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Towards A Targeted Socialism Not Minimum Socialism

The PAP is using $1000 to showcase the targeted democratic socialism announcedlast year. Cleaners and guards will have a guided basic wage of $1000 per month.And the PAP claims that this is not minimum wage. Only affected companies need to

comply if they want to renew their licenses and stay in business.

What is the difference between a targeted wage and a minimum wage? We don tknow as we have to watch the development whether all Singapore workers willdemand for $1000 per month when applying for a job. Now, there is a targeted wagerate, will other industries follow or not?

More importantly, will this close the gap between the rich and the poor? Most likelynot, from $800 to $1000 looks like a big increase of 20%, but what is $200 per monthto a high income earner? So, this is a targeted approach, just like a 5-year plan, howoften will it adjust? Or, the target is set intentionally low - an outdated calculation just

to showcase the so-called democratic socialism. Because there is a popular demandand because the fact shows no wage increase in the past 10 years, the PAP is forced tocome out with a lower than expected targeted wage guideline?

So, when we talk about Swiss standard of living, it is a target, and not the minimum.Now, you know why only few have achieved the Swiss standard of income (may beliving too), but majority of us are still looking at the target, laughing at the target.

Hence, when announcing this new strategy, DPM Tharman Shanmugaratnam said,Our approach is different. We want to raise incomes while helping everyone,including those with less skills, to stay on the job ladder. (Today, 9 Jan 2014).

Direct or Indirect Way

By using a targeted approach, the PAP is using an indirect approach in helping lowerincome workers. In fact, in the past 50 years, we have witnessed the change ofapproach from direct to indirect. From direct taxes to indirect taxes, from no COE,ERP to their implementations, even the public transport companies, there is a targetedrate of return.

The advantage of this indirect approach is that it is very easy to implement. The

government just uses administration measures to set the target, a moving andadjustable one, not a promised minimum one.

It means there is no human contact and no real feeling, only through two partiesbetween employers and employees and the government is an indirect third party.

This is the greatest disadvantage of an indirect targeted approach. When prices (COE,ERP, transport fees, taxi fares, school fees, HDB flat price and cost of living) increase,the government does not have a direct feeling. They just adjust the regulations and seta target.

An indirect targeted approach can become very passive in thinking, in running thecountry and in solving the real needs of lower income workers. Otherwise, the pro-

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claimed most efficient government in the world will not wait for more than 10 yearsor 15 years to look at the problems and try to solve it now (really?).

DPM Tharman admitted that Cheap-sourcing practices discourage wages, skills, andquality from moving up in the way they do in most other industries.

Why does the government allow cheap-sourcing practices for so long? It is becauseit is an easy way out and indirectly, the government can have extra revenues fromwork permits, levies etc.

This indirect thinking and approach is now deeply planted in the governmentadministration. So much so that even Temasek also claims that they do not manageCPF monies.

We all know that CPF monies go to the government through the issuance ofgovernment bonds. The government then provides monies to Temasek for

investments inside and outside Singapore. Yes, in paper, Temasek does not manageCPF monies directly. However, indirectly Temasek gets the funding from thegovernment. So, who are the main contributors of the sovereign funds to Temasek?The people of Singapore, including CPF members, through the government, give themonies to Temasek for management and investment.

The theory of Temasek does not manage CPF monies is an indirect thinking. Unless,

Temasek gets her monies from a foreign source, it then can claim that it is notmanaging the monies of Singapore. With this indirect approach and thinking, onewonders whether Temaseks investment approach is for Singapore or for her own

management.

No wonder up to now, there is still no government issued bonds to fight inflation inSingapore. Under the indirect target approach, can we expect a similar inflation-indexed ibond#1 on offer in Singapore?

#1http://en.wikipedia.org/wiki/IBond

http://en.wikipedia.org/wiki/IBondhttp://en.wikipedia.org/wiki/IBondhttp://en.wikipedia.org/wiki/IBond