker Stories

2011-12-30T02:48:00.001+08:00

Dec 25, 2011

The first-generation hawker: A master of heritage food

At just $1.20, hawker Chee Hua Pheow's stir-fried glutinous rice is easily among the cheapest meals sold at Chinatown's Smith Street Food Centre, and possibly island-wide too.

Mr Chee, 62, has kept the price of his hearty traditional fare the same in the last three years despite rising food costs.

This year, with the price of rice and oil going up, the bill for his ingredients has increased by some 30 per cent.

Yet the owner of Niu Che Shui Famous Glutinous Rice refuses to raise his price.

'All my customers are regulars and the least I can do to thank them for their support over the last 40 years is to keep the price low,' he said. 'As long as I can make ends meet, it is okay.'

Mr Chee, whose brother-in-law helps out at the stall, has been able to bring home more than $2,000 every month because of the low rent he pays as a subsidised hawker: $320 a month.

He said in Mandarin: 'People in their 20s and 30s, eager to become hawkers, often approach me to teach them my recipe. But I turned all of them away because I don't want to cause them harm.

'There is no way they can make money selling glutinous rice if they have to pay a few thousand dollars in monthly rent.'

Mr Chee, who has a habit of rocking his body back and forth as he dishes out the rice to queues of customers, started out as a roadside hawker in Trengganu Street in 1969 when he was 20. Then, he sold his fare for just 15 cents.

The secondary school-leaver learnt to cook the Teochew-style dish - the rice is steamed, then fried in shallot oil and tossed with anchovies, dried prawns and roasted peanuts - from his father, a street hawker with a separate stall in Mosque Street.

He was relocated to the Smith Street Food Centre when the building opened in 1983. After the hawker centre was revamped in 2008, his rent rose from $160 to $320.

He said he will retire when he no longer has the stamina to wake up at 3am, six days a week, to cook. The stall opens at 6.30am and he usually sells out by 11am.

He plans to give up his stall then and collect a modest takeover cum retirement fee instead of passing on the business to his only son, a 32-year-old software engineer who is not interested in becoming a hawker.

As for the loss of a heritage food from the local hawker scene by then, Mr Chee shrugged and said: 'It is inevitable. It will be tough for anyone to sell glutinous rice like I do for so cheap, with rents getting higher.'

Huang Lijie

The mid-career hawker: Lower rent a big draw

Mr Rozel John Bacomo's hip-looking pasta stall, Once Upon A Thyme, would fit right in - in a spiffy coffee shop or foodcourt.

But the 29-year-old former restaurant cook chose to open his stall in a hawker centre because it offered the cheapest rental rate.

The Singapore permanent resident from the Philippines pays $1,280 a month for his stall at Golden Mile Food Centre.

Mr Bacomo said he wanted to be his own boss, after spending six years as a cook at Swissotel The Stamford hotel, Mint Cafe in Seah Street and the PS Cafe chain.

The first-time entrepreneur, however, had limited capital so the low cost of opening a stall in a hawker centre appealed to him. He spent about $15,000 to set up and equip the stall.

He also felt the rent at a hawker centre stall would be more stable than that at a coffee shop.

'I have heard from people in the business that some coffee shop owners raise the rent if their tenants do well,' he said.

His Singaporean wife, Gina Tan, 29, a website designer and co-owner of the hawker business, successfully bid for a stall at the popular Golden Mile Food Centre through an open tender by the National Environment Agency in February.

Since becoming a hawker in April, he has had to handle the pressure of being a boss.

'As a cook in a restaurant or cafe, I just had to cook.

'Now, I have to take care of everything, including calculating my costs and making sure I can cover them,' he said. He has a part-time worker who helps with taking orders and serving food.

He has also been clocking 14-hour days instead of eight hours as a wage-earning cook.

But he derives satisfaction from seeing his business grow. He has an increasing pool of repeat customers, mostly office workers in the area who have no qualms about paying between $4 and $6 for his pasta meals when the average price of a meal at the hawker centre is about $3.

He explained that his pasta dishes, such as the $6 butter fish aglio olio, are priced that way because he uses mostly fresh produce, which drives up the cost of his ingredients.

He said: 'I want to do proper Western food, not the type of Singapore-style Western food where everything is deep fried.'

He also hopes to open his own cafe one day.

'For now, I am trying out my food in a hawker centre to see if it will sell, and to gain experience running a business,' he said.

Huang Lijie

The subletter: Business is good

The stall in the Chinatown People's Park Food Centre is barely twice the size of a toilet cubicle, but Ms Lina Ma, 32, willingly pays $5,000 a month to sublet it.

For 12 hours each day, the China-born hawker sells Japanese and Korean bento boxes, prepared with culinary skills she learnt from a chef in her Henan hometown.

A Singaporean permanent resident since 2008, Ms Ma can rent cheaper stalls from the Government, but she said her stall's location cannot be beaten.

'Even at the higher rent, I can take home about $2,000 a month. I don't know if it would be the same somewhere else,' she said.

She took over the stall last month, but has worked in food outlets as a cook since she arrived in Singapore in 2007.

'My husband works as a chef in a restaurant here. Cooking is all we have ever wanted to do,' she said.

She said starting her own stall took courage, but it was worthwhile. 'If you want to succeed as a hawker, the hours are very long and it is very tiring. But you make the decisions and don't have to answer to someone else,' she said.

At $3.50 to $5, her bento boxes are slightly more expensive than other fare in the centre, but she said customers have been willing to pay for the more unusual cuisine.

She saves on costs by hiring just one helper and working the entire shift.

The location has another unique draw: a tightly-knit Chinese migrant community.

More than half of the stalls in the centre are operated by China- born permanent residents.

When The Sunday Times visited the food centre on Friday, the stallholders were seen chatting with each other during the lull periods. They even gave advice to tourists from the mainland.

Such hawker centres with many migrant stallholders are becoming more common with the influx of foreigners into the Republic.

The Sunday Times found that at least 10 stalls in two Bedok hawker centres are also operated by China-born permanent residents. They also sublet the stalls at $5,000 or more a month.

The stall-holders, like Ms Ma, said they were willing to swallow the higher rents because of the established crowds and community.

'There's so much uncertainty when you bid for stalls from the Government,' said Ms Ma. 'Here, I knew exactly how much it would cost and what I'd get in return.'

Feng Zengkun

The middleman: When stalls change hands

Hawkers in the east know property agent Alwyn Chan as the go-to guy when they are retiring and want another hawker to take over their subsidised stalls for a plump fee.

In the past six years, the 27-year-old has helped to broker some 40 takeovers of hawker centre stalls.

He earns a 10 per cent commission on the takeover fee and the deals that he has brokered ranged from $30,000 to $100,000, depending on the popularity of the food centre and the location of the stall.

Hawkers paying subsidised rents who want to quit can return their stalls to the National Environment Agency (NEA) or assign them to someone else.

The new stallholders do not enjoy the same subsidy; their rents are raised from the subsidised level to the market rate over three years. But they can become tenants of coveted stalls in prime locations that have long been occupied by stallholders paying subsidised rents.

The takeover fee, however, is a private transaction between the hawkers and NEA does not keep track of it.

Takeovers are a lucrative, untapped market - something Mr Chan, a senior group director at real estate agency Dennis Wee Group stumbled on by chance.

A few of his early clients were hawkers selling their Housing Board flats who happened to also want to give up their hawker stalls.

Now, he receives calls from aspiring hawkers looking for a prime location to set up stall.

He started out by visiting about three to four food centres every week, seeking out hawkers keen to relocate and take over a stall in a popular location. He made repeated visits to about 20 hawker centres in the east, where he lives.

He would hand out his name card and marketing brochure and chat with stallholders to suss out their interest. He also kept a lookout for prospective customers who wanted to give up their subsidised stalls.

Over time, his network grew and he would get referrals for takeovers through word of mouth.

In the last two years, however, he has stopped spending as much time on matchmaking hawkers in takeover deals and turned his attention to coffee shops instead.

He said: 'Coffee shop takeovers are more lucrative because the changing of hands for a whole coffee shop is in the millions of dollars.'

Huang Lijie

The investor: Making the most of a stall

For 30 years, hawkers Florence Tan and her husband Tan Wai Kok have been selling wonton noodles at the Bedok Kaki Bukit 511 Market and Food Centre.

But three years ago, they started renting out their stall at night to other hawkers.

'We start at 5 in the morning, so we usually don't work at night anyway,' said Mrs Tan, who clocks about 10 hours at the stall each day with her husband.

The couple, both in their 50s, have charged different tenants $1,000 to $1,200 in monthly rent. They declined to reveal their monthly takings from selling noodles.

The couple inherited the stall from Mr Tan's mother, who paid $139,000 to lease it for 20 years in 1997. This means their monthly rent, averaged over the years, is just $580.

The Tans are among a group of savvy investors who look at their stalls as not just a workplace but also as a piece of property.

Mr Su Yuan, 45, a technical officer in the Housing Board, bought a stall at the Aljunied Market and Food Centre for $60,000 from his friend three years ago.

'It seemed like a good investment because everyone eats at hawker centres,' he said. Mr Su charges tenants about $1,300 a month, which will net him a profit of about $34,000 by the time the stall's lease expires in 2014.

Other investors told The Sunday Times that hawker stalls are a better investment option than residential properties as they are cheaper and have fewer restrictions.

An investor, who wanted to be known only as Mr Ng, snapped up four stalls at Chomp Chomp Food Centre in Serangoon Gardens between 2008 and 2009.

He charges about $3,000 rent a month for each stall, and expects to make a 5 per cent profit.

'It's a stable form of investment,' he said.

Feng Zengkun

Hawker Rents

2011-12-25T23:56:00.001+08:00

Dec 25, 2011

No more $2.50 chicken rice?
Hawker food prices may rise as subsidised rents are set to expire in the coming years

By Huang Lijie , Feng Zengkun

At the Zion Road hawker centre, a plate of chicken rice costs $2.50. But if you go to the coffee shop next door, be prepared to pay $3.20 for it.

At the foodcourt in the Great World City mall across the road, the price goes up even further, to $4.30.

Since the hawker centre came into existence almost 40 years ago, it has always been the lowest common food price denominator - guaranteeing cheap chow for the nation.

But that $2.50 plate of chicken rice may be a fantasy by the end of the decade.

The reason: Some hawker stall rents are set to soar by more than 10 times in the coming years due to expiring subsidies.

Stall owners in 15 food centres told The Sunday Times that when the rent hike comes, they will either raise their prices or quit the business.

The fallout could also affect food prices at their neighbours' stalls and at coffee shops and foodcourts, which sometimes peg the prices of their fare to those of nearby hawker competitors, The Sunday Times found.

In Clementi, Hougang and River Valley, where all three types of food centres can be found close to one another, the same dishes are priced within $1.50 of each other, with the hawker fare the cheapest.

This is why hawker rental fees must be kept low, argued experts.

'It's necessary so food prices do not escalate,' said Professor Lily Kong, vice-president of university and global relations at the National University of Singapore, who has written a book on hawker centres.

The secret to cheap food

Currently, prospective hawkers have to rent stalls from the National Environment Agency (NEA) or sublet them from other hawkers.

The NEA sets minimum rents determined by valuers for its vacant stalls and auctions them off every month.

Bidders have to be Singapore citizens or permanent residents, and the highest bidder gets the stall for three years, after which he gets priority to renew his lease, which comes at a new market rate.

If the minimum bid is not met, the stall is kept for the next auction.

The NEA also rents out stalls on one- to three-year leases on a walk-in basis, but these are typically leftover stalls in unpopular places.

The monthly rent ranges from $85 to $3,600 for market stalls, which sell sundry goods, although most stalls are rented for between $300 and $800.

The rent for cooked food stalls ranges from $300 to $4,900, but a majority are about $1,000 or more. Stalls in more central locations such as Newton and Serangoon easily command upwards of $2,500 in monthly rent.

Hawkers are allowed to sublet these stalls, even to foreigners, which may cause prices to climb higher in popular areas. At the People's Park Food Centre in Chinatown, for example, hawkers can pay more than $5,000 a month to sublet a stall.

But only half of the 15,000 stalls in Singapore have these market-determined rents.

The other half are now heavily subsidised or are owned by the hawkers themselves.

About 40 per cent of hawkers pay only between $56 and $320 for their stalls, possibly less than a tenth of the market rates.

This is mostly because they are first-generation hawkers, lured off the streets in the 1970s for hygiene reasons with the low-rent stalls.

Mr Chua Chuan Liang, 70, for example, has paid just $200 a month in rent for a minced meat noodles stall in the Clementi 448 Market and Food Centre for the past three decades.

The low rents are guaranteed as long as the hawkers personally operate them and do not sublet the stalls. When they die, their immediate family can also take up the subsidised stalls with the same conditions.

Another 15 per cent of the hawkers own their stalls, which they bought in the 1990s during a government project to encourage hawkers to be stall owners.

The costs of their 20-year leases were determined by valuers, and the hawkers were given a 30 per cent discount capped at $28,000.

These hawkers are free to resell their leases or sublet the stalls to anyone.

Mr Goh Chye Lee, 60, for example, paid $124,000 for his sugarcane juice stall at the Serangoon Gardens Chomp Chomp Food Centre in 1997.

This means his monthly rent, averaged over the 20 years, has been stabilised at just $520.

Subsidised and rent-free hawkers told The Sunday Times that this has allowed them to sell their food at lower prices.

Hawker Chee Hua Pheow, 62, for example, charges just $1.20 for a plate of stir-fried glutinous rice, among the cheapest meals sold at Chinatown's Smith Street Food Centre. He pays $320 in monthly rent.

The hawkers have also helped to hold down prices charged by their non-subsidised neighbours, and at coffee shops and foodcourts.

Ms Ng Siew Khin, 70, is Mr Goh's neighbour at the Chomp Chomp Food Centre and also sells sugarcane juice.

She pays six times his rent at $3,300 a month to sublet a same-sized stall, but sells the juice at the same price as Mr Goh - at $1.50 a glass.

'If mine is more expensive, nobody will buy from me,' she said.

Stall rents in coffee shops and foodcourts are determined by private owners who own the properties, or by the Housing Board, which leases stalls at market rents in 300 HDB coffee shops.

Checks by The Sunday Times at 40 coffee shops and foodcourts found that rents can range from $2,500 for a coffee shop stall in the heartland to $15,000 for a foodcourt stall in Orchard Road, also several orders above the subsidised hawkers' rents.

But the food sellers told The Sunday Times that they usually peg their prices to those of nearby hawker competitors, charging up to $1.50 more for the same dishes despite the much higher rental fees.

Mr Siva Kumar, 44, owner of an Indian Muslim food stall in a Ghim Moh coffee shop, sells prata for 80 cents, the same as that sold in the next-door Block 20 Ghim Moh Road hawker centre. This is despite monthly rents of $4,000, more than double that of his hawker competitor.

'If I don't follow the price in the hawker centre, customers will just go next door,' he said.

He covers his rent by offering a wider range of food items, such as Indian rojak, which he prices at 50 cents per piece.

The looming cost

But the era of low rents will soon be over for the subsidised half of the industry.

The first-generation hawkers can transfer their low rents only once to their family members.

After the second generation dies, or if the hawkers hang up their woks, the Government will take back the stalls and raise the rent back to market rates.

Ms Grace Fu, Senior Minister of State for the Environment and Water Resources, told reporters at a meeting about hawker centres earlier this month that the subsidies are unlikely to be extended.

Doing so would create hawker dynasties, making it harder for outsiders to gain a foothold in the industry, she said. 'I don't think a person should enjoy lower rents than her competitors just because her parents were hawkers,' she added.

This means many of the subsidies could expire within the decade.

The 20-year leases sold to hawkers will also expire between 2014 and 2017, after which those stalls will also be rented out at market rates.

At the Kovan Hougang Food Centre at Hougang Street 21, the end of the subsidies could mean a rent increase of more than 20 times.

One subsidised stall's monthly rent at the centre is $190, compared with $3,000 at the Government's non-subsidised rate and more than $5,000 if it is sublet.

Hawkers say food prices will increase with the rental fees.

Subsidised chicken rice seller Lin Leong Wah, 52, currently pays $200 a month to rent a stall in the Kovan food centre. He has dished out countless $2 plates, but said he would have to increase his price to at least $2.50 if his rent was higher.

'Otherwise how to survive?' he asked.

This may open the floodgates for their coffee shop and foodcourt competitors to raise their prices.

Mr Hong Poh Hin, 64, chairman of the Foochow Coffee Restaurant & Bar Merchants Association, which represents 450 coffee shop owners, said: 'If there is an overall increase in hawker food prices, coffee shop and foodcourt stall holders, especially those who have kept their profit margins very low to compete with hawker centres, will likely also adjust their prices to ease their burden.'

More complications

This spectre of rising food prices is among the top concerns of a panel set up to rethink the hawker centre.

In October, the Government announced it will build 10 new hawker centres after a 26-year hiatus.

It said this would provide cheap and good quality food for more Singaporeans; Ms Fu added that more stalls could help to spur competition and lower food prices.

The first centre will go up in Bukit Panjang within three years; the locations of the rest have not been determined but priority will go to the new towns, where there are fewer such centres.

Earlier this month, the Government unveiled a team of experts ranging from architects to food operators to come up with fresh ideas to run the new hawker centres. The panel will complete its consultation by next month.

Ms Fu said its solutions could be applied to the existing 107 hawker centres as well.

Social entrepreneur Elim Chew, who heads the panel, said keeping rental fees affordable will be among its priorities.

But hawker analysts said this may not be enough to keep the centres' food cheap, especially if the cost of living rises.

Ms Fu said there is no guarantee low rents will lead to low food prices. 'Some hawkers may choose to maximise their profits instead,' she said.

[No guarantee that more hawker centres will lead to better quality food or competition in food quality - only in pricing, and rental.]

The Sunday Times also found low-cost hawkers who sublet their stalls at higher rents to earn a passive income.

At the Chomp Chomp Food Centre alone, five of the 20-year leased stalls are legally sublet at market rents of $2,800 to $3,300 a month.

Hawkers who took over the long-lease stalls at the Kaki Bukit 511 Market and Food Centre in Bedok can even hand over more than $5,000 a month to their landlords.

Said one of the Kaki Bukit subletters, who declined to be named: 'The owner of this stall lives off my money in a bungalow.'

Others noted that low rents lead to problems such as limited opening hours.

Mr Patrick Sze, 51, chairman of the hawkers' association at the Clementi 448 Market and Food Centre, said hawkers tend to shutter their stalls once they hit a daily income target. He said: 'Subsidised stalls usually close after lunch because the owners have made enough to cover their low rent.'

And then there is the problem of manpower. NUS' Prof Kong asked if there are even enough passionate hawkers in the Republic to operate the new stalls.

'There is a concern that the quality of hawker food has declined because people with no skills or real interest enter the trade and treat it as a mere job,' she said.

["Passion"? I think many of the original hawkers also treated their jobs as jobs. For soe it was probably the only thing they could get, and they made the best of it. Today, people tend to have more choices. Passion comes few and far between.]

These interlinked problems will become even more stark as more Singaporeans eat out, said the analysts.

A national nutrition survey by the Health Promotion Board last year found that six in 10 Singaporeans eat out at least four times a week, up from five in 10 in 2004.

What is needed, they say, is a radical re-imagining of the Singapore icon.

The social solution?

One idea that has gained traction is that of a social enterprise. This would involve remaking the hawker centre as a non-profit place to provide cheap and good quality food. The idea was mooted by Environment and Water Resources Minister Vivian Balakrishnan in October and Ms Chew said the panel is considering it.

This would be similar to the role NTUC FairPrice plays to keep basic food items affordable, said Ms Fu. When global food prices spiked in February, the local supermarket chain froze prices for its house-brand rice for six months. It extended the freeze on its Thai house-brand rice on Thursday for another two months.

'Ideally, we want a hawker centre operator who can exert influence on opening hours, tenant mix and food prices,' added Ms Fu.

Ms Chew declined to provide more details on this as the panel is still gathering feedback.

Others said the Government could continue to offer subsidies, but with more restrictions.

These include banning sublets and private stall transfer arrangements between hawkers, which the Government currently does not track.

Hawkers have demanded fees of up to $300,000 just to transfer their rentals of stalls in highly sought-after places.

Food guru K.F. Seetoh and MP for Moulmein-Kallang GRC Denise Phua have raised concerns that these practices could drive up food prices as the new stall holders try to defray the cost of such fees.

The Government alone should handle the assignment of stalls to prevent this, they said.

Mr Tan Chin Keong, an equity analyst at UBS Wealth Management Research with an interest in property, suggested an official day-and-night dual leasing model.

'Taxi drivers share their cars in shifts. This would help to lower rental and operating costs for hawkers,' he said, although he noted this would work only in areas that attract a steady crowd at all hours.

As for ways to suss out passionate hawkers and to hone their culinary skills, Ms Chew said stalls could be provided to young entrepreneurs.

'Young people can explore possibilities for food start-ups and then move on to restaurants if they prefer that,' she said, noting that hawker centres have a lower start-up cost compared with more upscale establishments.

She added that the new hawker centres could double as a social safety net by offering jobs to the disabled.

Mr Nicholas Aw, president of the Disabled People's Association, said employing people with disabilities or setting aside stalls for them would create awareness of the issues they face and inspire the community.

But he added that the panel has not consulted his group.

'I hope the panel at least talks to a person with disabilities to understand what needs to be done for the idea to work,' he said.

Mr Seetoh said more should also be done to bridge the gap between the old guard and new entrants of the trade, and suggested setting up a cooking school to maintain a minimum hawker standard in the Republic.

Hawker centres in 2030

But whatever form the hawker centre of the future takes, it must not lose its role as a social glue, said Ms Chew.

She suggested that hawker centres be used for community activities in the future.

The panel is also considering installing wireless Internet at the centres for the connected generation.

And in a country where one in five Singaporeans will be 65 or older by 2030, hawker centres could even ease aching joints by delivering food to the elderly who live nearby, she said.

'Hawker centres have been in the lives of Singaporeans for decades.

'Now it's time to see how we can make it sustainable for generations to come,' she said.

zengkun@sph.com.sg

lijie@sph.com.sg

Make a suggestion to the panel at its Facebook page at www.facebook.com/myhawkercentre

Kicking up a fuss ensures MRT standards kept high

2011-12-22T13:41:00.001+08:00

Dec 20, 2011

By Joel Cooper

ANGER, frustration, dismay. All of these emotions were etched onto the faces of passengers left in the lurch by the past week's MRT breakdowns.

But as I looked at the pictures of stranded commuters, my main feeling was one of deja vu.

I come from London, a city that sits on top of the world's oldest underground rail network. In my hometown, getting stuck on a train that grinds to a halt for no apparent reason is an all-too-frequent experience. Just last year, passengers reportedly had to be led to safety down dark tunnels two days in a row due to power failures and a defective train.

Sound familiar? You bet. Yet there is one big difference between these incidents and Singapore's spate of MRT breakdowns - the reaction. In Britain's case, there were a handful of newspaper articles, but little public outcry. Here, we have had calls for SMRT's chief executive to resign and the Prime Minister announcing an inquiry.

This difference in attitudes has led some of my Singaporean colleagues to ask me whether I think that the public has overreacted to the current travel woes.

My answer is no.

Why shouldn't people demand that standards be kept high? Breakdowns like these might still be rare, but unless commuters keep up the pressure and refuse to accept poor service, they could easily become more common.

The last thing that anyone wants is a situation like in London, where delays happen so often that travellers simply shrug their shoulders as if to say 'just another hold-up'.

Not that the Tube is so terrible. Unlike the MRT, it has no shortage of alternative routes built into its vast underground network. So commuters struggling with one delayed line can often simply hop onto another without having to leave the station.

It's also a lot easier to forgive the occasional hiccup when you remember the Tube is nearly 150 years old in places and has a 408km labyrinth of track - all of which must be painstakingly maintained.

Compared with the clapped out, ageing London Underground, the MRT is like a brand new toy fresh out of its box. If it does not work perfectly, who can blame the customer for asking for his money back?

With only 146.5km of track, the network is also still quite small, which ought to make it easier to maintain. In general, SMRT and SBS Transit have clearly done a good job of this. Singapore is known throughout the world for its smooth and efficient transport network - which is why the scenes of stranded passengers are such a shock.

But as the network grows older, fatter and more unwieldy, I hope that standards do not start to slip.

After all, a lot is at stake. The Tube may be unreliable at times, but who goes to London for the trains anyway? For most people, it's more about having themselves photographed outside Buckingham Palace or Big Ben.

Singapore is in a very different situation. Being orderly and well run is one of its biggest selling points abroad. Whether you are a holidaymaker hoping for a hassle-free break, or a business traveller wanting to get to meetings on time, the Republic's efficiency is a major draw.

It would be a real shame to see this hard-won reputation eroded. One thing I enjoy about living in Singapore is not having to leave for work early in case of delays. In London, I always allowed at least an extra 15 minutes of journey time for things like cancellations, power failures or the classic British excuse for late trains: 'leaves on the line'.

Here, I can plan my journeys with almost pin-point precision because I know I won't have to wait longer than about five minutes on an MRT platform and, once I'm aboard, nothing will break down.

Of course, last week's setbacks have made me and many other commuters question whether we can still take these things for granted. There will always be the occasional technical glitch, which most of us can tolerate. But if it starts to happen too often, passengers' confidence and goodwill could end up being drained.

Unsurprisingly, research has shown longer train journeys are more stressful for travellers than short ones. This could even have implications for the economy. Commuters nearing the end of lengthy trips perform worse in simple tasks such as proof reading, according to a 2006 study by academics from New York's Cornell and Polytechnic universities.

So, no. Singaporeans are not overreacting to the troubling spate of delays. If you want the best service, you sometimes have to make a fuss. The fact the public has developed such high standards for the MRT shows just how fast and well run it still is. Long may that continue.

jacooper@sph.com.sg

Italian doctor may have found surprisingly simple cure for Multiple Sclerosis

2011-12-17T23:39:00.001+08:00

HEALTH AND WELLBEING

By Loz Blain

November 26, 2009

An Italian doctor has been getting dramatic results with a new type of treatment for Multiple Sclerosis, or MS, which affects up to 2.5 million people worldwide. In an initial study, Dr. Paolo Zamboni took 65 patients with relapsing-remitting MS, performed a simple operation to unblock restricted bloodflow out of the brain - and two years after the surgery, 73% of the patients had no symptoms. Dr. Zamboni's thinking could turn the current understanding of MS on its head, and offer many sufferers a complete cure.

Multiple sclerosis, or MS, has long been regarded as a life sentence of debilitating nerve degeneration. More common in females, the disease affects an estimated 2.5 million people around the world, causing physical and mental disabilities that can gradually destroy a patient's quality of life.

It's generally accepted that there's no cure for MS, only treatments that mitigate the symptoms - but a new way of looking at the disease has opened the door to a simple treatment that is causing radical improvements in a small sample of sufferers.

