Me: So, we return to the coverage of the upcoming General Election...
Dr. Chang: But before we continue, an MMS from Mr. Ham:
One year in the making
Me: Fine, so the Chinese yuan has just been devalued by some 4.5% in three days, a figure unprecedented in the last twenty years, against the US dollar - and this coming after a gradual decline from some 6.15 to over 6.25, before settling around 6.20 - which Mr. Ham called correctly in July last year. Still, he doesn't have to be this smug about it.
Dr. Chang: That's Mr. Ham for you.
Me: So, you gonna supply the explanation?
Dr. Chang: *twiddles whiskers* Well, I am the resident China specialist, after all. Alright, first, the facts. The yuan, or renminbi, had been soft-pegged to the US dollar, such that it is allowed to float within a 2% band on a daily basis. Of course, China's central bank retains control over setting the reference rate about which the band is centered, so the exchange rate can hardly be said to be determined by free market forces.
Now, the Western stand on the yuan for the past decades has, almost without exception, been that it is undervalued, and that China is a filthy currency manipulator out to steal jobs from honest, hardworking American and European workers. The charge of Chinese currency manipulation has been in and out of the news for a long, long time, with estimates of the yuan being underpriced by up to 40% being common, in recent years. This was one of the few issues that both candidates agreed on during the last U.S. presidential elections, as China-bashing cuts across party lines.
[N.B. There's no danger of Trump winning, so might as well enjoy the invigorating lack of political correctness for now]
With the devaluation, such accusations will inevitably fly once again. However, though I am hardly a cheerleader for PRC economic and political practices, it's interesting to note that when faced with the observation that Western economies turn to tools such as quantitative easing and slashing interest rates to further their own interests, this is defended by the assertion that this is okay since it is allowed under IMF guidelines and international law - which are dominated by you-know-who. One, then, understands why China is eager to start its own multinational organizations.
Which brings us to - while the popular Western narrative has always been that the yuan is systematically undervalued, and that the yuan should rise to curb China's "unfair" export advantage, and allow manufacturing and jobs to flow back to the West, what Mr. Ham had probably realised in making his prediction, was that this easily leads to a misleading read of the actual situation on the ground.
First off, one could question the definition of "fair value", when it comes to currency pairs; all too often, it seems that the argument boils down to "we're bleeding cash and jobs at this exchange rate, therefore it's unfair!" - extremely general indices like the infamous Big Mac tracker aside, some have based their arguments for undervaluation on purchasing power parity, to the effect that China should be importing as much as it exports - which begs the simple question: why should China even want to, given that their demographics are set to unavoidably fall off a cliff?
If this is not considered an acceptable rebuttal by the West, a second realisation might be even harder to swallow. Recall that all the yelling over the yuan's supposed undervaluation had only been necessary due to the yuan being pegged - therefore, the idea goes, everything would be just fine if big bad China would just liberalize their currency, and allow the yuan to float freely; the divine free market would then bid it up, and those stolen jobs would then flow back West!
Bad news here, as Mr. Ham recognized, and others are now expressing, is that it is likely that the yuan would actually depreciate if it were floated. In other words, the yuan is actually overvalued, and has been for some time.
They were outta jobs, but lookit what I got!
There is ample empirical evidence for this view. Since the yuan is on a soft peg, free market forces can, and do, nudge it in its preferred direction - which has largely been down. Also, observing Hong Kong's offshore market for yuan, which is less restricted than the main soft-pegged onshore market, the freer offshore yuan has almost without exception been valued lower than the standard yuan proper!
In other words, America is probably correct in accusing China of currency manipulation. Thing is, China has in recent years been doing it to keep the yuan high - as the West desires.
Simplified: on balance, capital wants out of China, all the more due to increasingly dodgy growth figures, as so often raised here. Indeed, official word from the IMF has just been that the yuan is not undervalued, which threatens to deprive Obama of a convenient scapegoat.
Me: Just for completeness' sake, it should be mentioned that the yuan had been appreciating in relative terms against other currencies due to its dirty peg to the US dollar, with the euro and Japanese yen already down about 20% against the almighty dollar on the year.
