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[h=2]Why I Cannot Support the PAP Today[/h]
January 22nd, 2013 |
Author: Contributions
Though many PAP supporters seem to like to tar us, who do not support the PAP, as ungrateful wretches, we do know where Singapore has come from.
Many of us have the empathy to have felt the vicarious fear of “there having been a fight” (a.k.a. race riot), and the economic/numerical sense to compare the Singapore economy in the (uncertain) 1960s with that in the (“booming”) 1970s. I am very much aware, albeit intellectually, of the dislocation felt in the “Lim Chong Yah economic restructuring” of the 1980s. There is certainly something good to be said about being born in a place where outside of politics there is clear rule of law, though in matters of politics things have been argued to be the contrary.
But knowing where we came from is not the same as knowing where we should go.
This is why I am with a party that advocates “robust policies”, that are defined as policies that provide a substantial amount of stability to Singaporeans in their necessities (such as in healthcare and housing). Macroeconomically speaking, it is like the domestic consumption expenditure stabilizer that many developed countries have but we do not. This is a very disturbing matter because the welfare of Singaporeans becomes subject to the considerably more volatile components of aggregate demand. However, robust policies come at the cost of growth of income at the top, which the PAP government seems to not be willing to give up (for whatever reason). My biggest disagreement with the PAP is on the account of this. Why do they care so little about the people to want stability for investors, but not stability for citizens’ well-being (even though the latter contributes to the former)?
Let me make a few other observations.
The PAP is a selfish allocator of risk. It moves risk to the people even though the government sector is best placed to bear certain risks (contrary to the basic principles of financial securitization). In housing, which I am more close to, it created the BTO system to reduce inventory risk for the government. But in turn, young couples are saddled with the need to wait 3 to 5 years to get their flats (from the time of their first application). This is a horrible trade since government might easily deal with the inventory risk.
The PAP advocates courses of action that are questionable for political reasons. After the launch of the SDP Public Housing Plan, they pushed the “asset appreciation” argument once more. Let me explain why “asset appreciation” is questionable. In Singapore, the people who buy (as opposed to servicing loans for) housing are largely between the ages of 30-49. This mostly determines the demand for housing, so I’ll call that age band the demand base. Interest rates also have a major influence on demand and low interest rates (and expectations of continued low rates) raise demand substantially. In Singapore, demographics reveals that the demand base has already begun to shrink at an average rate of 1% per year. In 10 years, it will be 91.1% of its current size and in 20 years it will be 81.6% of its current size. Interest rates will almost surely rise within the next 10 years too. Furthermore, foreign demand remains high now, and can only go down in future. It is hard to fight demography whose numbers determine how many tens of thousands of households are in the market for housing. It will take major demographic patching (immigration) every year to patch the demographic hole (and these people may not be staying for as long as 10 years). Put all these together and the claim that a HDB flat is an appreciating asset becomes rather questionable. It is disgusting that a government recommends questionable courses of action on Singaporeans. It is just irresponsible.
There is more, but let’s leave it at that. Like the rational PAP supporters (who surely must exist), I would like a good future for Singapore. This is why I cannot support the PAP today.
.
Jeremy Chen
* Jeremy is currently a PhD student at the Dept of Decision Sciences at NUS Business School. Previously, he was with DSTA, working on developing decision support systems and performing operational studies. Jeremy believes in “social justice” and “the free market”, and in particular that they can be beautifully synthesized. He explained that it is for this reason that he is politically aligned with SDP. He blogs at http://jeremy-chen.org.
Though many PAP supporters seem to like to tar us, who do not support the PAP, as ungrateful wretches, we do know where Singapore has come from.
Many of us have the empathy to have felt the vicarious fear of “there having been a fight” (a.k.a. race riot), and the economic/numerical sense to compare the Singapore economy in the (uncertain) 1960s with that in the (“booming”) 1970s. I am very much aware, albeit intellectually, of the dislocation felt in the “Lim Chong Yah economic restructuring” of the 1980s. There is certainly something good to be said about being born in a place where outside of politics there is clear rule of law, though in matters of politics things have been argued to be the contrary.
But knowing where we came from is not the same as knowing where we should go.
This is why I am with a party that advocates “robust policies”, that are defined as policies that provide a substantial amount of stability to Singaporeans in their necessities (such as in healthcare and housing). Macroeconomically speaking, it is like the domestic consumption expenditure stabilizer that many developed countries have but we do not. This is a very disturbing matter because the welfare of Singaporeans becomes subject to the considerably more volatile components of aggregate demand. However, robust policies come at the cost of growth of income at the top, which the PAP government seems to not be willing to give up (for whatever reason). My biggest disagreement with the PAP is on the account of this. Why do they care so little about the people to want stability for investors, but not stability for citizens’ well-being (even though the latter contributes to the former)?
Let me make a few other observations.
The PAP is a selfish allocator of risk. It moves risk to the people even though the government sector is best placed to bear certain risks (contrary to the basic principles of financial securitization). In housing, which I am more close to, it created the BTO system to reduce inventory risk for the government. But in turn, young couples are saddled with the need to wait 3 to 5 years to get their flats (from the time of their first application). This is a horrible trade since government might easily deal with the inventory risk.
The PAP advocates courses of action that are questionable for political reasons. After the launch of the SDP Public Housing Plan, they pushed the “asset appreciation” argument once more. Let me explain why “asset appreciation” is questionable. In Singapore, the people who buy (as opposed to servicing loans for) housing are largely between the ages of 30-49. This mostly determines the demand for housing, so I’ll call that age band the demand base. Interest rates also have a major influence on demand and low interest rates (and expectations of continued low rates) raise demand substantially. In Singapore, demographics reveals that the demand base has already begun to shrink at an average rate of 1% per year. In 10 years, it will be 91.1% of its current size and in 20 years it will be 81.6% of its current size. Interest rates will almost surely rise within the next 10 years too. Furthermore, foreign demand remains high now, and can only go down in future. It is hard to fight demography whose numbers determine how many tens of thousands of households are in the market for housing. It will take major demographic patching (immigration) every year to patch the demographic hole (and these people may not be staying for as long as 10 years). Put all these together and the claim that a HDB flat is an appreciating asset becomes rather questionable. It is disgusting that a government recommends questionable courses of action on Singaporeans. It is just irresponsible.
There is more, but let’s leave it at that. Like the rational PAP supporters (who surely must exist), I would like a good future for Singapore. This is why I cannot support the PAP today.
.
Jeremy Chen
* Jeremy is currently a PhD student at the Dept of Decision Sciences at NUS Business School. Previously, he was with DSTA, working on developing decision support systems and performing operational studies. Jeremy believes in “social justice” and “the free market”, and in particular that they can be beautifully synthesized. He explained that it is for this reason that he is politically aligned with SDP. He blogs at http://jeremy-chen.org.