Italian Dr. Paolo Zamboni has put forward the idea that many types of MS are actually caused by a blockage of the pathways that remove excess iron from the brain - and by simply clearing out a couple of major veins to reopen the blood flow, the root cause of the disease can be eliminated.

Dr. Zamboni's revelations came as part of a very personal mission - to cure his wife as she began a downward spiral after diagnosis. Reading everything he could on the subject, Dr. Zamboni found a number of century-old sources citing excess iron as a possible cause of MS. It happened to dovetail with some research he had been doing previously on how a buildup of iron can damage blood vessels in the legs - could it be that a buildup of iron was somehow damaging blood vessels in the brain?

He immediately took to the ultrasound machine to see if the idea had any merit - and made a staggering discovery. More than 90% of people with MS have some sort of malformation or blockage in the veins that drain blood from the brain. Including, as it turned out, his wife.

He formed a hypothesis on how this could lead to MS: iron builds up in the brain, blocking and damaging these crucial blood vessels. As the vessels rupture, they allow both the iron itself, and immune cells from the bloodstream, to cross the blood-brain barrier into the cerebro-spinal fluid. Once the immune cells have direct access to the immune system, they begin to attack the myelin sheathing of the cerebral nerves - Multiple Sclerosis develops.

He named the problem Chronic Cerebro-Spinal Venous Insufficiency, or CCSVI.

Zamboni immediately scheduled his wife for a simple operation to unblock the veins - a catheter was threaded up through blood vessels in the groin area, all the way up to the effected area, and then a small balloon was inflated to clear out the blockage. It's a standard and relatively risk-free operation - and the results were immediate. In the three years since the surgery, Dr. Zamboni's wife has not had an attack.

Widening out his study, Dr. Zamboni then tried the same operation on a group of 65 MS-sufferers, identifying blood drainage blockages in the brain and unblocking them - and more than 73% of the patients are completely free of the symptoms of MS, two years after the operation.

In some cases, a balloon is not enough to fully open the vein channel, which collapses either as soon as the balloon is removed, or sometime later. In these cases, a metal stent can easily be used, which remains in place holding the vein open permanently.

Dr. Zamboni's lucky find is yet to be accepted by the medical community, which is traditionally slow to accept revolutionary ideas. Still, most agree that while further study needs to be undertaken before this is looked upon as a cure for MS, the results thus far have been very positive.

Naturally, support groups for MS sufferers are buzzing with the news that a simple operation could free patients from what they have always been told would be a lifelong affliction, and further studies are being undertaken by researchers around the world hoping to confirm the link between CCSVI and MS, and open the door for the treatment to become available for sufferers worldwide.

It's certainly a very exciting find for MS sufferers, as it represents a possible complete cure, as opposed to an ongoing treatment of symptoms. We wish Dr. Zamboni and the various teams looking further into this issue the best of luck.

Via The Globe and Mail.

Beware the inequality trap

2011-12-14T22:55:00.001+08:00

Dec 14, 2011

Singapore should consider more inclusive approach to social spending

By Donald Low & Yeoh Lam Keong

INCOME inequality in Singapore has risen significantly in the last decade. Whether measured by the Gini coefficient or by the ratio of incomes between the top and bottom 20 per cent, the evidence points to a more unequal society. Government redistribution in the form of taxes and transfers has not slowed the increase in inequality sufficiently. According to the Ministry of Manpower's data on employed citizens, Singapore society after government redistribution is more unequal today than it was 10 years ago before government redistribution, as measured by the Gini coefficient.

Not only is income inequality rising, there are also certain aspects of Singapore's inequality patterns that make it especially worrying. To begin with, the increase in income inequality is accompanied by wage stagnation for some segments of the workforce. Between 2001 and this year, the median incomes for full-time employed citizens increased by just 11 per cent in real terms, while the 20th percentile saw no increase at all. Including part-time workers would likely show wage stagnation extending to a much larger proportion of the workforce.

Second, there are concerns that social mobility in Singapore has declined. Inequality is more tolerable if social mobility is high. Policymakers have tended to place greater emphasis on social mobility when discussing rising inequality, arguing that the former ameliorates the effects of the latter. But cross-country evidence suggests that more equal societies are also more mobile. Even if policymakers care mainly about equality of opportunity, they cannot ignore distributional concerns altogether.

Third, as a growing wealth of research indicates, people's well-being is affected as much by inequality - or relative incomes - as absolute incomes. Even if absolute incomes are rising across the board, rising inequality alone reduces subjective well-being.

Fourth, a more unequal distribution also makes it more difficult to have coherent policies that all segments of society can rally behind. Income stratification, especially if it is combined with low social mobility, may polarise societies as different income groups begin to see their interests as conflicting.

Singapore's social policies - founded on the ideas of individual responsibility, economic growth and jobs for all, and a social security system that emphasises savings and home ownership - have served Singaporeans well. They have enabled Singapore to achieve 'growth with equity' and delivered high standards in education, housing, health care and social infrastructure without imposing a huge burden on public spending.

But in the face of significant changes in Singapore's operating context - globalisation, rapid technological change, a maturing economy, an ageing population, greater economic volatility, and a more uneven distribution of the fruits of growth - Singapore's social compact needs to be re-examined and reformulated.

Targeted v inclusive approaches

IN MUCH of the policy discourse on inequality, the emphasis in Singapore has been on what (more) the Government should do for the poor. The implicit assumption here is that the state's role should be confined to poverty reduction, and that inequality by itself does not merit policy action.

This is consistent with the Anglo-Saxon or 'residual' model of social welfare. In this approach, social transfers are means-tested rather than universal. This model also envisages a smaller, less redistributive state since the aim is not to achieve more equal outcomes but to ensure no one falls below a certain absolute level. It is therefore ambivalent about the need for more government redistribution in the face of rising inequality.

Policymakers in Singapore generally subscribe to this more targeted approach of social welfare. They believe that government assistance should be limited, that it should help only those least able to afford basic services. The case for this residual model of social welfare is augmented further by the emphasis on the family as the first line of defence after the individual has exhausted his means, and by concerns over the fiscal sustainability of inter-generational transfers.

A second approach, favoured by the northern European countries, espouses the principle of inclusion and relies more on universal programmes that benefit the large majority of their populations.

These systems emphasise the government's role in redistributing incomes, and in fostering solidarity and social trust. Social scientists mostly accept that trust is correlated with a number of normatively desirable things. For instance, people who believe that most other people in their society can be trusted are more inclined to have a positive view of their public institutions, to participate more in civic organisations, to give more to charity, and to be more tolerant towards minorities and people not like themselves.

More inclusive universal social programmes raise social trust in at least three ways. First, because such programmes are more redistributive than means-tested ones, they result in lower levels of economic inequality after government taxes and transfers are taken into account. Second, since inclusive programmes are based on the principle of equal treatment, they increase the sense of 'equal opportunities' more so than means-tested programmes. Third, means-tested programmes often accentuate class divisions within a society, and lead to less trust. By contrast, inclusive programmes enhance solidarity and the perception of a shared fate among citizens.

Despite their appeal, inclusive and more universal social programmes that promote trust may be hard to establish in societies with already high inequality.

This is partly because these programmes often extend benefits to better-off groups which can be difficult to justify. Such societies may find themselves stuck in an inequality trap characterised by low levels of trust, an aversion to more inclusive and universal social programmes, and increased reliance on targeting to differentiate between those entitled to benefits and those who are not.

To be sure, inclusive universal social programmes have their costs too.

Broad-based benefits in child care, health care, elder care, pensions and unemployment protection cost more than means-tested ones. In northern European countries, generous benefits have to be financed by a wide range of higher taxes.

But policymakers should weigh the costs of inclusive universal programmes against their benefits in terms of fostering norms of fairness, and in promoting social trust, citizenship and solidarity. Whether the costs of such programmes exceed their benefits is an empirical, rather than theoretical, question.

Relevance for Singapore

IT WOULD be easy for Singaporean policymakers to dismiss the inclusive approach to social spending as too costly, too corrosive of Singapore's work ethic and too undermining of competitiveness. In Singapore's multi-ethnic context, given its heavy reliance on foreign investments, policymakers may argue that Singapore cannot afford the aggressively redistributive model of northern Europe.

Notwithstanding differences in contexts, there are still important lessons that the more universal approach offers Singapore. The first is that when designing social programmes, the traditional objectives of efficiency and getting incentives right should be complemented with an understanding of the norms that inclusive social programmes may help to foster.

In theory, means-tested programmes limit moral hazard and 'deadweight funding'. In practice however, they often result in high administrative costs, divisiveness and rent-seeking behaviours. For instance, the British government's efforts in the early 2000s to means-test state pensions resulted in people saving less so as to qualify for higher entitlements.

Pursuing a more inclusive approach to social spending in areas such as early childhood development, unemployment protection, health care and long-term care could strengthen norms of fairness, promote social trust and foster an egalitarian ethos. Within this approach, benefits can be structured progressively.

In elder care for instance, instead of only targeted subsidies, a basic tier of benefits could be considered for all older citizens who require long-term care, combined with means-tested ones for those with lesser means.

Second, policymakers should analyse social policies in terms of cost effectiveness, not just cost containment. A cost containment mindset focuses on keeping social spending as low as possible in the fear that transfers, once provided, fuel an insatiable demand for more. However, the key question is not how Singapore can keep social spending on a tight leash, but what kinds of social spending deliver the largest benefits and how an appropriate balance of universal and targeted policies can be designed. Applying this approach may well result in social policy choices quite different from the ones today.

Singapore's own history also suggests that large-scale, inclusive social programmes have generated the largest benefits. Its public housing programme, the heavily subsidised basic education system, and the large investments in public health, water and sanitation were largely universal. They fostered a sense of citizenship and helped to create the social conditions that supported economic growth.

Singapore needs the same boldness of using public monies to achieve desirable social ends to be applied to the policy challenges of today - an ageing population, wage stagnation, rising inequality and increasing health and long-term care needs. A narrowly targeted approach to these challenges may enable the government to maintain healthy surpluses, but would also result in missed opportunities to improve the welfare of citizens and bolster social trust. To avoid the inequality trap, Singapore needs not just expanded social safety nets, but also more inclusive ones.

The writers, both of whom used to work for government agencies, are vice-presidents of the Economic Society of Singapore.

Property curbs nothing to do with speculation

2011-12-10T11:50:00.001+08:00

Dec 9, 2011

Commentary
The problem now is rising asset prices as global capital pours in

By Robin Chan

THE Real Estate Developers' Association of Singapore (Redas) had a sharp riposte for the Government on Wednesday night, after an unprecedented set of cooling measures was unveiled for the property market.

It said there had been 'no return to a speculative market' in Singapore - implying that the Government misread the problem of continually rising prices and consequently applied the wrong sort of medicine.

With all due respect to Redas, I suspect that the association may have been the one to have misread the problem.

That is because any casual observer - and so, certainly policymakers in the Government - can quite easily tell that there is very little speculation now in the property market.

Subsales, a classic indicator of speculative buying, now constitute just 6.6 per cent of transactions - their lowest level in five years.

The Government also killed off most, if not all, speculative activity by imposing a hefty seller's stamp duty of up to 16 per cent on any property that is resold within four years.

So the measures announced on Wednesday could not have been about warding off speculation. That issue has mostly come and gone.

The measures also did not seem to be about protecting buyers against default. That objective was largely met by progressively lowering the loan-to-value ratio to 60 per cent for property investors with an existing home loan, to ensure that they are adequately cushioned against a sudden fall in prices.

So if they were not primarily about preventing speculation or protecting buyers, what were the latest curbs really meant to do?

To me, the answer does not lie with Minister for National Development Khaw Boon Wan or his colleagues, but with economic agencies like the Monetary Authority of Singapore (MAS).

For a while now, Singapore's financial stability watchdogs have been warning about the dangers of rising asset prices as increasingly large waves of global capital flood into the country in the current era of low interest rates.

In MAS' recently published 40th anniversary book, its managing director Ravi Menon is quoted as saying that monetary policy has traditionally focused on stability in consumer prices, but 'dislocations in asset prices' like property prices can be much more disruptive to economic growth. He made the same point in a speech last week.

To see this, we need only look back a couple of years to the last global financial crisis, which was triggered by a property bubble that burst in the US and parts of Europe. In Singapore, buyers and developers took almost a decade to recover from the 1996 property crash.

The problem, Mr Menon says, is that 'we don't have a means for even measuring asset price inflation, let alone a coherent set of tools to deal with it'.

'Developing a toolkit to address asset price inflation is going to be a key challenge for the next 10 years,' he concludes.

'What does it mean for adjusting our existing policy framework - I don't know. I do know that we just cannot sit still and continue to apply the old paradigms. And we may need solutions that perhaps go beyond the MAS.'

Indeed, in announcing the property curbs, Deputy Prime Minister and MAS chairman Tharman Shanmugaratnam put large investment flows into the property market at the heart of the rationale for policy change.

He said action was needed now to 'avoid the prospect of a major, destabilising correction further down the road'.

Seen in this light, the property curbs announced on Wednesday night are really a prudential measure to safeguard the economic stability of Singapore.

The risks are very real. With anaemic economic growth forecast for all the world's major developed economies - the US, Europe and Japan - central banks look set to continue pumping cheap money into markets. There is already talk of a third round of quantitative easing and more interest rate cuts in Europe.

Much of that money will flow into Asia, which has more attractive growth prospects. And this will send more money into hard assets like Singapore property.

The island Republic is already seen as a safe haven for foreign investors and its property market is open and highly attractive. Bank of America-Merrill Lynch economist Chua Hak Bin said that for Singapore, these episodes of foreign capital inflows (and outflows) can be 'enormous and unsettling'.

A second factor influencing these latest measures is political. As Citigroup economist Kit Wei Zheng put it, part of the social contract in Singapore is to turn each average worker into a property owner and allow him to benefit from asset price inflation.

Therefore, property prices ought not to rise faster than people's ability to pay those prices, that is, they should roughly be in tandem with wage increases.

But the link between property prices and wage increase breaks down if a substantial proportion of purchases is from foreigners whose ability to pay has nothing to do with Singapore's economy.

Will the measures work as intended? Commentators say there are two major risks.

One drawback is that they could signal to foreign investors that Singapore is becoming less open, even if people like Mr Tharman speak to the contrary, especially as it comes on the back of tighter immigration laws.

Another is that these measures could further drag down growth in the Singapore economy, which is already expected to grow a weak 1 to 3 per cent next year.

If home prices collapse, consumer spending will be hit. Business services will likely slow as property transactions freeze up, conveyancing activities wind down and mortgage loans soften further, affecting banks, law firms, property developers and agents.

It all just goes to show how tricky it has become to manage all the interconnected parts of an open and global economy.

'I think the world is in an experimental phase on how to deal with asset price inflation. And in Singapore we have been doing our own experiments,' says Mr Menon in the MAS book.

So as the toolkit is being refined and expanded, expect plenty of heart-stopping moments like Wednesday night's along the way.

chanckr@sph.com.sg

See Prime, Forum

No easy way to fix cab conundrum

2011-12-09T17:46:00.001+08:00

Dec 7, 2011

System of surcharges is confusing and remains a second-best alternative

By Christopher Tan

MAKE no mistake, ComfortDelGro's 'taxi fare structure revision' is, to the man in the street, nothing but a fare hike. And a pretty fat one, at that.

The actual list of changes is long: a higher flagdown and metered rate, lengthened surcharge periods, and so on. But the bottom line is, taxi rides will cost appreciably more come Dec 12. A 10km journey to the office in the morning will easily cost 33 per cent more than today.

The most significant change is the extension of the peak period by one hour in the morning and the addition of four new peak hours at night from 8pm to midnight, every day of the year including Sundays and public holidays.

What this means is that only 81/2 out of 24 hours on any day will be effectively 'non-peak' and free of time-based surcharges.

The question is: Why have we reached this state of affairs? After all, Singapore has more taxis per person than most - if not all - big developed cities.

As at 2008, there were close to 5,200 cabs here for every one million people, versus 2,640 in Hong Kong, 3,280 in London and 1,520 in New York.

Yet, complaints from commuters who can't find a cab when they need one have never ceased, whatever we seem to throw at the problem.

The latest attempt is a two-pronged strategy that aims to do two things at the same time - reduce demand and increase supply.

On the demand side of the equation, the fare hike is meant to price out some commuters during the peak period crunch, making it easier for the rest to get a cab.

But whether this will actually happen, of course, remains a function of the size of the fare increase. And past experience has shown Singapore commuters to be fairly resilient in this regard.

The increase has to be substantial enough to have an effect on demand, or it will be a meaningless exercise.

On the supply side, the hope is that more cabbies will find it worthwhile to drive at night.

But here, simple economics does not always translate to the desired change in driving patterns.

Most cabbies, one National University of Singapore study supervised by transport economist Anthony Chin found, have a target take-home income. Once they have achieved it, they either call it a day, or take it easy. Enhancing surcharges will only help these cabbies reach their target earnings faster.

So it remains to be seen what effect the new surcharges will actually have on the ground.

In the meantime, however, the country will be left to deal - more than ever - with the distortionary economic effects of surcharges.

Whoever devised surcharges meant well. In theory, surcharges help to target specific areas or periods of time when supply does not meet demand adequately.

In the case of the Singapore taxi industry, however, the reality is that surcharges have only given rise to yield-maximising behaviour on the part of cabbies.

Better known distortions that customers know all too well include:

cabs disappearing before midnight,
taxi queues growing longer as empty cabs cruise in nearby lanes waiting for phone bookings, and
a supply void that materialises at the same time at dawn and dusk as every driver changes shift at the same time (to allow the next driver a fair shake of the next peak surcharge period).

And we have not even factored in the messy confusion that tourists are faced with every time they pay for a cab ride.

Is it time, therefore to 'reset' the system here?

One way is to dismantle all the clunky surcharges and simply raise the flagdown and metered fares. Let market forces dictate how supply matches demand.

Indeed, there are examples of simple fare structures working well elsewhere.

Hong Kong, where the cab service is rated favourably (at least by Singaporean visitors), has none of the surcharges applied here. Call-booking charge is a flat HK$5, or around 85 Singapore cents. While there are surcharges for luggage and pets in Hong Kong, they are nominal.

Of course, implementing a simple fare structure alone won't solve the problem of an excess demand for cabs. It is a question of price.

Trebling or quadrupling fares to make cabs a luxury (like in places such as Tokyo or New York) could therefore be an effective solution.

But it is a brutal one, and the social and political costs may be too high.

Such a move would easily price out half of the one million or so daily cab trips - something we may not want to do today, with trains and buses so packed and car prices so steep.

Such a system will also see far fewer cabs in operation, and consequently, working cabbies.

So all things considered, ComfortDelGro's fare revision seems a more palatable solution, even if inelegant.

Whatever you may say, it should work to keep cabs plying for longer by rewarding main drivers who can muster longer hours each day.

It will also make it worthwhile for more relief drivers to come into the market. There are more than 93,000 people with vocational licences to drive taxis here - roughly 31/2 for every cab.

But it remains very much a second- best alternative.

Come next Monday, commuters will realise that the only hour of the day that a cab ride will be cheaper than today will be between 5pm and 6pm.

And that might create yet another curious effect in the local market: a mad Happy Hour rush akin to pub goers quaffing down as many beers as possible.

christan@sph.com.sg

Reports of America's death much exaggerated

2011-12-04T23:19:00.001+08:00

Dec 4, 2011

By Michael Dee

As an avid reader of The Straits Times Review pages, I have witnessed a decided concern and hand-wringing about the future of the United States which often reads like an obituary.

As Mark Twain said upon reading that he was dead: 'Rumours of my death are greatly exaggerated.'

While I too am concerned about America's current path, my response has been to read more American history in order to refresh the context of the broad sweep of the American experience.

An America in decline is not the America I know and thus I feel compelled to offer three points to put the current situation into a broader context.

First, the current political and economic situation is not unusual in the history of American politics and is likely not even in the top 10 of American crisis periods. Historically, over the last 235 years, America has dealt with much bigger problems such as invasions, civil wars, natural disasters, depressions, World Wars and overall nation building.

Aside from debilitating crises, America has always had to deal with conflicting internal visions as to the nature of American society and its governance. This nature regularly changes in ebbs and flows over time with transitions not too dissimilar to today's. However, despite such challenges, the American resilience and optimism, along with the ability to dynamically reinvent itself while adapting to new conditions, is the greatest strength of the country.

It is compromise that America lacks at this moment but, again, we've been there many times before. The short-term vision of just a few years or even decades is not enough to fully appreciate what has come to be known as American Exceptionalism. While some will debate the point, I believe America is exceptional for the very reason that its citizens do have conflicting visions and they are allowed the candour and forum for the expression of those ideas, which are vetted and then voted upon.

In the short term, it looks messy from the outside, but only because all points of view can be heard and the process is highly transparent and often very loud. But think about it, when was the last time you heard a debate among Chinese Politburo members? In the grand sweep of history, 'Of the people, by the people and for the people' are sweet words indeed, words worth fighting and dying for.

Second, competing visions are healthy and are part of the reason America is the global leader it is. Competition is what drove our species from cave drawings to space travel in the blink of an evolutionary eye. At times we compete and at times we cooperate; this is our nature. One without the other is less efficient.

The America the world sees now is facing two conflicting visions of the world and its future. The fierce independent streak of the American psyche must reconcile itself with the compassionate nature of its people. The wealth and influence allowed to the most successful of its citizens must reconcile with the broader needs of social justice and upward mobility. An America which has only recently built its own nation must now seek to find its place in a newly dynamic world.

To some, America's government is a force for good yet, for others, less is more. Each has a point. The federal government is controlled by the 545 Americans of the Congress, the President and the Supreme Court, who will naturally struggle to reconcile the desires and visions of a free people 55 thousand times larger amid the cacophony of special interests.

Third, the American people are ultimately in control of their fate and should be trusted to resolve its issues in due time with peaceful elections, but not without fierce debate. America was established to balance power. The American people are not wussies. Americans will fight for what they believe in. Americans do not build statues to committees. Americans look for leadership and have proven time and again that they will change direction as needed under inspired leadership.

Americans and their government will make mistakes but will then correct those mistakes, sometimes faster, sometimes slower, with each successive American election in many ways a reflection of the one that preceded it.

Foreign pundits who speak about America are most often not speaking to Americans, but rather to their own domestic citizens for their own agendas. While that is as it should be, we welcome the critique and appreciate the global importance attached to the moral, economic and political stability that the US brings to the world stage.

We strive to do our best, yet let's not forget that the American taxpayer foots a large portion of the military expense, development aid and humanitarian relief globally to create a peaceful and just world. Until foreign governments step up and agree to share the fiscal cost and burden, their voice will be held in context.

The American people are in control of America's future and, as a nation, we will do what we as a people believe is the right thing to do. We seek to form a consensus or at least a majority to reconcile our differences.

In the meantime, enjoy the musical beauty of the arguments for it is the sound of freedom, and there is no better sound in the world.

The writer, a Singapore permanent resident, is a former regional CEO for Morgan Stanley and former senior managing director of Temasek Holdings.

[To be sure, SG would like to the US to recover and continue to provide stability in the region and in fact, the world. But the antics of the US govt, is unlikely to inspire confidence.

The cacophony of voices and views is not unusual, Dee claims. So we are supposed to be assured that eventually the voice of reason will be heard above the cacophony and commonsense will prevail. How do we know that the cacophony is the process by which the voice of reason emerges, or that in all those other times, reason emerges in spite of the cacophony, not because of it?

America has faced many challenges in the past and prevailed in spite of their entrenched process of thesis-antithesis. But this time sheer momentum will make China the largest economy in about 15 years (give or take) regardless of what the US does. In other words, in the past, America was its own worst enemy. Now the challenge is from the outside. The centre is shifting, regardless of America's doing. And the sad part is, instead of facing up to the challenge, America is business as usual, and deluding itself with concepts like "American Exceptionalism".

The reality may simply be that in the new world order, the muddling ahead, the back-and-forthing, the Washington two-step may not be responsible enough.

The fact is political expediency has trumped vision and inspiration. Yes, America has been blessed with inspired leaders in the past, but in the present, the media and the internet has effectively crippled if not emasculated the political leadership. No US leader can say anything, without the media dissecting and disparaging any and every word spoken.

Before any leader can inspire, he is already disparaged. Yes, America needs an inspiring leader. Unfortunately, the system has precluded the prospect of any such leader.

e pluribus unem? More like e pluribus nihilum.

So yes. America needs to do better. But to do better, it needs to make the tough choices. But the tough choices are not politically palatable. And the politicians don't have the guts to make those choices and sell those choices to the people, the voters. Or before they can sell those choices, their opponents are already tearing apart their idea for political gain.

Or the politicians have already sold their votes to big corporations for short term capitalistic gain.

Where is the infrastructural investment necessary for America's economic growth? Where is the investment in education and training to prepare young Americans for jobs of today and the future?

Maybe Dee is right and America will get around to it. But they don't seem to be ready to do so. Oh they are ready to talk about it. And yell at each other about it. And maybe even vote on it. But that's a long way from doing anything about it.]

Martin Feldstein: Europe is Not the United States

2011-11-30T17:25:00.000+08:00

Nov 30, 2011
CAMBRIDGE - Europe is now struggling with the inevitable adverse consequences of imposing a single currency on a very heterogeneous collection of countries. But the budget crisis in Greece and the risk of insolvency in Italy and Spain are just part of the problem caused by the single currency. The fragility of the major European banks, high unemployment rates, and the large intra-European trade imbalance (Germany's US$200 billion current-account surplus versus the combined US$300 billion current-account deficit in the rest of the eurozone) also reflect the use of the euro.

European politicians who insisted on introducing the euro in 1999 ignored the warnings of economists who predicted that a single currency for all of Europe would create serious problems. The euro's advocates were focused on the goal of European political integration, and saw the single currency as part of the process of creating a sense of political community in Europe. They rallied popular support with the slogan 'One Market, One Money,' arguing that the free-trade area created by the European Union would succeed only with a single currency.

Neither history nor economic logic supported that view. Indeed, EU trade functions well, despite the fact that only 17 of the Union's 27 members use the euro.

But the key argument made by European officials and other defenders of the euro has been that, because a single currency works well in the United States, it should also work well in Europe. After all, both are large, continental, and diverse economies. But that argument overlooks three important differences between the US and Europe.

First, the US is effectively a single labour market, with workers moving from areas of high and rising unemployment to places where jobs are more plentiful. In Europe, national labour markets are effectively separated by barriers of language, culture, religion, union membership, and social-insurance systems.

To be sure, some workers in Europe do migrate. In the absence of the high degree of mobility seen in the US, however, overall unemployment can be lowered only if high-unemployment countries can ease monetary policy, an option precluded by the single currency.

A second important difference is that the US has a centralised fiscal system. Individuals and businesses pay the majority of their taxes to the federal government in Washington, rather than to their state (or local) authorities.

When a US state's economic activity slows relative to the rest of the country, the taxes that its individuals and businesses pay to the federal government decline, and the funds that it receives from the federal government (for unemployment benefits and other transfer programs) increase. Roughly speaking, each dollar of GDP decline in a state like Massachusetts or Ohio triggers changes in taxes and transfers that offset about 40 cents of that drop, providing a substantial fiscal stimulus.

