Political Economy, Taxes and Economic Realities

David M

Die-hard PAP Supporters at a PAP Rally

Die-hard PAP Supporters at a PAP Rally

While political discourse in the campaigning season in Singapore has been interesting to say the least, I do notice an undercurrent of oversimplifying vitriol which I think should be addressed:

Competition

A significant proportion of the electorate proclaim themselves devout believers in the benefits of competition. However, they usually apply this exclusively to political competition in parliament as a check on accountability & prevention of “groupthink”.

Insisting on competition in parliament while refusing to make the effort to compete with foreign workers willing to accept lower wages is inherently contradictory. While taking a pay cut is certainly an odious solution, it is equally certain that making a concerted effort to upgrade one’s skills (whether formally in course or informally on the job) to justify higher wages is a sensible way forward, on both the individual scale & as a workforce as a whole.

I can fully sympathise with the a reluctance to change habits that is the baggage cart pulled along by the stallion of skill upgrading, being on many occasions simply too laid back or lacking in moral fibre to make the effort, it is something I struggle with. Nonetheless, neither do I denigrate the necessity of improvement.

Attempting to shut ourselves off from competition with the rest of the world will only lead to our comparative deterioration in skills & capacity for work that will, in the years ahead, come back to haunt us. At the same time, this should not devolve into hostile nativist competition, for that is much we can learn from individuals/groups bringing their experiences from all corners of the globe. We shouldn’t forget how much Frederick II’s Prussia (amongst many other states in history) benefitted from diversity in skills & experiences.

To be sure, such changes are much more difficult for silver generation retirees. I’ll admit that finding a solution to this will not be easy. Naturally, this works both ways, & an incumbent political entity should not be too averse to competition for the same reasons mentioned.

Consequences of Multiparty National Assemblies

As mentioned in the 1st point, the presence of diversity within the national political assembly of a nation can serve as an accountability check on ruling executive. Some of the issues raised by the opposition undoubtedly brings to the national spotlight realities on the ground which the nation’s elites may not be entirely aware of.

All the same, we shouldn’t kid ourselves into assuming that multiparty national assemblies are an ideal solution that will ensure infallible governance. I dare say that, under anything other than exceptional circumstances, having a diversity of entities in the decision making process will inevitably impact the efficiency with which bills can be passed & their implementation expedited. It is also not uncommon for good ideas to be shot down merely because they were proposed by an opposing political faction. It is safe to say that this has occurred on numerous occasions in the history of the world’s major democracies.

It’s worth mentioning that I’m not trying to make the case for single-faction hegemony in representative national assemblies. I’m merely stating that loss of efficiency, & to some extent, loss of effectiveness in implementation, is something that an electorate must be willing to accept should it insist on political diversity.

Economic Reality

We all want lower GST, ERP abolition & less of a plethora of inherited costs in simple economic transactions & when making a lifestyle decision. It is as perfectly natural to long for these goodies as it is unrealistic to insist that the nation can continue to function as before without consequence in spite of their drastic reduction/abolition.

I dare say that Singapore at present, when it decides to increase taxes & tariffs, does tend to ensure that such increases are in the form of indirect, consumption-based taxes. Thus incurring excessive & unbearable costs to some extent can be avoided by lifestyle choices. To be sure, there are important exceptions, food prices (which are unavoidable by a mere change in lifestyle choice) perhaps, the unwillingness to allow diesel powered personal automobiles & most alarmingly & significantly, the cost of medication*, but it does seem that the general trend leaves open the possibility of savings via choice.

I should state that I’m no economic pundit & I may be wrong. To a certain extent, my misanthropy & detachment from typical consumables does leave me at odds with current opinion. I’m also unaware of other sources of government revenue & their ability to meet the nation’s financial needs independent of indirect taxes.

Conclusion

This in itself speaks for the need for diligent & logical analysis of any political entity’s (whether incumbent or challenger) proposed economic policy, something which admittedly could be helped by greater transparency on national finances. Ultimately however, a realistic attitude that a nation must have revenue to survive & that citizens are not absolved of some responsibility of providing that revenue (it is our country, after all) should always be the basis for election decisions, rather than blatant & excessive (in terms of time) reductions of the more visible, as opposed to the most effective, financial commitments of the electorate.