Tuesday, 21 October 2014
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Dangers of 'please-all economics' real: PM Lee

Posted on Jun 16, 2014 6:01 PM Updated: Jun 16, 2014 6:09 PM

SINGAPORE - Singapore must acknowledge and address serious trade-offs facing the country as it moves to improve people's welfare while ensuring jobs and economic opportunities for the future, Prime Minister Lee Hsien Loong said in a Facebook post on Monday that was prompted by an article warning of the perils of "please-all economics".

The article was written by Reuters columnist Andy Mukherjee and published in The Straits Times on Saturday.

Mr Mukherjee wrote that with Singaporeans demanding a bigger retirement nest egg, more subsidied healthcare and housing, and yet being against admitting more foreigners or raising the consumption tax, the Government faced a long-term challenge of "squaring this fiscal circle".

Mr Lee described the piece as "thoughtful" and wrote: "It explains clearly the issues and trade-offs Singapore faces in building our ideal society, while ensuring that Singaporeans have jobs and economic opportunities to build better lives and a brighter future."

Mr Mukherjee also said there are several actions Singapore can take but each has its challenges.

It can expand the economy and therefore the tax base, but with foreign labour constrained, that means the local workforce has to up its productivity, which he termed "a long shot".

Singapore could also tax companies more heavily, he wrote, but business costs here are already quite high.

It could also invest its sovereign wealth in riskier assets, but "that could backfire, leaving less money for welfare".

Finally, the Government could reduce the pace of its investments overall, but he said that "if Singapore loses its urban buzz and stops attracting investors and tourists", that would affect the real estate market.

"That will make Singapore's property-loving citizens less wealthy and more miserable," he said.

Still, Singapore enjoys some advantages as rivals such as Hong Kong also face their own challenges, Mr Mukherjee said.

Agreeing, PM Lee said: "We do enjoy important advantages compared to other countries, but it will still not be easy. There are serious trade-offs, which we must be willing to acknowledge and address. If we just pretend that everything can be better, and no hard choices are necessary, we will get into trouble.

In his article, Mr Mukherjee also expressed confidence that "for all the grumbling, the majority of Singaporeans are too pragmatic to opt for unbridled welfarism at the next elections".

The Prime Minister, in his post, concluded: "We must make sure that he is right."