There is no comparable offset in Europe, where taxes are almost exclusively paid to, and transfers received from, national governments. The EU's Maastricht Treaty specifically reserves this tax-and-transfer authority to the member states, a reflection of Europeans' unwillingness to transfer funds to other countries' people in the way that Americans are willing to do among people in different states.

The third important difference is that all US states are required by their constitutions to balance their annual operating budgets. While 'rainy day' funds that accumulate in boom years are used to deal with temporary revenue shortfalls, the states' 'general obligation' borrowing is limited to capital projects like roads and schools. Even a state like California, seen by many as a poster child for fiscal profligacy, now has an annual budget deficit of just 1 per cent of its GDP and a general obligation debt of just 4 per cent of GDP.

These limits on state-level budget deficits are a logical implication of the fact that US states cannot create money to fill fiscal gaps. These constitutional rules prevent the kind of deficit and debt problems that have beset the eurozone, where capital markets ignored individual countries' lack of monetary independence.

None of these features of the US economy would develop in Europe even if the eurozone evolved into a more explicitly political union. Although the form of political union advocated by Germany and others remains vague, it would not involve centralised revenue collection, as in the US, because that would place a greater burden on German taxpayers to finance government programs in other countries. Nor would political union enhance labor mobility within the eurozone, overcome the problems caused by imposing a common monetary policy on countries with different cyclical conditions, or improve the trade performance of countries that cannot devalue their exchange rates to regain competitiveness.

The most likely effect of strengthening political union in the eurozone would be to give Germany the power to control the other members' budgets and prescribe changes in their taxes and spending. This formal transfer of sovereignty would only increase the tensions and conflicts that already exist between Germany and other EU countries.

Martin Feldstein, Professor of Economics at Harvard, was Chairman of President Ronald Reagan's Council of Economic Advisers and is former President of the National Bureau for Economic Research.

Traditional Chinese medicine face uphill battle in Western countries

2011-11-29T17:34:00.000+08:00

Nov 29, 2011

(CHINA DAILY/ASIA NEWS NETWORK) - Ms Jiang Yuechun turned to traditional Chinese medicine (TCM) after Western treatments failed to remove dozens of flat warts coating the backs of her hands.

The 31-year-old university teacher in Beijing says the warts shriveled away without scarring after she ate a porridge of coix seeds - a tropical grain.

She is among many Chinese seeking TCM treatments in place of modern Western remedies at a time when her homeland is promoting the internationalisation of its traditional medicine - already regularly used in about 140 countries but part of the healthcare systems of only a few.

China's 12th Five-Year Plan (2011-2015) earmarks financial support for TCM's globalisation. It also outlines plans for TCM's development and industry regulation.

'Despite TCM's popularity overseas, only a handful of countries, such as Singapore, legally recognise it,' the Beijing University of Chinese Medicine's former president Mr Long Zhixian said.

'Few countries include TCM in their healthcare systems.'

Artemisinin - a southernwood extract used to treat malaria - is the only TCM widely accepted abroad, mostly in Africa, Beijing University of Chinese Medicine professor Mr Gao Xuemin said. The World Health Organisation lists it in its essential medicines catalogue.

Several other traditional remedies, including those for cardiovascular diseases, are undergoing clinical testing overseas and may soon be approved for international use.

But Mr Long believes there are many obstacles to TCM's expansion in the global market.

Perhaps the most challenging is that TCM is based on traditional Chinese culture and philosophy. These include such concepts as the balance of yin (the cool, calming side of the body) and yang (the hot, stimulating side of the body), and the relationship of the five elements that are said to constitute the universe - fire, earth, metal, water and wood.

'Western culture is totally different,' Mr Long said. 'It's not easy for them to believe in TCM if they don't understand these theories.'

He says another difficulty is difference in scientific views. 'Westerners value experimental data in medicine, while TCM is based on experience accumulated over the past 4,000 years,' he said.

'They always try to understand TCM according to the Western medical perspective. But that doesn't make any sense. In my opinion, as long as a medicine cures, it's a good one.'

[TCM has to be differentiated from their herbalogy/apocathery section and their diagnostic, and their acupunture/moxibustion/philosophy/cosmology section. Herbalogy or herb lore may have some pharmacological effects that are provable, and it can be used.

The science of medicine and the art of healing is not always an exact science. There is as much psychology as there is physiology and biology. Much of medicine is about dealing with the patient. And medicine's effectiveness is as much a matter of placebo effect and expectations as it is pharmacological effects.

In many ways, the treatment is as much about making the patient feel better as it is about make the patient better. Our bodies are mostly quite able to heal itself given time. For chronic ailments, if TCM can provide (placebo) relief, it can be chearp and less dangerous than western drugs which try to do the same.]

More than 9,000 TCM treatments were approved for sale in the market in 2008, according to the White Paper on Status Quo of Drug Supervision in China.

These TCM treatments have all passed clinical safety tests. Most have a history of several centuries, Mr Long said.

'Current technology can't detect the active ingredients in some TCM compounds, which are very complicated,' he said.

Mr Long says it's difficult to determine the numbers and ratios of ingredients in most TCM compounds. Determining which are active ingredients is even more challenging. Artemisinin is an exception, which is why it has been successfully globalised.

TCM doctor Zhou Chaofan says another challenge to internationalisation is medicine export standards vary around the world, and China's standards often can't meet foreign countries'.

'Some TCMs use heavy metals, such as cinnabar and realgar, which may not meet some foreign countries' criteria,' Mr Zhou said.

Mr Long agreed. 'Standards for heavy metals are different in countries,' he says.

'It's hard to establish a global standard for TCM because of its complicated ingredients lists.'

But Mr Long remains optimistic. 'It's just a matter of time for TCM to officially enter the global market,' he said.

'We first and foremost must promote Chinese culture, so foreigners can understand TCM's philosophy.'

The market will surely open up if TCM can cure diseases Western medicine can't, he believes. And more experiments will provide clinical evidence of TCM's usefulness and show how it works.

Dozens of Western pharmaceutical companies are currently undertaking such research in hopes of entering the Chinese market as foreign brands.

'This is a typical approach,' Mr Long said. 'They first take notice of a TCM treatment and then research and finally produce it. But the impact on the Chinese market is limited.'

But some don't view TCM's prospects for internationalisation as so promising.

Among their ranks is Mr Fang Zhouzi, an academic known for his opposition to 'pseudoscience' and TCM.

'TCM theories are not scientific,' Mr Fang said.

'They're just an amalgam of superstition, metaphysics, philosophy and witchcraft. They should be replaced by better medical science. Some theories aren't logical at all, such as eating bones to strengthen one's bones.'

But time, tests and international opinion will tell whether TCM will become a basement of parochial quackery or a lofty pillar of global healthcare's architecture.

Era of Western domination 'is ending'

2011-11-29T16:43:00.001+08:00

Nov 29, 2011

Professor Kishore Mahbubani was ranked on Foreign Policy magazine's list of the world's top 100 thinkers this week. He believes the era of Asian domination is returning and that greater global governance is needed in a more interdependent world.

-- ST PHOTO: DESMOND FOO

By Cheong Suk-Wai, Senior Writer

AT A gathering of thought leaders two years ago in Davos, Switzerland, someone tapped Professor Kishore Mahbubani on the shoulder. As Prof Mahbubani, 63, recalls: 'It was Mr Jan Peter Balkenende, who was then prime minister of the Netherlands, and he said, 'Aren't you Kishore Mahbubani?'

'I said, 'Yes, how do you know me?' and he said, 'My mother asked me to read your book.''

That book is The New Asian Hemisphere, Prof Mahbubani's third. Published in 2008, it is about the resurgence of Asia and also a caution to a complacent West to rev up its competitiveness.

This week, Foreign Policy (FP) magazine named this veteran diplomat one of the world's 100 top thinkers, alongside investing oracle Warren Buffett, Microsoft co-founder Bill Gates and United States President Barack Obama. This is the third time Prof Mahbubani, a married father of three, has been listed thus. The first was in 2005, when he was named one of FP's top 100 public intellectuals; the second was last year when he was ranked 92nd. He is in the same position this year.

After 33 years in diplomacy - including as ambassador to the United Nations, with a stint as president of the UN Security Council - he is now dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, and professor in the practice of public policy.

I sat down with him last week to learn more from him about the US' renewed interest in Asia, among other concerns:

What do you make of China-US ties today?

In the last year or so, China has been trying to rise quietly without waking up the sleeping tiger that is the United States. But the tiger has been woken up. For a long time, the US viewed China's rise with a certain degree of equanimity. But it has suddenly become - I won't say alarmed - but concerned about that rise. When Mr Bill Clinton was president of the US, he was very laidback about China, and his successor George W. Bush was actually very good for China because he had the US fighting wars in Afghanistan and Iraq, and gave China a geopolitical window of opportunity to focus on its development. We are finally seeing the entire Washington establishment focused on China in a way it never was.

Which is ironic given how insular China's focus is, rarely on geopolitical concerns that aren't in its economic interest?

I would not say it has been necessarily insular. In fact, the Chinese have been quite proactive; for example, it shocked the world in 2001 by proposing the Asean-China free trade agreement (FTA), which was a bolt out of the blue for the Japanese. But China has deliberately continued to follow its former leader Deng

Xiaoping's policy of keeping a low profile - except in 2009 and last year when it made lots of mistakes, including with the visit of US President Barack Obama to Beijing, and declining to condemn North Korea's shelling of a South Korean island. These mistakes alarmed many, but China has since been working very hard to calm waters again - and has, so far, done so successfully.

Its continued claims in the South China Sea can't be calming.

Yes. China needs to spell out its position on this sea more clearly, especially as to how it is consistent with, say, the principles of the UN Law of the Sea Convention. It has to put up a case on the sea that is defensible under international law and they should learn from countries such as Malaysia and Singapore that have referred their disputes to the International Court of Justice, which is a valuable mechanism for resolving maritime disputes.

What do you make of Chinese thinker Yang Xuetong's suggestion that China has to have moral authority to defeat the US?

I like it. As he wrote in the International Herald Tribune on Nov 21: 'It is the battle for people's hearts and minds that will determine who eventually prevails. And, as China's ancient philosophers predicted, the country that displays more humane authority will win.' This is the kind of competition we want to see in Asia. In theory, the US has more soft power than China but, at the same time, China has increased its trade in the region much faster than the US has in recent times. The biggest challenge for the US in Asia is that its deeds have to match its words. So it has to deliver on the Trans-Pacific Partnership (TPP - a regional trade agreement currently being negotiated between the US and eight other Asia-Pacific countries, including Singapore). And if the US Congress does not support the TPP, the US will go nowhere in Asia.

The Chinese are going to try very hard to demonstrate to the rest of the world that its rise is good for the world. I actually believe that, because China alone has rescued 600 million people from absolute poverty; no other country in human history has ever done so. And China is also really investing in green technology, so there are many positive things that China is doing that often go unrecognised.

But who wants to be pro-Chinese?

You do not have to be. In fact, we are going to move away from a world where we try to be more Chinese or more American and move into a world where we are more of ourselves.

Is that why you are now writing a book on global governance?

I am trying to persuade countries, especially the big powers, that their national interest is aligned with greater global governance. In the past, the world's 193 countries were in separate boats; you just needed rules to make sure that these boats did not collide. Now, we all live in 193 separate cabins on the same boat and would want a captain and crew taking care of all on the boat; that is global governance.

The challenge is to persuade the great global powers that we need greater global governance and stronger multilateral institutions, which they think constrain their powers. It can be done if you appeal to their national interests.

Why are the great powers slow to embrace such long-term benefits?

Quite often, governments know what is the right thing to do. The Singapore Government's big strength is that it knows what is right and has the capacity to make long-term decisions, compared to, say, France and Italy, which do not have such capacity because it is sometimes politically impossible to do the sensible thing in many developed countries.

Why so?

If you look at the problems that are happening in the world today, from continuing unemployment in the US to the struggles of Greece, Italy and now Spain to regain growth, the reason why they are struggling so is they have not educated their populations that, with the return of Asia, they now have to retool their societies and become competitive again. The great myth and illusion that American and European politicians have engendered in their populations is, 'Don't worry, things will bounce back naturally.' That is not true.

So what is the true picture?

I am working on three sets of big ideas about that. First, we have reached the end of the era of Western domination of world history. Related to the first idea is the second one, which is the return of Asia.

Which means the return of an economic miracle?

It is not a miracle at all; in fact, it is a completely normal thing to have happened. From the year AD1 to the year AD1820, the two largest economies in the world were always China and India. It was only in the last 200 years that Europe and North America have taken off. These last 200 years, against the backdrop of the last 2,000 years, have been a major historical aberration and if you have such an aberration, clearly it has to end.

What is your third big idea then?

That in our new, smaller and interdependent world, we need greater global governance. The world's big states have progressively weakened multilateral institutions because those constrain their powers, whereas multilateralism increases the influence of a small state. But my argument is that it is now in, say, the US' interest to strengthen multilateralism because the US is also becoming interdependent on the rest of the world. We are all now interconnected so we have to work together to solve problems.

suk@sph.com.sg

Singapore can be intellectual capital of Asia

FIRM and precise, Professor Kishore Mahbubani has long been a passionate champion of Asia and he is now looking forward to a cultural renaissance in the region, riding on the bracing confidence of its youth. Here he is on:

Singapore

'It has the opportunity to be the intellectual capital of Asia because of the quality of its ideas. As an American thinker told me recently, 'I come to Singapore to get my geopolitical fix.''

The view that Singapore is too repressive for ideas to flourish here

'I disagree completely with that. Singapore has opened its door to many foreign universities; that's a sign that it is strong and confident enough to allow the marketplace of ideas to decide what is right and what is wrong.'

Critics who say his latest book, The New Asian Hemisphere, is an anti-Western polemic

'How can that be when I say the reason why Asians are succeeding now is that they have finally understood, absorbed and implemented the seven pillars of Western wisdom? Any Asian reading my book should send a thank-you note to the West for sharing that wisdom with him.'

The West's view of China

'China has been run by a communist party in 1949, 1979 and 2009. But Westerners don't see the change, whereas I've been dealing with Chinese government officials for 30 years and am absolutely astonished at how the younger ones among them are far more thoughtful and aware of the changing world than their Western counterparts.'

The Arab Spring

'It's a wonderful phrase but it conveys a false sense of hope about the future because the Arab world hasn't got middle-class populations yet, so its transition to democracy won't be as easy as it was for Eastern Europe, which already had a large, well-educated middle class when communism fell there.'

The idea of an Asian century

'I actually call it the Asian Millennium; I'm far more excited about the next 20 years than I have been about any other period of my life.'

CHEONG SUK-WAI

Contain China?

2011-11-27T17:08:00.001+08:00

Nov 26, 2011

The Obama Doctrine is dangerous

By Hugh White

SINCE 2009, China's challenge to American primacy in Asia has become too stark to ignore. Last week President Barack Obama gave his response. On his Asian journey, he enunciated what truly deserves to be called the Obama Doctrine. It is perfectly clear. The United States will resist China's challenge to its primacy in Asia, using all the instruments of its power to strengthen and perpetuate the preeminent leadership it has exercised in the region for decades.

Mr Obama also sketched plans to implement this doctrine by reorganising Asia under new US-led regional structures which exclude China. His Trans-Pacific Partnership creates a new economic framework for the Asia-Pacific without China, while an expanded defence presence in Australia signals his aim to build armed strength in Asia and draw friends and allies into a larger and tighter strategic coalition against China's growing military weight.

Of course, Mr Obama hopes that the resolve he has shown will persuade China to drop its challenge and accept US leadership once more. But his doctrine clearly implies that if China cannot be persuaded, it will be compelled. This is very ambitious. Indeed it is America's most ambitious new strategic doctrine since Truman committed America to contain the Soviet Union.

Some will dispute that comparison. They will say the policy is not containment, and the adversary is not the Soviet Union. But think about it. America's aim is to resist an expansion of China's influence in Asia by building an economic and strategic coalition of friends and allies around its geostrategic periphery. The Obama Doctrine lacks the ideological dimension of Cold War containment - but it mirrors the geostrategic and political essence of the Truman Doctrine. It walks like a duck and quacks like a duck.

And is China the Soviet Union? In many ways it is not. China is still much weaker militarily than the Soviets were, and less threatening. But relative to the US, China is much richer than the Soviets ever were, and that makes it in the long run a much more formidable adversary. Indeed it is the most formidable strategic competitor America has ever encountered, because it is the only one ever to approach the US so closely in sheer economic weight. And that has nothing to do with overblown doom-saying about American decline. It simply flows from China's remarkable growth.

These sobering reflections prompt two critical questions: Where does the Obama Doctrine lead? And what are the alternatives?

Where it leads depends first on the Chinese. The idea that they will simply cave in is just wishful thinking. That leaves only two possibilities. One is that China's economy stumbles. This seems to be what Mr Obama expects. He clearly had China in mind when his major speech in Canberra last week foreshadowed the failure of any country which is not a democracy. Maybe he'll be proved right. But people have been predicting the failure of China's Market-Leninist model for 30 years now, and for 30 years the model has delivered growth at 10 per cent per year. Americans would be unwise now to assume that China will fail any time soon.

If it doesn't, we can expect China to push back against the Obama Doctrine. And we can assume that America will then push back in turn. What follows then is steadily escalating strategic competition between two very powerful rivals, playing out in a setting that gives China big asymmetrical advantages. That will carry immense costs for America, and even bigger risks.

One risk is that escalating strategic competition will disrupt the vital economic relationship between the US and China. Many hope that the two countries' deep interdependence will prevent their rivalry getting out of hand. But that will happen only if both sides are willing to forgo strategic objectives to protect their economic cooperation. With the Obama Doctrine, the President has declared that he has no intention of doing that. Why should we expect the Chinese to act any different? So it is more likely that escalating rivalry will soon start to erode economic interdependence between the two nations, at great cost to both.

The other risk is the growing chance of conflict. A war with China over Taiwan or the Spratly Islands is simple to start but hard to end, and could very easily escalate. China is a nuclear-armed power capable of destroying American cities, and the threshold for nuclear exchanges in a US-China clash might be dangerously unclear and disastrously low.

So the Obama Doctrine seems to lead in some very dangerous directions. Those dangers might nonetheless be worth running, if the only alternative was to stand back and let China take over Asia. And many people see us facing this stark choice - a choice between re-asserting US primacy in Asia and abandoning the region to Chinese hegemony.

But these are not the only possibilities. We can imagine an Asian future dominated neither by America or China. Beijing and Washington could share power, each balancing and restraining the other. This would be much less congenial to most of us than the uncontested US primacy of the past 40 years. But it would be much better than the escalating rivalry that looms today, and much better too than unrestrained Chinese hegemony.

Of course this could work only if both China and the US agree to make it work. We cannot be sure that such an agreement has ever been possible. But it was always worth exploring. The window for doing that was never large, and is closing fast. The way things are going, the two countries will soon be so deeply entrenched in rivalry that a deal like this becomes impossible.

That's why the Obama Doctrine is a very serious mistake. It commits America to a strategic confrontation which will cost it dearly, which it might not win and which it could quite possibly avoid without sacrificing its vital interests in Asia. America should step back from the Obama Doctrine and explore the possibility of a deal with China to build a better basis for peace in the Asian Century.

That will not be as popular with today's American voters as the muscular resolve he showed in Asia last week. But it might earn him the gratitude of their grandchildren, which was how Bismarck defined the difference between a politician and a statesman.

The writer is professor of strategic studies at the Australian National University in Canberra and a visiting fellow at the Lowy Institute in Sydney.

THE WALL STREET JOURNAL

The lies economists tell us about money

2011-11-24T14:45:00.000+08:00

Nov 24, 2011

Understand the 'money illusion' and how it confuses your brain

By Andy Mukherjee

ONE of the biggest frauds perpetrated by the economics profession on hapless mortals over the last 70 years is its insistence that there is no such thing as 'money illusion'.

New evidence suggests that money does create illusions: it not only muddles the thinking of individuals; en masse, it precipitates property and stock market bubbles. When these bubbles burst, as in many parts of the world in 2007-08, societies come under severe stress.

But what exactly is money illusion?

British thinker John Maynard Keynes was the first to use the term, and, in 1928, the great American economist Irving Fisher devoted an entire book to it.

Simply put, money illusion is the inability of the human mind to separate 'nominal' variables, such as wages, rents, mortgage payments and dividends, from 'real' variables, which factors in how inflation affects incomes and expenses. The purchasing power of money keeps getting altered without our fully realising it.

No other unit of measurement is like money. What we mean by a kilogramme of sugar, a metre of cloth or a kilowatt hour of electricity, remains constant. But what we mean by US$1 or €1, and the happiness we derive from owning it (or the unhappiness we suffer from losing it) keeps changing.

Take two girls - Ann and Barbara - who graduate one year apart and have the same starting pay. At the end of the first year, Ann gets a 2 per cent raise. At the end of Barbara's first year at work, during which the inflation rate is 4 per cent, her pay goes up by 5 per cent.

In economic terms, Ann is better off at the start of her second year at work. Her inflation-adjusted, or real pay increase is (2-0) = 2 per cent, while Barbara's real increment is (5-4) = 1 per cent.

But who, between the two, will be a happier employee? Who will be more likely to switch jobs in the second year?

Thanks to a sharp turn the economics profession took 67 years ago, it became illegitimate to even ask such questions.

This is how it happened: In 1944, John von Neumann, one of the greatest mathematicians of all time, teamed up with German-born economist Oskar Morgenstern, a colleague at Princeton University's Institute of Advanced Studies, where they were both contemporaries of Albert Einstein's, and decided to bring some mathematical rigour to economics.

von Neumann and Morgenstern developed a calculus of 'subjective expected utility', the personal happiness that we seek to maximise. The theory relied on four axioms. Any human behaviour that violated any of the axioms was deemed irrational, unlikely to persist and unworthy of further comment; if all four held, then it was stable and predictable. Economists declared that this latter type of rational, self-seeking, utility-maximising behaviour is what makes the world go around.

How wrong they were.

Cognitive psychologists Eldar Shafir and Amos Tversky, together with economist Peter Diamond, decided to test people's opinion about Ann and Barbara. While 71 per cent of those they surveyed agreed that the pay increase had left Ann better off than Barbara 'in economic terms', fully 64 per cent of the respondents believed that Barbara would be happier than Ann at the start of her second year at work and less likely to quit.

Published in 1997, the Shafir-Diamond-Tversky study showed that the von Neumann-Morgenstern model of rationality, the foundation stone of modern macroeconomics, was shaky. And that the hunch of Keynes and Fisher is right - that we suffer from money illusion and don't factor in how inflation changes the value of a dollar.

A decade later, researchers at the University of Bonn and California Institute of Technology did a more direct test. They ran MRI scans and found that a part of the brain's pre-frontal cortex, which decides our response to rewards and punishments, reacts more to nominal than real variables. (The same part of the brain derives greater satisfaction when we're drinking Pepsi that's labelled as Coke.)

But all that came later. Meanwhile, the theory of Rational Economic Man (and Woman) became so entrenched that there was total disdain for the notion that money confuses the mind. James Tobin, who would win a Nobel prize in economics in 1981, said: 'An economic theorist can, of course, commit no greater crime than to assume money illusion.'

The banishing of money illusion was a crucial victory for the finance profession because if there was widespread money illusion, there could never be such a thing as efficient markets.

And efficient markets was the lie that the financial industry wanted you, me and politicians everywhere to believe so that no one gets terribly nervous when asset prices reach the stratosphere.

Ask yourself, why is it that housing markets in the United States, United Kingdom, Canada, Australia and many other advanced economies saw spectacular run-ups, followed by dramatic crashes, starting in the 1980s, a theme that played repeatedly until the huge subprime mortgage collapse in 2007-08? One part of the answer is money illusion, say Princeton University economist Markus Brunnermeier and London School of Economics professor Christian Julliard.

After creating havoc in the 1970s, the inflation genie went back into the bottle in the early 1980s. Nominal interest rates declined, making mortgages appear attractive to home buyers. What they didn't understand was that inflation had collapsed more than interest rates. So the real interest rate had actually risen; mortgages had become more expensive, not less.

Banks that financed the gush of mortgages profited, while governments and central banks stood by and watched. They were powerless to act because mainstream economists had no advice on how to deal with irrational exuberance caused by money illusion. After all, no such mirage was supposed to exist.

With the world economy still reeling from the 2008 crash, let's hope something has been learnt. One lesson is that as long as we use a thing of no fixed value as money, we will continue to be confounded by it. Thus, asset bubbles are inevitable. But as prices start getting out of whack, policymakers have to step in and ask people to sober up. Parties that break up early are less painful the morning after. A second lesson is that when modern macroeconomists claim to describe or predict behaviour, ask them if they are assuming people to be rational. If they are, chances are they're wasting your time.

andym@sph.com.sg

Medical magic

2011-11-21T00:17:00.001+08:00

Nov 20, 2011

Three surgical procedures which went smoothly set me thinking about things one can learn from them

By Ignatius Low

There are times in your life when you want to lift your skinny arms to the sky and thank the heavens for the gift of good pharmaceuticals.

Oh wait, the legal ones, I mean. No, no, it's not that sort of column.

Or is it?

The first time I took valium was for Lasik, a medical procedure that has become almost as cheap as a smartphone these days but no less life-transforming.

At the time, however, I paid the equivalent of several smartphones to engage one of the best surgeons in town. These are my eyes, I said to myself, as I emptied the bank account to sit in his swish office at Camden Medical Centre.

My nervousness must have been apparent at a sort of 'dry run' of the surgery we did. This is what paying top dollar buys you - the chance to lie down in the operating room before the event, with all the implements in your eye, while highly paid doctors and assistants talk you through every step of the way.

But, as I was to discover later, it was the promise of valium that would really make the difference.

'We find that it relaxes our more nervous patients and makes the procedure easier for both parties,' the surgeon said, smiling.

In the end, I wasn't just relaxed.

I went on a trip to outer space where an alien breed was conducting benign experiments on me. The whirr and click of the machines were soothing and the blinking lights - oh, the lights! - were so beautiful and captivating.

After it was all over, blurry people in surgical masks were fussing over my eye, smoothing it down with a brush and mumbling exciting-sounding commands. I half- expected them to call me Scully.

Today, my vision is perfect but my memory of the operation is tantalisingly hazy. By all accounts, Lasik was to have been a scary experience but the only word that really comes to mind for me is: Wow.

This is perhaps why I was so game to try another wonder drug when it was suggested for another common medical procedure.

This time, I was at my trusty dentist, an ex-classmate I have known literally half my life.

He has done very well and is also at the top of his game. In an interview, he once described himself as a 'humble mechanic' who removes and replaces the faulty bits in people's mouths.

For me, that faulty bit was a big molar that was so decayed it couldn't be saved. He suggested an implant, which put the fear of God in me right away.

