Disparity for the sake of efficiency – is this the type of society we want?

~ By Texas Hong ~

A cleaning lady works in the pantry of my office, doing simple chores. Let’s call her Lucy. Yesterday, she told me how she admired the design of my cup that I use in the office. Curiously, she wanted to know how much I bought it for.

“Ten dollars”, I said proudly, thinking that I managed a good deal.

Lucy walked away with her head bowed; muttering words which meant that it is very expensive and that I must be earning a lot of money. No I do not earn a lot of money, but to the cleaning lady, she thinks I do.

This made me reflect upon the on-going debate about Professor Lim Chong Yah’s proposal to structurally raise wages of low income earners. This made Lim Swee Say remind Singaporeans of the connection between productivity and wages.

Am I more productive than her? Surely the chores that she does for a living is something I dare not imagine undertaking myself. What made me so special in comparison to her such that I am earning so much more than her? I sit at my desk plodding away on my keyboard every day, swapping contracts at a macro level. Is this what we mean by being productive?

Singapore is not a pin-making factory in Adam Smith’s hypothetical world, it is a country. While we try to remain competitive in the global village, we have created too much social division in this nation. It is saddening to see our labour movement subscribe to bare naked economics plucked from ‘A’ levels textbooks.

Lim Swee Say’s assertion is not wrong. In the globalised world today, we must try our best to source for the cheapest input (in this case, labour) and maximise the value of our output to remain competitive. Just as critics label Professor Lim’s idea as something which ignores the productivity function, they have also forgotten about the social disparity function which is a serious problem to any country in the world.

In a capitalist society, companies cream off profits from their business ventures on the back of people like Lucy. It is time to redistribute some of these profits back to these people through the most direct way – wages, not handouts.

While Lucy might be benefitting from state-sponsored handouts because of her low income, I hope for the day that she does not find my cup expensive.

Headline illustration courtesy of Hub Pages