The Singaporean Wealth Gap

The Occupy Wall Street movement sounded the alarm for many around the world. The alarm rang about the failure of our current capitalist system to truly create advances in our society. The Occupy movement created a new paradigm that had not emerged in the United States since the Vietnam War protests in the 1960s and 1970s. The paradigm was one of anger and frustration and critique, where the populace, unafraid of the established powers, voiced their opinions.

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Beyond the debates about the effectiveness and long-term strategies of the Occupy movement, it did in fact produce one significant and indisputable outcome; it brought discussions of wealth and inequality—typically sequestered in government and academia—to the forefront of public political discourse. Singaporean Prime Minister Lee Hsien Loong, Massachusetts Governor Mitt Romney, and President Barack Obama have all addressed income inequality in the last year. Income inequality exists and it needs to be engaged with.

In The Spirit Level: Why More Equal Societies Almost Always Do Better, Richard G. Wilkinson and Kate Pickett examined eleven social problems: physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child well-being.  In each of the different countries analysed, as inequality increased, social problems intensified. For example, the income inequality issue in Singapore is quite salient. According to a National University of Singapore report, Singapore’s inequality has dramatically increased in the last decade.  Although many countries have seen a rise in income inequality, the speed and level of the Singaporean increase is startling.

In Singapore, globalisation and trade have expanded significantly in the last thirty years. This economic growth has facilitated an influx of cheaper goods from more efficient suppliers. Globalisation and trade have begun to isolate the lower wage sectors of the Singaporean economy. Why is this growth problematic? On the social level, income inequality may disrupt the ingrained social fabric, leading to general dissatisfaction with the social contract. Equality, income distribution, and well-being go hand in hand. Equal incomes lead to equality and increase well-being.

Wilkinson and Pickett argue that high levels of income inequality influence all levels of society in an extremely negative way. In unequal societies, the economic elites experience more social problems than their counterparts in egalitarian societies. Wilkinson and Pickett point out that these societies can view monetary status as a justification for self-respect.  Singapore’s five C’s—cash, car, credit card, condominium, and country club membership—exemplify Wilkinson and Pickett’s argument. Inequality in Singaporean society is a systemic problem resulting from globalisation, skill-based technical change, and now insufficient domestic policies. These should be inherently worrisome for the Singaporean establishment as these practical implications cause stress, depression, drug use and criminality.  The consequences of income inequality in Singapore may prove disastrous for a nation known for its successful economy and adeptness in attracting global investment.

How can Singapore combat its inequality dilemma? If the system produces the problem, then the solution is located in the system. The Singaporean system was created for a relatively young population, a growing GDP, rising wages, and nearly full employment.

Some dramatic and alarming shifts have occurred in Singaporean society:  an aging population decreased social mobility, and less predictable economic growth. As a result, Singapore can no longer enjoy both a rapidly growing GDP and a rising well-being. The policies that have guided Singapore in the past and contributed to its development are slowly being rendered obsolete. Globalisation and rapid technological advancements have changed the equation used for calculating domestic social policies. If Singapore wishes to remain an integral state in Southeast Asia, it must address its lagging domestic policy.

This shifting socioeconomic dynamic means that Singapore must formulate a new social contract that balances equality with growth and social insurance with individual accountability. Singaporeans must shift away from their pursuit of the five C’s and consider common benefits. To depolarize the society, thinking must consider the sacrifice of short term gains to achieve long term societal improvements.

*The author wishes to dedicate this article to Dr. John Keshishoglou.