By Tan Jee Say –
PM said nothing new in his speech to the Economic Society of Singapore on 8 June 2012. Instead he hardened his position on economic strategy with fallacious arguments, contrary to public expectation of a change in government attitude and policy following his well-publicized apology just before the last general election in 2011. The "alarming implications" of his speech were highlighted by Kenneth Jeyaretnam (www.sonofadud.com). Other writers have also made similar criticisms. In this posting, I will zero in on just one key aspect of his subsequent Q&A session when "Mr Lee said there is no country in the world where the population gets smaller and incomes rise at the same time." (here)
Did I read it correctly, that "there is no country in the world where the population gets smaller and incomes rise at the same time"? Prime Minister, you are wrong. On the same day that PM's speech was published (9 June), there was a feature article in the Straits Times showing Estonia's population declining -0.65% while its GDP rose by 7.9% in 2011. But it is by no means the only country to achieve it. There are at least 3 other countries whose national income/GDP rose in 2011 while population declined. In addition, 4 countries (Austria, Finland, Taiwan and S Korea) whose populations effectively stagnated as they grew only marginally, registered respectable real GDP growth rates of 2.7 to 5.2%; and these are developed, high-income economies like Singapore. (All statistics are taken from CIA Factbook.)
Population growth rate GDP real growth rate
1. Estonia – 0.65 % 7.9 %
2. Latvia -0.598 % 4.0 %
3. Lithuania -0.278 % 5.8 %
4. Ukraine -0.625 % 5.2 %
5. Austria 0.026 % 3.3 %
6. Finland 0.065 % 2.7 %
7. Taiwan 0.171 % 5.2 %
8. S Korea 0.204 % 3.6 %
The experience of these countries including the Baltic states which are small open economies like Singapore, shows that there is no reason to believe that incomes in Singapore cannot rise even if reducing the number of foreign workers in Singapore results in a net decrease in the overall population. We are in a better state as our total fertility rate is positive and exceeds one. In addition, our labour productivity growth rate is not bad. In the ten-year period 1991-2000, Singapore's productivity growth rate was 3.3% before the liberal influx of foreign workers brought it down to 1.8% in the following decade 2000-2010, resulting in an average rate of 2.5% for the 20-year period 1991-2010. (Source : Economic Survey of Singapore 2011). If we achieve a targeted productivity growth rate of around 3% (which we did before the deluge of foreign workers), our GDP can grow by an average of at least 4% a year over the medium and long term . This is a respectable GDP real growth rate for Singapore at this stage of our economic development.
I am disappointed that the Prime Minister resorted to the use of incomplete facts and false argument to push through his economic policy of achieving growth with more and more foreign workers. If he does not have any new ideas to grow the economy without over-straining the physical infrastructure and destabilizing the social peace, he should step aside and let others lead the country with a new vision to take Singapore and Singaporeans forward.