During the Q&A session of the inaugural Progress Singapore Party (PSP) Talk on poverty in Singapore and gaps in the social safety net, veteran economist Yeoh Lam Keong was asked why the 250,000 people living in absolute poverty in the country are not putting more pressure on the PAP for help.
Mr Yeoh illustrated that the majority of those living in poverty are children and so they are not voters. Of those who do vote, they only make up a fraction of the overall voting population. They are, unfortunately, a small minority said the former GIC Chief Economist.
Mr Yeoh added that the rest of the voters are also not aware enough of the predicament of the poor because of various reasons, form inadequate data being collected and not enough forums to educate people, meaning that story of the poor are not told to the rest of the voters.
“So the key is really the swing voters in the middle, the people who are not absolute poor who will have to vote for the benefit of the absolute poor,” asserted Mr Yeoh.
“It is you and I who will have to put the political pressure on our policymakers to say it matters to us that our underprivileged brothers and sisters are not being well looked after. It matters to us,” he added.
Mr Yeoh said it’s up to the rest of the voters to make a dent in the votes, otherwise the poor will never be looked after. Aside from the lack of information, he said “this is partly why this has gone on for some time.”
The same audience member also asked about Singapore’s Gini Coefficient compared to other OECD countries. On this, Mr Yeoh notes that Singapore’s Gini Coefficient is among the highest in the world even after being adjusted for the fact that it’s a city. This shows that Singapore is still one of the most unequal societies and economies in the world.
However, Mr Yeoh notes that poverty is only a small subsection of the overall problem of inequality, which is what the Gini Coefficient measures. “Inequality generally is a deep social problem as well,” said the economist.
Universal Basic Income
Another attendee asked if a universal basic income (UBI) would be able to alleviate the problem of jobs being lost to automatic and the current problem of poverty.
Mr Yeoh responded, “First of all you start with the basics. You need an unemployment insurance system. Then we talk about UBI.”
One of the reforms recommended by Mr Yeoh in his earlier talk was the introduction of a comprehensive national unemployment protection system to help the unemployed poor in Singapore.
Focusing specifically on UBI, Mr Yeoh notes there are certain attractions to this concept including alleviating anxiety in the uncertain gig economy.
“The attraction is this, if you give a basic income of let’s stay $1,000 to everybody and they know they can get it if they need it, then what happens when you face a gig economy, when you don’t know whether your next job is going to be next week or next month?”
He continued, “This amounts to a high anxiety, miserable existence. No longer do you have a job. So without, if you have all these gigs, it’s going to be a miserable existence without a basic income.”
Drawing on his own experience, Mr Yeoh said:
“I had to work for 25 years in GIC and I can tell you that a lot of it I didn’t really enjoy. A lot of it I enjoyed and I love GIC as an organisation but in any organisation, working day in day out having to work on your mind 24/7 – which we had to in GIC – is not a pleasant experience. I would not wish that on my kids to have to work, to slave away.”
With UBI, a person’s basic needs are covered which means they are able to then take up jobs that they actually like and enjoy instead of resorting to slaving away at a job they hate just to put food on the table.
“So in a gig economy you have more freedom. You can pick and choose because you have a basic income support. You don’t have to have a miserable existence,” said Mr Yeoh.
However, he pointed out that although basic income is a good thing, he has a problem with the ‘universal’ aspect of it.
“Why are we paying $1,000 to everybody whether they are at the top 10% or bottom 10% of the population? The guys in the top 50% don’t need the $1,000. Why are you paying them? The guys at the bottom 20% need it… You are making it 5 times more expensive for taxpayers.”
So Mr Yeoh says he agreed with a basic income for the bottom 20%, not everybody.
Redistributive taxes
On whether there are additional taxes that can be implemented to secure additional funding, Mr Yeoh says there are some options.
“The first one is actually an environmental tax. If we don’t do something about the environment, if we continue abusing the environment like we do today, there’s not going to be any society for our kids. So you need to tax it heavily so that we do not go in that direction,” he explained.
Holding up Scandinavian countries as an example, Mr Yeoh noted they raise an average of 1-2% of their GDP from environmental taxes. This is something he says Singapore should do as well.
“We could do that and that money can go to the poor or education or healthcare. 1-2% of GDP is significant,” he added.
He also talked about redistributive taxes such as a wealth tax which he says is a ‘reasonably good idea’ which could help level the playing field.
A wealth tax, as suggested by US democratic presidential candidate Elizabeth Warren, on those above the $10-15 million threshold is a good idea, said Mr Yeoh.
He also suggested a progressive consumption tax. Acknowledging that it’s not something most people like, but he highlighted that if the poor are exempt from income tax and essential items are excluded from the consumption tax, then this could raise about 2% of GDP which can then fund a basic income for the bottom 20% in the country.
“So it’s changed from a consumption tax which is regressive to a progressive consumption tax,” explained Mr Yeoh.
Mr Yeoh said he thinks Singapore should look at dramatic radical redistribution through these kinds of taxes: super wealth taxes, environmental taxes, and progressive consumption taxes.
“Singapore is blessed in the sense that we don’t have to look at that many of them because we already have huge fiscal headroom. It may not be enough for everything we need but the remainder can be done through environmental taxes I think quite easily,” he concluded.
