By Dr Yuen Chung Kwong
Singapore’s official social philosophy has always placed emphasis on self reliance, fearing that that welfare provisions might encourage undesirable patterns of behavior, e.g., unemployment benefit might reduce motivation to work; child endowment might encourage illegitimate births – as well as fostering a sense of entitlement among the population. The CPF (see http://sbr.com.sg/economy/commentary/what-you-need-know-about-singapores-compulsory-saving-scheme, http://sbr.com.sg/economy/commentary/what-you-need-know-about-singapores-annuity-scheme for my discussion) scheme is based on the idea of self reliance. Family is seen as the next resort, e.g., there is a legal provision to require children to support aging parents.
“Self reliance” is of course a fine concept, but does self reliance eliminate the need for social welfare completely? We need to remember that some selves are easier to rely on than others. Some people are born smarter, calmer, healthier, richer, etc, than others, or are simply luckier. We might have a meritocratic system, but this does not mean every benefit one enjoys is due to merit and is well deserved. Just as social welfare has its limitations, so does self reliance.
Market forces might in the most cases operate towards the optimal deployment of resources, but there are also cases beyond its reach, e.g. in a totally free market for health services, a doctor would probably get paid a lot more for wart removal or breast enlargement for wealthy clients, than for saving the life of a poor person, but it would be hard to argue that the former has more merit than the latter. It is usually necessary for governments to step in and fill gaps market forces miss out. Similarly, pornography and prostitution are easy ways for a girl to make money because there is constant demand, but governments usually would place some restrictions on such self reliance and market forces.
It is also generally the case that the rich are more able to benefit from market forces, e.g., they have capital to make use of investment opportunities, better access to education to change with new technology, and financial buffer to cope with recession, sickness and other misfortunes that might ruin someone on the economic margin.
We have had many decades of economic advances, but this has been accompanied by social changes that generate greater demands for social welfare. People live longer and require post-retirement income for more years than before – extending the retirement age a few years provides only a partial solution, and it is far from satisfactory to have frail, less mobile and sickness/accident-prone aged people, less competitive than younger people in the job market, trying to supplement their income with menial part time jobs. Divorces are more widespread, often leaving children under single income or non-working parents struggling to meet their basic needs including expenses for schooling, with the risk of future social dysfunction. Medical services have become very expensive, partly because of the complex facilities modern hospitals and clinics have to maintain, and partly because of high professional income, at least at the upper echelons.
Like “self reliance”, “mutual help” is a fine concept. Both annuity and life insurance are mutual help schemes: in life insurance, the people who pay premium but do not die during the policy period are subsidizing those that die early; in annuity, those who pay premium but die soon are subsidizing those that live long. They differ from social welfare only in the nature of the group: instead of being subsidized by other members in the same annuity/insurance scheme, welfare schemes require subsidy by the whole body of a nations’ taxpayers.
The tolerance for taxation to support social welfare is culture and ideology dependent, but it is also a pragmatic issue balancing the consequences of higher taxpayer burden against those of welfare deficiency. Welfare also produces the need for a government machinery that monitors as well as distributes benefits to ensure their reaching the genuinely needy, which can result in elaborate bureaucracy and unpleasant confrontations. The issue goes well beyond the matter of government budget.
[divide] Yuen Chung Kwong completed his PhD in Computer Science from Sydney University in 1972 and worked in Australia and Hongkong before joining NUS Computer Science Department in 1983; he was department head from 1985 to 1993 and retired in 2007.