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<TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>kojakbt89 <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>Jan-27 11:57 pm </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>27796.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Being the second freest economy in the world – What does it mean to Singaporeans?
January 27, 2010 by Damon Yeo
Filed under Damon Yeo, Economics, Opinion, Society
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http://www.temasekreview.com/2010/01/27/being-the-second-freest-economy-in-the-world-%e2%80%93-what-does-it-mean-to-singaporeans/
By Damon Yeo
For 2010, the Singapore economy has been named as second freest economy in the world, after Hong Kong by the Heritage Foundation. Since 2000, our economy has consistently scored about 87 by the foundation, a considerably high score according to this index.
So, what does this study mean for the average working class Singaporean? If you do not have time to finish reading the article, here is the answer: very little.
Well to be fair to the study, which had been carried out annually since 1995, it was not set out to measure the overall well-being of an average citizen in any given economy. Instead it just specifically measures how freely an individual can work, produce and consume as well as how freely the government allows labour, capital and goods to move around. It does not measure how much an individual has to start with.
The index measures ten separate broad areas of economic freedom and a maximum score is 100 for every area.
Government Spending
One area to determine economic freedom is by looking at how much the government spends. The concept is that the less the government spends, the less economic distortions there will be in the market. In this benchmark, an economy where the government spends nothing at all will get a score of 100.
Compared to other economies in the world, Singapore is ranked second. Only Myanmar has a ‘better’ score (possibly due to corruption). As expected, Scandinavian economies with generous welfare benefits are heavily penalised in this area – Sweden is ranked third last and Denmark fifth last.
Quite clearly, this benchmark illustrates the inverse relationship between (the lack of) government spending and economic freedom.
However, bear in mind that low level of spending by the Singapore government does not necessarily indicate neglect of provision of public goods – it could also represent the lack of unemployment benefit payouts and efficiency.
Labour Freedom
Our economy also ranks number one in the Labour Freedom benchmark. This benchmark measures six different factors, including hindrance to hiring additional workers, difficulty of firing redundant employees and mandatory severance pay. Broadly speaking, if companies in an economy can hire additional workers easily, fire redundant workers easily and pay very little (or no) severance pay, this economy is defined as free.
This benchmark obviously measures economic freedom from the perspective of the corporations and not the workers.
A previous article has already discussed this extensively. This report, which is done independent of World Economic Forum’s report on Competitiveness, reaffirms the fact that corporations are “well-treated” in Singapore, at the expense of workers themselves. This particular benchmark will be uncomfortable reading for many Singaporeans who lost their jobs during the current recession.
This labour freedom is likely achieved by the tripartite relationship (government, unions and workers), which had been often championed as a comparative advantage of our economy.
Monetary Freedom
This particular benchmark in the study measures price stability and level of price controls in an economy. The study deems that If prices are stable (ie low inflation) and the government does little to interfere with market prices, the economy is free.
Singapore is ranked relatively high at ninth for this benchmark, behind economic powerhouses like Japan, Hong Kong and Switzerland.
However, the overall level of government involvement in Singapore’s economy is very different from that of the rest of these countries. More than 80% of Singaporeans own properties sold to them by the government and through Temasek Holdings, the government has significant interests in a large number of companies listed on the Straits Times Index. In a nutshell, the Singapore government can impose much more effective price controls than most other developed economies.
Despite its ability to, the study has shown that the Singapore government has done little to control prices in Singapore. This somewhat explains the exponential increase in prices of HDB flats in Singapore.
There will be debate on whether price controls have desirable effects on the society (not economy) in general, but it is clear from here that our government has chosen not to control prices.
All in all, this report from the Heritage Foundation tells us very little what we don’t already know. For many a years now, the Singapore economy has been a great role model for all other countries in the world, but the bigger question is – how much had that benefitted workers in Singapore?