Dr. Chang: USD-CNY remains the big one, mind, when talking about the yuan. Well, on to implications. China's trade rivals won't be happy, definitely, and tit-for-tat devaluations could birth a currency war in earnest. The Singapore STI, already floundering, was rekt, plunging almost 3% to trail only Greece as the worst-performing index for the year.
An especially concerning sign is that, while Tuesday's 1.9% cut was declared as a "one-off" by China's central bank, further rate-slashing the very next day can only fan expectations of continued devaluation in the months to come, leading bolder contrarians to posit that China's financial woes are worse than they're letting on - which would be entirely in keeping with character. Unfortunately, a single-digit cut doesn't seem like it'll boost exports enough to matter, all the more as depreciation will accelerate capital flight as both locals and carry trade investors seek to flee, in a vicious cycle.
Seeing as to how the devaluation has been implemented, though, a number of commentators including the ever-vocal Krugman and an Alhambra analyst are now suspecting that the People's Bank of China is clueless and simply desperately trying to wing it - but to be fair, this describes much of the economics profession.
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Me: Wasn't China trying to get the yuan included in the IMF's reserve currency basket, though?
Dr. Chang: The devaluation won't do their bid much good, but this is again what Mr. Ham was probably alluding to - for all the vaunted long-termism that one-party states are supposed to excel at, it tends to come down in the end to 先救眼前之急. The timing, coming just before the Fed's long-telegraphed interest rate hike, might be more than a coincidence.
Dr. Chang: And, as it happened, the ongoing devaluation was punctuated by the Tianjin tragedy, which the looney fringe has expectedly put down as more than a mere coincidence. Doubt over the number of casualties is probably more justified given the scale of the disaster, but yeah.
A short digression here. Every so often, when detailing my projections, one gets objections of the form of: "why do you think so?" and "you can't be sure", especially when those projections are not in the interests of the listeners.
The key here, I have to say, is that yes, I might be wrong - or as previously explained to be the preferred term, inaccurate. However, if I am inaccurate on a matter I express a strong opinion on, I am inaccurate after many hours of examining and considering the issue from as many angles as I recognize, with as much data as I can amass. Mostly, I prefer to let my analytic and predictive record speak for itself.
Me: But that's Herr Ahm?
Dr. Chang: We, uh, work closely together. Hamster research fellows are a tight-knit group. In any case, the moral here is that not all guesses are created equal... and sadly, being cynical tends to give the most accurate estimations thus far.
Me: Yeah, the problem of bending one's own researched views to "give face", is that inaccuracies tend to creep in one after the other. Concede a degree here, then another degree there, and sooner or later your mental map's all haywire. Such explanations might not always get the marks, but I'd rather stake my satisfaction on what happens in reality.
Battle Lines Drawn
Me: Anyway, on to the incumbents!
Dr. Chang: Hokey-dokey. Quick overview of what's happened since the electoral boundaries were released, then. A fair number of their high-profile Members of Parliament have taken the opportunity to tender their resignations, among the first of whom was Inderjit Singh, formely of the PM's Ang Mo Kio GRC, and one of the all too few brave souls who stood up against the Population White Paper... and yet oddly had that particular speech deleted from his Facebook archive, while his others from that period of time had been preserved. But, this is the Internet age, so nothing ever disappears.
Speculation over whether he had left of his own accord, or had been pushed, were only fanned when another longstanding incumbent MP publicly chided the outgoing Singh for the "undignified" announcement of his retirement on Facebook... only to wind up bidding farewell to a former DPM in a kopitiam a few weeks later, quantum of dignity unspecified.
Overall, the big names who made way were not riding especially high in the popularity stakes, having presided over bubbling housing prices and not-so-bubbly public transport respectively. The outgoing Transport Minister was under no illusions about the reviews received, though online opinion against him appears to have softened somewhat following his perceived falling on his own sword.
