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Saturday, Sep 12, 2015 - 19:42 SGT
Posted By: Gilbert

Postmortem 69

"The people have spoken.
They like being screwed.
Eh, actually, so do I."

- Herr Ahm



Some Nonpartisan Poster To Begin With

Haven't watched it yet actually.


Thankfully, not for too much longer.


Also got to hold my baby nephew for the first time yesterday. He does the "what is this idiot doing, if I don't open my eyes wide maybe he'll put me down" look magnificently. Sibei cute!


Out Of Position

Dr. Chang: *shuffling papers* Well, well, well. Lots to discuss. Overview first: the incumbents got returned to power with 69.9% of the popular vote, a near 10% increase from 2011, while main opposition the Workers' Party defended Hougang and Aljunied, but narrowly lost by-election trophy Punggol East, alongside not making any new inroads.

Although we had plugged for an increase in incumbent votes, to the range of 59-65%, this is admittedly above what had been anticipated. Now, firstly, it should be said that this is - mostly - democracy in action; while my own opinion is that more and more diverse opposition pressure is desirable, one has to respect the outcome of the vote.


Also gets the similarity with China...
(Source: forums.hardwarezone.com.sg)


Notably, in terms of seat share, the results are identical to that of the "watershed" 2011 elections. Of course, the popular vote share swingback will be interpreted as a strong mandate, in other words, more of the same. Definitely, EDMW is having a field day with "drumsticks given, taking back whole chicken" sentiments and wallowing in misery and self-consolatory zeh zeh kym posts, but no prizes for guessing that one.

Me: To sum up: 新加坡人是现实的. Again, as I've been saying all too often recently, nothing wrong with that.

Dr. Chang: Going through what we got right, and what we didn't: on the WP retaining existing seats but not extending their margin due to the town council scare saga, this was mostly true, with the nationwide shift leading to a razor-thin defeat in Punggol East. About the SDP rising, I daresay they are now firmly the secondary opposition after the WP, and indeed lost less vote share compared to the last elections, but are shut out of the NCMP seats by the WP, as foreseen.

Two of the greatest shocks of the election, personally, were in Fengshan and East Coast, which the incumbents kept with 57.5% and 60.7% of the vote respectively, which differed from my projections by almost exactly the 10% base swing. Other than that, the SPP appears to be history, with Lina Chiam getting just 33.6% in Chiam See Tong's 25 year-stronghold of Potong Pasir, and the seasoned Jeannette Chong-Aruldoss but 28.2% in Mountbatten.

Me: It looks like a very sad conclusion to Chiam See Tong's political career; so it seems that our former PM's admonition not to "chase after meat" rang true, after all - citizens have shown themselves to prefer carrots instead. Some are questioning why the Opposition should bother at all, and from what happened, it's hard to answer that question.


What has been seen...
(Source: bbc.co.uk)


Dr. Chang: *flicks on Powerpoint slide* That said, the outcome reflects some 5% of the voters switching from the opposition to the incumbents in general, as compared to the last election. Is that a lot? Well... taking into account popularly-recognized factors, perhaps not:

  • LKY/SG50/Pioneer Package

    On hindsight, the 5% could easily have been achieved from these feel-good factors alone. They're not exactly subtle, but do they work!

  • New citizens

    A favourite pro-oppo netizen complaint fodder, but by all indications, the net change since 2011 is probably in the region of just 100k, maybe 4% of the 2.3 million electorate. Then again, 4% in five years is quite a lot, assuming they do tend to be pro-incumbent, and it's probably some 10-15% starting from 2001. This is a dark rabbit hole to head down on, though.

  • AHPETC AHPETC AHPETC

    Let's face it, this really works too. Really, in the first place, one barely understands why town councils have got to fall under political purview, and secondly, why this ever became such a huge deal given that incumbent organizations aren't any better, but spam it enough in the media, and it becomes relevant.

  • Rally rip-off

    Ironically, the huge turnout at opposition rallies could well have persuaded swing voters to bat for the incumbents, just in case a "freak outcome" actually happens; this has long been recognized as the by-election effect, and likely contributed to WP's win in Punggol East then.

As such, one supposes that much of the electorate can be characterized as:

  • STABILITY LUMBER ONE, NIMBY, MUH ASSET APPRECIATION, UP UP UPZ

    ...Yeah, having an opposition co-driver would be nice, but ah, can somebody else do it? Then I benefit from the checking, but also get estate upgrading, while their property prices stagnate in comparison! Muahahaha! Which may, come to think of it, have contributed to SPP's total collapse in Potong Pasir, after residents figured that Aljunied could hold the baby now.

And, what probably wasn't a factor:

  • Candidate quality

    I'm not including the obvious head-scratchers, such as Mr. Happy Man who expected 40% but wound up with 0.6%, but it can hardly be denied that many opposition candidates nowadays wouldn't look at all out of place in incumbent white. A simple demonstration is as follows: switch team colours and stands in many constituencies, and it's not certain if the results would be different.

