Taken from
Oxfam India
I’ve just come
back from nearly three days stay in hospital. I had a pain in my left knee on a
Friday. It got bad enough to keep me in bed over the weekend (struggled to make
toilet trips). Then on Sunday night, it reached a stage where the pain was so
bad and it looked like it would never end without medical guidance that I
called the ambulance on Monday morning and got myself carted to the nearest hospital.
I will leave my
experiences in hospital for another story. However, I will say that lying in a
hospital bed is one of the ways of focusing your mind on one of the pressing
but often ignored or dismissed issue of inequality. This is especially true if
you’re on self-employed terms like I am. A sick day is not just a day of no
work, it’s a day of no income.
It’s been known for over a decade that Singapore is an unequal society and didn't seem to care about that fact.
As far back in 2018, Singapore ranked amongst the bottom ten countries in its
efforts to reduce inequality, ranking just above Bangladesh and Laos). The
report can be found at:
For the longest
of times, the government would always stumble and try to focus on the reasons
as to why the gini-coefficient wasn’t really a good measurement of social
inequality. However, with the onset of Covid last year, there were a rash of
measures and Singapore was able to lower its gini coefficient score to a two
decade low, which the local press were quick to report on:
It was clear that Covid-19 was more than just a disease. It was something that exposed social fault lines. In Singapore, the extent of our "unequal society became crystal clear. The gap between "haves" and "have nots" became clear. Those with the luxury of a "skilled" profession could continue to earn whilst being "liberated" from the office.
However, those who depended on jobs that required you to be "physically" there, risked either getting the bug or a loss of income. It took Covid and the various restrictions for people to understand that the cleaning aunty was actually doing work and needed to be paid a salary rather than pocket money. To be fair, the government has made some noises about raising the wages of the underpaid and has proudly announced that they’ll double their wages in two years.
This inequality isn't unique to Singapore. Thanks to Covid, the poor have gotten
poorer and the rich have become astronomically richer. The Forbes rich saw
several changes at the top and in the latest list, the top three fortunes in the
world are all over USD$150 billion.
https://www.forbes.com/billionaires/
To put things
into perspective, a single member of the top three richest in the world, has a net
worth larger than the combined GDP of the smallest economies in Southeast Asia
(Myanmar at 76.2 billion, Cambodia at 27.24 billion, Laos at 20.44 and Brunei
at 15.28 billion). The statistics can be found at:
https://www.statista.com/statistics/796245/gdp-of-the-asean-countries/
This perspective
might explain why the government excited by the prospect of billionaires
settling in Singapore. A member of the top three, it seems, has the potential to
give us more than say trading with the number of Cambodians or Laotians. Singapore
made a big deal about the benefits of people with lots of money spending our
economy into the next level when it talked about how Sir James Dyson bought an
expensive apartment. I also remember being at the press conference where Doctor BK Modi of Spice Group announced he was setting up shop in Singapore. He talked about all the properties he was buying and then quipped about when his Permanent Residence status would be ready. The chap from EDB got visibly nervous.
However, is
billionaire spending a good thing. Does it drive the economy in any meaningful
way? Let’s take a look at India, our tenth largest trading partner as an example.
India has Asia’s
richest man in Mukesh Ambani, head of Reliance Industries. Mr. Ambani has a
fortune of around US$85 billion dollars and is the owner of what is probably
the world’s largest and most expensive residence in the world (estimated at
around US$2 billion). Not far behind Mr. Ambani on the Forbes List is Mr. Gautam Adani,
who is estimated to have a shade under $70 billion. Despite Covid devastating
India in every sense of the word, both men have done exceedingly well:
Mr. Ambani and Mr. Adani are the type of billionaires who would fit the criteria of billionaires who spend enough to drive a small economy. The cost of building Mr. Ambani's house is well known. The cost of running it is also by no means small (its been said that the Ambani household hires 600 servants to look after its six residents). Then there are the famously lavish weddings of the very wealthy. It was reported that Mr. Ambani spent some US$100 million on his daughter's wedding.
