As explained, the PAP’s four-prong strategy has caused the wages of Singaporeans to be depressed, which has also diminished our purchasing power.
Driving Up Loans To Increase Prices And Forcing Singaporeans Into Debt
More importantly, this has caused Singaporeans to sink further and further into debt. “Singapore households are (now) among the most indebted in Asia,… (where) households had borrowings worth 151 per cent of their annual income last year.” Also, “Household assets grew by 7.8 per cent year-on-year in the third quarter of last year, but household debt grew by a bigger 10.4 per cent, driven largely by housing loans, (which) has led to Singapore’s household debt to GDP ratio” being at the most dangerous level.
As Jesse Colombo had written, “Low interest rates are helping to inflate a credit bubble in numerous sectors of the Singaporean economy”. What this also means is that because Singaporeans are facing higher and higher debt, the government had lower interest rates to encourage spending. Not only that, now, it is more and more common for us to receive calls from banks asking if we could like to receive a cash advance. However, according to Investopedia, “cash advances should be viewed as a method of last resort” because “cash advances typically carry a high interest rate – even higher than credit card itself – and the interest begins to accrue immediately”.
In short, what this means is that by the banks’ tactics, this would push Singaporeans further and further into debt. Singaporean consumers are led to believe we are still able to spend on borrowed savings, and thus the demand drives up prices which allows the PAP to earn from the profits. But this is all at the expense of Singaporeans going into heavier and heavier debt, and being less able to pay off these debts. But, who owns the banks? You guessed it.
As Jesse Colombo had explained, “Singapore’s ratio of household debt to gross domestic product recently hit approximately 75 percent, which is up from 55 percent in 2010 and 45 percent in 2005. Singapore’s household debt has risen by 41 percent since 2010, while household income has increased by only 25 percent and wages by a paltry 15 percent in comparison.”
But what’s worse is this – with your declining real wages and diminishing purchasing power, the PAP has allowed HDB flat prices to escalate, which means further dipping into your CPF to offload the mortgage, thus further entrapping you into a debt cycle, which imprisons Singaporeans into a long-term debt situation, which you would have to work for the rest of your lives to pay off for, since your CPF wouldn’t be able to function as what it should have – rightfully, as a retirement fund. Leong Sze Hian has estimated that 1 in 8 Singaporeans would not be able to meet the CPF Minimum Sum. What can the nearly 90% of us Singaporeans do if the CPF cannot be counted on for us to retire on, and we are so mired in debt? We have to continue to work until our deaths and never be able to retire.
PAP’s Greed Has Corrupted The Singapore Economy
Earlier, we had seen how an equilibrium economy is one where everything is well-balanced and the economy can run like clockwork – but what has the PAP’s selfish profit-motives led Singapore to?
The PAP’s selfish motives have led to the equilibrium economic model completely collapsing. In its want to earn more and more money for itself, the PAP has siphoned off money which should have rightfully gone into the wages of the people and took it for themselves. This is why Singaporeans only earn 42% of the wage share of our GDP, as compared to the 60% that workers in the other high-income countries earn.
Not only that, our purchasing power gets dramatically reduced, and with it productivity. How so, you ask? Dr Seet Min Kok had explained that, “higher wages can encourage more workers to queue up more eagerly for the higher-paying jobs thereby enabling the firm to select better, more productive workers from a larger pool”.
As such, the PAP’s selfish motives might precisely be the cause of Singapore’s undoing. The equilibrium economic cycle has now malfunctioned and has become imbalanced. The incentive to work and innovate has now been removed from the system which has thus caused the stagnation in our labour productivity and efficiency.
Singapore’s High GDP Figures: More Than Meet The Eye, Singaporeans Not Earning
In fact, Jake van der Kamp and Tom Holland had both written about how even though Singapore’s GDP per capita had grown tremendously, this is a superficial growth that does not benefit the lives of Singaporeans.
Jake van der Kamp had shown that, “In Singapore, personal consumption expenditure has steadily fallen over the years as a percentage of GDP and, at 35 per cent, is now barely half of what it is in Hong Kong,” and that, “Singapore’s high GDP numbers are mostly an anomaly created by very generous industrial concessions to foreigners. ”
So, the question is – so what if the Singapore Prime Minister had said that, “if I can get another 10 billionaires to move to Singapore and set up their base here, my Gini coefficient will get worse but I think Singaporeans will be better off, because they will bring in business, bring in opportunities, open new doors and create new jobs, and I think that is the attitude with which we must approach this problem”? Because the statistics show otherwise. Sure, the Prime Minister and the rich with him might get richer, but the rest of the wealth does not go back to Singaporeans and is flowing out of the hands of Singaporeans.
Tom Holland had also explained that as “Hong Kong people spend an average of US$24,000 a year each, while Singaporeans can manage only US$16,000” (after adjusting for purchasing power), “Hongkongers are considerably better off than their Singaporean peers”. In fact, “over the past 10 years the differential has widened in Hong Kong’s favour… In 2003 the average Hongkonger was 20 per cent better off than the average Singaporean. In 2012 he or she was nearly 50 per cent better off.” He ended off by saying that, “while all of Singapore’s immigration and reclamation might have inflated official egos, it has done little or nothing to boost ordinary people’s living standards”. Singaporeans are getting relatively poorer by the minute, precisely due to the PAP’s unrestrained policies.
In simple terms, the diminishing purchasing power is forcing Singaporeans to spend less. In the long term, this will threaten the economic growth and prosperity of Singapore.
I am not sure if most Singaporeans realise this.
Please note that there are 5 pages to this article:
Page 1: PAP’s Big Four Profit Strategies
Page 3: Lower Wages which Increases Debt and Reduces Spending