Me: Indeed, as we have suggested here back in 2012, and further expounded on in 2014, the bare fact is that the Transport Minister's hands are tied - he can get extremely concerned and make a cameo each time a breakdown happens, but then what? Fine the SMRT? It's not like they won't just raise fares eventually to chao chao maintain a S$20 million profit per quarter, because otherwise how to explain it to Our Most Successful Investment Firm? What are captive commuters gonna do, walk to work?
Dr. Chang: Back to the buildup. Provisionally, the most hotly-anticipated SMC contest, at least amongst kopitiam uncles, has looked to be MacPherson, which at one point threatened to feature not one, not two, but three fine ladies. Unfortunately, with the NSP pulling out as recommended, we have to be content with it likely coming down to the incumbents' Tin Pei Ling vs. Workers' Party representative He Ting Ru.
Me: This, I feel, is one of the more interesting gambits that the incumbents have set up. The contrast between the handpicked Ms. Tin, who infamously won herself the "Kate Spade" moniker with an ill-advised photo, and Ms. Nicole Seah, who projected a far more impressive picture of the Opposition's youth brigade, was one of the definitive images of the last elections.
Dr. Chang: Yep. By delegating Ms. Tin to stand by herself in an SMC, the incumbents are attempting to defuse insinuations that she had been merely tagging along for the ride, and thereby redeem her - and to an extent, their next generation's - reputation. Now, while opposition supporters, as evidenced in the cartoon above, are relishing a spading-out, they should be cognizant that the incumbents are well aware of the symbolism associated with this particular contest, and have taken extra pains to stack the deck in their favour, aces high.
To begin with, the MacPherson ward has historically been strongly in favour of the ruling party. It has never yielded less than 65% for the men in white, with the most recent showing in 2006 being 68.5%, though admittedly against a relatively weak SDA opponent. Secondly, Ms. Tin has been able to quit her previous job to be a full-time MP in preparation for this, despite dismissing the possibility early on. By all accounts, she has been dutiful, which gives her detractors even less to work with. Having a baby won't have hurt, either.
Me: With all this to her advantage, I'd say she has to be the favourite by a fair margin. It would be a pity if the NSP's candidate doesn't get to stand somewhere, though.
Dr. Chang: By divesting a largely-safe ward and reabsorbing the teetering Joo Chiat SMC, which had been worked strongly by the Workers' Party, one suspects that the incumbents are banking on the Opposition ambiguity over the rest of Marine Parade GRC to carry them through. I'd say this arrangement does give the incumbents about the best chances to retain all constituent wards... but also raises the possibility, however slender, that they have miscalculated on both fronts.
Me: It's already heating up terribly quickly nearby, with no less than a DPM jumping the gun on a mere Instagram photo of a citizen enjoying a simple hawker centre meal at Fengshan, which has to some plainly reeked of insecurity:
Relac lah bro, I finish dinner then play with you, 'kay?
Dr. Chang: Seems like he's been designated bad cop again. Well, it's a dirty job, but somebody has to do it.
Let us zoom out from the individual skirmishes here, exciting as they may be, and return to the big picture: what exactly are the upcoming elections about? I'd say, in one sentence: a referendum on the existing one-party state system.
A Single Super White?
- the late founding Prime Minister, in 2006
"There is a sense of adventure, there is the confidence that anything is possible!"
- the current Prime Minister, in 2015
Dr. Chang: To give some perspective, having a single party in charge for fifty years is not that unusual. Since "special Asian values" tend to come in vogue whenever discussions about democracy crop up in these parts, let us inspect how the dominant parties in the region have fared. We chart the popular vote, except for figures from 1989 and before for Taiwan, which are seat share:
Browsing through the countries' electoral histories was instructive in itself; there are others, certainly, with South Korea worth a mention - their main parties appear to change their name for each elections! All in all, though, the takeaway is that political behemoths in the region tend not to poll over 50% nowadays, with the exception of Singapore and Malaysia, the latter perhaps partly magical.