Despite the lavish spending of Mr. Ambani, Mr. Adani and their fellow billionaires, life for India's masses remains wretchedly poor as stated in the following Oxfam report.
https://www.oxfam.org/en/india-extreme-inequality-numbers
In fairness to India's very wealthy, there is a system of private philanthropy. India's largest conglomerate, The Tata Group, is active in trying to incorporate community betterment as part of its everyday business activities. The Indian tycoons, particularly in the software space are known to be genuinely serious in their efforts to give back. Azim Premji of Wipro, Shiv Nader of HCL and Arun Jain of Intellect Design Arena come to mind. A list of India’s more generous tycoons can be found at:
However, despite
the efforts of the Tata Group and the likes of Mr. Azim Premji to try and address issues like making health care more accessible to the masses, India remains a place where basic healthcare is considered a luxury for the majority. Things have gotten particularly nasty for India's masses during Covid-19. Despite efforts by the Tata Group to buy oxygen for India's hospitals from around the world, India still lacks oxygen in hospitals. Inequality has not caused "society-burning" social unrest in India. What it has done is to provide any Indian who can recite half the Western alphabet a reason to leave and stay out. Leaving aside questions on how India hopes to recover from the devastation of Covid-19, one also needs to question if the "demographics boom" that economist have predicted for India will be enjoyed by every other country except India.
Another model of billionaire management can be found further north in China, which has a far larger economy than India and far more billionaires than India.
Where the Billionaire’s
Come from – Wikipedia
Whilst having significantly
more billionaires than India, the billionaires in China have recently found
themselves trying to understate their wealth. Many of China's richest have found themselves housing officials from the tax department and it's not just billionaires. Movie stars have found themselves disappearing from China's cyberspace for things as minor as "tax avoidance." China's Communist Government has been on a mission to remind the world that despite China's very large economy - it is still a "Communist" government that enforces a policy called Common Prosperity.
Taken from
Global Times
Why is President
Xi talking about “Common Prosperity” now? Part of the reason could be because
China’s inequality problem was getting bad. In February 2021, Communist China
had greater inequality than capitalist America and as Foreign Affairs argues,
the choices were not good:
https://www.foreignaffairs.com/articles/china/2021-02-11/chinas-inequality-will-lead-it-stark-choice
A Communist
Nation has more inequality than a Capitalist One
On a personal level, I
disagree with using the heavy hand of government to move against the rich. China’s
top tycoons like Jack Ma of Alibaba and Ma Huateng of Tencent Holdings are guys
that China needs – genuine wealth creators who found a way to gather various technological innovations and applied them, and created something that made life easier for the average Chinese consumer. These guys moved China away from the "cheap manufacturing" that drove early prosperity to the "high value and ground breaking" stuff that China needs to secure its future. If you think about it, Alibaba became a competitor of Amazon instead of a supplier, which was the old business model.
These guys are “self-made” rather than “crony-made,” which makes them
aspirational characters for the millions of poor Chinese looking to better
themselves. It sends a bad message to the world when you crush the “mavericks”
like Jack Ma in China or Prince Alwaleed in Saudi Arabia because you need to
show the world whose boss.
Having said what
I’ve just said, China has an inequality was a problem. The Cultural Revolution is still part of living memory. People have not forgotten that China, unlike India, did not have a "struggle for independence." They had a civil war and communism came about because of the vast inequalities of the time. Mao may have been a disaster of a ruler but he was a brilliant revolutionary who lit the fuse at the bottom of an unequal society. Both China's Communist Government and Rich do not wish for history to repeat itself and so, the rich have rushed to donate to President Xi's "Common Prosperity" drive.
In Singapore, we need to understand that inequality is expensive. Bloomberg reported that inequality in the USA had a cost of US$23 trillion since 1990.
To put this into perspective, the current economy of the USA is US$21 trillion. In 20-years it spent US$2 trillion or ten percent of current GDP in the war in Afghanistan. However, inequality costs it, in 31-years, the USA lost itself. Is this something that we need.
The two Asian giants have potential models for us. We need to find a balance. We should not "target" the wealth creators in the same way that China has. Yet, at the same time can we really afford the obscene wealth imbalance that we see in India.
Our situation looks relatively healthy, which means there's never been a better time to make the necessary changes. We need more competition at the top and the power of the usual landowners that dominate the Straits Times Industrial Index (STI) needs to be disrupted. At the same time, we also need to find ways for people at the bottom to earn living wages. Covid has exposed holes - it would be a waste to leave them uncovered.
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