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Tuesday, Aug 07, 2012 - 01:00 SGT
Posted By: Gilbert

A Skein Unravels

With Mr. Ham having drunk himself under the table, I was left to contemplate the bottom of my mug, and let my thoughts wander.


Most days, I will pass by a now-empty noticeboard at the ground floor of the building my lab is located in, vacated by a student chapter of a particular religion that got busted earlier this year for certain controversial statements. At times, a slight twinge of sorrow at the forlorn sight passes through me, for despite basically disagreeing with most of the religion-specific positions they promulgate, the loss of a society is still nothing to be pleased about.

Then again, their brother organizations are still pretty healthy and active on campus, as far as I can see. A few months ago, one guy - former Taoist, I think - attempted to get me interested, after spotting me in my Bare Your Sole/Habitat for Humanity T-shirt. And just last week, a couple of survey-takers (on that religion, what else) approached me as I was digging into a bag of Cheetos. I had to ruefully inform them that I had been through this before.

One thing I can say is that they haven't been pushy about it, and I wish them well - for if they deny my going to the same better place as them after we all pass, due to my differing beliefs, I have no objections to them arriving at wherever I will go to, if is better, and if it exists at all, despite their differing beliefs. Therefore, I do dwell little on this matter.

For it is not a sad (and not a little ironic) that, having theorized a perfect, limitless and unknowable potentiality, the very next step is so often to corral it with names and plaster all manner of exclusive and fantastic rules onto it, commonly and increasingly involving the contribution of money? I have searched long but in vain for the people who declared themselves only the second best chosen of a Supreme Being, as they would have in doing so elevated themselves to a unique and uncontested station.

Six Flags (More Or Less)

Living on the fifteenth floor has among its advantages the ability to survey a good swathe of the region by simply looking out of the window. Astoundingly, among the hundreds of windows - perhaps over a thousand - I could observe, the number of national flags on display could be counted on my fingers. I vaguely recall an extremely different lead-up to National Day in years past.

This count is excepting one particular block, which has two unbroken lines of flags stretching from the second floor to the top, in stark contrast to the surroundings. I am not sure whether this makes it better or worse. Likely worse.

It Follows Directly

"3-4 per cent labour force growth, 2 to 3 per cent labour force growth are more characteristic of developing countries. We are a developed country. We should wake up, grow up, and be a developed country."

- Yeoh Lam Keong, vice president, Economic Society of Singapore

One of the items I have neglected to comment on is a paper on Scenarios of Future Population Growth and Change in Singapore, released by the Institute of Policy Studies last year, and dutifully reported in the press. This has recently been followed by a paper on Citizen Population Scenarios this April by the National Population and Talent Division.

As the underlying population statistics are the same, the conclusions do not vary by much. Both paint a dire picture of a declining citizen population without significant immigration - on the order of twenty thousand new citizens annually at least - with all the attendant miseries, particularly the increased strain on the relatively-diminished working population.

Some cynical netizens have (probably correctly) guessed that these arguments are simply an excuse and prelude to the government pressing on with pursuing an aggressive policy on immigration. Still, at first sight, the mathematics of the demographic situation appear watertight, which means that this future direction, however unpopular it may be, is necessarily entailed by the cruel reality we exist in.

But is this logic valid?

Let us shift to another topic for awhile here (it'll be relevant). While I do have my differences with the incumbents, one of their principles which I do support is that of a balanced budget - I can probably be characterised as fiscally firmly conservative, socially leaning liberal (which I believe is possible, whatever some say - note that preferences like lower taxes are not necessarily required for fiscal conservatism, the central spirit of which I take to be no unnecessary borrowing, which should almost always be read as no borrowing, period, and in the same vein unlimited welfare is not synonymous with social liberalism)

Credit to them here, the government has been prudent - even tightfisted - with the national budget (and extremely-secret reserves). This, I think, is an understated virtue in our age of maniac borrowing. Now, if some Opposition politician suggested running an annual ten-billion-dollar deficit without raising revenues from taxes or other sources - essentially borrowing it from future generations - I gather his proposal would be shot down, and quite properly so.

Back to the population issue. I reproduce here one of the graphs from the first Scenarios paper:

Scenario 1: Total Fertility Rate (TFR) 1.24, no net immigration
Scenario 2: TFR 1.24, 30000 net migrants per year
Scenario 3: TFR 1.24, 60000 net migrants per year
Scenario 4: TFR 1.85, no net immigration

[N.B. Tellingly, 60000 net migrants per year is referred to merely as "Medium Migration" in the paper! *shudders*]

It is a well-known sales tactic to present an unpalatable option or two, so as to guide the consumer towards a desired product. Here, my personal hunch is that the target is the 30k per year choice (tagged as Low Migration), which would see the resident population hit nearly 5 million in 2050, with the total population probably nearer 7 million, including non-residents. Hopefully public transportation technology would have improved considerably by then.

Now, the authors admit they do not expect the TFR to return to the replacement rate of 2.1, and I have to agree with them, going by current trends. So let us assume, as they did, that the TFR remains at around 1.24, and fast-forward two decades to 2035. What is the situation?

Well, since the TFR remained so consistently low, the age-group distribution of demographics would not have improved - which means that the children of today, the policy-makers of 2035, are simply faced with exactly the same problem we are facing today.