If you don't already know, a dental implant is a titanium screw which they put into your jaw where the lost tooth used to be. Once it is in, and fused with the surrounding bone, you can put a crown (a sort of artificial tooth) on it and voila, it's as if the years of laziness and neglect never even happened.

But before we get to that happy conclusion, the patient has to endure an hour-long procedure that involves a fair bit of slicing and drilling.

'It goes better for you and me if you are relaxed,' he said, a by-now familiar refrain. 'And I've worked on your teeth long enough to know that you are not relaxed.'

'Valium?' I asked hopefully.

No, he replied. We will actually put you to sleep - with propofol.

My eyes widened. 'The drug that killed Michael Jackson?'

'Um, yes. But it's really very good,' he replied. 'It costs a bit more because a medical doctor trained as an anaesthetist will have to be there for the whole operation, but trust me, it's worth it.'

On the day of the operation, the anaesthetist came with a big suitcase and a big smile. He put an IV line in me, hooked everything up and pretty soon a milky white liquid was coursing through my veins.

'Like soya bean milk' was the last thing I remember him saying before I went to sleep and had a nice dream about planning for an overseas vacation. Then someone was shaking me awake.

After general anaesthesia, many patients report feeling nauseous and some throw up.

But I was in a wonderful mood. I remember telling another patient who was with me in the recovery room about my dream and soon we were chatting and laughing about our jobs and lives.

Later, I asked whether propofol always felt like this. They told me that patients are in such a good mood, they have actually ended up going on dates with strangers they met in the recovery room after surgery.

Again that word - Wow.

I confirmed my theories about propofol last week when I went for knee surgery to fix an old problem that had gotten worse with age and too many squats at the gym.

When I was told that I would be put to sleep for an hour or so, the first word out of my mouth was a hopeful one: 'Propofol?'

When they said yes, my heart skipped a beat. I felt that I had won another minor prize in the lottery of life.

This time, the anaesthetist likened it to a 'champagne buzz' before I went under, for a larger dose that meant that the medical team had to regulate my airways.

Again, I woke up feeling incredibly fine after what was a deep and satisfying nap. I checked my phone for messages five minutes after I was wheeled back into my room.

'Are you okay?' a colleague had asked.

'Yeah, I just came out. Good mood now!' I texted her, before wolfing down a three-course dinner of soup, shepherd's pie and cake.

The thing is, the three procedures I went through were common enough for there to be so many horror stories about pain and complications.

Yet my own experience was more than all right. Borderline pleasurable, even.

MJ certainly knew he was getting the best, and it's easy to see how he could become addicted.

Okay, so maybe it wasn't all just about the drugs.

All three doctors who attended to me were expert practitioners with many years of experience. They not only did very neat work that ensured quick healing, but each of them has also made an art out of post-op pain management.

What's my point in all of this?

I don't know really. Maybe it is just to point out that there are these little shortcuts in life that one can take and that it is perfectly okay to want them.

Or that one should never judge the rightness or wrongness of something until one has experienced it for himself.

That it pays to pay a little more for important medical procedures; or simply that happiness can be a chemically altered state of mind (legally procured, of course).

You decide.

Me? I'm just happy with these little bits of what was nothing less than medical magic.

ignatius@sph.com.sg

[Happiness is a chemically-altered state of mind.]

.

Leaders who will not lead

2011-11-17T17:18:00.000+08:00

Afraid of their people, none in the US, India or Europe will take hard decisions needed to improve living standards

by Thomas L Friedman

Nov 17, 2011

Driving to the covered bazaar in the exotic western Indian town of Jodhpur last week, our Indian guide stopped to point out a modern landmark. "Do you see that stoplight?" he asked, pointing to a standard green-yellow-red stoplight in the busy intersection. "It's the only stoplight in Jodhpur. There are 1.2 million people living here."

The more you travel around India, the more you notice just how lightly the hand of government rests on this country. Somehow, it all sort of works. The traffic does move but for the first time in all my years visiting India, I've started to wonder whether India's "good enough" approach to government will really be good enough much longer.

Huge corruption scandals have stripped the government of billions of dollars of needed resources and, as much as I'm impressed by the innovative prowess of India's young technologists, without a government to enable them with the roads, ports, bandwidth, electricity, airports and smart regulations they need to thrive, they will never realise their full potential.

This isn't just a theoretical matter. The air in India's biggest cities is unhealthy. You rarely see a body of water here - a river, lake or pond - that is not polluted. The sheer crush of people - India will soon have more than China - on an unprotected environment really seems to be taking its toll.

Without better governance, how will India avoid becoming an ecological disaster area in 10 years? Eventually the law of large numbers - 1.2 billion people - just starts to devour every minimalist step forward that India makes. India doesn't need to become China, and isn't going to. But it still needs to prove that its democracy can make and implement big decisions with the same focus, authority and stick-to-itiveness as China's autocracy.

Mr Azim Premji, the chairman of Wipro, one of India's premier technology companies, did not mince words about the future when he announced his company's earnings two weeks ago: "There is a complete absence of decision-making among leaders in the government. If prompt action is not taken, the country will face a setback. You must appreciate how serious it is."

Sound familiar? Mr Premji could have been speaking about the European Union or the United States. No leaders want to take hard decisions anymore, except when forced to. Everyone - even China's leaders - seems more afraid of their own people than ever.

One wonders whether the Internet, blogging, Twitter, texting and micro-blogging, as in China's case, has made participatory democracy and autocracy so participatory and leaders so finely attuned to every nuance of public opinion, that they find it hard to make any big decision that requires sacrifice. They have too many voices in their heads other than their own.

Here we are in America again on the eve of a major budgetary decision by yet another bipartisan "supercommittee", and does anyone know what President Obama's preferred outcome is? Exactly which taxes does he want raised, and which spending does he want cut? The President's politics on this issue seems to be a bowl of poll-tested mush.

At a time when, from India to America, democracies have never had more big decisions to make, if they want to deliver better living standards for their people, this epidemic of not deciding is a troubling trend.

It means that we are abdicating more and more leadership to technocrats or supercommittees - or just letting the market and Mother Nature impose on us decisions that we cannot make ourselves. The latter rarely yields optimal outcomes.

The European Union has a particularly acute version of leaders-who-will-not-lead, which is why both Greece and Italy have now turned to unelected technocrats to run their governments. Writing in The Financial Times on Saturday, Mr Tony Barber noted, "In effect, euro zone policymakers have decided to suspend politics as normal in two countries because they judge it to be a mortal threat to Europe's monetary union. They have ruled that European unity, a project more than 50 years in the making, is of such overriding importance that politicians accountable to the people must give way to unelected experts who can keep the show on the road. "If so far there is little public outrage in Athens and Rome, it is surely because millions of Greeks and Italians hold their political classes in such contempt."

Yes, it's true that in the hyperconnected world, in the age of Facebook and Twitter, the people are more empowered and a lot more innovation and ideas will come from the bottom up, not just the top down. That's a good thing - in theory.

But at the end of the day - whether you are a President, Senator, Mayor or on the steering committee of your local Occupy Wall Street - someone needs to meld those ideas into a vision of how to move forward, sculpt them into policies that can make a difference in peoples' lives and then build a majority to deliver on them.

Those are called leaders. Leaders shape polls. They don't just read polls. And, today, across the globe and across all political systems, leaders are in dangerously short supply. The New York Times

Thomas L Friedman is a three-time Pulitzer Prize winner.

How Singapore uses behavioural economics

2011-11-16T17:01:00.000+08:00

Nov 16, 2011

By Ravi Menon

OME 15 years ago, Switzerland held a referendum about where to put nuclear waste dumps. Researchers went from door to door in two Swiss cantons and asked people if they would accept a dump in their communities. People thought that such dumps might pose a risk to their health or depress the value of their properties. But a surprisingly high 50 per cent of those who were asked said they would accept a nuclear waste dump in their communities. People felt responsibility as Swiss citizens.

But when people were asked if they would accept a nuclear waste dump if they were paid a substantial sum each year - equal to about six weeks of the median wage - a remarkable thing happened. Only about 25 per cent of the respondents agreed to have the dumps. The offer of cash undermined the motive to be a good citizen.

Similar observations have been made in other settings. When students are paid to go to class, attendance falls. When a fine is imposed on parents who pick up their children late from childcare, more parents turn up late and just pay the fine. It is as if when people are paid to do the right thing, they do less of it.

These findings run smack in the face of conventional economics. Traditional neo-classical economics tells us that individuals are rational. This means they prefer more to less. They respond to incentives. They act in their self-interest. They maximise their utility by making well-informed choices within a budget constraint. These assumptions are intuitive and resonate with the observed ways in which most people make decisions.

Of course, few economists would say that all of us make rational decisions all the time. But as long as most people behave rationally most of the time the foibles and errors of those who do not cancel out in aggregate. These assumptions have been repeatedly validated and form the basis of many public policies.

But the exceptions to rational utility maximising behaviour are too numerous to ignore:

People do not save as much as they themselves think they should.
People believe in a lucky streak even though the probability of winning in each toss of the dice remains constant.
People do not opt out of default options, but do not opt in when these same options are presented without default.

The assumptions of neo-classical economics remain a useful tool to understand how people make choices. But there is clearly a need to have a more nuanced understanding of human psychology and behaviour. And it is easy to see why such an understanding is critical for public policy: because all public policies are based on some assumption - explicit or implicit - about how people will respond to these policies.

Behavioural economics is an attempt to blend the insights from psychology with the traditional assumptions of economics to yield a richer understanding of how people make decisions.

Behavioural economists describe three ways in which the assumptions of neo- classical economics are bounded or limited by psychological and cognitive factors.

First, our rationality is bounded.

Second, our willpower is bounded.

Third, our self-interest is bounded.

Economic rationality is limited by imperfect information, time constraints and cognitive biases. Individuals cannot assimilate and analyse all the information necessary to fully maximise their benefits from various courses of action. Instead of optimising, we use various mental models, 'rules of thumb', and other cognitive shortcuts to make decisions. For example, when we choose a home mortgage or health insurance plan, we settle for one that is 'good enough' rather than exhaustively search for the optimal plan. Some would say the same approach applies to choosing a spouse, though whether such a thing as an optimal life partner exists is another matter.

Rules of thumb are not entirely undesirable. They reduce the complex tasks of assessing probabilities and predicting gains and losses. They can improve decision-making if their structure is well- adapted to the situation they are being used in.

But some cognitive shortcuts can be misleading, and sometimes even dangerous. For instance:

Saliency bias leads us to assign undue significance to events that occurred recently. Immediately after witnessing a serious car accident, people are likely to believe that road travel is more dangerous than it actually is.

Cognitive dissonance makes us overly confident in firmly held beliefs, in the face of compelling evidence to the contrary. It is often a good explanation for market manias and financial crises.

During the 2000s, when securitisation of sub-prime mortgages surged in the United States, market participants were blind to its risks. Most of them could not contemplate the possibility of a global financial crisis.

Closer to home, despite repeated bouts of property market collapses, many Singaporeans seem to believe that property prices can never come down. Or that interest rates can go up.

The second way in which we fall short of the rational utility maximiser of Economics 101 is bounded willpower. There is substantial empirical evidence that we often procrastinate, have low self-control and suffer from inertia, failing to make choices that are in our long-term good. Many people do not exercise as much as they would like to, or find it difficult to quit gambling or smoking even though they want to.

Perhaps the most obvious and economically significant demonstration of bounded willpower is our inability to save enough for the future. There appears to be a universal lack of self-control to reduce current consumption in favour of future consumption. A more extreme version of this lack of self-control is manifested not just in too little saving but too much borrowing. At the heart of the macroeconomic problems afflicting many advanced economies today is a high level of indebtedness - both among households and governments.

Third, we display bounded self-interest. We do not simply seek to maximise our individual utility, but instead care about fairness and relative outcomes. We engage in altruistic activities; respond to community identities, norms and values; and are often prepared to incur personal cost to help achieve collective outcomes we perceive as good.

Even when we respond to incentives, we do so in complex, nuanced ways. Experiments show that providing people with monetary rewards as compensation for accepting an unpleasant responsibility can erode the intrinsic motivations of civic behaviour and public-spiritedness.

The case of the Swiss referendum on where to site nuclear waste dumps is a vivid example of this. When people were simply asked whether they would accept the nuclear waste dumps, half of them responded affirmatively, based on considerations of public responsibility. But when they were asked the same question with the offer of money, it was as if they were being told to consider only their self-interest and not public responsibility. And through the lens of self-interest, compensation equal to six weeks of the median wage was not enough.

Behavioural economics in S'pore

IN SINGAPORE, public policies have been strongly guided by the rigour of economic logic. Getting prices right, using financial incentives, making choices transparent and letting the market work are key ingredients of this approach. Economic rationality has generally served the country well.

But what is less well known is that policies have been shaped also by considerations of people's likely responses and reactions which may not be consistent with economic logic. Of course, it is not that the government had a deep understanding of behavioural economics, or even knew that it was applying concepts from behavioural economics. Rather, it was a pragmatic approach of learning from mistakes, of developing an intuition for how people will respond and continually adjusting policies in the light of experience.

Let me cite three ways in which insights from behavioural economics have been applied in Singapore.

Taking advantage of cognitive biases

FIRST, rather than try to change people's cognitive biases through economic argument, it may be better to modify policies to take advantage of such biases to deliver the desired social outcomes. Transport policy is a good example - few issues in Singapore are subject to as much cognitive biases, and few areas have seen as much application of insights from behavioural economics.

Take for instance, the phenomenon of sunk costs - the tendency to continue an activity once an investment of time or money has been made. Neo-classical economics tells us that sunk costs are irrelevant to current decisions - which should only be based on a consideration of marginal costs and benefits of undertaking that activity. In other words, no matter how much we pay for our cars, it should not affect how often we use them. But that is not how we behave in practice: because we have paid so much for them, we drive them more! In fact, the high cost of cars could have the perverse effect of increasing road usage. Hence, the gradual policy shift away from upfront ownership costs through the Additional Registration Fee on cars to usage costs through Electronic Road Pricing (ERP).

The ERP also offers a good way to exploit the saliency bias of motorists. Neo- classical economics tells us that we make commuting choices after taking account of all the relevant costs - parking, petrol, ERP and others. But in reality, we are not good at making such calculations. We focus on the more frequent or salient costs - like parking or ERP - rather than less frequently incurred costs like petrol.

In fact, studies by LTA show that motorists are about three times more sensitive to a $1 increase in ERP compared to a $1 increase in petrol costs, for the same journey. The 'beep' from the in-vehicle unit and display of the charge incurred every time the motorist passes an ERP gantry has a tangible and immediate effect that filling up petrol at the pump every week does not.

Using default options

SECOND, understanding people's tendency to follow the default option has been a powerful element in many of Singapore's public policies.

Most people intuitively understand the importance of health insurance but never get round to buying a policy. If MediShield, the insurance programme for catastrophic illness offered through the Central Provident Fund, had been an opt-in scheme, people's inertia and status quo bias might have resulted in a low take-up. Understanding this, the government introduced MediShield as an opt- out scheme. This helped ensure a high participation rate without taking away people's choice.

Similarly, participation in organ donation was established as the default for Singaporeans over 21 years of age and of sound mind unless they explicitly opted out. Few Singaporeans chose to opt out. Kidney donations by the deceased rose by about nine times following the passage of the legislation on organ donation - a socially good outcome that was achieved, again without taking away people's choice.

Paying attention to norms, not just incentives

THIRD, policies have sought to preserve and enhance, rather than erode, people's intrinsic motivations for good behaviour. For instance, through the use of public campaigns and education, policy has reinforced social norms and strengthened Singaporeans' intrinsic reasons for behaving in socially responsible and civic conscious ways.

Financial incentives and social norms go hand in hand. Take the policy on smoking, for instance. Singapore has one of the highest duties on cigarettes in the world - a powerful financial disincentive. More importantly, this is complemented by measures aimed at changing social norms and making smoking as inconvenient as possible. Public campaigns focus not just on the personal health risks of smoking but also its social undesirability - that it is not cool to light up.

One area where greater reliance could perhaps be placed on social norms rather than just financial incentives is in procreation policy. Over the last two decades, the government has made repeated attempts at raising the fertility rate through various financial incentives, ranging from paid maternity leave to tax deductions for parenthood and cash handouts through the Baby Bonus. Success has been elusive; the fertility rate has continued to fall.

It is not that financial inducements do not matter, but perhaps we should borrow a leaf from the Nordic countries whose high fertility rates seem to reflect a broader set of family friendly practices and norms that permeate all parts of society. The challenge for Singapore is to harness the obviously strong desires of Singaporeans for marriage and parenthood into creating a similar broad social norm or compact that celebrates, prioritises and supports the family.

Policymaker, heal thyself

PERHAPS the most profound implication of behavioural economics is that we can no longer assume that all the voluntary choices we make will promote our well-being in the best way.

Does this mean that governments should restrict individuals' choices? For instance, if there is solid evidence that people systematically make poor choices regarding insurance coverage, school applications, savings decisions or health-care plans, are policymakers justified in making choices on people's behalf? In many countries, car insurance and health insurance are mandatory; saving for retirement is also increasingly becoming compulsory; seat belts, crash helmets, the list goes on.

But a word of caution is due. The fact that people sometimes make choices that may not be in their best interest does not mean that things would necessarily be better if government made those choices on their behalf. Policymakers themselves suffer from similar cognitive and psychological biases when analysing challenges or designing solutions. After all, government is also composed of people and they are not immune from making bad choices. A good dose of humility and self- awareness is in order.

Policymakers need to be more cognisant of our own psychological and emotional biases, and do our best to mitigate them. Cognitive biases, assumptions and blind spots can derail good policymaking. It is important that we retain a certain scepticism about our own operating assumptions and mental models, and periodically test them against new evidence and a changing environment.

There is much to learn. We are only beginning to understand how behavioural economics works and how its insights can be harnessed for policy design. And we need these insights more than ever. Both the domestic and external environments have become more complex and challenging. We need new lenses to complement our traditional lenses, to be able to better see and understand what people want and how they will respond.

The writer is a managing director at the Monetary Authority of Singapore.

This is the text of a speech delivered last week at the launch of the book Behavioural Economics And Policy Design: Examples From Singapore, edited by Donald Low and published by the Civil Service College, Singapore.

Beijing blew it; Washington shouldn't

2011-11-14T22:19:00.000+08:00

Nov 14, 2011

THE CHANGING GAME IN ASIA

By David F. Gordon

ATTENDING the Asia-Pacific Economic Cooperation (Apec) summit in Honolulu over the weekend, US President Barack Obama would have realised that he confronts a changing game in Asia. During a recent visit to the region, a senior Asian policymaker told me: 'We used to ask what we could get from the Americans in return for their military personnel and basing rights. The new question is, what will we have to give them to get them to stay. And it's all because of China.'

Japanese, Australian and South-east Asian policymakers and business executives have made clear to me that China is misplaying its hand in Asia. Beijing has miscalculated its ability to cater to nationalist sentiment at home without alarming its neighbours and is inadvertently driving Asian states to build closer economic and strategic ties with the United States and each other. This misstep gives Washington an enormous opportunity.

For the past decade, Beijing wagered that its neighbours' reliance on its economy for trade and investment would buy goodwill, closer ties and space for occasional strategic posturing. In other words, China sought to provide the economic engine for the region while espousing a 'peaceful rise' principle that eased suspicion over its geopolitical intentions. And for its neighbours, an economically vibrant and diplomatically modest China provided the perfect partner.

Over the past 18 months, however, China has taken a more aggressive tone towards territorial disputes in the South China Sea and elsewhere. This is partially driven by the leadership transition in Beijing, as factions in the Communist Party seek to curry favour with hawks, hard-liners, the nationalistic press and business. Although a few Chinese policy-makers have begun to walk back some of the aggression, their hands are tied by the jockeying for power in Beijing.

Wariness of China is pervasive and increasing among the elites and general populations in Vietnam, the Philippines, South Korea, Japan and elsewhere. Meanwhile, economic sentiment regarding China is shifting from bullishness to caution.

Even without an economic 'hard landing', China may face years of slower growth and higher inflation, coupled with rising fears about bad debt. Its neighbours worry that a weakening in China's economic trajectory could have drastic effects on their economies. A more assertive but less economically dynamic China is the region's worst nightmare.

In response, China's neighbours seek a balance to Beijing. When Chinese Foreign Minister Yang Jiechi last year warned members of Asean to 'remember how much of your economic prosperity depends on us', he motivated not a strategic kowtow but increased efforts by regional nations to reduce their dependence on China.

These dynamics are not yet fully appreciated in Washington, but they present a strategic opportunity. We have already taken advantage in the military sphere, strengthening cooperation beyond defence agreements with Australia, Singapore, Taiwan and Vietnam since last year. In Japan and South Korea, alliances with the US remain extremely popular.

Washington has an even greater opportunity in the economic realm: to shape the emergent Asia-Pacific financial and commercial architecture, enabling the US to provide what will probably be necessary economic underpinnings for long-term US military and security commitments to the region. But Washington has been slow to pursue this opening, even with a path readily available. The Trans-Pacific Partnership (TPP) is a free trade agreement that includes Australia, New Zealand, four South-east Asian nations, Chile and Peru.

Japan is expected to announce its intention to join negotiations. US Secretary of State Hillary Clinton emphasised the TPP when speaking about economic diplomacy last month, but negotiations have proceeded slowly. While Washington cannot drive the TPP on its own, the Obama administration's approach to Asian trade and commercial issues has been tepid. The Apec summit is likely to bring only a skeletal outline of the pact's terms, rather than the full agreement as originally planned.

As Mrs Clinton said last month: 'America's economic strength and our global leadership are a package deal.' A vibrant TPP, complete with rules and reciprocity on investment, will ensconce the US firmly in the emerging economic and political architecture in East Asia. Although the US is still a leading trade partner of many Pacific Rim countries, its share of regional trade is declining. The TPP, especially if it includes Japan, would provide a strategic counterpoint to last year's China-Asean pact. It presents an alternative to Chinese economic and strategic domination that nations in the region are actively seeking, and offers economic and strategic benefits for the US in a region that has begun to define the international scene.

This opportunity will not last. After China's leadership transition is complete, there could be a more decisive shift in Beijing towards a more effective Asian policy. For now, though, driving the TPP to a successful conclusion would be an important step towards ensuring that the US has a secure place in the region's new dynamics.

The writer is head of research and director of global macro analysis at Eurasia Group, a global political risk consultancy. He was director of policy planning at the US State Department from 2007 to 2009.

LOS ANGELES TIMES-WASHINGTON POST

2.05m Japanese on welfare - a post-war high

2011-11-14T21:42:00.000+08:00

Nov 10, 2011

July's figure includes thousands hit by March 11 disaster

By Kwan Weng Kin

TOKYO: Japan's prolonged recession has led to a record 2.05 million people living on welfare, narrowly surpassing the previous high posted during the post-World War II years.

In July, the number of people on welfare hit 2,050,495, almost 4,000 more than the previous record of 2,046,646 posted 60 years ago in 1951.

This number is expected to grow in the coming months, given Japan's rapidly ageing population.

Last year, almost one-quarter of the Japanese population - 23 per cent - were aged 65 and above. The figure is expected to reach nearly 30 per cent by 2020.

While the Health, Labour and Welfare Ministry's report did not give a breakdown of the types of welfare recipients, they included thousands who lost their jobs because of the March 11 earthquake- tsunami disaster and the nuclear crisis that it triggered.

Japan imposes stringent conditions on welfare applicants, who must show that they have exhausted all available personal assets and all avenues for employment, and must be living in poverty.

In practice, applicants are told to first live off their savings and sell any assets or property they have to support themselves. Welfare counsellors also advise applicants to find work.

An elderly applicant who is entitled to a pension or other allowances from the state is told to apply for those benefits first.

Japanese society also continues to uphold family ties. Welfare applicants are routinely told to seek financial support from close family members or relatives, rather than depend on the state.

Despite this, the number of people on welfare has been rising since it bottomed out in 1995 at 880,000 a month. After hitting two million in March this year, the number has grown by about 10,000 a month.

While the elderly comprised over half of all welfare recipients previously, the proportion of younger Japanese on welfare swelled in recent years, particularly after the 2008 global financial crisis.

Thousands of part-time workers have been left jobless since employers cut manpower costs to stay afloat three years ago.

Those in their 30s to 50s find it especially difficult to find a new job because of their age.

The persistently poor job situation in Japan is due to the sluggish economy. Government-funded skills retraining programmes have not helped much.

The government's expenditure on welfare benefits has gone up as the number of recipients continues to rise. The total payout topped 2 trillion yen (S$32.6 billion) in 2001 and reached 3 trillion yen in 2009.

For the fiscal year ending next March 31, the government has set aside 3.4 trillion yen.

But Japan is far from being like many Western countries, where young people are said to be able to live on the dole and not have to work.

A young couple with one infant living in the Tokyo area will receive about 175,000 yen - equivalent to the starting monthly pay of a college graduate. If they live in places where the cost of living is lower, the payout is about 20 per cent less.

Welfare recipients who need medical care will have their bills paid directly to the hospital.

wengkin@sph.com.sg

[Much like Singapore.]

Time to give workers bigger slice of the pie

2011-11-14T21:39:00.000+08:00

Nov 10, 2011

Commentary
G-20 leaders must set figures for wage rises in order to boost growth

By Andy Mukherjee

IN THE middle of yet another nerve-racking week in the markets, with the epicentre of the European crisis seemingly having shifted to Italy from Greece, it is legitimate for investors to ask what, if anything, politicians are doing.

Now, at least one politician did do something good this week - Italian Prime Minister Silvio Berlusconi promised to step down. That gave a faint glimmer of hope to investors yesterday, though it is not clear just how Rome - with or without Mr Berlusconi - will be able to make a dent in the country's staggering debt burden, which at €1.9 trillion (S$3.3 trillion) is 119 per cent of its gross domestic product.

As the world heads towards another 2008-type crisis, there is talk that the International Monetary Fund's (IMF) resources will be expanded - at a future date. There is also expectation that the European Financial Stability Facility, Europe's bailout fund, will be ramped up - at a future date.

Investors are justifiably angry with world leaders for not presenting a clear battle plan at the recently concluded Group of 20 (G-20) summit in Cannes, France.

Still, I would argue that it would be a mistake to view the shindig as a complete failure. Take, for instance, the Cannes Action Plan for Growth and Jobs, through which the leaders made a commitment to implement 'structural reforms to raise growth and enhance job creation across G-20 members'. The 'ultimate objective', they declared, 'is to provide more and better jobs for our citizens'.

Now, it is admittedly a vague commitment. The investor community, which has very little faith left in the ability of present-day politicians to do much good, will not get excited about what they see as yet another platitudinous statement. But then, most political commitments of far-reaching significance begin life this way - as nebulous ideas. It is now up to the technocrats in each country, and at multilateral agencies such as the IMF and the International Labour Organisation (ILO), to flesh out the political intent into specific, time-bound commitments.

One such commitment on which urgent political consensus is needed is wage-led growth.