Other articles by Damon Yeo:
>> GIC’s investment in Stuyvesant Town: Unraveling the mystery
>> The demise of Dubai: How the mighty have fallen
>> The minimum wage: pros and cons
>> HDB’s 2 billion dollar deficit: More questions than answers
>> Singapore v Hong Kong
>> DBS and a series of ‘unfortunate events’
>> Sale of Chartered – An Anatomy
>> 3rd most competitive nation in the world and what it means to the average worker
About the Author:
Damon is a proud graduate of Nanyang Technological University in 2004 with a degree in Accountancy. He is currently working in the finance department of a UK Bank
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January 27, 2010 by Damon Yeo
Filed under Damon Yeo, Economics, Opinion, Society
Leave a comment
http://www.temasekreview.com/2010/01/27/being-the-second-freest-economy-in-the-world-%e2%80%93-what-does-it-mean-to-singaporeans/
By Damon Yeo
For 2010, the Singapore economy has been named as second freest economy in the world, after Hong Kong by the Heritage Foundation. Since 2000, our economy has consistently scored about 87 by the foundation, a considerably high score according to this index.
So, what does this study mean for the average working class Singaporean? If you do not have time to finish reading the article, here is the answer: very little.
Well to be fair to the study, which had been carried out annually since 1995, it was not set out to measure the overall well-being of an average citizen in any given economy. Instead it just specifically measures how freely an individual can work, produce and consume as well as how freely the government allows labour, capital and goods to move around. It does not measure how much an individual has to start with.
The index measures ten separate broad areas of economic freedom and a maximum score is 100 for every area.
Government Spending
One area to determine economic freedom is by looking at how much the government spends. The concept is that the less the government spends, the less economic distortions there will be in the market. In this benchmark, an economy where the government spends nothing at all will get a score of 100.
Compared to other economies in the world, Singapore is ranked second. Only Myanmar has a ‘better’ score (possibly due to corruption). As expected, Scandinavian economies with generous welfare benefits are heavily penalised in this area – Sweden is ranked third last and Denmark fifth last.
Quite clearly, this benchmark illustrates the inverse relationship between (the lack of) government spending and economic freedom.
However, bear in mind that low level of spending by the Singapore government does not necessarily indicate neglect of provision of public goods – it could also represent the lack of unemployment benefit payouts and efficiency.
Labour Freedom
Our economy also ranks number one in the Labour Freedom benchmark. This benchmark measures six different factors, including hindrance to hiring additional workers, difficulty of firing redundant employees and mandatory severance pay. Broadly speaking, if companies in an economy can hire additional workers easily, fire redundant workers easily and pay very little (or no) severance pay, this economy is defined as free.
This benchmark obviously measures economic freedom from the perspective of the corporations and not the workers.
A previous article has already discussed this extensively. This report, which is done independent of World Economic Forum’s report on Competitiveness, reaffirms the fact that corporations are “well-treated” in Singapore, at the expense of workers themselves. This particular benchmark will be uncomfortable reading for many Singaporeans who lost their jobs during the current recession.
This labour freedom is likely achieved by the tripartite relationship (government, unions and workers), which had been often championed as a comparative advantage of our economy.
Monetary Freedom
This particular benchmark in the study measures price stability and level of price controls in an economy. The study deems that If prices are stable (ie low inflation) and the government does little to interfere with market prices, the economy is free.
Singapore is ranked relatively high at ninth for this benchmark, behind economic powerhouses like Japan, Hong Kong and Switzerland.
However, the overall level of government involvement in Singapore’s economy is very different from that of the rest of these countries. More than 80% of Singaporeans own properties sold to them by the government and through Temasek Holdings, the government has significant interests in a large number of companies listed on the Straits Times Index. In a nutshell, the Singapore government can impose much more effective price controls than most other developed economies.
Despite its ability to, the study has shown that the Singapore government has done little to control prices in Singapore. This somewhat explains the exponential increase in prices of HDB flats in Singapore.
There will be debate on whether price controls have desirable effects on the society (not economy) in general, but it is clear from here that our government has chosen not to control prices.
All in all, this report from the Heritage Foundation tells us very little what we don’t already know. For many a years now, the Singapore economy has been a great role model for all other countries in the world, but the bigger question is – how much had that benefitted workers in Singapore?
Other articles by Damon Yeo:
>> GIC’s investment in Stuyvesant Town: Unraveling the mystery
>> The demise of Dubai: How the mighty have fallen
>> The minimum wage: pros and cons
>> HDB’s 2 billion dollar deficit: More questions than answers
>> Singapore v Hong Kong
>> DBS and a series of ‘unfortunate events’
>> Sale of Chartered – An Anatomy
>> 3rd most competitive nation in the world and what it means to the average worker
About the Author:
Damon is a proud graduate of Nanyang Technological University in 2004 with a degree in Accountancy. He is currently working in the finance department of a UK Bank
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