Saturday, January 30, 2010
Pressure to develop the financial market
The pressure to develop the financial market caused the fiasco in the credit linked notes, according to this article. This is true, not only in Hong Kong but in Singapore as well.
Low cost housing - a model for economic development
The Singapore experience is a useful lesson for developing countries in their economic development.
During the initial two decades, the Government built low cost housing for the people. It creates employment and gives the people a chance to work hard to own a property. The economic growth generated by the housing sector flowed to other sectors of the economy. The Government enforced a high savings rate to generate funds for this sector. It even implemented land acquisition to facilities the development. These were tough policies, but they produced a good outcome. This was leadership at its best - to set the priority for the country and to mobilize the people towards the priority goal.
The next two decades is a lesson on what to avoid. The Government decided to free up the property market under the "asset enhancement" policy, which created a bubble in housing prices. The ordinary people, who own only one property did not benefit from the appreciation, as they still need a place to live in. Only the few who emigrated or downgraded to a smaller property were able to enjoy the appreciation. Young people have to pay a higher price for a property which take away a larger share of their earnings.
The parties which benefited are the property developers and owners of land and capital. They enjoyed the appreciation in property prices and become billionaires on the debt burden carried by the rest of the population.
Life would have been much better for Singaporeans, if the property prices had been kept stable, rather than be allowed to appreciate in the "free" market. Actually, there is no free market, as the supply of land is held by a few parties, properties are too costly to be transacted freely, and consumers have insufficient information (leading to speculation caused by greed and fear). This is the worst case of a "free" market that is not controlled and exploited by certain parties.
Tan Kin Lian
During the initial two decades, the Government built low cost housing for the people. It creates employment and gives the people a chance to work hard to own a property. The economic growth generated by the housing sector flowed to other sectors of the economy. The Government enforced a high savings rate to generate funds for this sector. It even implemented land acquisition to facilities the development. These were tough policies, but they produced a good outcome. This was leadership at its best - to set the priority for the country and to mobilize the people towards the priority goal.
The next two decades is a lesson on what to avoid. The Government decided to free up the property market under the "asset enhancement" policy, which created a bubble in housing prices. The ordinary people, who own only one property did not benefit from the appreciation, as they still need a place to live in. Only the few who emigrated or downgraded to a smaller property were able to enjoy the appreciation. Young people have to pay a higher price for a property which take away a larger share of their earnings.
The parties which benefited are the property developers and owners of land and capital. They enjoyed the appreciation in property prices and become billionaires on the debt burden carried by the rest of the population.
Life would have been much better for Singaporeans, if the property prices had been kept stable, rather than be allowed to appreciate in the "free" market. Actually, there is no free market, as the supply of land is held by a few parties, properties are too costly to be transacted freely, and consumers have insufficient information (leading to speculation caused by greed and fear). This is the worst case of a "free" market that is not controlled and exploited by certain parties.
Tan Kin Lian
Universal coverage for health care
Thailand has an interesting and useful experience in implementing universal coverage for health care in a pragmatic way. They adopted a lot of common sense ideas. Read this article.
Morality
If you sell a product that earn you a high commission and you know is bad for customers (e.g. you would not buy the product for your own use), it may still be legal (i.e. you have observed the law strictly to the letter), but you are acting immorally (i.e. to know right from wrong, good from bad).
Many years ago, society observed moral and ethical values. Today, society has accepted immoral values in the pursue of the capitalist profit. They created terms such as "caveat emptor" and "open your eyes" to justify the immoral pursuit of profit. Even the leaders set a bad example by benchmarking their salaries to the top corporate profits, which may be obtained through immoral ways.
Tan Kin Lian
Many years ago, society observed moral and ethical values. Today, society has accepted immoral values in the pursue of the capitalist profit. They created terms such as "caveat emptor" and "open your eyes" to justify the immoral pursuit of profit. Even the leaders set a bad example by benchmarking their salaries to the top corporate profits, which may be obtained through immoral ways.
Tan Kin Lian
Small country can find its niche
Hi Mr. Tan,
In view of global competition and Singapore's small size, is it really possible for Singapore and its citizens to slow down?
Can we really afford to work at a much slower pace like the Europeans? Isn't it better to work hard and hence improve our learning curve on how to work more efficiently and effectively? Can one learn how to be more efficient and effective by working at a slower pace? (I do agree that balance is good, but can we afford to do so?)
Will the MNCs choose Singapore over China or their home countries if we do not offer them a competitive advantage?
While a lot of Singaporeans would like to have a "slower pace" of lifestyle. In the long term, can we really afford to do so? If we do so, will we need to return to Malaysia?
I am really not sure. It is a constant dilemma. Competition vs Coorperation. Environmental Conservation vs Rapid growth and innovation. Drive and Industry vs Balance and Comfort.
But I am sure about a few things:
1. We need to have the best brains to run the country - Especially for a small country like Singapore. Let's face it. Some people can never think as well as others. Even if the desire to serve at the top level is strong. One has to realize his strengths and weaknesses. Otherwise, it might bring about long term and irrecoverable damage to the country. But whether or not, the best brains' values and attitude towards certain things need to be changed, I'm not sure. Maybe that can be improved on.
2. Unnecessary and excessive competition that leads to resource wastage and detoriation of ethics should be frown upon.
Regards,
Mr. L
REPLY
There are many small countries in Europe and they do well without using the competitive policies that are adopted in Singapore. I think that a small country can do well by finding its niche.
In view of global competition and Singapore's small size, is it really possible for Singapore and its citizens to slow down?
Can we really afford to work at a much slower pace like the Europeans? Isn't it better to work hard and hence improve our learning curve on how to work more efficiently and effectively? Can one learn how to be more efficient and effective by working at a slower pace? (I do agree that balance is good, but can we afford to do so?)
Will the MNCs choose Singapore over China or their home countries if we do not offer them a competitive advantage?
While a lot of Singaporeans would like to have a "slower pace" of lifestyle. In the long term, can we really afford to do so? If we do so, will we need to return to Malaysia?
I am really not sure. It is a constant dilemma. Competition vs Coorperation. Environmental Conservation vs Rapid growth and innovation. Drive and Industry vs Balance and Comfort.
But I am sure about a few things:
1. We need to have the best brains to run the country - Especially for a small country like Singapore. Let's face it. Some people can never think as well as others. Even if the desire to serve at the top level is strong. One has to realize his strengths and weaknesses. Otherwise, it might bring about long term and irrecoverable damage to the country. But whether or not, the best brains' values and attitude towards certain things need to be changed, I'm not sure. Maybe that can be improved on.
2. Unnecessary and excessive competition that leads to resource wastage and detoriation of ethics should be frown upon.
Regards,
Mr. L
REPLY
There are many small countries in Europe and they do well without using the competitive policies that are adopted in Singapore. I think that a small country can do well by finding its niche.
Pro-investor Champions
Three participants played all the way to Level 9 and reach the status of Champion. They have shared their experiences under Champion tab. They can reset to Level 1 and play again. All the best. You can try the simulation game here. Learn the skill of stock picking. This is especially important for students studying investments, with the ambition of entering the fund management industry.
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