The average real, or inflation-adjusted, annual wage growth in G-20 economies in 2006 and 2007, the two years preceding the global crisis, was a lacklustre 2.5 per cent and 2.8 per cent respectively. If you take China out of the picture, the reality was even grimmer. For G-20 excluding China, real wages rose just 1.6 per cent and 1.8 per cent in 2006 and 2007.

The 2008 crisis was a hard blow to taxpayers, who had to pony up the resources for the cleaning-up of the mess left by irresponsible bankers. But the crisis also delivered a knock-out punch to labour. Real wage growth in G-20 excluding China collapsed to just 0.5 per cent in 2008, and it rose no faster than that in 2009.

One does not have to be a card-carrying communist to share the rage of the Occupy Wall Street protesters against this assault on the working class.

In formulating its action plan on jobs, the G-20 has taken an important first step. The next step should be for the G-20 leaders to adopt - and announce - simple numerical targets for what the wage share in each of their economies should be by the end of the present decade. No one number will fit all. But the targets have to be worked out in a way that, on average, a large share of economic output of G-20 gets paid out to workers as wages.

A commitment to wage-led growth will be a powerful signal to consumers to start spending again.

Before the onset of the 2008 crisis, conventional economic wisdom de-emphasised wages and promoted profits. One of the central tenets of this orthodoxy was that policymakers must insist on wage moderation because if they did not, there would be too much inflation.

This view found ready acceptance among policymakers as the world was in no mood to relive the inflationary 1970s.

Promoting profits at the expense of wages, it was believed, was a much better growth strategy. The assumption was that higher corporate profits would lead to higher investments, which will, in turn, produce economic growth, create jobs, and bolster government revenue.

Consumption, the spin doctors said, would be supported not by current wage incomes, which were largely stagnant, but by wealth.

For a while, it was possible to do this. Household ownership of financial products was rising globally. So even a part of the middle class, which would have liked to see its wage income rise, got hoodwinked by bankers into accepting the notion that it could always consume a part of its illusory stock-market and real-estate riches. According to an ILO study, between 1980 and 2007, in 17 out of 24 of the world's richest nations that belong to the Organisation for Economic Cooperation and Development (OECD) and for which data is available, the share of wages in the economy fell.

Not that developing countries were spared. Between 2000 and 2009, real wages in China grew 12.6 per cent a year, but productivity grew faster at 13.7 per cent. As a result, the share of wages in gross domestic product fell 4 per cent annually. The yearly decline in wage share in India was 1.4 per cent.

The slavish pursuit of wealth-oriented growth sowed the seeds of the 2008 financial crisis, which brought the whole edifice crumbling down.

The wealth that was supposed to have paid for current consumption simply vanished into thin air. After governments were forced to assume the liabilities of a troubled banking sector to get credit flowing again, they discovered that their budgets were overstretched and no longer capable of supporting the vast social safety nets that they had put in place.

The folly of systematic suppression of wages became all too apparent.

It is time for course correction, which can only happen if G-20 leaders eschew the doctrine that got much of the world into this mess, and give a strong push towards wage-led growth.

andym@sph.com.sg

Greek crisis not as bad as 2008 - yet

2011-11-05T13:03:00.001+08:00

Nov 5, 2011

Commentary

Things could still get far worse as political will, policy options crumble

By Robin Chan

GREEK politics this week may have seemed like a comedy of errors to some, but there is nothing funny about the global outlook if the long-simmering euro zone crisis is not addressed urgently.

So far, the crisis has not evolved to the magnitude of the global financial crisis of 2008 and 2009, which saw Wall Street giant Lehman Brothers collapse, global markets plunge, and economies around the world cascade into a sharp and broadbased economic recession.

But as events in Europe take improbable and dramatic twists and turns, the impact on the financial system and economies around the world is becoming more and more pronounced - and bleak.

Europe now appears headed for a recession, which could easily send the global economy deep into the doldrums.

And the longer Greece delays a decision on its euro zone future and reforms to its economy, the higher the risk of contagion spreading to Spain and especially Italy, which is in a precarious state.

As an HSBC report noted yesterday, far from ring-fencing Greece, the contagion and associated credit crunch risks appear to be intensifying. If this happens, the crisis could claim much more significant victims than the likes of Wall Street brokerage MF Global, which collapsed in the past week, and Europe's Dexia Bank, bailed out earlier this year. It could be 2008 all over again.

There are three reasons why things could still get much worse.

First, euro zone debt problems are widening. As it stands, Greece, Portugal and Ireland are rotten apples that must be contained to stop contagion from spreading.

The three economies are small, and combined they are still less than the size of Spain which has a gross domestic product (GDP) of US$1.4 trillion (S$1.8 trillion).

The amount of debt is relatively small. Greece has sold US$62 billion in debt - small beer compared with the credit default swap market which ballooned to a whopping US$62 trillion in 2007 in the lead-up to the last crisis. US home loan lenders Fannie Mae and Freddie Mac also held US$5.3 trillion in mortgage assets, which led to billions of dollars of write-offs, which led to the collapse or nationalisation of many a bank in Europe and the United States.

If the problems are confined to the peripheral economies of Portugal, Greece and Ireland, the world can live with that.

But contagion is spreading to Spain and Italy as well. The latter has an economy double the size of Spain and US$2.2 trillion in debt. The Spanish government's exposure to Greek debt totals US$502 million while Italy's totals US$2.4 billion, according to the Bank of International Settlements.

As German Chancellor Angela Merkel has remarked: If Italy's debt stays at 120 per cent of its GDP, it won't matter how high the protective wall is, it won't help win back market confidence.

Already, credit spreads on Italian government bonds have blown out relative to equivalent German debt - a sign of confidence flowing out of Italy - with fears it could follow in Greece's footsteps.

The second key reason that things could get worse is that governments' ammunition may be running out, with another crisis following so soon after the last.

Back in 2009, central banks around the globe slashed interest rates and splashed out more than US$6 trillion combined to resuscitate the economy.

Worryingly, Bank of America-Merrill Lynch economist Chua Hak Bin noted that the scope for policy responses is not as great as it was in 2008.

Monetary policy has its limits, as US interest rates are at record lows in the US, while Europe's are near zero, and have just been cut on Thursday.

The US may be about to launch a third round of quantitative easing, effectively printing more money, but the first two rounds have not boosted growth much or eased unemployment.

United Overseas Bank head of research Jimmy Koh said the easier solution would have been for the European Central Bank to write a blank cheque to bail out the troubled economies, as the US did for banks at the height of the last crisis.

[This was in effect what SG govt did when they guaranteed and backed local banks.]

But European leaders are not willing to do so and have chosen to use the expanded €1 trillion (S$1.7 trillion) European Financial Stability Fund, a rescue fund to limit contagion, hoping to tap global investors including from China and Singapore.

But with the Greek outlook gravely uncertain, investors are hardly keen to step into the fray. A US$3 billion bond sale has been delayed.

The third big worry is that strong and coordinated political leadership seen in 2009 appears to be lacking.

Mr Koh noted just a handful of key players including US Federal Reserve chairman Ben Bernanke made the big, urgent decisions to avert the US financial meltdown. But in the now two-year-old euro zone crisis, there are 17 national leaders, all with differing agendas, leading to a convoluted decision-making process.

[In a crisis, a coordinated leadership is vital to effective action. Which is why armies are not led by committee. Or in the case of the US-Vietnam war, when it is led by committee, they are less effective.]

The shock referendum called, then withdrawn, this week, by Greek PM George Papandreou drew the ire of Dr Merkel and her European counterparts, as politics is increasingly clouding an already complex policy process in Europe. The bizarre turn of events also dominated the high-level G-20 meeting in Cannes which markets had looked to for hope.

There, Singapore Prime Minister Lee Hsien Loong warned the euro crisis is already on a bigger scale than the 2008 financial crisis and that the risk of a sudden and unpredictable global contagion has risen. His message that political leadership is critical to solving economic problems must not go unheard.

Hope is dimming. The US Federal Reserve has downgraded the US' long-term growth forecast, while Singapore is preparing for below trend growth.

Most now realise that even if Greece is bailed out, there will be a recession in the euro zone and a long road to recovery.

But that will be better than a collapse of banks and even states and a global recession - a scenario that while once far-fetched, has now become ever more likely as the crisis deepens.

It is not too late to avert that disaster. The prescription is clear, but the decisions are much harder to make.

chanckr@sph.com.sg

7 Billion and the challenges

2011-11-02T17:01:00.000+08:00

Nov 2, 2011

editorial

But there isn't enough water

THE world's population reached seven billion this week. The day, Monday, was marked with becoming happiness in countries that symbolically ushered in seven-billionth births. But it is the business of the United Nations Population Fund to inject realism into a statistical milestone few earthlings care about. It warns against over-consumption of resources: This was true before the fifth billion was crossed a generation ago. More optimistically, it says the crowded world could have thriving cities and productive labour that will grow economies, given the right planning and investment.

That is demanding a high threshold of proof. As 43 per cent of the seven billion are aged under 25, education and training obviously will make the difference between hope and despair.

It would have been nice if some of the increase of the past generation had been home-produced, in Singapore, for one. Or in Japan and South Korea. But what has been overlooked in the numbers lark is that falling fertility rates of the past half century - from six births per 1,000 to 2.5 - could see slower population growth than the addition of a billion every dozen years. It is possible the end-century number would be several billion short of 14-15 billion, at current rates of increase. Whatever the profile, competition for resources is the one constant that governments and the UN have to be watchful about. It is not food production. The world can feed itself. Such shortages that occur are mainly the result of questionable political choices and the machinations of food multinationals and futures markets. It is not about oil: Alternatives can be found or new industrial processes will emerge.

It is about water. Rivers cannot be transported to arid lands. 'Owners' of rich river sources and basins (China and Turkey are examples) will face increasing conflict with downstream nations as demand rises.

The World Resources Institute, a United States think-tank, calculates that water use will rise by 50 per cent in developing nations by 2025. Two representations highlight the challenges. The first: Only 2.5 per cent of the Earth's water is fresh, with two-thirds of that frozen. How soon can it be when oceans of salty water can be mined cheaply?

The second: It requires 100 litres of water to grow 1kg of potatoes, but to produce 1kg of beef takes 13,000 litres. There is scant chance of a change in eating habits when the middle-class multitudes of China and India are taking to meat-eating with gusto.

But if industry and governments would be as imaginative in seeking solutions as scientists are graphic in posing the challenge, Earth may not feel so overcrowded.

Why reject the tech that puts food on plates of the poorest?

Now that we are 7 billion, let's feed the world

by Michael Hanlon

Todayonline Nov 02, 2011

Happy birthday, baby 7 billion, Danica May Camacho, born on Sunday night in Manila.

Since 1880, the world population has doubled and doubled again, and this has changed the face of the planet. We (hopefully) won't see a further doubling, but even the best-case projections see the human tide topping out at around 9 to 10 billion in the 2060s.

I am an optimist; I think we will cope, just - but it won't be easy. I know that to stand a chance of keeping an extra two or 3 billion people fed, watered and sheltered in the decades ahead without completely ruining our planet, we are going to have to abandon our bizarre, decadent aversion to "risky" new technologies and embrace a Brunellian programme of hyper-tech big engineering and innovation.

Today, we ignore the fact that the reason food is mostly affordable and famines are relatively rare is almost entirely down to the work of scientists few have even heard of - the plant breeders who forged the "green revolution" in the post-war years.

Nobel peace prizes have been awarded to some dodgy people, but if one man deserved it a thousand times over it was American scientist Norman Borlaug, whose work on dwarf and disease-resistant wheat varieties has been credited with saving a billion lives. His research proved wrong the doomsayers such as the US economist Paul Ehrlich, who in the '60s predicted global famines by the century's end.

But we may be getting close to the limits of conventional plant-breeding and we cannot take for granted its ability to feed an extra 1 to 2 billion mouths in future. Mr Ehrlich's predictions may yet come true - and food prices have been rising for some time.

There is fury among scientists at the reluctance of the world (outside the US and China) to embrace GM technology. In Britain, scientists have developed varieties of transgenic wheat that are resistant to a new strain of deadly stem-rust disease. Geneticists in the UK, the US, Switzerland and elsewhere have developed wheats, "golden" rices and barleys that require less expensive pesticides, less herbicides and far less water to grow, or which can even grow in brine.

Yet this technology is shunned not only in Europe but in Africa, where local green activists take their cue from decadent, well-fed Europeans who would presumably rather see the Third World starve than adopt "unnatural" technology.

If few have heard of Dr Borlaug, Ms Rachel Carson is a heroine to millions. Her 1962 book Silent Spring is credited with launching the modern green movement, and detailed the effects of chemicals such as DDT and pesticides on the food chain. Carson made "chemical" a dirty word. What her followers ignore (to her credit, she did not) is the fact that if it weren't for chemicals that kill insects, fungus and weeds, 2 billion people would be starving.

We are not just running out of food. The world faces an energy crisis of grotesque proportions. China's population has (more or less) stopped growing but India's hasn't, and if the subcontinent is to keep the lights on, it must invest in new energy technologies.

Again, we face a choice: Earth has plenty of coal and gas, but to power a world of 10 billion people using carbon-emitting, coal-fired steam turbines will invite consequences so dire that even the most diehard climate sceptics will be finally convinced, as the floodwaters come lapping round their ankles.

Again, there is an answer - the wholesale adoption of ultra-modern, clean, green nuclear-fission technology. Nuclear is not perfect. There are well-known dangers and costs associated with the atom. Like democracy, nuclear energy is the worst option there is - apart from all the alternatives.

Greens - not all, but too many - hate machines. We could go back, of course, to a world where food is grown "naturally" and our lives are powered by windmills and everything is sustainable and organic. Such a world would be a paradise if there were a billion humans. But there are not.

If the late-21st century is not to be remembered as the era of the giga-famine, we will have to stop pretending we live in a prelapsarian idyll and accept that only our ingenuity will allow Danica Comacho to live in anything approaching peace and prosperity. THE DAILY TELEGRAPH

Does Redistributing Income Reduce Poverty?

2011-11-02T16:29:00.000+08:00

Nov 2, 2011

COMMENTARY
Jagdish Bhagwati

NEW YORK - Many on the left are suspicious of the idea that economic growth helps to reduce poverty in developing countries. They argue that growth-oriented policies seek to increase gross national product, not to ameliorate poverty, and that redistribution is the key to poverty reduction. These assertions, however, are not borne out by the evidence.

Since the 1950's, developmental economists have understood that growth in GNP is not synonymous with increased welfare. But, even prior to independence, India's leaders saw growth as essential for reducing poverty and increasing social welfare. In economic terms, growth was an instrument, not a target - the means by which the true targets, like poverty reduction and the social advancement of the masses, would be achieved.

A quarter-century ago, I pointed out the two distinct ways in which economic growth would have this effect. First, growth would pull the poor into gainful employment, thereby helping to lift them out of poverty. Higher incomes would enable them to increase their personal spending on education and health (as seems to have been happening in India during its recent period of accelerated growth).

Second, growth increases state revenues, which means that the government can potentially spend more on health and education for the poor. Of course, a country does not necessarily spend more on such items simply because it has increased revenue, and, even if it does, the programs it chooses to fund may not be effective.

In almost willful ignorance of the fact that the growth-centered model has proved itself time and again, skeptics advocate an alternative 'redistributive' developmental model, which they believe will have a greater impact on reducing poverty. Critics of the growth model argue that it is imperative to redistribute income and wealth as soon as possible. They claim that the Indian state of Kerala and the country of Bangladesh are examples where redistribution, rather than growth, has led to better outcomes for the poor than in the rest of India.

Yet, as Columbia University economist Arvind Panagariya's recent work shows, Kerala's social statistics were better than those in the rest of the country even before it instituted its current redistributive model. Moreover, Kerala has profited immensely from remittances sent home by its emigre workers in the Middle East, a factor unrelated to its redistributive policy. As for Bangladesh, the United Nations' Human Development Index, admittedly a problematic source, ranks it below India.

In impoverished countries where the poor exceed the rich by a huge margin, redistribution would increase the consumption of the poor only minimally - by, say, a chapati a day - and the increase would not be sustainable in a context of low income and high population growth. In short, for most developing countries, growth is the principal strategy for inclusive development - that is, development that consciously includes the marginal and poorest members of a society.

But the political sustainability of the growth-first model requires both symbolic and material efforts. While growth does benefit the poor, the rich often benefit disproportionately. So, to keep the poor committed to the system as their economic aspirations are aroused, the wealthy would be well advised to indulge less in conspicuous consumption.

At the same time - and more importantly - the poor need greater access to education in order to increase their economic opportunities and social mobility.

'Less excess and more access' must become the principle that guides development policy.

Jagdish Bhagwati is University Professor of Economics and Law at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations. Co-Chair with President Tarja Halonen of Finland of the UNCTAD Eminent Persons Group on Developing Countries in the World Economy.

Python Findings Shed Light on Human Heart Health

2011-11-02T15:03:00.000+08:00

After feeding, snake blood has high levels of enzymes that protect the heart

October 27, 2011
http://health.usnews.com/health-news/family-health/heart/articles/2011/10/27/python-findings-shed-light-on-human-heart-health

THURSDAY, Oct. 27 (HealthDay News) -- Huge amounts of fatty acids that circulate in the bloodstreams of pythons when they feed promote healthy heart growth, a finding that may lead to new ways to treat heart disease in people, researchers report.

One day after eating, triglyceride levels in Burmese pythons increased by more than 50-fold. Triglycerides are the main component of natural fats and oils.

There was also an increase in the activity of an enzyme known to protect the heart from damage, the University of Colorado Boulder researchers found.

The team identified the chemical composition of blood plasma in pythons that had just fed. They injected fasting pythons with either "fed python" blood plasma or a fatty acid mixture they created to mimic such plasma.

Both types of injections led to increased heart growth and indicators of cardiac health in the fasting snakes.

The same results were seen in mice that were injected with either "fed python" blood plasma or the fatty acid mixture.

"We found that a combination of fatty acids can induce beneficial heart growth in living organisms," first author and postdoctoral researcher Cecilia Riquelme said in a university news release. "Now we are trying to understand the molecular mechanisms behind the process in hopes that the results might lead to new therapies to improve heart disease conditions in humans."

The study appears in the Oct. 28 issue of the journal Science.

The three key fatty acids in fed-python plasma are myristic acid, palmitic acid and palmitoleic acid. The enzyme that showed increased activity in the python hearts during feeding is called superoxide dismutase. It's a well-known enzyme that protects the heart in humans and many other living organisms, the researchers noted.

The Wrong Inequality

2011-11-02T00:24:00.001+08:00

The New York Times
October 31, 2011

By DAVID BROOKS

We live in a polarizing society, so perhaps it’s inevitable that our experience of inequality should be polarized, too.

In the first place, there is what you might call Blue Inequality. This is the kind experienced in New York City, Los Angeles, Boston, San Francisco, Seattle, Dallas, Houston and the District of Columbia. In these places, you see the top 1 percent of earners zooming upward, amassing more income and wealth. The economists Jon Bakija, Adam Cole and Bradley Heim have done the most authoritative research on who these top 1 percenters are.

Roughly 31 percent started or manage nonfinancial businesses. About 16 percent are doctors, 14 percent are in finance, 8 percent are lawyers, 5 percent are engineers and about 2 percent are in sports, entertainment or the media.

If you live in or around these big cities, you see stores and entire neighborhoods catering to the top 1 percent. You see a shift in social norms. Up until 1970 or so, a chief executive would have been embarrassed to take home more than $20 million. But now there is no shame, and top compensation zooms upward.

You also see the superstar effect that economists have noticed in the income data. Within each profession, the top performers are now paid much better than the merely good or average performers.

If you live in these big cities, you see people similar to yourself, who may have gone to the same college, who are earning much more while benefiting from low tax rates, wielding disproportionate political power, gaining in prestige and contributing seemingly little to the social good. That is the experience of Blue Inequality.

Then there is what you might call Red Inequality. This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else. In these places, the crucial inequality is not between the top 1 percent and the bottom 99 percent. It’s between those with a college degree and those without. Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 percent more than the average high school graduate, according to the Fed chairman, Ben Bernanke. Now the average college graduate makes more than 75 percent more.

Moreover, college graduates have become good at passing down advantages to their children. If you are born with parents who are college graduates, your odds of getting through college are excellent. If you are born to high school grads, your odds are terrible.

In fact, the income differentials understate the chasm between college and high school grads. In the 1970s, high school and college grads had very similar family structures. Today, college grads are much more likely to get married, they are much less likely to get divorced and they are much, much less likely to have a child out of wedlock.

Today, college grads are much less likely to smoke than high school grads, they are less likely to be obese, they are more likely to be active in their communities, they have much more social trust, they speak many more words to their children at home.

Some research suggests that college grads have much bigger friendship networks than high school grads. The social divide is even starker than the income divide.

These two forms of inequality exist in modern America. They are related but different. Over the past few months, attention has shifted almost exclusively to Blue Inequality.

That’s because the protesters and media people who cover them tend to live in or near the big cities, where the top 1 percent is so evident. That’s because the liberal arts majors like to express their disdain for the shallow business and finance majors who make all the money. That’s because it is easier to talk about the inequality of stock options than it is to talk about inequalities of family structure, child rearing patterns and educational attainment. That’s because many people are wedded to the notion that our problems are caused by an oppressive privileged class that perpetually keeps its boot stomped on the neck of the common man.

But the fact is that Red Inequality is much more important. The zooming wealth of the top 1 percent is a problem, but it’s not nearly as big a problem as the tens of millions of Americans who have dropped out of high school or college. It’s not nearly as big a problem as the 40 percent of children who are born out of wedlock. It’s not nearly as big a problem as the nation’s stagnant human capital, its stagnant social mobility and the disorganized social fabric for the bottom 50 percent.

If your ultimate goal is to reduce inequality, then you should be furious at the doctors, bankers and C.E.O.’s. If your goal is to expand opportunity, then you have a much bigger and different agenda.

Uniquely Singapore: staff shortage and the foreign worker crunch

2011-10-26T10:36:00.001+08:00

Oct 26, 2011

special report
Tough to meet orders

AN UNUSUAL quiet has settled on the once bustling production floor at Apex Technologies; machines that once hummed with activity lie dormant, accumulating dust.

The lack of activity is not due to the usual suspect of falling orders, but to a shortage of workers to operate the machinery, said managing director Alan Hoong.

The Toa Payoh precision engineering firm makes moulds for the semiconductor industry, employing mainly foreigners.

It had about 60 on the payroll a year ago, but that has fallen to around 35.

The factory used to run two shifts, with one worker manning one machine, but Mr Hoong has had to combine the two shifts into one and get each employee to operate multiple machines.

Even with this radical revamp, the company is struggling to regain the level of productivity it once had.

'It is quite drastic. Even right now, we are having difficulty filling orders,' Mr Hoong said, even with sales dropping due to the global economic slowdown.

He estimated that the company has lost about 30 per cent of orders due to the staff shortage.

Mr Hoong said it takes anywhere from six to 12 months to get workers up to speed because of the level of training required. And while foreign workers are hard to employ, locals are simply not staying on.

He has tried all avenues, from hiring local ex-convicts to older workers, but most give up after a few days of training.

'Most don't have the patience - they quit halfway and become property agents,' he said.

The labour supply headache extends to senior staff as well, with foreigners who had spent almost a decade at the company working their way up to become supervisors, group leaders and project managers having to go.

'We spent so many years training them, and they were willing to stay on, so imagine the relationship, trust, goodwill.

'Now, the work permit gives us a two-year term, but by the time the workers are trained enough to be independent, we have to send them back,' said Mr Hoong.

'I feel helpless, and angry.'

He said Apex Technologies has explored the possibility of moving into automation, but it would cost around $10 million, which the company cannot afford at this moment.

'That (automation) needs a much higher skilled person to manage, but that is my only hope. Right now, I have foreigners willing to undergo the training, but locals don't want to,' he said.

MELISSA TAN

Plenty of customers, but not enough staff

MR WEI CHAN, founder of Next Door Deli in Ang Mo Kio, is beset by various problems, but a lack of customers is not one of them.

It is quite the opposite, in fact. He has had to put expansion plans on hold, and his shelves are half empty.

The crux of the problem is that Mr Chan, 47, also the business development director of popular bakery Pine Garden's Cake and Vietnamese delicatessen Baguette, has been unable to find vital new employees in recent months.

Despite spending up to $4,000 on advertising each month, he is still looking to employ eight more staff, including bakers and drivers for the three businesses.

In total, they have 38 staff, of whom 20 are local. The 18 foreigners include Malaysians, Chinese and Myanmarese.

He told The Straits Times: 'I would love to make kueh. I have the recipes, but I simply do not have the manpower. For my deli, I would want to operate for longer hours on the weekends, if possible.

'I could also operate my machines 24/7, and that would increase production by a lot more. The opportunity cost of not having enough employees is really high.'

Mr Chan actually prefers to hire Singaporeans because foreigners who have been trained to bake or cook may eventually not have their S-passes renewed.

The cost of hiring a foreigner works out to be the same as a local, after including the cost of housing and the levies.

A baker can earn from $2,200 to $2,500 a month.

'Singaporeans simply are not interested in being bakers. When they do actually turn up for the interviews, we end up being 'interviewed',' he said.

Some of the questions the job seekers have asked Mr Chan include 'Does the bus stop in front of your shop?' and 'Can I get a cash advance?'.

He likens the situation to how households in Singapore no longer employ Singaporean maids.

'Can you find Singaporeans who want to be maids? There are jobs that we don't want to do, and we have to look elsewhere. By restricting the number of S-passes and E-passes, it is really hurting our business,' he said, referring to the various types of employment passes.

Automation is also not a real solution for his bakery and deli. Although productivity can be improved by 3 per cent to 4 per cent, there are some processes that still require the human touch.

'Can a robot refill my salt and pepper shakers? Or do that?' he said, pointing to an employee who was wiping dust off one of the decoration pieces in Next Door.

'Customers love our bakery for customised cakes. A robot cannot do that for us,' he said.

MAGDALEN NG

Firms feel impact of foreign worker crunch
Businesses protest, but some economists believe the limits are necessary

By Aaron Low, Magdalen Ng & Melissa Tan

WINNING a $3 million contract should have been a triumph for Mr Robert Goh's electrical engineering business, but the foreign worker levy is ramping costs up so high that the 15-year-old company's future is in doubt.

SJ Thames Engineering employs about 20 foreigners for technical and basic engineering work, but once-healthy margins are being squeezed hard by the levies.

The cost per foreign worker is about $2,000 to Mr Goh. This cost includes $250 for lodging, salary of about $900 and a levy of $450.

'But even if I offer that amount, I can't get a local to join,' said Mr Goh, who placed an advert recently for an engineering job that attracted just six Singaporeans out of 160 applications.

He said that implementing productivity improvements is not that straightforward as the work is labour-intensive.

Mr Goh's concerns are mirrored across the business community as disquiet increases over government measures to slow the flow of foreign workers.

There have been a series of moves over the past 12 months to make it costlier for companies to hire foreign workers, both at the unskilled and semi-skilled levels.

