TR Emeritus

Mar 20, 2014

http://www.tremeritus.com/2014/03/20/singapores-crony-capitalism-a-recipe-for-disaster/

The Economist has ranked Singapore 5th on the crony-capitalism index. According to The Economist, Singapore is the 5th most easiest place for “where politically connected businessmen are most likely to prosper“.

Also, Singapore’s crony sectors to non-crony sectors share seems to be the third highest amongst the countries.

The Economist had also said that, “efficient government is no guarantee of a good score” as “Singapore (is) packed with billionaires in crony industries”.

But this ranking isn’t even as comprehensive as The Economist had only counted “the wealth of billionaires”, and “plenty of rent-seeking may enrich the very wealthy who fall short of that cut-off”, which means that Singapore could do even worse.

But nonetheless, the ranking on the index squares closely with the number of billionaires in Singapore – last year, Singapore ranks as having the 5th largest concentration of billionaires in the world, and we have the highest concentration of millionaires in the world. It won’t be a surprise if we actually rank top on the crony-capitalism index, if including for millionaires.

Thus it is worrying when the Singapore Prime Minister had said that, “In fact, if I can get another 10 billionaires to move to Singapore and set up their base here, my Gini coefficient will get worse but I think Singaporeans will be better off, because they will bring in business, bring in opportunities, open new doors and create new jobs, and I think that is the attitude with which we must approach this problem.”

Is this the right attitude? Is it right when Singapore’s capitalism is actually a “crony” one, and where the rich will get richer while the poor would get poorer.

In fact, when you look at the rich-poor gap, the gap has indeed become wider and wider – the rich has accumulated more wealth while the poor has heavily stagnated.

Not only that, the gap has grown so wide that Prof Tilak Abeysinghe has shown that ”the bottom 30 per cent of (Singaporean) households spent 105 per cent to 151 per cent of their income last year “.

Indeed, the government might hang on to the age-old argument for cronyism but this has clear implications for the general populace.

For Singapore, arguably it has resulted in an elitist society, huge influx of foreigners, low wages and a high cost of living unmatched by any developed society in the world.

Where Singapore is now ranked the most expensive place in the world to live in and where Singaporeans are paid among the lowest wages among the high-income countries, it is perhaps high time to shift away from our current economic model towards one where the wealth of the country is equitably shared among its inhabitants, who have toiled and worked hard to create the Singapore that it is today, together.

As scientists have noted that even with “growing economic instability”, “the elite of society have often pushed for a “business as usual” approach to warnings of disaster until it is too late.”

However, scientists have also explained that, ”Collapse can be avoided and population can reach equilibrium if the per capita rate of depletion of nature is reduced to a sustainable level, and if resources are distributed in a reasonably equitable fashion”.

It is high time that Singapore moves into a more equitable distribution and one that is sincerely more equitable. As much as the Singapore government claims that it is moving into a “fairer and more equitable” system, the current under-expenditure by the Singapore government is contrary to their claim and this does not bode well for Singapore’s long term future.

Leong Sze Hian and Roy Ngerng

* Leong Sze Hian is a Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, Wharton Fellow, SEACeM Fellow and an author of 4 books. He is frequently quoted in the media. He has also been invited to speak more than 100 times in 25 countries on 5 continents. He has served as Honorary Consul of Jamaica, Chairman of the Institute of Administrative Management, and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelor degrees and 13 professional qualifications. He blogs at www.leongszehian.com

* Roy Ngerng blogs at thehearttruths.com.