The big contrast comes in with the respective Parliamentary makeups, considering seats held by the ruling party/coalition, as compared to actual popular vote share [pv]:
The first bit is quite understandable, due to unavoidable discrepancies arising from multi-level aggregated representation - recall Al Gore's contentious loss in 2000 despite winning the popular vote, for instance. To drag that into a 30-plus percent advange, however, takes a fair bit of effort, but through a combination of fortunately tiny spatial extent, judicious gerrymandering and the world-first GRC system, the incumbents have managed it.
Me: Is there a take-home message from all this?
Dr. Chang: Well, note that having 90-plus percent of the seats makes for a very different Parliamentary experience, than with a more modest fifty to sixty-odd percent stake. It is pretty standard for a two-thirds majority to suffice for a very wide range of motions, which means that gaining that many seats mostly makes sessions a formality; it is no wonder, then, that representatives do not even bother to turn up.
There has also been an impression in some quarters that your main Opposition has been "quiet". However, this is not borne out by the records, which show that among all MPs, three of the top four most vocal, by number of speeches given, hail from the Opposition! Of course, how much effect their words have, with only a handful of voting seats, is another question, but this is another of the areas in which selective coverage from the mainstream media can shape impressions.
Me: I suppose it isn't easy to give up what one regards as his.
Dr. Chang: On that, allow me a bit of historical reenactment?
Me: Why not?
Dr. Chang: Okay, here goes:
恕谋士直言: 儿续父业, 理所当然, 当今太子登位, 确是举国上下几生俢来之弘福也! 所谓虎父无犬子, 皇太子功徳盖世, 力压剑桥众儒, 年不过三甲已被命为镇国准将, 根本就是个名副其实的白马王子, 前无古人, 后无来者, 就算华盛顿也不可相提并论, 今时今世得以齐名者, 只属朝鲜大元帥金正恩也. 只惜土民素质庸劣, 亏朝廷立邦半世来精心栽培, 只训出一群无才无德的狗奴才! 害得天子费尽心思, 悬千金重赏, 自认召聘入党的能人义仕始终寥而可数, 为民之孽也!
好在天子抱着悯人之怀, 仗着皇室丰厚实力, 挽救这帮忘恩负义之徒; 劳得皇后亲自出马, 掌管财政, 二王爷又挺身而出, 负责通讯. 再来个曾岳叔侄担任总统之职, 皇家血统宏伟贡献, 难以置信, 不可多得!
亏仁帝竭尽所能, 不肖子民仍冷言相迫, 过问着区区几十亿小数目何去何从, 何为天理? 枉聖上多年来无私的付出, 虎落平阳被犬欺, 终究裁在无知草民之下, 得以赐歉, 龙颜何存, 确是当朝奇恥大辱! 见天子欲一巴掌打扁叛奸算了, 只恐一代枭雄太上始皇动怒, 又见大片中原江山给番夷工军攻陷, 驻将全军覆没, 只得忍辱负重, 忍气吞声.
好在聖上好歹过了民主主义血光之灾, 四方叛党还是走着瞧! 贱民不才, 不识抬举, 怎怪皇室近年大批进口上等外来人才, 转眼已达两百万之巨, 如无意外, 再过几十年便能把这班绝子绝孙的脓包取而代之, 杜绝后患. 贱民要怪, 只得怪自己不知进取, 连操也不要了, 害得人口下跌, 人肉发展战略行不通, 没钱进贡国库大臣! 不仅如此, 劣民还真无幽默感, 说公积金五十五岁时全银奉还, 明显只是说笑, 何必当真? 頂多大不了再开几间赌场, 怕本皇室欠不起不成?
反正倘若经济衰退, 公寓卖不出, 棺材本尽失, 量这撮乌合之众也只懂小心眼地怪罪聖上, 毫无风度, 全然不接受投资定有风险! 不若先下手为强, 捉了几头贼首丢入狱终生监禁, 殺一儆百, 但近期又出现了什么什么新媒体的, 机关报相比下终日不成章, 要只手遮天谈何容易, 就连圣旨也给草民评得一无是处, 简直来个反朝欺君之罪! 亚运费功买进几枚中制金令牌, 始终难得民心, 贱民果然不知所谓, 该打!