At the lower end of the skills scale, the Government is raising the levies of Work Permit holders. Companies will have to pay between $130 and $320 more a month for each foreign worker by July 2013, depending on the company's sector.

At the higher end, the Manpower Ministry is raising the salary criteria for Employment Pass holders to level the playing field for Singaporeans competing with foreigners for the same jobs.

This is to ensure that Singaporeans remain the core of the workforce, Deputy Prime Minister and Manpower Minister Tharman Shanmugaratnam has said.

Tax breaks and incentives were also implemented alongside the foreign worker policy changes to entice firms to increase productivity by investing in technology.

The main objective of these measures is to wean companies off cheap foreign labour as the country and its infrastructure cannot absorb infinite numbers of workers, said economists.

They are also meant to help raise productivity and indirectly increase salaries of Singaporeans.

The Government wants to lift real wages by 30 per cent over the next decade, largely through increases in productivity.

The impact of the measures is already showing up. A Citigroup report found that 130,000 non-residents entered Singapore in 2007, while 191,200 came here in 2008. In the recession year of 2009, this dropped to just 57,000.

Last year, even when the economy recovered and grew at 14.5 per cent, the number was even lower at 51,300.

And the latest rounds of tightening are likely to choke the numbers even further, even though the Government has said the economy must stay open to foreigners.

The prospect of not getting access to foreign workers is clearly worrying many bosses.

In a rare show of public disapproval, the major business associations have issued statements in the past month highlighting their concerns, warning that without access to manpower, companies are thinking of packing their bags.

The strongest warning came from the Singapore International Chamber of Commerce, which represents multinational firms. It said its members are watching the foreign worker situation carefully.

Chief executive Phillip Overmyer said: 'If this continues, you would probably see some companies shrinking their Singapore operations over the next few years, and this would mean fewer jobs for Singaporeans.'

Singapore Chinese Chamber of Commerce and Industry president Teo Siong Seng told The Straits Times that businesses can see that Singapore cannot simply just take in more foreigners every year.

'But many firms are asking, 'If locals don't want to work here, why is the Government restricting foreign workers to these sectors?' Shouldn't there be a more flexible approach, to look at each sector?' said Mr Teo.

Some companies such as contract manufacturer VDL ETG Singapore have been successful in entering higher value markets and switching to more efficient modes of production, but many others are struggling to do so.

The basic problem most have is being unable to attract locals in the first place, said marine firm BH Global Marine.

Executive chairman Alvin Lim told The Straits Times: 'We are willing to pay $2,500, higher than the $2,000 we pay for foreigners, for a new local, but they tell us, 'Saturday, Sunday I don't work. Go out to sea to troubleshoot, very tough, cannot'.'

As a result, the company has set up a branch in China, where it needs to pay only $1,000 for an engineer, he said.

'In Singapore, we try to get Singaporeans, but if we cannot get, then what can we do. No choice but to move overseas,' said Mr Lim.

Despite protests from businesses, economists believe pain is inevitable if Singapore wants to move up the productivity ladder.

Lee Kuan Yew School of Public Policy economist Hui Weng Tat said Singapore should focus on 'industries and businesses in which we have a comparative advantage'.

'Export-oriented, labour-intensive businesses and industries that thrive on relatively cheap labour should be restructured or relocated overseas. This may be painful in the short term, but necessary for the long-term good,' said Professor Hui.

But Mr Lawrence Leow, president of the Association of Small and Medium Enterprises, pointed out that restricting foreign workers affects small businesses and may, in the longer term, hit the entrepreneurial dreams of aspiring businessmen.

He said: 'It is about the whole eco-system and whether the Government remains friendly to business. But if it gets too hard, people will just pack up and chase their dreams elsewhere.'

Higher costs may force MNCs to move

THE increased foreign worker levy is affecting not just smaller firms, but causing pain for some multinationals as well.

Operational costs at ASM Technology Singapore, a subsidiary of the Dutch-owned ASM International, have increased by 5 per cent to 7 per cent year-on-year.

The average starting pay of an engineer ranges from $2,700 to $3,000 a month. The increased levy of $200 is more than 7 per cent of the total salary.

The semiconductor equipment manufacturer has approximately 1,100 employees at its Yishun site - two-thirds are engineers, and about 12 per cent of all employees are foreigners.

Mr Patrick Lim, ASM's vice-president for corporate services, told The Straits Times: 'Our manpower and production are not immediately affected by the increased levy because we can still afford to pay.

'But over time, the rising costs will not be something that we can ignore.'

Mr Lim said Singapore's competitive labour costs have always been a draw for multinationals, but once these expenses rise too high, the companies will have to look elsewhere.

Relocation is an option that cannot be ruled out for ASM Technology if costs continue to increase.

'Singapore's problem is also compounded by our strong currency. Put these two factors together, Singapore is no longer attractive compared to places like Hong Kong or China,' said Mr Lim.

'Once companies start to move their (research and development) teams out of the country, there will be less activity in the manufacturing sector, and Singapore will lose its competitive advantage.'

[As Singaporeans become more selective about the jobs they will do, perhaps these jobs should move out of the country. However to be replaced with jobs where Singaporeans have a comparative advantage is easier said than done. What are our comparative advantages? We criticise, complain, and denigrate. But how many movie critics can Singapore support?]

Bikes' revival provokes tension in Germany

2011-10-25T22:53:00.001+08:00

23 October 2011

BERLIN: Germany might still be known for its high-speed autobahns, but in cities, bicycles are now so popular that a war of words has broken out between drivers and cyclists over who rules the road.

In Berlin, more than 500,000 of the 3.5 million inhabitants get on their bikes daily to move about the city, twice as many as a decade ago, making the most of an extensive network of cycle paths.

On Unter den Linden, the capital's celebrated, tree-lined central boulevard, cyclists zoom up and down between the pedestrians and hordes of tourists admiring the Brandenburg Gate.

'Beer bikes' pedalled simultaneously by about a dozen or so people who drink beer while cycling around the city are also a common sight in the German capital.

"There is a real problem with the cyclists who do not respect the rules, who zigzag and ride any old way. They are becoming less and less civilised," Tahmaures, a 58-year-old taxi driver, fumed.

Germany traditionally conjures up images of a nation of car lovers, but the Transport Ministry said there had been "a renaissance of the bicycle since the beginning of the 90s".

And it is concerned about the high number of accidents suffered by cyclists.

One in three accidents in towns involved bicycles last year, and the rate was one in four for fatal accidents, according to the German Statistics Institute.

"Infrastructure for traffic is no longer suitable. The growing number of cyclists requires a new concept for urban organisation," Claudia Nolte, spokeswoman for the German Automobile Club for the Berlin-Brandenburg region, said.

In 2011, the German federal state devoted 86 million euros (118 million dollars) to cycling infrastructure.

Critics, however, complain that cyclists tend to run red traffic lights, cycle the wrong way up one-way streets and take up too much of the pavement without regard for pedestrians.

"Aggressiveness is not solely the domain of bikes, there is also a lot of rudeness by drivers who do not pay attention to bikes," Roland Huhn, of the German cyclists' association, said for his part.

In a book published earlier in the year, author Annette Zoch criticised cyclists for hiding behind the excuse that their chosen mode of transport is environmentally-friendly.

"On a bicycle, man becomes a monster," Zoch said in her ironically written "Book For Those Who Hate Bikes", while the respected Der Spiegel weekly has devoted its front page to conflicts caused by the rise of the bike.

In Freiburg, the southwestern German city which prides itself for its strong ecological achievements, a third of all movement around the city is done by bicycle which authorities have promoted since the 1970s.

A giant car park near the train station can even host 1,000 bicycles.

Some of the city centre's narrow streets, though, have become so blocked by bikes, pedestrians can hardly get through and a ban on the parking of bicycles has been imposed in some places.

"Relations between pedestrians and cyclists have rather deteriorated" recently, Stefan Lieb, spokesman of the pedestrians' association Fuss e.V., said, adding it was mainly because bike use had grown so much.

Some German towns and cities, including Berlin and Munich, have imposed speed limits of 30 kilometres an hour in certain areas or turned over certain streets for sole bike use.

- AFP/de

[So sg cyclists are not the only ones.]

Asia's next battleground: Water

2011-10-25T10:51:00.000+08:00

Oct 24, 2011

Its scarcity could spark major conflicts, warns expert

By Ravi Velloor

NEW DELHI: It may seem odd to talk about it at a time when television screens are filled with scenes of the worst flooding that Bangkok has suffered in 50 years.

But a new book by a respected voice on Asian strategic affairs warns that a scarcity of water is set to become Asia's most defining crisis by the middle of the century, one with the potential to trigger major conflicts.

As Asia continues to live beyond its means where water is concerned, accentuating its scarcity, disputes and competition over bodies of water that cross the boundaries of various countries pose a greater threat to peace and stability in a continent already marked by festering territorial and resource disputes, Professor Brahma Chellaney says in the first such wide-ranging study on water and peace.

Add to this the fact that people are using more water and Asia is expected to bear the greatest impact of global warming, and the region faces an incendiary situation.

'National reliance on oil can be reduced through other sources of energy,' Prof Chellaney says in Water: Asia's New Battleground. 'There is no such hope with water. Water has no substitute.'

Worries over water have begun to manifest in myriad ways across Asia.

Pakistan has sought international arbitration to stop India's run-of-the-river projects upstream on the Indus River, despite a treaty signed in 1960 that has survived even the worst lows in their bilateral ties.

India itself never fails to raise its concerns with China about its plans to build the world's biggest dam along the Brahmaputra River, which originates in Tibet and flows through India before reaching Bangladesh.

Indochinese states are warily watching China's massive river engineering plans to take moisture to its parched regions by diverting water from elsewhere.

In West Asia, some disputed or occupied territories such as the Golan Heights and the West Bank draw their strategic value as much for their water wealth as their advantageous location.

Prof Chellaney of New Delhi's Centre for Policy Research says the forestalling of water wars demands a cooperative Asian framework among river basin states, so that they work towards a common ownership of shared resources and share the benefits securely.

In this context, he points out, no country is more central to the issue than China, which has been noticeably cool on a multilateral approach to water, as, for instance, at the Mekong River Commission.

Smaller states, for this reason, fear that China may be following a strategy of 'divide and conquer'.

'No other country in the world matches China's position as a multi-directional, transboundary water provider,' says Prof Chellaney. 'Significantly, the important international rivers of China all originate in ethnic- minority homelands, some of which are racked by separatist movements.'

He says China's increasing assertiveness on such issues will prompt a number of regional actors to form a web of interlocking partnerships to act as a discreet check on its exercise of power.

'As the dispute over the South China Sea shows, this may actually bring other claimants together in opposition to Chinese policy and make them turn to the United States for security assurances,' he says.

That said, it will be impossible to turn the competition for water into cooperation without China's active support for sub-regional water sharing and cooperative-management mechanisms. But for that to happen, China will need to drop its allergy to terms such as 'internationally shared water resources' and for legally binding accords on water.

Prof Chellaney says: 'To cite one example, China needs to go from being a 'dialogue partner' to becoming a member of the Mekong River Commission, so that it can work with its (neighbours)... on a water management plan for the mutual benefit of all.'

velloor@sph.com.sg

Is Population Growth a Ponzi Scheme?

2011-10-22T00:21:00.001+08:00

By Joseph Chamie
Thursday, March 04, 2010
The Globalist

The basic pitch of those promoting population growth is straightforward in its appeal: "More is better." Joseph Chamie, who has spent a lifelong career as a demographer, including 12 years of service as the director of the United Nations Population Division, finds that more is not necessarily better.

Bernie Madoff's recent Ponzi scheme has drifted out of the world’s headlines. However, there is another even more costly and widespread scheme — "Ponzi Demography" — that warrants everybody’s attention.

While it may come in many guises, Ponzi demography is essentially a pyramid scheme that attempts to make more money for some by adding on more and more people through population growth.

While more visible in industrialized economies, particularly in Australia, Canada and the United States, Ponzi demography also operates in developing countries. The underlying strategy of Ponzi demography is to privatize the profits and socialize the costs incurred from increased population growth.

["Privatise the profit and socialise the cost" was the specific indictment of the bank bailout. Where the banks made huge bets for huge profits, but when the bets when the wrong way, they suddenly became too big to fail and got bailed out. This has nothing to do with and does not explain "Ponzi Demo". This happened because of lax financial regulation that allowed banks to gamble. Throwing in a "Ponzi Demo" theory and conflating it with the bank bailout sounds like the first step in shifting the blame away from the investment banks and to start blaming immigrants.

How does Ponzi Demo privatise profits and socialise costs? He does not say. He simply assumes that you know what he means. It's like a spiritual medium. Someone with a name starting with "R" is calling...]

The basic pitch of those promoting Ponzi demography is straightforward and intoxicating in its pro-population growth appeal: “more is better.” However, as somebody who has spent a lifelong career as a demographer, including 12 years of service as the director of the United Nations Population Division, I find that more is not necessarily better.

As has been noted by Nobel laureate economists Joseph Stiglitz and Amartya Sen as well as many others, current economic yardsticks such as gross domestic product (GDP) focus on material consumption and do not include quality-of-life factors.

Standard measures of GDP do not reflect, for example, the degradation of the environment, the depreciation of natural resources or declines in individuals’ quality of life.

[The writer is a hack. Brilliant, but still a hack. Using Madoff and Ponzi as the hook, he then strings together a series of soundbites that taps upon the zeitgeist or shared consciousness of his readers. The first two soundbites are drawn from environmental issues and are valid concerns, but it is generally irrelevant to the Ponzi Demo hypothesis. But it's nice to pull in the "environmentalist" support.

The third is a humanistic concern. While valid, it's like saying, "the doctor takes my pulse and blood pressue, but those tests don't tell me about the quality of my life!"]

According to Ponzi demography, population growth — through natural increase and immigration — means more people leading to increased demands for goods and services, more material consumption, more borrowing, more on credit and of course more profits. Everything seems fantastic for a while — but like all Ponzi schemes, Ponzi demography is unsustainable.

[More borrowing, more credit is specific to the US and UK, and also perhaps the PIGS in Europe who were emulating the US. It is not a necessary, or even a supplementary part of the Pop growth strategy. ]

When the bubble eventually bursts and the economy sours, the scheme spirals downward with higher unemployment, depressed wages, falling incomes, more people sinking into debt, more homeless families — and more men, women and children on public assistance.

[Again conflating the sub-prime triggered financial crisis that rose from poor financial practices and regulation with population growth policies. Oh wait. Maybe I'm being hasty. Which bubble is he talking about? The tech bubble in 1998? The Asian Financial Crisis in 1997? The Sub-prime housing bubble in 2008? They all have different catalysts and causes and if the writer wants to make a case that the common thread in all these bubbles were because of the Ponzi Demo effect, he needs to provide proof. Otherwise, the other theory that I have, Human Greed works as well as an underlying theory.]

That is the stage when the advocates of Ponzi demography — notably enterprises in construction, manufacturing, finance, agriculture and food processing — consolidate their excess profits and gains. That leaves the general public to pick up the tab for the mounting costs from increased population growth (e.g., education, health, housing and basic public services).

[Analyse this para carefully. He is saying that construction, manufacturing, finance, agriculture and food processing industry are advocates for population growth. Really? McDonald's is an advocate of population growth? Apple is an advocate of population growth?Nabisco? Proctor & Gamble? Ford? Goldman Sachs? Citibank?

And when the bubble burst, these "advocates" will consolidate their excess profits and gains? In what world did this happen? Which one of these advocates were consolidating their excess profits and gains when Lehman Brothers went bankrupt?

As for the mounting costs, see below.]

Among its primary tactics, Ponzi demography exploits the fear of population decline and aging. Without a young and growing population, we are forewarned of becoming a nation facing financial ruin and a loss of national power.

Due to population aging, government-run pensions and healthcare systems will become increasingly insolvent, according to advocates of Ponzi demography, thereby crippling the economy, undermining societal well-being and threatening national security.

[This is a welfare state US social security issue. The problem does not arise from pop growth, but rather because the underlying policies of US social security system has the young of today paying for the benefits of the old today. The question then is who will pay for the social benefits of the young today when they get old? That's why they need population growth.

Even so, there may be evidence that the US system would have been sustainable except for corruption.

To be sure the CPF system is a save for your retirement plan that is not dependent on a govt pension or retirement plan.

As for Healthcare, the US govt spents 17% of their budget, Singapore spends about 5%. And our healthcare is actually more accessible.]

Low birth rates, especially those below replacement levels, are considered a matter of national concern. Without higher fertility rates and the resulting population growth, the nation, it is claimed, faces a bleak and dreary future.

So Ponzi demography calls for pro-natalist policies and programs to encourage couples to marry and to have more children, which will lead to the promised sustained economic growth.

In addition to financial incentives and other benefits for childbearing, appeals are also made to one's patriotic duty to have children in order to replenish and expand the homeland: “Have one (child) for mum, one for dad and one for the country.”

In addition to measures to increase fertility levels, Ponzi demography also turns to immigration for additional population growth in order to boost companies' profits. The standard slogan in this instance is “the country urgently needs increased immigration,” even when immigration may already be at record levels and unemployment rates are high.

[Employment rates in SG are low even when immigration is high.]

Among other things, increased immigration, it is declared, is a matter of national security, long-term prosperity and international competitiveness. Without this needed immigration, Ponzi demography warns that the country’s future is at serious risk.

[Here you have to wonder. Who the fark goes around saying increased immigration is a matter of national security?]

Another basic tactic of Ponzi demography is a pervasive and unrelenting public relations campaign promoting the advantages and necessity of an increasing population for continued economic growth. Every effort is made to equate population growth with economic prosperity and national progress.

"Economic growth requires population growth" is the basic message that Ponzi demography wants the public to swallow. No mention is made of the additional profits they reap and the extra costs the public bears.

[No mention is made because... it doesn't happen! See comments above on the profiteering of advocates of population growth. See again how clever he is? "They don't mention it" thus implying that it happens? That you know it happens? ]

Attempts to question or even discuss Ponzi demography are denigrated and defamed to such an extent that concerns about population growth become radioactive. Politicians, journalists and environmentalists, for example, choose by and large to sidestep the entire issue.

[REALLY? Environmentalists would side-step the issue? You must be hanging out with the wrong kind of environmentalists. No, what I hear from environmentalists is a concern that increasing population and urbanisation will severely stress the biosphere. Oh you mean sidestep your theory of Ponzi Demo like it was dog turd? Oh yes, I can see that happening.]

When confronted with environmental concerns such as climate change, global warming, environmental contamination or shortages of water and other vital natural resources, the advocates of Ponzi demography typically dismiss such concerns as unfounded and overblown.

[Actually, in the US, the people against immigration tend to be Republicans, and the people who tend to dismiss climate change evidence are... also Republicans.]

And they claim there is no scientific basis, or they obliquely stress “innovation,” ingenuity and technological fixes as the only appropriate and workable solutions.

Many are complicit with Ponzi demography or at least tacitly support its goals. Few politicians, for example, are able to resist promises of campaign financing, the appeal of increased numbers of supportive voters, prospects of increased tax revenues and the political backing of pro-natalist and pro-immigration lobbyists and special interest groups.

[Pro-natalist and pro-immigration in the same group? Pro-natalist would be pro-life and these tend to be Republicans. But they tend to be Anti-immigration. Incredible that the pop growth party can pull together such diverse political enemies.]

Many environmental groups are also reluctant to take up or even touch the volatile subject of population growth, especially those that have been burned on this issue in the past. Such groups fear possibly offending some members and donors, which might undercut their organizations and efforts.

[In Wikipedia, these are called weasel words. Vague accusations, nameless victims, shadowy perpetrators. Actually, the whole article is full of weaselly words and statements.]

Despite its snake-oil allure of “more is better,” Ponzi demography’s advocacy for ever-increasing population growth is ultimately unsustainable. Such persistent growth hampers efforts to improve the quality of life for today’s world population of nearly seven billion people as well as for future generations.

[There is some truth in this article. But it is the truth of a broken clock. That is, even a broken clock is correct twice a day. And if you write long enough, sooner or later, you will accidentally say something that is right. Though maybe for the wrong reason. Does he think China believes its population should continue to grow? Oh wait, he probably doesn't know or care. But no. China would like it's population to stop growing, but there is a natural momentum that cannot be stopped without horrific humanitarian issues. So it will continue to grow for a while. China's problem is not a lack of population growth, but feeding and housing and providing jobs for them all.

But yes, SG is pursuing a replacement level birthrate supplemented with some immigration in the best case scenario. However it is not ever-increasing population growth indefinitely. There will be some optimal sustainable stable population level. ]

Moving gradually towards population stabilization, while not a panacea for the world’s problems, will make it far easier to address problems such as climate change, environmental degradation, poverty and development, human rights abuses and shortages of water, food and critical natural resources.

Fortunately, most couples around the world have chosen — or are in the process of choosing — to have a few children rather than many and to invest more in each child’s upbringing, education and future well-being. Nations need to make the same vital transition with respect to their populations.

The sooner nations reject Ponzi demography and make the needed gradual transition from ever-increasing population growth to population stabilization, the better the prospects for all of humanity and other life on this planet.

[And he ends with some handwaving to the hot button topics of the day. Wow, he even manages to wave ti human rights abuses. Fantastic!

Seriously, taking this at face value it is a nice article, not terribly bad and not terribly insightful. Read it, mull over the ideas, toss it.

But if you are suspicious type like me you wonder. There are a lot of red herrings, nudge-nudge wink-wink, soundbites, shared and assumed knowledge, but very little actual evidence of a Ponzi Scheme. The so-called advocates of ponzi demo are non-starters. I don't see Citibank asking the US govt to be pro-immigration anymore than I see DBS asking the SG govt to let in more immigrants.

So in summary, if there is a Ponzi Scheme based on population growth, the parties he charges as being the advocates of such a scheme are not in fact the advocates. He claims that these advocates make excessive profits during boom times and when the bubble burst they consolidate their profits. They don't. In a bust, almost everybody suffers.]

New foreigner hiring rules 'put off MNCs'

2011-10-21T11:45:00.000+08:00

Oct 21, 2011

Resulting staff shortage may cause firms to pack up or scale back, says business group

By Yasmine Yahya

MULTINATIONALS are finding it so hard to find skilled staff in the light of the new rules on hiring foreign workers that some may scale back their operations here.

That was the stark warning from the Singapore International Chamber of Commerce (SICC), which has called on the Government to review the policies.

It suggests that the measures, which apply to all sectors in a standard form, be fine-tuned and tailored for specific industries.

The SICC's call echoes one earlier this week by the Singapore Business Federation, which raised concerns about the foreign worker levy.

The worker shortage appears to be showing up across the board, from a lack of chambermaids in the hotel sector to a need for engineers for manufacturers and drivers for logistics companies.

SICC chief executive Phillip Overmyer told The Straits Times multinationals and big local firms from many industries are finding it very difficult to fill vacancies.

Mr Overmyer cited the case of two hotels at the integrated resorts that held a recruitment drive last year to find up to 50 people in service and maintenance roles.

The hotels have to abide by a strict quota of foreign workers and so need to find Singaporeans instead.

About 400 Singaporeans applied for various positions but not all turned up for the first round of interviews and even fewer for subsequent interviews.

By the end of the process, only four people accepted jobs and, after just a week, two of them quit. The other two followed within a few weeks.

Mr Overmyer said the hotels remain understaffed.

'Because there are so many other jobs, most Singaporeans don't want to take up service jobs. Singaporeans don't want to wait on people or work shift hours,' he said.

The result has been feedback from guests slamming service standards as 'terrible', he added.

'This is the kind of thing we're hearing more and more at the integrated resort hotels - and this is an industry we just created only a few years ago.'

Mr Overmyer noted that companies in sectors such as manufacturing, oil and gas, education and construction engineering face similar challenges.

Even though Singapore is a logistics and distribution hub for many companies, it is tough for bosses to find locals willing to work as drivers or warehouse operators, he said.

He noted that the foreign worker policy could have consequences throughout the economy, beyond the immediate affected firms.

Mr Overmyer also pointed to international schools, such as the Singapore American School and the Overseas Family School, which will have to meet stricter criteria when selecting and hiring teachers from next year.

Principals are concerned that some of their staff might not make the cut and it would be tough to find replacements. That in turn could make Singapore a less attractive place for expatriates to work and raise their families.

Eventually, if it becomes increasingly difficult for multinationals to bring in foreign employees, they will likely move their Asian headquarters to Hong Kong or another neighbouring city, he said.

The recent moves made by the Government to tighten controls on the hiring of foreigners have made many of these firms nervous.

'Nobody is packing up just yet, but they are waiting and running the numbers. If this continues, you would probably see some companies shrinking their Singapore operations over the next few years, and this would mean fewer jobs for Singaporeans,' Mr Overmyer said.

The SICC is surveying member companies on foreign manpower issues.

Its preliminary findings show more than half of the 120 companies polled so far saying that access to foreign talent was an important factor in helping them decide to set up or expand their operations here. And while they prefer to hire Singaporeans, they often find it hard to recruit and retain locals.

Some companies are considering outsourcing certain business operations but they fear this will not be a viable solution as those third-party operators are also likely facing similar manpower issues, Mr Overmyer said.

The SICC hopes the Government will take a more targeted approach towards its foreign worker policies, he added. The policies should be industry-specific and not so broad that the same policy applies to all sectors.

'We might be able to find a way to shrink some industries but not others. If we don't take action to allow the big guys to play as they've been playing here for the past several decades, I'm very much afraid they will leave in a few years.'

Mr Gan Chin Yean, managing director of US precision engineering firm Interplex, said the problem of finding staff is real, even for a multinational like his.

'It's just difficult to get locals... So we may have to move our operations to Malaysia or elsewhere if the foreign worker policy continues to get worse.'

yasminey@sph.com.sg

Big boys call the shots in EU financial crisis

2011-10-19T12:23:00.000+08:00

Oct 19, 2011

commentary

Tiny Slovakia forced to join bailout despite doing everything right

By Jonathan Eyal

SMALL countries are supposed to know when to shut up and simply do as they are told.

At least that is the opinion of Mr Jose Manuel Barroso, the European Union's top-ranking official, who was infuriated last week when Slovakia, one of the EU's newest member states, had the temerity to reject a bailout plan for Europe's financial crisis. 'Sovereignty is fine,' Mr Barroso lashed out, 'but you cannot allow a small stakeholder in the community to slow down all the others.'

Slovakia ultimately relented: Under intense pressure from its neighbours, its Parliament duly voted again, approving the bailout proposals.

However, ordinary Slovaks have every right to feel aggrieved. The way big European countries treat their smaller allies is little short of appalling. An EU which was created in order to ensure the independence and equality of its members is now trampling on these very principles.

Slovakia, with a population of 5.5 million, may account for only 2 per cent of the EU's total population, but far from being the object of ridicule, it should be hailed as Europe's poster child.

The Slovaks languished under the colonial rule of Austria and Hungary for centuries and, more recently, were part of a union with the Czechs in what used to be called Czechoslovakia. That union failed and, in 1992, the Czechs and Slovaks parted ways.

