Left-leaning global city is Singapore's new social compact

Left-leaning global city is Singapore's new social compact

It has taken a one-two punch for the Government to be now officially declared as being left-leaning.

That is how it seems after it announced an increase in taxes for top earners and a new scheme to give cash handouts to lower- income elderly Singaporeans.

None of its previous initiatives, including Workfare, have had the same effect.

Perhaps, it was the upping of the top tax rate by two percentage points that did the trick. You can't be said to have shifted left without being seen to be taking something away from the rich.

What is not clear, though, is whether this latest tilt brings Singapore to left of centre, or whether it is still somewhere to the right, though closer to the middle than it was.

Of course, there isn't a benchmark of where the centre is, and no one can say exactly where the Government is in the ideological spectrum between socialism and unfettered capitalism.

Singapore is now such a complex mix of the two - it defies easy labelling.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam made a strong case to argue that the system here was one of the most progressive in the world when he wrapped up the Budget debate earlier this month.

Some of the data he cited: 14.3 per cent of those in the bottom 20 per cent who are now in their late 20s and early 30s have moved up to the top 20 per cent of income earners, compared with only 7.5 per cent in the United States, 9 per cent in Britain and 11.7 per cent in Denmark.

His point: The poor in Singapore are socially more mobile than in supposedly more egalitarian countries known for their comprehensive welfare systems.

Another piece of evidence: For every dollar that middle-income earners here pay in taxes, they received $1.73 back in benefits from the Government - higher than what their counterparts get in the US, Britain and Finland.

So, while Singapore's overall welfare benefits might not be as generous as these countries', it was more progressive for the middle-income, who pay much lower taxes. In contrast, while those in other countries might receive more benefits, they paid a lot more taxes in return.

It was an impressive speech, scoring high on logic and analytical persuasiveness.

As I was listening to him, the one thought that came to mind was, why, despite the evidence and all the measures that have been implemented in the last few years, there is the widespread feeling among the population that this is still a market-driven place, with minimal safety nets.

No prizes, too, for guessing what the answer would be if you asked a Finn or a Dane, and a Singaporean, which country had more generous state support.

Perhaps, it is because Singapore's move towards being a more inclusive society has been a relatively recent one.

It is up against the much more entrenched, hard-wired perception that this is a highly competitive place, with no natural resources, and that if you did not take care of yourself, and your family couldn't, no one else would.

That was the narrative for so long - it will take many more years of left-leaning shifts to change it.

It will also take some time for the new measures to work their way, and the effect to be felt.

As Singapore looks for answers to how far it should go towards helping the weak and vulnerable, the experience of other countries will provide useful lessons. Much of Mr Tharman's speech was devoted to this when he warned against blindly following their bloated welfare systems, which he argued was not sustainable.

There are probably no universally right or wrong answers to these questions, and every society will have to find its own.

What is right for one country might not be so for another, given their different cultures, circumstances and resources.

One particularly tricky area unique to Singapore is related to its aspiration to be a global city attracting some of the world's richest.

Of all its recent economic strategies, this has been one of its most successful.

The world's rich like this place, its stability, security and efficiency.

So much so that Knight Frank, in its annual wealth report just released, has predicted that it will see the biggest growth in the number of what it calls "ultra-high net worth individuals" among cities globally over the next 10 years. These are people with more than US$30 million (S$41 million) in assets, excluding their own home.

Such an explosion in the number of wealthy people in Singapore will exacerbate the rich-poor divide more so than in any other society because here, the city is the country.

There is no rural space or alternative cities the domestic population can withdraw to, to seek refuge from the lifestyles of the super-rich.

And because resources are limited, especially land, they will inevitable raise the cost of living because of their sheer buying power.

How to prevent this from becoming a political problem?

In a perverse sort of way: more welfare and stronger safety nets.

The more Singapore becomes this global city attracting the rich, the more it needs to move left, to mitigate the ill-effects of growing inequality.

Otherwise, resentment against the wealth influx will increase, which indeed has happened.


This article was first published on March 15, 2015.
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