Only a lot bigger, and with far less wiggle room.

Note here that the objection to an immigration-centered solution is not even due to cultural and integration concerns! The new immigrants and their - our - children would all be staring together into this widening abyss.

So what can they do? Maybe some miracle solution would have presented itself by then, but if not, I would not blame them for seriously looking to do as their predecessors did, i.e. continue taking in migrants. However, there is clearly a limit to how long this strategy - the demographic equivalent of undisciplined fiscal borrowing - can hold out.

In fact, the ultimate consequences are probably worse than the fiscal equivalent. If countries are unable to repay their debts, they can always default on their loans, which may be bad for their reputation - but that at least largely wipes out their obligations and allows them to start afresh (though they may find it hard to regain investor confidence)

But how can a nation default on its resident population?

There is a special consideration here - if immigration were largely composed of family units of two adults and a couple of kids, the imbalance would be mitigated. However, with the justification for immigration being largely economical, and with the added complication of families likely being less mobile than single workers, I doubt this has been the case.

While exact statistics are hard to come by as usual, some ballpark figures can be estimated - from Singstat's Population in Brief 2011 and the Singapore Demographic Bulletin of January 2011, the resident population increased from some 3.27 million in 2000 to 3.79 million in 2010, yet for the same period, the number of children aged 0 to 14 years fell from some 717000 to 637000.

Interestingly, despite nearly 30000 people being granted Permanent Resident (PR) status in 2010, the total number of PRs actually declined slightly from 541000 in 2010 to 532000 in 2011. In any case, generously assuming an organic increase in the resident population of some 250000 people in that period, that would still mean that only about 20% of new residents were aged from 0-14 years old, which seems about right, seeing as 63% of new PRs and 53% of new citizens in the period 2007-2011 were 30 years old or below, the bracket particularly attractive to employers.

Unfortunately - and this is the fatal flaw - the new residents are not about to be any more eager to reproduce than existing ones, going from the evidence of the past two decades.

Again, using the debt analogy - instead of striving for a balanced budget by raising revenues (returning the fertility rate to replacement levels), the government strategy has been, for quite some time, to borrow (accepting largely ready-made economically-active new residents), and rather heavily at that (well over 30% in the period between 1990-2010 for residents, some 66% [!] considering the total population)

As with borrowing money, borrowing people is very attractive in the short term - one enjoys a higher, unwarranted, level of consumption (for money) or economic growth (for people). But one cannot borrow indefinitely, and worse, the longer one depends on borrowing, the harder and more painful it is to break the habit. Eventually, the debt has to be repaid - with interest - both for money and for people.

Europe today shows the folly of sustained borrowing of money, which their respective governments adopted as a shortsighted way out; I fervently hope that we do not in time become the poster boy for sustained borrowing of population, with commentaries in the global news all pointing out how obvious the unhappy outcome was in retrospect.

I think it is fair to say that our government, so responsible in so many respects, has had at best a chequered record on population planning, taking a full decade to belatedly reverse its Stop At Two policy after domestic fertility rates had dipped below replacement levels. However, they did - and still just about do - have a unique mandate to face the challenge head on, with all the levers of the state fully at their disposal.

Now let us be brutally honest - children have never been particularly prized as a resource here (cue Have Three Or More If You Can Afford It), with actual concrete incentives being positively pitiful (S$750 in child relief. Ok). Furthermore, despite the Graduate Mothers' Scheme and similar questionable initiatives being (rightly) abandoned, their shadow still lingers on in the form of the on-the-surface oh-so-"generous" tax rebate of S$20000 - for which the half of the resident population not paying income taxes (but not able to escape the GST etc) are doubtless so wonderfully inspired by.

It has often been happily pointed out by official sources that babies and children are already "subsidized". My own opinion is firstly that these subsidies are not particularly impressive by the standards of most developed nations, and secondly that "subsidy" is not quite the right term anyway; it should rightly be "investment" (as opposed to our current "borrowing" of immigration)

Yes, I understand the argument that if the state actually gave sort-of-substantial benefits for having children, like say subsidized baby essentials, free schooling, or even a couple of hundred of dollars each month, we might get irresponsible moochers and welfare queens, blah blah - but given the absolutely dire state of our demographics, I believe there remains no excuse not to at least give it a try.

Some rough doodling, to give an idea: At S$200 a child per month until the child is twelve years old, this would eventually impose an annual burden of about S$100 million on the treasury - but in perspective, this is a mere 0.2% of the current national budget, and the money is directly invested back in our citizens, where it rightfully belongs, anyway.

It would, to me, be utterly unconvincing if the government does not, in its forthcoming White Paper, get its priorities straight and make a clear statement of intent by at the very least attempting a fair, universal and direct measure of this meager magnitude in response to this admittedly complex problem, instead of pursuing reckless borrowing by another name, and kicking the can of worms down the street.

With a fire - and a fire it is - already at one's doorstep, should one's first concern really be that turning on the tap might cause flooding? The risk involved is self-bounded in any case: if the incentives don't work, the overall payout would be low, and if they do work... well, the government can give itself a pat on its back for doing its job and solving one of the nation's most pressing problems in a sustainable fashion.

I swirled my mug...

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