In a near-mirror image of Singapore's historical experience, the Slovaks were initially told they were too small and resource-poor to thrive on their own. And, just like Singapore, they proved their doubters wrong. Slovakia attracted massive investment from overseas; it is now one of Europe's top car producers. Although still relatively poor, Slovakia's economic growth rate is among the highest in the industrialised world. It has shown that ingenuity and good governance count for more than sheer size.

When Slovakia became the first Eastern European country to join the euro currency zone in 2009, it took its obligations seriously. Its government reduced its debts and stabilised inflation, a Herculean feat which won universal praise.

Yet, to their horror, the Slovaks soon discovered that other euro member states exercised no such responsibility; in fact, they continued to borrow and spend freely. And, when Greece, Ireland and Portugal faced bankruptcy, the Slovaks were suddenly told they must pay into a fund to bail out these countries.

The sums involved are considerable: Slovakia's contribution is €7.7 billion (S$13.5 billion), a mere 1 per cent of the total bailout fund, but a lot of money for a small country. More importantly, Slovaks are incensed by the idea that they should bail out countries which are far richer, and which have only themselves to blame for their current predicament.

European officials brush aside such objections. To them, joining the euro zone club entails both benefit and responsibility.

There is no doubt that Slovakia derives enormous benefits from euro membership: It operates a currency with a global reach, it is able to borrow far more cheaply and has gained the credibility of a mature economy, thereby attracting further investment. Still, the argument that, as a result, it must now pay for its bankrupt euro partners remains false.

Existing European treaties forbid the bailout of any country and ban the European Central Bank from lending to individual states. So, Slovakia is perfectly within its rights to say no, because the current effort to save the euro is being undertaken despite, and not because of, existing legal obligations.

Still, the Slovaks have accepted that if they wish to save the European currency system, they have no choice but to cough up the cash. Yet what worries them is that the sums recently pledged are already considered insufficient; much larger figures, going into the trillions of euros, are now being bandied about.

All the initiatives on saving the euro are being launched by two big countries: Germany and France. They decide how much money should be offered, to whom and on what conditions.

What is more, an informal division exists between Western and Eastern Europe. The objections of Western European countries are always taken seriously. For instance, not one European politician dared to accuse Britain of irresponsibility when it blocked the idea of introducing a tax on financial transactions.

Similarly, no wave of criticism fell on France, the Netherlands or Ireland when they rejected a project for an EU constitution back in 2005. And no one condemned the Germans when they recently subjected Europe's financial arrangements to a decision of their own national constitutional court.

But when Slovakia dared to raise objections, it was treated much like an irritant. Literally minutes after its Parliament voted against paying its money last week, German Chancellor Angela Merkel defiantly announced that the financial bailout project 'will go ahead'.

Mrs Iveta Radicova, the Slovak Prime Minister, paid for the passage of the bailout vote with her job: She pushed through the deal, but her government collapsed, and fresh elections are due next year. Yet, the rest of Europe is mistaken if it believes this is the end of the story.

Currently, Germany and France's plan to remove the right of individual countries to make any decisions in future economic affairs, and transfer this to a European committee - which, inevitably, will be dominated by the bigger members - is creating an uproar throughout the continent. In their rush to save the euro, Germany and France may end up tearing the EU apart.

The sorry treatment of Slovakia carries a warning for other regional organisations inspired by the EU. Bodies such as Asean are frequently criticised for taking decisions by consensus because it supposedly slows down progress.

However, as the EU's current experience indicates, any arrangement which ignores the interests of individual states because they are small is not only dangerous, but also deeply unjust.

Just ask Slovakia, which did everything right and has the law on its side, but still finds it difficult to be heard.

Jonathan.eyal@gmail.com

Sylvia Lim, PAP MPs spar over happiness gauge

2011-10-18T16:08:00.000+08:00

Oct 18, 2011

parliament

By Tessa Wong

WORKERS' Party chairman Sylvia Lim locked horns with PAP MPs Cedric Foo (Pioneer) and Heng Chee How (Whampoa) yesterday over her criticism of the Government as too focused on gross domestic product growth, at the expense of Singaporeans' happiness.

In her maiden speech as an elected MP, Ms Lim (Aljunied GRC) said Singapore had co-sponsored Bhutan's resolution at the United Nations General Assembly titled Happiness: Towards A Holistic Approach To Development.

She wanted to know what measures the Singapore Government planned to put in place to measure happiness and how its policies over the next five years would be guided by such indicators.

She also observed that headline figures on GDP growth mask the 'harsh realities' for certain groups of Singaporeans.

These include the bottom fifth of households by income, a group whose wages have stagnated in the last decade, those who feel unfairly treated as compared to foreigners, families hit by divorce who are left homeless, as well as seniors who worry about health-care costs, she said.

She cited Singapore's low fertility rate as an example of a policy the Government would approach differently if it were more concerned about happiness.

Quoting an article published in The Straits Times last month, she said National University of Singapore economist Tilak Abeysinghe had found that - based on data from 1977 to last year - fewer children were born when home prices rose.

Ms Lim said yesterday: 'If the happiness and sustainability of Singapore's society is the overarching goal, then there's a need to unravel the exact relationship between high property prices and fertility and what responses might arrest or even reverse the decline in fertility rates.'

[As my stats professor explained many times, correlation is not causation. And in this case, there isn't even a consistent correlation. After the 2000 spike which was mainly due to the Dragon year phenomenon, the housing Affordibility Index (HAI) actually increased slightly (which means housing is more affordable), but TFR continued to crash. There is a relationship... if you ignore the inconvenient exceptions that cannot be explained.]

Her speech drew swift rebuttals from Mr Heng and Mr Foo. Mr Heng challenged her to come up with ideas to help Singaporeans pursue happiness.

Mr Foo questioned Ms Lim's choice of Bhutan as a model for Singapore to follow, pointing out that the landlocked Himalayan nation of 700,000 people has a per capita GDP of only about US$2,000 (S$2,500) compared to Singapore's, which is over US$43,000.

'I think the opposition member couldn't have chosen a more dissimilar country to compare Singapore with. We are exposed to the seas, exposed to the onslaught of competition from the world, we were dealt a different deck of cards... and we must find our own formula forward,' he said.

Mr Foo also pointed out that Bhutan was for many years a monarchy and held its first general election in 2008. Perhaps it was because Bhutan only has two opposition members in its legislature's Lower House that 'the people are very happy', he added.

Observing that happiness measures are meant to complement, not replace, GDP growth figures, he said: 'I want the opposition member, Ms Sylvia Lim, to clarify whether GDP growth is total baloney.'

Ms Lim said she did not say GDP was irrelevant as an indicator, but that international opinion showed it is 'inadequate to represent the state of happiness or sustainability or well-being of a society'.

[Other comments on the HAI-TFR "link" :
http://blog.iproperty.com.sg/housing-woes-affecting-birth-rates/

http://asiasingapore.blogspot.com/2011/09/rising-house-prices-and-declining.html

Before we can pursue happiness, we have to first define it.]

Presidential election needs more clarity: Alvin Yeo

2011-10-18T15:36:00.000+08:00

Oct 18, 2011

parliament

THE recent presidential election has caused some confusion - starting with how the eligibility of candidates is determined, said Mr Alvin Yeo (Chua Chu Kang GRC). One question that arose was whether a cooperative is equivalent to a company.

Another was whether a senior position in a fund management company with assets under management - but not paid-up capital - of more than $100 million, could qualify someone as a candidate.

The first question was in relation to presidential candidate Tan Kin Lian and the other, Mr Tan Jee Say.

The Constitution requires candidates to serve at least three years as chairman or chief executive of a company with a paid-up capital of at least $100 million, or in a 'similar or comparable' position.

Mr Yeo observed that the three-member Presidential Elections Committee decides whether a candidate is in such a position, and its decision is final. He said he was not seeking to criticise the committee's decision.

But, he added, it seems incongruous that the statutory criteria is so open to interpretation, and the decision is made by three individuals without review by other bodies.

The Government should review the situation and consider if greater clarity is needed, he said.

Mr Yeo also addressed two other aspects: the president's duties and powers, and how elections should be run.

Candidates in the recent election had disagreed on the president's functions, and some voters may have been misled, he said. This, in turn, affected how the presidential campaigns were conducted.

'The election of our supposedly non-political president had strong political overtones to it,' he said.

Mr Yeo asked if candidates should be required not to have been members of political parties, nor to have taken part in political activities and contested elections for a minimum period of years.

He also asked if limitations should be put on campaigns to keep them non-political, so that candidates 'do not promise to do something if elected, which is not legally within their powers'.

JANICE HENG

Call to re-look pricing of new flats

2011-10-18T14:19:00.000+08:00

Oct 18, 2011
parliament

Zainudin also wants Govt to help families, lower-income group

By Kor Kian Beng

GIVING Singaporeans affordable roofs over their heads was uppermost in the mind of Mr Zainudin Nordin (Bishan-Toa Payoh GRC) yesterday, when he called on the Government to re-look the way new HDB flats are priced, with a view to lowering the prices further.

He felt more could be done, especially in imputing the cost of land in the price formula.

Current home prices worry him, he said, because from listening to his residents he finds that Singaporeans are spending a large chunk of their incomes on paying their housing loans.

Beyond new flat buyers, he wants the Government to help two other groups.

One is the low-income.

The Government should restrict the resale of three-room HDB flats to only the low-income, as is the HDB's original intention, he said. Currently, there is no income ceiling for these resale flats unless buyers are applying for government loans or grants.

The other group are families who need cheap, temporary shelter while waiting for longer-term accommodation, like new flats to be built.

In his focus on affordable housing, Mr Zainudin wants the Government to 'seriously consider the pricing formula'.

'I agree that we have to impute a cost for the use of land to build flats, but on what basis? I don't think this question has been adequately debated,' he said.

Though government figures show Singaporeans spend a smaller proportion of their incomes on home loans compared to international benchmarks, he feels more could be done to ease their burden.

It would help increase their retirement savings, he added, noting that they also spend a large chunk on transport and education.

Singapore families who own new flats in non-mature estates spend an average 23per cent of their incomes on paying their 30-year home loans. Internationally, the rate is 30 per cent to 35 per cent.

Mr Zainudin also wants the pricing formula to be as transparent as possible. Doing so will assure Singaporeans that 'the Government is not out to make a profit through the sale of public housing'.

As for the resale prices of three-room flats to the low-income, he suggests prices be pegged to the original sales price plus the annual inflation rate.

Such a move would pave the way for these families to own flats, as well as exclude people who buy them 'as an investment or for speculation'.

kianbeng@sph.com.sg

[Haves and Have-nots. Restricting resale of 3-room flats to low income families would mean that 3-rm flat owners cannot ask for better price. This would be a drag on their attempt to upgrade. E.g. say they bought a 3-rm flat from HDB, after 10 years, they sell the flat back to HDB at a slight appreciation due only to inflation. Currently, they can get a very good market-based price for their flat, which would go towards offsetting their second bite of the cherry for an upgraded 4 or 5 room flat direct from HDB.
This would mean that it would be more difficult for them to upgrade, and they may not in effect upgrade, and they may not even be able to sell the flat because they can't afford to upgrade, and they would be less socio-economically mobile, being stuck in a 3 room flat for a longer time.
The current set up is a good compromise. HDB builds and sells at a discount 3-room flats to eligible low-income families. The flats rise in price and the low income family is able to sell the flat at a gain and buy another subsidised flat from HDB. The 3-rm flat is then released to the open market for higher income buyers to transfer their income to the low income family. This is redistribution of wealth. In a sense the govt has tapped into the private market to "subsidise" the low income family's upgrading.]

The instability of inequality

2011-10-17T21:29:00.001+08:00

Unless relative economic roles of the market and state are rebalanced, protests will get more severe

by Nouriel Roubini

TODAY Oct 17, 2011

This year has witnessed a global wave of social and political turmoil and instability, with masses of people pouring into the real and virtual streets: The Arab Spring; riots in London; Israel's middle-class protests against high housing prices and an inflationary squeeze on living standards; protesting Chilean students; the destruction in Germany of the expensive cars of "fat cats"; India's movement against corruption; mounting unhappiness with corruption and inequality in China; and now the "Occupy Wall Street" movement in New York and across the United States.

While these protests have no unified theme, they express in different ways the serious concerns of the world's working and middle classes about their prospects in the face of the growing concentration of power among economic, financial and political elites. The causes of their concern are clear enough: High unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalised world; resentment against corruption, including legalised forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.

Of course, the malaise that so many people feel cannot be reduced to one factor. For example, the rise in inequality has many causes: The addition of 2.3 billion Chinese and Indians to the global labour force, which is reducing the jobs and wages of unskilled blue-collar and off-shorable white-collar workers in advanced economies; skill-biased technological change; winner-take-all effects; early emergence of income and wealth disparities in rapidly growing, previously low-income economies; and less progressive taxation.

The increase in private- and public-sector leverage and the related asset and credit bubbles are partly the result of inequality. Mediocre income growth for everyone but the rich in the last few decades opened a gap between incomes and spending aspirations. In Anglo-Saxon countries, the response was to democratise credit - via financial liberalisation - thereby fuelling a rise in private debt as households borrowed to make up the difference. In Europe, the gap was filled by public services that were not fully financed by taxes, fuelling public deficits and debt. In both cases, debt levels eventually became unsustainable.

Firms in advanced economies are now cutting jobs, owing to inadequate final demand, which has led to excess capacity, and to uncertainty about future demand. But cutting jobs weakens final demand further, because it reduces labour income and increases inequality. Because a firm's labour costs are someone else's labour income and demand, what is individually rational for one firm is destructive in the aggregate.

The result is that free markets do not generate enough final demand. In the US, for example, slashing labour costs has sharply reduced the share of labour income in GDP. With credit exhausted, the effects on aggregate demand of decades of redistribution of income and wealth - from labour to capital, from wages to profits, from poor to rich, and from households to corporate firms - have become severe, owing to the lower marginal propensity of firms/capital owners/rich households to spend.

The problem is not new. Karl Marx oversold socialism but he was right in claiming that globalisation, unfettered financial capitalism, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fuelled by credit bubbles and asset-price booms and busts.

Even before the Great Depression, Europe's enlightened "bourgeois" classes recognised that, to avoid revolution, workers' rights needed to be protected, wage and labour conditions improved, and a welfare state created to redistribute wealth and finance public goods - education, health care and a social safety net.

The push towards a modern welfare state accelerated after the Great Depression, when the state took on the responsibility for macroeconomic stabilisation - a role that required the maintenance of a large middle class by widening the provision of public goods through progressive taxation of incomes and wealth and fostering economic opportunity for all.

Thus, the rise of the social-welfare state was a response (often of market-oriented liberal democracies) to the threat of popular revolutions, socialism, and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued, from the late '40s until the mid-'70s, a period when inequality fell sharply and median incomes grew rapidly.

Some of the lessons about the need for prudential regulation of the financial system were lost in the Reagan-Thatcher era, when the appetite for massive deregulation was created in part by the flaws in Europe's social-welfare model. Those flaws were reflected in yawning fiscal deficits, regulatory overkill, and a lack of economic dynamism that led to sclerotic growth then and the euro zone's sovereign-debt crisis now.

But the laissez-faire Anglo-Saxon model has also now failed miserably. To stabilise market-oriented economies requires a return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of unregulated markets and the continental European model of deficit-driven welfare states.

Even an alternative "Asian" growth model - if there really is one - has not prevented a rise in inequality in China, India and elsewhere.

Any economic model that does not properly address inequality will eventually face a crisis of legitimacy. Unless the relative economic roles of the market and the state are rebalanced, the protests of this year will become more severe, with social and political instability eventually harming long-term economic growth and welfare. PROJECT SYNDICATE

Nouriel Roubini is chairman of Roubini Global Economics, Professor of Economics at the Stern School of Business, New York University, and co-author of Crisis Economics.

The Euro-Crisis

2011-10-16T00:45:00.001+08:00

Oct 15, 2011

Euro crisis dominates G-20 summit

PARIS: The finance chiefs and central bank governors of the Group of 20 (G-20) began last night a two-day summit to put flesh on the bones of plans to end Europe's festering debt crisis conclusively.

'The absolute priority is to find ways to stabilise the euro zone, epicentre of the global crisis,' French President Nicolas Sarkozy, the G-20's outgoing chairman, said on the eve of the meeting.

Underlining the challenge ahead, Standard and Poor's cut Spain's long-term credit rating, while another ratings agency, Fitch, downgraded Switzerland's UBS and placed seven US and European banks on a credit watch for a possible downgrade.

United States Treasury chief Timothy Geithner also weighed in, warning that 'cascading default, bank runs and catastrophic risk' lie ahead for the world economy unless Europe puts its house in order.

A Franco-German crisis plan is likely to ask banks to accept bigger losses - possibly as much as 50 per cent - on their Greek debts than the 21 per cent spelled out in a July plan for a second bailout of Athens, which now looks insufficient.

'It will be more, that's more or less certain,' said French Finance Minister Francois Baroin, who is hosting the Paris talks.

The G-20's finance ministers are also pressuring Europe's banks to shore up their capital, as the likelihood of Greece declaring a default keeps flaring up.

Efforts to fortify the continent's lenders took a sense of urgency after Franco-Belgian bank Dexia collapsed because of its huge exposure to Greek debts.

Also on the table are plans to leverage the euro zone's €440 billion (S$769 billion) rescue fund - the European Financial Stability Facility (EFSF) - to give it more firepower.

Emerging economic powers China and Brazil, meanwhile, are offering to help out by increasing the International Monetary Fund's war chest to make it more effective at dealing with Europe's debt crisis.

A key concern has been that, while the EFSF has the resources to cope with bailouts for Greece, Portugal and Ireland, it will be overwhelmed by the need to rescue bigger economies such as Italy or Spain.

Such a firestorm will devastate bank balance sheets, rock markets, derail economic growth and threaten to splinter the 17-nation euro area.

Europe's woes are already responsible for wiping out about US$13 trillion (S$16.5 trillion) of wealth since July 1, analysts at Barclays Capital estimate.

The most effective method would be to turn the EFSF into a bank, so it could draw on European Central Bank resources. Both Germany and the central bank, however, are opposed to that.

The G-20 may refer to the euro crisis in its communique and in closing news conferences tonight, but little else of substance is likely to be inked in, with the EU summit in nine days' time the make-or-break moment.

The Paris meeting may give the green light to regulators for new rules on banks deemed 'too big to fail', including capital surcharges.

Any concrete progress on bigger goals, such as setting parameters to measure global imbalances and reining in speculative capital flows, is unlikely to come before a Nov 3 to Nov 4 summit in Cannes, where France will pass the G-20 baton to Mexico.

The G-20 countries make up 85 per cent of global output.

REUTERS, BLOOMBERG, AGENCE FRANCE-PRESSE

NEWS ANALYSIS
The end of an economic dream

Market upheavals in the euro zone are symptoms of a deeper problem. Here's a look at what the buckling of an untenable model will mean for jobs, welfare and pensions in Europe, as well as its impact on national politics.

By Jonathan Eyal

LONDON: It is highly unusual for the European Union to miss one of its regular summits: These are hugely important gatherings, where its 27 member states conduct their business.

But that's precisely what the EU has now done, by postponing a summit originally scheduled for this weekend.

Ostensibly, the delay is needed to allow governments to come up with an answer to Europe's roiling financial crisis. However, no such solution is in sight. A plan to help EU countries on the verge of bankruptcy was nearly derailed by Slovakia, one of its poorest members, before it finally relented on Thursday.

As the continent flounders in disarray, European Central Bank chief Jean-Claude Trichet warned this week that political dithering is 'only aggravating the situation'.

And yet, regardless of what its politicians do, decades of austerity and economic decline loom for a Europe that was built on fragile foundations, the cracks of which are emerging now in the form of the wildly teetering market movements.

Its beginnings go back to the end of the Cold War two decades ago, a period when, paradoxically, Western Europe seemed to be at the height of its powers.

It was then that the EU embarked on its most audacious project: the creation of the euro as its single currency. Some experts warned that no monetary union can succeed unless national economies approach a similar level of development, and spending priorities are decided centrally, rather than in each state. But the warnings were ignored.

The result is today's disaster. A currency designed for an industrial giant such as Germany, which exports more than the United States, was also adopted by Greece, whose exports are less than a tenth those of Singapore's. European governments were allowed to spend as much as they wished, borrowing at cheap interest rates that they would never have enjoyed had they retained their old national currencies.

What's more, Europe's problem is no longer one of just too much debt, but one of long-term economic competitiveness, destroyed by an overvalued currency. For example, after Italy adopted the euro, its effective exchange rate - based on its labour costs - rose by 26 per cent. The only way this disparity can be addressed is by either devaluing the currency, or by depressing the salaries of workers, a method that economists call 'internal devaluation'.

The first option is not available, since the euro is controlled by a bank beyond the influence of any government. And the second option is equally impossible, since workers will not tolerate a huge drop in their earning power. So, even if Germany - which now bankrolls Europe - agrees to guarantee the debts of all other European governments, this will still not stop Europe's crisis.

Getting out of Europe's monetary union is not an option either. According to the most optimistic calculations, an exit from the euro could cost Italy about 10per cent of its gross domestic product, as government debts remain unpaid and banks go bankrupt. The country would need about 25 years of uninterrupted growth to merely recover from this loss. In short, the Europeans are damned if they stay in the euro, and damned if they don't.

The only way out of this deadlock is to reinvent Europe's monetary union, this time according to economic, rather than political, principles. Countries will have to abandon all control over their financial policies; these will be decided on a Europe-wide basis. And they will have to continue repaying their huge debts. Some nations will make it, but others will not; this will be a battle in which only the fittest survive.

Either way, the continent is inevitably facing decades of misery. Since the end of World War II, Europe's economic model was broadly the same. Each government came to power promising to expand the provision of health care and welfare services. And each took it for granted that the economy would inevitably continue to grow. Capital was cheap, companies made fat profits and jobs were plentiful.

Europe's model has been fraying for years. An ageing population has already made the generous provision of pensions unsustainable. The cradle-to-grave welfare system excused the Europeans from hard work: When France faced a high unemployment problem, it simply shortened the working week, on the assumption that employers would be forced to hire more people.

The nanny state also protected people from the consequences of their own actions: Children from broken families were left to the state to look after, while few Europeans saved any money, because no financial cushion for a rainy day was needed. And, as Europe became less competitive, its share of global trade shrank. A century ago, Britain alone was responsible for more than half of global commerce; today, all of Europe accounts for a quarter.

Yet, although European governments knew they had to address these problems, they hoped that the process of adjustment would be gradual, and that economic recessions would remain short.

When the global financial crisis struck in 2008, then British Prime Minister Gordon Brown famously proclaimed that it would last a mere six months.

Europe's current crisis means that the hard choices can no longer be postponed. As debts are being repaid and governments struggle to balance their books, welfare and pension entitlements will be slashed. And Europeans will be forced to save rather than spend, leading to a prolonged period of zero growth.

But the continent is ill-prepared for what lies in store. Politicians, all of whom were born during an age of plenty, have yet to explain what needs to be done. And the EU, which until now was associated with ever-rising prosperity, will come in for even more criticism as an organisation that imposes permanent austerity with no democratic accountability.

Unsurprisingly, therefore, Europeans are now lashing out at others - immigrants, 'devious bankers' or 'unfair traders' such as China - rather than admitting that the failure is theirs alone.

Still, the coming European depression will be different from the global Great Depression of the 1930s. For while that century's crisis resulted in a great expansion of the role of the state, the current European crisis can be solved only by actually shrinking the powers of governments.

The only common thread between these two huge economic disasters is that, as always, it will be the ordinary citizen who will pay the immediate price.

---

Of swimming pools and the Greek crisis

LONDON : It invented the Olympics and the word 'democracy', and served as the cradle of European civilisation. Today, however, Greece may also be the country which drags down the entire continent with its monumental debts.

The Greeks are far from poor: the nation of 11 million is ranked 22nd in the latest Human Development Index. Nor are the Greeks lazy; in terms of official hours worked per year, they work harder than the Spaniards or Italians. But such statistics are rendered meaningless by a culture of bribery and tax-dodging.

If a Greek wants anything from the government, he assumes a bribe is expected; even the supreme court ruled that bribes are legal although, quaintly, only if they are offered after, rather than before services are rendered. But, once the bribe is paid, a citizen does not see why he should also pay taxes. Last year, for example, 324 homes in a part of Athens declared for tax purposes that they own a swimming pool. But satellite photography showed 17,000 pools there.

Among the developed countries, Greece ranks bottom in terms of public sector efficiency. Its officials can retire at the age of 58, on almost full salary. Better still, pensions often continue to be paid after a person is deceased, since families avoid recording the death. A country both spendthrift and incapable of collecting taxes can only survive by borrowing. Greece's debt stood at 94 per cent of its total economy a decade ago; today, it is 144 per cent, and rising.

Yet, as disaster loomed, Europe looked the other way. 'Matters such as probity, auditing, efficiency of tax collection and the nature of public spending were studiously ignored by the European Union,' claims Jason Manolopoulos, the author of a recent angry book about the country.

And nothing currently contemplated tackles the problem. Greece was offered a bailout of €110 billion (S$193 billion). In return, it has pledged to balance its books: It has introduced six budgets in the past year, each with braver financial targets. All of these were missed.

It has also vowed to raise €50 billion from the sale of government assets; not even 5 per cent was collected. Everyone continues to claim Greece will not default on its debts, but every European government is planning for it. The economy shrank by 6 per cent this year, throwing one million people out of work.

'We have told the Greek population that, maybe, it is time to pay some tax,' a Greek official meekly told protesters outside Parliament recently.

The response was immediate: He was pelted with rocks, and someone shouted back: 'Let the German taxpayers pay; It's our right not to pay tax.'

Jonathan Eyal

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Euro crisis fuels rise of French far-right

AMNEVILLE (France): Amneville, a town in north-eastern France, does not look like a fault line in the euro zone. The smell of grilled chicken wafts over the marketplace on a Saturday morning, the CD vendor plays German oom-pah music and the sky behind the ochre clock tower is a steely blue.

Yet, the single currency is a target for an unusual politician canvassing voters in this town near the German border.

Mr Fabien Engelmann, a 32-year-old plumber with tight-cropped hair, was an activist with France's leading trade union and a Trotskyist for many years. Later he joined the far-left New Anticapitalist Party. This year, he switched party again - but not on a leftist ticket.

He joined France's famed far-right National Front, and he was not the only one among disenchanted unionists. Since January, Ms Marine Le Pen has taken charge of the minority party and revived it.

'It really is the arrival of Marine Le Pen that convinced me to join the National Front,' Mr Engelmann said. 'She has an economic programme that is much more geared to defending the little people, the workers.'

Ms Le Pen is reshaping France's political landscape and putting pressure on mainstream parties with her populist war cry on pocketbook issues.

Whereas her father, Jean-Marie, played up worries about immigration as party leader, the anxiety she addresses is economic and deep. Her party's new target is the oppressive power of global finance, and the mood she is tapping spreads across Europe.