    Yes, seriously - in a bizarro world where, say, Kenneth Jeyaretnam were an establishment guy toeing the basic party line and regurgitating motherhood statements, he'd be fetted as having "impeccable academic credentials", and quite likely have garnered a couple dozen directorships and other posts too. Ditto Leon Perera, Paul Tambyah, Daniel Goh and many others.

    Bottom line is, when KJ says he's gonna give out money, it turns out that... he can't. When Generic Man In White says that he's gonna pump millions in taxpayer - including opposition supporter - money into local infrastructure, for some reason, he can. How ah? Don't care Son of Punggol or Son-in-law of Ang Mo Kio lah, got lift at every floor anot?

    Case in point - the incumbents' Aljunied suicide squad actually garnered 49%, against the unchanged WP A-team. If that isn't an indication that many voters are "heck the quality, show me the money", I don't know what is. By the way, this should be more confirmation that on pure political canniness, the WP is the pick of the lot on the opposition side. Then again, they could perhaps have thrown their stars at SMCs instead, and given up on East Coast, but who could have known?

  • Civil liberties, rights, transparency

    First they came... did the iPhone 6s just come out?

    Unfortunately for the SDP, their core message doesn't look like it will find sufficient resonance to gain Parliamentary representation, for the foreseeable future. For all his undoubted skill at public speaking, Chee remains a deeply polarizing figure, and probably lost them about as many votes as he gained.



Eh you die your business lah, this is Singapore leh
(Source: facebook.com)


Your thoughts, human?

Me: You have got to give it to the incumbents, they've managed the institutional lock-in near-flawlessly. I don't want to lie - I remain utterly unconvinced that in the long term, this practice of having a dominant party control all the pursestrings and moulding social and economic policy from the top down is best for the nation. Now, there are plenty of systems that offer a more proportionate voice, but there's also zero indication that the incumbents will ever consider them, given that the GRCs had been engineered to push in the other direction.

But, fine, I can see the attraction of the unity, undivided, don't-think-too-much manifesto of the incumbents, all the more as they actually do kope choice ideas from the opposition - without attribution, obviously. If you haven't figured it out, the first rule of winning elections here has been - protect the economy, protect property value, for the next five years. The rest, all negotiable.

Actually, in this, one might realise that perhaps, locals are just getting what they deserve, as the esteemed Reform Party sec-gen said. For example, the prevailing complaint against foreigners has often not been against them as a whole, but along the lines of "foreign workers do jobs locals don't want, so it's ok, but foreign PMETs displace locals, is bad." From this, it seems that not many actually have a problem of a large permanent transient underclass of maybe 20% of the population, as long as their own ricebowl is unaffected.

I don't want to make this more of a ramble than it has been, so I'll just expand on the CPF-HDB setup covered in the previous blog post, as promised in the corresponding comments. One thing about the incumbents, is that they have often managed to discredit their more prominent critics, by harping on the parts of their analyses that are poor - though to be fair, much of this has been self-inflicted.

Taking Roy Ngerng as an example: While his mainstream reputation is probably irrevocably soiled, it does not follow that all - or even most - of his writings make no sense. Sadly for him, the points of his that are bad, for example the complaint that we spend only S$4 billion annually of the S$66 billion Medisave balance, when this should be roughly how a health insurance fund operates, have tended to be used to shout down his other, better, points.

Another of Ngerng's problems is possibly informational overload. Though one can hardly knock him on lack of background research, the dumping of huge amounts of data and accompanying charts have made many of his articles slightly tiring to follow, and moreover lend themselves to having minor technical errors, again empowering his detractors. In fact, he has covered the CPF-HDB relationship extremely thoroughly, but very unfortunately, I suspect many will dismiss it offhand because "oh, it's the guy who harassed special needs kid at his demonstration".


Properties (And Retirement, Revisited)

Let me then try to distill the arguments. A commenter asked if my own take was that HDB prices should have been kept low, to the point that people would be able to service installments from take-home pay. I answered in the affirmative - house should be house, investment asset should be investment asset, they should not have been so systematically mixed.

It could be enlightening to consider this CPF-HDB tie-up from the view of the various stakeholders:

Typical Citizen (Home "owner")
  • Has 20%-40% of his gross salary automatically deposited into CPF (essentially untouchable); note that his actual percentage of take-home disposable income may actually be similar to those socialist Nordics!
  • Uses bulk of it to fund HDB flat
  • At retirement, net worth from lifetime CPF savings is something like: 80% of [whatever his HDB flat value is], 20% in liquid cash
  • May well find monetizing HDB flat value difficult - you can sleep in your flat, but can you eat it? How do you sell, say, 10% of it to meet immediate needs?
  • But - if he had bought the flat at say S$200000, and it is now worth S$400000 (both inflation-adjusted), he may well figure that the illiquidity is worth the profit. This is what has been happening, mostly. But...
New-generation Citizen
  • Has to buy the same flat at S$350000 (after grants). But nevermind, he can sell it for S$600000 at least when he's due to retire in 30 years... right?
HDB/CPF - i.e. Government
  • Good news on high CPF contributions - funds received upfront (relatively short-medium term). For example, a 25-year HDB mortgage starting in say 1990, represents a reliable cash flow for the authorities from 1990 to 2015. Surely there's some way these funds can be put to good use..? [GIC reps sidle up]
  • Bad news on high CPF contributions - they are ultimately a liability (long term). Assume a 25 year-old man took out that mortgage in 1990 and paid it off in 2015. He will however only retire about 2030, at 65+ years of age, if all goes well.
  • Good news for the government - thus far, they have largely avoided having to directly repay the portion of CPF tied up in property. When Mr. Pioneer Generation who bought his flat in 1970 retired around 2005, it was often Mr. Newguy who happily paid handsomely for the 65 years of the remaining lease.
  • Bad news for the government - eventually, probably within a couple of decades, the leases for a lot of existing flats will dip below 50 years. Buyers do not appear to have been considering the lease much, further encouraged by generous SERS buybacks, but the populace will (rightly) come to expect a standardized solution to the disposal of low-lease units.

In summary: the administration has, for the first fifty years of an independent Singapore, been taking in rather more from HDB public housing, than they have had to pay out due to CPF pension commitments. Moreover, part of the CPF burden has been taken up by new entrants (resale flat buyers)

Due to demographics, however, the CPF liability part is set to increase heavily, as the HDB mortgage income inflow part is set to plunge. Officially, Singapore has few social safety nets/trampolines, which makes any decline in value of one's CPF nest egg - which is in turn near-synonymous with HDB flat value - quite uncountenanceable indeed.

Note again the titanic disconnect between the people who introduced the CPF-pay-HDB policy, and those who will have to find a way to honour those commitments; the first group were the politicians-bureaucrats of the late Sixties, while the second group - due to the 99-year lease - will be those in charge in 2030 and beyond... probably when almost all of the first group have passed on!

Definitely, the change from the system running a net positive (HDB mortgages dominate CPF payouts) to a net negative (vice versa) would never exactly have been sudden, though it would certainly be inexorable. It's not easy to come up with exact figures, all the more due to the administration's noted stinginess with this kind of data, but on a big-picture level, I believe that this description is broadly accurate.

The response has been the obvious one - since we need more new HDB buyers to help support the retiring ones than the native birthrate can provide, why, simply import them! Policy has been to create about 20000 new citizens on average each year, which translates into additional annual HDB demand in the ballpark of perhaps 10000 flats? To put this in perspective, the number of live births nationally has been between 40000 to 50000 since 1970, which suggests that the boost in HDB demand from the "natural" level is maybe as high as an extra 50%, without even considering permanent residents!

Of course, thing is, new citizens are also citizens - if they're being recruited at an average age of 25, then they will also constitute new CPF liabilities payable forty years hence... but it's not as if such timelags ever stopped policymakers. Actually, the consequences were recognized at least as far back as 1986, but for some reason, it all trundled on.

Which is why one suspects that the pressure to continually grow the population would be much reduced without CPF value being so dependant on housing prices - imagine that the CPF had instead been barred from being used to pay mortgages, and had instead largely been diversified in major global financial markets. Ignoring the liquidity benefits, this would also protect pensions from domestic downturns - are enemies really gonna crash all the markets to get at you? - but well, every institutional investor, homegrown stalwarts not excepted, thinks he's smarter than the market.


SG100 Incoming

Dr. Chang: *nods* Can't say this doesn't make sense.

Me: And, once more, CPF is not self-funded, for most intents and purposes. If a typical citizen puts S$400000 into his CPF and uses S$300000 of it on a flat, he does not have S$400000 compounded by whatever the interest rate is - he has S$100000 compounded and a flat, value not guaranteed.

Dr. Chang: One then supposes that another reason for the heavy incumbent bias is that, in view of the system, quite a lot have recognized that 大局已定. The only reliable way to prop up housing demand is to get new buyers, and for all their other grouses, no local homeowner wants to be the one left holding the bag when the game of musical chairs stops. In the absence of exceedingly bold leadership, the default strategy has to be to continue cranking the population lever, which - fortunately or not - can technically work for quite a long time.

Me: For myself, I'd be mightily impressed if someone actually came up with a practicable roadmap for weaning local public housing off the CPF. Then again, Singapore is small, so a lot is possible - it might well turn out that simply being stable, with consistent rule of law, is sufficient to maintain the state as a regional base of operations and capital storage port, i.e. the Switzerland of South Asia. While I don't think I can ever fully support a one-party system bolstered by dubious institutional and electoral practices, I suppose it could have been worse.

A part of me is still hoping for actual, robust, public examination of policies without handwaving, and a level playing field for non-incumbent parties, but another part suspects that neither is going to happen for a long, long time.

Dr. Chang: Well, then have I got the song for ya.



Whatever will be, will be




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What It Is (Part Two)
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