来日天子再次就位, 不认同聖上英明领导的四成贱民便知死, 毕竟他爸是李刚; 小心本朝再来个 "加税救济", 分离省份来个围城杜粮, 内里忠贞于本朝的也就死了算了, 算是为国捐躯吧! 祝皇室持续千秋百世, 源远流长! 亚洲价值观封建主义万岁, 万岁, 万万岁!
From Here On
Me: Uh, *ahem*. Actually, to be honest, on an entirely technical level, you have to give it to the PM - how many political leaders do you know who have actually studied computer science, and have actually coded up their own Sudoku solver? As an aside, this being the Internet, not even being a PM spares one from code review. On a personal level, he can come across as a fairly nice fella.
This has to, however, be weighed against the very real threat of institutional entrenchment, which has already occurred with all too many instruments of the state. From what I can see, the arguments on these are mostly handwaved with LKY-era "young punk doesn't know what he's talking about" statements, which is more than a little disconcerting.
Dr. Chang: This is one of the side-effects of the GRC regime, I fear - it smells of an administration that cannot bear to withstand the slightest challenge. I mean, doesn't having a JBJ or Francis Seow in the house spice things up and relieve the tedium? It's not as if The State's Times and company report much of anything of what goes on inside anyway...
Me: There's the political stability concerns if the incumbents even - shock and horror - lose a two-thirds majority.
Dr. Chang: Frankly, any transition will involve pain, there's no escaping that. Just look at the transfer of a single lousy town council, like that already cry father cry mother take the ball and go home; let me assure you, in the event of anything bigger, you can expect the mother of all hissy fits!
Me: Yeah, all the more there should be mandated term limits - then, leaders can just walk away when their time is up, duty done, with heads held high, and leave it to the next batch.
Dr. Chang: On that, even China has implemented them. Sure, changeovers remain tricky, but it has more or less worked out, thanks in large to the unspoken agreement not to touch previous leaders-turned-party-elders. Of course, those of the more-assertive mould, such as the current Mr. Eleven, might well come to test the waters.
Me: Any other thoughts on the future of the incumbent party?
Dr. Chang: On that, Alex Au's post-2011 elections primer on the local political spectrum has to be mandatory reading. In particular, his updated position map:
With the accompanying note that while the SDP has oft been vilified, they are actually completely middle-of-the-road by the standards of most first-world democracies! The proximity of the incumbents and the WP's stands on social issues, for instance, was also mentioned to be a factor in the WP being an easy pick for those who want an alternative without sea change... which however also raises the possibility of the incumbents hustling back towards the centre in response. Actually, we have already seen a little of that, most recently with the new trend for in-kopitiam pronouncements.
That said, the incumbents are a big ship, and they can't reinvent themselves at the drop of a hat; and take the recent call to vote incumbent to "strengthen the team"... well, they should really have thought about that before coming up with GRCs and tying their top ministerial-calibre guys to their more-average candidates, shouldn't they?
A telling indication, then, could be your PM's recent statement that "...overall, we think religion is a good thing. I mean, if we were [a] godless society, we would have many other problems, the communists found that out", which reintroduced the grand old Marxist bogeyman out of the blue. This brought about a protest letter from local humanists, which in turn got a reponse that communism does mandate atheism... which while not unarguable, seems to have missed the point.
This may be fairly speculative, but I gather that the incumbents may well find themselves appealing to the homegrown "religious right" for votes, and thereby become, in a very broad sense, Singapore's Republican Party. In fact, given the incumbents' staunch conservatism on the whole, this is a natural fit, all the more given the stark Abrahamic overrepresentation in their MP ranks.
Doubtless, some canvassing may already be happening - and there's nothing particularly wrong with that, per se, unlike say the gay agenda - though it may be worth a mention that the Minister Mentor was ever unequivocal on his iron agnosticism. What might be worth watching is if endorsements from religious heads become increasingly blatant... but then again, the church-natural aristocracy tag-team is one of the oldest games around.
Me: Intriguing, to say the least. Say, this interview's gone on for awhile - it might be time to have a break...
Next: Exactly As Charged
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