Traditionally in France, President Nicolas Sarkozy's right-of-centre UMP party wins the votes of the self-employed, farmers and retirees. Government workers, young people and urbanites favour the Socialists. The swing voters - blue-collar workers and low-level employees - are the Front's constituency. And they are tired of making sacrifices to shore up the single currency and fed up with losing jobs to global rivals.

To make things better, Ms Le Pen wants to pull France out of the euro, reinstate protectionist barriers and reassert the state's supremacy over market forces.

And she is being taken seriously by French opinion makers. She has been on the front page of every magazine and newspaper, and is a regular on prime-time TV. She already ranks third in polls for the next presidential election in May.

Her score in an Ipsos voting intention poll this month was 16 per cent, behind Socialist Francois Hollande (32 per cent) and Mr Sarkozy (21 per cent). In 2002, her father beat Socialist candidate Lionel Jospin with just 16.86 per cent of the first-round votes. Mr Sarkozy's biggest fear is that Ms Le Pen could knock him out in the first of the two-round vote.

'Our ideas are gaining ground,' says finance professor Jean-Richard Sulzer, who is in charge of the party's economic programme. His glee is evident as he points out a protectionist Socialist Party goal that echoes one of the Front's. 'They are spreading like an oil slick.'

The National Front rejects all the ideas that have previously driven European economic growth: globalisation, free trade and the dominance of services and the financial industry. To restore French competitiveness, it will quit the euro; to boost employment, it will close French borders to cheap Chinese imports, re-industrialise and empower the state's regulatory role. And it will bring the banks to heel.

For some in towns like Amneville, scarred by the loss of jobs as its factories close, this sounds like an idea worth trying.

In the eyes of the working classes, power is no longer held by politicians but by the financial markets, says sociologist Alain Mergier.

The European Union, far from protecting workers, overexposes them to the effects of globalisation. The working classes are the most eager for France to abandon the euro, Ifop polls show. Nearly one in two blue-collar workers wants a return to the French franc.

REUTERS

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Economic nationalism making a comeback

LONDON: They do not like immigrants and they do not like Europe. Some of them do not even like being called 'far right'.

However you describe them, fringe parties from Finland to the Netherlands are taking a cue from the euro crisis to revive ideas of economic nationalism.

Few go as far as Ms Marine Le Pen's National Front in France, which advocates a pullout from Europe's single-currency regime.

But some have turned up the rhetoric in favour of a strong state to reclaim powers lost to Brussels. Often they want to shed the burden of bailing out weaker euro zone partners like Greece.

In the Netherlands, Mr Geert Wilders' Freedom Party is now the second most popular, recent polls show.

'The peoples of Europe were robbed of their sovereignty, which was transferred to far-away Brussels. Decisions are now being taken behind closed doors by unelected bureaucrats,' Mr Wilders said in a Berlin speech last month.

He has toyed with the idea of leaving the euro but it does not seem that strong a view - he would rather be in the euro club with Germany and kick out the countries on the periphery.

The Finns Party, known until recently as the True Finns, won 19 per cent of the vote in an April election. Their opposition to bailouts gained sympathy among voters who resent helping southern countries while they face austerity. The party wants countries like Greece out of the euro.

Austria has two far-right parties, both in opposition and widely accepted on the political landscape. Both oppose further bailouts of euro zone countries.

One, the Freedom Party, has proposed dividing the euro zone into two parts: the strong north and Mediterranean weaklings. It often comes second in opinion polls behind the Social Democrats.

Among Europe's big countries, Germany's National Democratic Party and the British National Party are more marginalised.

Britain's Conservatives provide a mainstream outlet for euro sceptics, and German Chancellor Angela Merkel has been the reluctant party in euro zone bailouts.

A September poll showed a euro-sceptic political party would find strong support in Germany. Around 50 per cent said they would welcome such a group on the scene.

REUTERS

'Policies are rational but politics is emotional'

2011-10-15T23:30:00.001+08:00

From Straits Times, Oct 15, 2011

While in town recently, British politician Peter Mandelson spoke about a party's loss of emotional connection with voters and how that can lead to defeat at the polls. Insight reports on the discussions his comments sparked.

By Andrea Ong

HE WAS a co-architect of Britain's New Labour movement, which swept the party to victory in 1997 and helped it stay in power for 13 years.

But during a recent visit here, Lord Peter Mandelson was more focused on the reasons for Labour's loss at last year's polls.

He identified one crucial factor: emotional connection.

'As a party, we had begun to drift, to misplace our New Labour identity... Finally, we lost what I can best describe as our emotional connection with our voters,' he said.

Lord Mandelson, a former British secretary of state for business and European Union trade commissioner, was in town last month as a Lee Kuan Yew Exchange Fellow.

His words struck a chord with his Singaporean audience.

Lee Kuan Yew School of Public Policy dean Kishore Mahbubani said the two words to take away from Lord Mandelson's lecture were 'emotional connection'.

Soon after, an extract from Lord Mandelson's speech appeared on the People's Action Party's (PAP) website. It also generated fresh discussion online on the disconnect between the Government and voters.

The challenge of reconnecting with voters is an issue that has been much on the minds of PAP leaders since May, when the party saw its share of the national vote slide to 60.1 per cent - the lowest since Independence in 1965.

At the National Day Rally in August, Prime Minister Lee Hsien Loong stressed that going forward, 'we have to get our politics right as well as our policies right'.

And that means appealing to people's emotions.

'Policies are rational but politics is emotional,' was how Lord Mandelson put it. In politics, people are driven by emotional forces like passion, ambition and ideals, he said.

But after 52 years in power, is the PAP able to summon such emotional force among voters, and to move the people it governs?

Civil servant Jeremy Tay, 26, sums up his feelings towards the PAP in one word: indifference. 'They keep things running. I'm not sure there ever was much emotional connection to begin with,' he says.

For sales executive Cao Wei, 28, who has worked in two foreign multinational companies, it is the issue of foreigners competing with locals for jobs that can spoil the emotional connection.

'At the lower-income levels, you will never be cheap enough to compete with foreigners. At the same time, the top-tier jobs are taken up by expatriates,' he says.

The PAP, he says, should not just stop at explaining the rationale for foreigners' presence. Instead, 'they could show that they are taking people's views into account by having more forums and dialogues'.

The incumbent's dilemma

INCUMBENCY poses several challenges.

Successful parties that have been long in power have to find ways to continuously reconnect and not fall complacent, and that is difficult, Lord Mandelson said in his lecture.

At the same time, they come up against voters' rising expectations.

'People want better and cheaper housing, more subsidies in their lives as the cost of living rises, better urban living, ever-rising quality of public services like education, health, transport,' he tells Insight in an interview.

'These are the right demands for people to have, but you can't always satisfy them in the way and as quickly as people want,' he adds.

Minister of State for Defence and Education Lawrence Wong posted an excerpt of Lord Mandelson's speech on his Facebook page.

Mr Wong agrees that with incumbency comes added burdens, such as having 'to explain what you are doing across the entire front of government, from A to Z, everything that affects people's lives', whereas parties out of government can choose to champion a single cause.

A first-term Member of Parliament, Mr Wong acknowledges that the PAP government has to rethink how it formulates and communicates its policies.

'You need to find some way to not get too embroiled in the details and logic of each individual policy, and be able to put out an overarching message that is compelling,' says Mr Wong, who heads the PAP's publicity and publication sub-committee.

Dr Terence Chong of the Institute of Southeast Asian Studies says the PAP's relations with Singaporeans are 'transactional' rather than emotional in nature.

'You deliver growth, we remain compliant, things will be fine,' is how he sums it up.

'Perhaps the relationship was characterised by a grudging obedience since the PAP got things right more times than it got things wrong,' he says.

While the Government has a duty to ensure Singapore remains economically competitive, Dr Chong points out that 'it's difficult to build emotional connection by telling citizens that the big bad world will eat you up if you don't buck up'.

Dr Reuben Wong of the National University of Singapore says the PAP also has to contend with its reputation for a 'technocratic scholar-mindset which is increasingly removed from the average Singaporean'.

Voters thus associate the PAP with values like credibility, efficiency and capability - which do not stir the emotions.

'These have positive but very 'cold' associations as they do not relate to how one feels,' says Associate Professor Sharon Ng of the Nanyang Technological University's (NTU) business school.

Prof Ng, who researches on marketing, contrasts that with the 'very hot' topics which the opposition parties spoke out on, relating to people's aspirations and fears. These 'connected with the public on a different level', she says.

Rebranding the PAP?

AFTER the 2006 General Election, the 'post-65' group of first-term MPs tried to appeal to young voters by launching a group blog and performing a hip-hop dance at the Chingay Parade.

But those attempts to popularise the PAP soon fizzled out.

Is the PAP in need of a new branding campaign? After all, politicians in various countries are heading down that path.

British Prime Minister David Cameron appeared on the cover of GQ men's magazine ahead of last year's polls. US President Barack Obama's 'Yes We Can' campaign in 2008 banked on pop culture and online media like YouTube and Facebook.

Most recently, Malaysian Prime Minister Najib Razak embarked on a 'cool campaign' to shore up support for his party ahead of the national polls. Reportedly advised by former New Labour campaign members, he showed up at pop concerts and radio stations, and tweeted about his appearances.

Opinion is divided on whether the PAP should employ such soft marketing tactics.

Dr Reuben Wong believes Singapore politics is becoming Americanised, with television and social media becoming increasingly important platforms.

He cites the recent presidential election, during which all four candidates faced off in three roundtable discussions that were broadcast on traditional and new media.

Others are of the view that political marketing cannot replace substance.

New Labour came to power in 1997 with a savvy 'Cool Britannia' campaign which saw former prime minister Tony Blair being backed by popular bands like Oasis, Blur and Suede, says Dr Terence Chong. 'But they abandoned him when they felt he no longer spoke for them or the working youth,' he notes.

Mr Lawrence Wong is similarly sceptical of branding efforts.'Policies still matter because that's the substance of what the Government does,' says the former career civil servant who entered politics earlier this year.

But the Government can improve on how it communicates and presents these policies, he adds. People have to feel, not just understand rationally, how policies can benefit them.

There is also greater scope for consulting citizens when formulating policies. And when policies are implemented, the Government can afford to be more flexible in how it treats people at the margin, who just miss qualifying for help, Mr Wong says.

Lord Mandelson, labelled 'the Sultan of Spin' by the British press, agrees that emotional connection cannot be forged from political style alone.

'It's to do with truthfulness, authenticity and being consistent with what you think, say and do. It's called leadership,' he says. 'And Singapore continues to have leadership in ways and on a scale that a lot of other countries are denied.'

Ministers and MPs have also been stepping up their use of social media in a bid to engage the public. But the jury is still out on whether such attempts represent real change.

Associate Professor Benjamin Detenber from NTU's Wee Kim Wee School of Communication and Information says it will take time to cultivate a genuine connection and presence online.

'Just having a Facebook page and updating your status does not automatically qualify as connecting,' he notes.

People judge politicians through a whole series of online activities, such as the comments they post and the photos and links they 'like', he adds.

Dr Reuben Wong regards Minister of State for Manpower and National Development Tan Chuan- Jin as 'one of the better ones' among the PAP MPs using social media. But, he notes, Brigadier-General (NS) Tan still steers clear of controversial issues.

Agreeing, Dr Terence Chong argues that engagement is not just about the medium but the message. 'The medium must never become the message. If so, it'll just be the Government giving you the same stock answers, this time in 140 characters or less,' he says, referring to the maximum length for a message on Twitter.

Reconnecting from the ground up

BRANDING aside, the PAP has quietly set itself a bigger goal in connecting with voters.

After the General Election, both the Prime Minister and former foreign minister George Yeo spoke about reform within the party.

PM Lee said at his post-election press conference that the PAP would embark on 'soul-searching' in the months ahead, to find a formula to go forward.

Mr Yeo, who lost his Aljunied GRC seat in the May 7 polls, was more forthcoming.

'I think it should be the revitalisation of a movement, of a movement which, in an earlier phase of great unity, created Singapore and enabled us to make the astonishing progress that we've made.

'What we need to do now is re-achieve a new unity so that in this century, with all the challenges of globalisation and information technology, also fragmentation, we continue to surge ahead. We're smack right in the middle of a region which is bursting with energy. If we get our domestic politics right, we'll have a very bright future,' he had said then.

Dr Reuben Wong says that in order for the PAP to relaunch itself as a mass movement, its members first need to question what the PAP stands for and some underlying assumptions.

For instance, the PAP may have to look beyond its usual pool of civil servants and professionals for candidates.

'The PAP needs to regain street credibility and show they understand how ordinary Singaporeans feel,' he says.

In the meantime, MPs are expanding their outreach efforts. They are employing new platforms, such as townhall meetings and policy dialogues, to engage people whom they have not been as effective in reaching out to in the past.

The party's committee to review its election results has been at work since May but has said little in public about its findings.

Perhaps the party's preferred strategy is to talk less and do more, especially in reaching out to Singaporeans on the ground and beefing up its support at the grassroots.

Mr Lawrence Wong hints at these efforts. He says reconnecting with voters may involve small changes, such as re-timing house visits to suit the schedules of young professionals who work, or organising activities beyond the usual block parties and karaoke sessions.

'It may not make a huge, nice, sexy story, but it's the small things that can help MPs connect emotionally with their residents and present a human face to the party,' he says.

It remains to be seen if the PAP can - as it did in its early years - tap into the spirit of these times and stir hearts to its cause once again.

andreao@sph.com.sg

From garden city to urban farms

2011-10-15T23:14:00.002+08:00

Oct 15, 2011
WORLD FOOD DAY

In a nation of food lovers, there should be room to grow food aplenty

By Asit K. Biswas & Leong Ching

HERE'S an unthinkable thought for World Food Day tomorrow - could Singapore be self-sufficient in food one day? Surely, an impossible dream - it is too small, its land too expensive, and it's far cheaper to import.

These very same stones were hurled at the issue of water in 1965. But Singapore has gone from almost totally dependent on imported water from Malaysia, to importing 40 per cent today, and by 2061, when its second water agreement with Malaysia expires, self-sufficiency.

Food, however, has never been given the same strategic position as water - gram for gram, it has a far higher value and can be imported from a diverse number of sources. Today, food comes from Malaysia, Indonesia, Australia, China and the United States.

Only 738ha, or about 1 per cent, of land is set aside for farming, compared with 12 per cent for roads and 15 per cent for housing.

Cities after all are for vibrancy and dynamism, for buzz and nightlife, and more recently for gambling, high fashion, champagne and car races.

But here are good reasons for Singapore to rethink its urban landscape. For one, global cities are being redefined with urban agriculture seen as a viable, efficient and environmentally-friendly complement to farms.

In 2008, London launched a scheme to turn 2,012 plots of unused land into tiny farms to grow food by 2012. More young people and professionals are taking up farming.

In Milan, a 27-storey apartment complex is now under construction. Named Bosco Verticale (Vertical Forest), it is the brainchild of architect Stefano Boeri. Each apartment will have a balcony with oaks and amelanchiers to filter air, providing shade in summer; in winter, sunlight will shine through the branches. This is a new collaboration of out-of-the-box-thinking by architects, engineers, botanists and town planners.

Similarly, in Valencia, 96 apartments are being built, with 8m balconies cantilevered in the sky. Residents of Torre Huerta (Orchard Tower) will literally be able to pick oranges and lemons from the sky.

Then, too, issues of food safety and security are increasingly important. Tainted food and food viruses require vigilant checks and accreditation while extreme climatic events have led to wild fluctuations in prices.

In 2007, high food inflation prompted the Government to set aside more land for farming and to give $5 million to support agricultural entrepreneurs. Since then, however, little has been said.

We argue that urban agriculture is not only possible, it provides an alternative and equally exciting vision of Singapore. Three lessons from an impossible dream three decades ago - the water story - may help.

Overcome physical constraints

SINGAPORE was thought to be too small to hold enough water. We overcame this by pushing out into the sea - Marina Barrage is a fresh water lake reclaimed from the sea. We also used all the drains and recycled every drop used.

Land scarcity applies too in agriculture. But why not push upwards into the sky?

A good prototype for vertical farming has already been developed by the Agri-Food and Veterinary Authority and a private company. This 'farm' is a collection of two-storey tall structures, rotating slowly, so the sun shines on each in turn. This increases the yield per metre by five times.

Aside from new technology, old-fashioned urban planning may help.

Nanyang Technological University estimates that 2,331ha of farm land would supply enough greens for Singapore. Meanwhile, the National University of Singapore has estimated that there is a rooftop area of approximately 1,000ha in HDB housing blocks. There are also green spaces in between blocks, the common areas in corridors.

Physically, we can do far better than the 7 per cent of vegetables that we are producing now.

Political champion

FOR innovative food policies to have a place at the table, a political champion is needed. Then Prime Minister Lee Kuan Yew had said that every policy 'bent at the knee' for water. Food policies too need similar high-level commitment.

The current goals are modest - limited self-sufficiency in eggs, fish and leafy vegetables. The target is to increase production from 23 per cent of eggs, 4 per cent of fish and 7 per cent of leafy vegetables to 30 per cent for eggs, 15 per cent for fish and 10 per cent for leafy vegetables by 2015.

For the longer term, an ambitious target would be to have near self sufficiency in these areas.

Appreciating food

SINGAPORE imports 90 per cent of all its food. Yet each year, Singapore throws out 570 million kg of food, mainly edible food scraps - one fifth of its supply.

A frugal attitude and self control are needed - order only what we can finish, plan meals so that we do not have to throw out stale food.

These things will take time, judicious investments and enduring policy commitment. Yet, Singapore's edge lies exactly at this praxis - witness its remarkable policy successes in areas as diverse as water, public housing and industrial infrastructure.

We believe that Singapore can add urban agriculture to the list.

The first writer is a distinguished visiting professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore and the second is a PhD candidate at the same school.

[Better to use our roofs to grow food than to try ot generate solar power. And I wish we would quickly develop our vertical farms.]

Five myths of American exceptionalism

2011-10-15T23:05:00.001+08:00

Oct 15, 2011

By Stephen M. Walt

OVER the last two centuries, prominent Americans have described the United States as an 'empire of liberty', the 'last best hope of earth', the 'leader of the free world' and the 'indispensable nation'.

These enduring tropes explain why all presidential candidates feel compelled to offer ritualistic paeans to America's greatness and why President Barack Obama landed in hot water for saying that while he believed in 'American exceptionalism', it was no different from 'British exceptionalism', 'Greek exceptionalism' or any other country's brand of patriotic chest-thumping.

Most statements of 'American exceptionalism' presume that America's values, political system and history are unique and worthy of universal admiration. They also imply that the United States is both destined and entitled to play a distinct and positive role on the world stage.

The only thing wrong with this self-congratulatory portrait of America's global role is that it is mostly a myth.

Although the US possesses certain unique qualities - from high levels of religiosity to a political culture that privileges individual freedom - the conduct of US foreign policy has been determined primarily by its relative power and by the inherently competitive nature of international politics. By focusing on their supposedly exceptional qualities, Americans blind themselves to the ways that they are a lot like everyone else.

This unchallenged faith in American exceptionalism makes it harder for Americans to understand why others are less enthusiastic about US dominance, often alarmed by US policies and frequently irritated by what they see as US hypocrisy, whether the subject is possession of nuclear weapons, conformity with international law or America's tendency to condemn the conduct of others while ignoring its own failings. US foreign policy would probably be more effective if Americans were less convinced of their own unique virtues and less eager to proclaim them.

What we need, in short, is a more realistic and critical assessment of America's true character and contributions. In that spirit, I offer here the Top 5 Myths About American Exceptionalism.

Myth 1: Uniquely exceptional

WHENEVER American leaders refer to the 'unique' responsibilities of the US, they are saying that it is different from other powers and that these differences require them to take on special burdens.

Yet there is nothing unusual about such lofty declarations. Most great powers have considered themselves superior to their rivals and have believed that they were advancing some greater good when they imposed their preferences on others.

The British thought they were bearing the 'white man's burden', while French colonialists invoked la mission civilisatrice to justify their empire. Portugal, whose imperial activities were hardly distinguished, believed it was promoting a certain missao civilizadora. Even many of the officials of the former Soviet Union genuinely believed they were leading the world towards a socialist utopia.

When Americans proclaim they are exceptional, they are simply the latest nation to sing a familiar old song.

Myth 2: The US behaves better

DECLARATIONS of American exceptionalism rest on the belief that the US is a uniquely virtuous nation, one that loves peace, nurtures liberty, respects human rights and embraces the rule of law. Americans like to think their country behaves much better than other states do, and certainly better than other great powers.

If only it were true. The US may not have been as brutal as the worst states in world history, but a dispassionate look at the historical record belies most claims about America's moral superiority.

For starters, the US has been one of the most expansionist powers in modern history. It began as 13 small colonies clinging to the eastern seaboard, but eventually expanded across North America, seizing Texas, Arizona, New Mexico and California from Mexico in 1846. Along the way, it eliminated most of the native population and confined the survivors to impoverished reservations. By the mid-19th century, it had pushed Britain out of the Pacific north-west and consolidated its hegemony over the Western Hemisphere.

The US has fought numerous wars since then - starting several of them - and its wartime conduct has hardly been a model of restraint. The 1899-1902 conquest of the Philippines killed some 200,000 to 400,000 Filipinos, most of them civilians, and the US and its allies did not hesitate to dispatch some 305,000 German and 330,000 Japanese civilians through aerial bombing during World War II, mostly through deliberate campaigns against enemy cities. No wonder General Curtis LeMay, who directed the bombing campaign against Japan, told an aide: 'If the US lost the war, we would be prosecuted as war criminals.' The US dropped more than six million tonnes of bombs during the Indochina war, including napalm and lethal defoliants like Agent Orange, and it is directly responsible for the deaths of many of the roughly one million civilians who died in that war.

The US never conquered a vast overseas empire or caused millions to die through tyrannical blunders like China's Great Leap Forward or Stalin's forced collectivisation. Given the vast power at its disposal for much of the past century, Washington could certainly have done much worse. But the record is clear: US leaders have done what they thought they had to do when confronted by external dangers, and they paid scant attention to moral principles along the way.

Myth 3: America's special genius

THE US has enjoyed remarkable success, and Americans tend to portray their rise as a direct result of the political foresight of the Founding Fathers, the virtues of the US Constitution, the priority placed on individual liberty, and the creativity and hard work of the American people. In this narrative, the US enjoys an exceptional global position today because it is, well, exceptional.

There is more than a grain of truth to this version of American history. It's not an accident that immigrants came to America in droves in search of economic opportunity, and the 'melting pot' myth facilitated the assimilation of each new wave. America's scientific and technological achievements are fully deserving of praise and owe something to the openness and vitality of America.

But America's past success is due as much to good luck as to any uniquely American virtues. The new nation was lucky that the continent was lavishly endowed with natural resources and traversed by navigable rivers. It was lucky to have been founded far from the other great powers and even luckier that the native population was less advanced and highly susceptible to European diseases. Americans were fortunate that the European great powers were at war for much of the republic's early history, which greatly facilitated its expansion across the continent, and its global primacy was ensured after the other great powers fought two devastating world wars.

This account of America's rise does not deny that the US did many things right, but it also acknowledges that America's present position owes as much to good fortune as to any special genius or 'manifest destiny'.

Myth 4: The US is responsible for most of the good in the world

AMERICANS are fond of giving themselves credit for positive international developments. President Bill Clinton believed the US was 'indispensable to the forging of stable political relations', and the late Harvard University political scientist Samuel Huntington thought US primacy was central 'to the future of freedom, democracy, open economies and international order in the world'.

Once again, there is something to this line of argument, just not enough to make it entirely accurate. The US has made undeniable contributions to peace and stability in the world over the past century, including the Marshall Plan, the creation and management of the Bretton Woods system, its rhetorical support for the core principles of democracy and human rights, and its mostly stabilising military presence in Europe and the Far East. But the belief that all good things flow from Washington's wisdom overstates US contribution.

For starters, though Americans watching 'Saving Private Ryan' or 'Patton' may conclude that the US played the central role in vanquishing Nazi Germany, most of the fighting was in Eastern Europe, and the main burden of defeating Hitler's war machine was borne by the Soviet Union. Similarly, though the Marshall Plan and Nato played important roles in Europe's post-World War II success, Europeans deserve at least as much credit for rebuilding their economies, constructing a novel economic and political union, and moving beyond four centuries of sometimes bitter rivalry. Americans also tend to think they won the Cold War all by themselves, a view that ignores the contributions of other anti-Soviet adversaries and the courageous dissidents whose resistance to communist rule produced the 'velvet revolutions' of 1989.

Moreover, as Godfrey Hodgson recently noted in his sympathetic but clear-eyed book, The Myth Of American Exceptionalism, the spread of liberal ideals is a global phenomenon with roots in the Enlightenment, and European philosophers and political leaders did much to advance the democratic ideal. Similarly, the abolition of slavery and the long effort to improve the status of women owe more to Britain and other democracies than to the US, where progress in both areas trailed many other countries. Nor can the US claim a global leadership role today on gay rights, criminal justice or economic equality - Europe's got those areas covered.

Bottom line: Americans take too much credit for global progress and accept too little blame for areas where US policy has in fact been counterproductive.

Myth 5: God is on our side

A CRUCIAL component of American exceptionalism is the belief that the US has a divinely ordained mission to lead the rest of the world. President Ronald Reagan told audiences that there was 'some divine plan' that had placed America here, and once quoted Pope Pius XII saying: 'Into the hands of America God has placed the destinies of an afflicted mankind.' President George W. Bush offered a similar view in 2004, saying: 'We have a calling from beyond the stars to stand for freedom.'

The same idea was expressed, albeit less nobly, in Otto von Bismarck's alleged quip that 'God has a special providence for fools, drunks and the United States.'

Confidence is a valuable commodity. But when a nation starts to think it enjoys the mandate of heaven and becomes convinced that it cannot fail or be led astray by scoundrels or incompetents, then reality is likely to deliver a swift rebuke. Ancient Athens, Napoleonic France, imperial Japan and countless other countries have succumbed to this sort of hubris, with catastrophic results.

Despite America's many successes, the country is hardly immune from setbacks, follies and boneheaded blunders. If you have any doubts about that, just reflect on how a decade of ill-advised tax cuts, two costly and unsuccessful wars, and a financial meltdown driven mostly by greed and corruption have managed to squander the privileged position the US enjoyed at the end of the 20th century.

Instead of assuming that God is on their side, perhaps Americans should heed Abraham Lincoln's admonition that our greatest concern should be 'whether we are on God's side'. Given the many challenges Americans now face, from persistent unemployment to the burden of winding down two wars, it's unsurprising that they find the idea of their own exceptionalism comforting - and that their aspiring political leaders have been proclaiming it with increasing fervour. Such patriotism has its benefits, but not when it leads to a basic misunderstanding of America's role in the world.

The writer is a contributing editor at Foreign Policy magazine (from which this article was adapted), and Robert and Renee Belfer professor of international affairs at Harvard University's Kennedy School of Government.

WASHINGTON POST