The Return to Normal Office Life Symbolises the Return to an Economic Model that was Losing Value
Went to the office this morning to find that the train
system was on the blink again. People were having to leave the MRT stations to
get onto buses to send them back to their favourite place – the office. The
breakdown in the train system coincides with the announcement that Singapore
will be taking yet another step to returning to “normal” and that “work-from-home”
systems that had been in place, would no longer be the “default” mode.
Buses to Fix the Broken Trains
I guess people are happy to return to normal. After all,
working home and going into endless Zoom meetings did give people stress. In China,
the birthplace of the virus and the concept of lockdowns, there was surge in
divorce cases as couples couldn’t take the stress of being with each other
24/7. I guess, to many, returning to the office had a feel of returning to that
safe and familiar life.
However, for me, the broken train system coinciding with the
return to “normal” of going back to the office, made me realise one thing – our
“normal” pre-covid economic model was pretty much like the train system – still
functioning but increasingly faulty and instead of trying to fix the fundamental
problem, the powers running the economic model were behaving like the train operators
arranging for emergency buses – slapping on a band aid instead of fixing the fundamental
problem.
Like our train system, the economy looks good on the outside
and still hums along nicely when compared to quite a few other places. However,
like the MRT system, a large part of the economy was built for a different era
and there have been notable breakdowns in the economy in the same manner that
there have been notable breakdowns on the MRT. Our economic managers have behaved
in the same way as the MRT managers rushing emergency buses to the stations –
slapping on band aids instead of looking for fundamental problems and fixing
them. As a small nation, Singapore cannot afford to rest on “The system is
still better than elsewhere.” This thinking is a recipe for future problems.
The problem with the MRT is simple. The original system was
built back in 1987 when our population was a shade under three million
(2,775,000) and it grew to around 3,047,000 in 1990, which is an increase of
272,000 people in three years. This is roughly 90,000 a year or less than a
percent a year. In 2004, when a new Prime Minister came into power, our
population was 4,167,000 and in 2007, our population reached 4,589,000 or
422,000 in three years. Our population grown between 2004 and 2007 was steeper
than Hong Kong (which has an influx of migrants from China, which is a stone’s
throw away) and Kuala Lumpur.
The majority of the population growth came from migration. The
logic behind opening the doors to migration was simple – economic growth. Logic
was simple, with more people, there would be more money. More people would give
local businesses more customers and a larger labour force and so on and so on. While
the logic works on paper, the MRT system was built to withstand the influx of
people and instead of choosing engineers to fix the basic rail system, successive
SMRT CEO’s were given a mandate to make more from the retail operations, which
benefited the shareholders (the largest shareholder at the time being Temasek
Holdings, which has since bought SMRT).
Call it a coincidence but how is it such that there were no
breakdowns when Covid restrictions were in place and less people used the
system, then it breaks down when the restrictions are lifted and people rush
back to use the system.
Something similar could be said about the economy. Our
economy was built on being the centre of everything. First it was
manufacturing, where the key was to attract multinationals to build big factories.
Then it was finance, where multinationals were encouraged to set up huge, gleaming
offices to be regional headquarters. This model did provide lots of jobs for a
while. It gave Singapore plenty of shiny buildings and made vast fortunes for
Singapore’s landlords (the largest being the government, Far East Organisation
and Hong Leong Group).
However, just as our MRT system was not prepared for an
influx of customers, the economy never factored the rise of cheaper
manufacturing centres in the region like China and increasingly Vietnam as well
as rival financial centres. The economic solution has consistently been the
same – tax breaks and credits for investors willing to set up shop to build big
factories and/or to rent expensive properties.
Unfortunately, there are limits to this. Covid-19 forced
businesses to work differently. Remote working had to become a fact of life and
suddenly, there was no need to house people in expensive offices. Entrepreneurs
found that they could work without interruption. Small time start-ups, who are
the backbone to any economy had a way of doing things without having to take on
the crippling cost of criminally high rentals to unproductive organisations.
Instead of encouraging this movement to develop, the
government remained focus on the glamorous parts of the economy that centred
around big offices. Sure, I can understand that there was a need to help
businesses get through the early stages of covid-19. However, instead of trying
to encourage the return of normal, more could have been done to create an
economic model that worked for Singapore and as many as her residents as
possible. Missing that opportunity to create something new is a pity.
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