The nonsense some people write on the internet
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There have been a number of errors made by netizens regarding important issues that affect all of us here in Singapore. I don’t blame them for it for it sometimes require some reading and looking deeper into the facts. The most common errors concern the minimum wage, our CPF and Singapore taxation. I will debunk the myths and tell you the truth.
1) The minimum wage
Often people complain that Singapore does not have a minimum wage. Their thinking is that if the government sets a minimum wage, employers will be forced to pay our lowest paid workers a higher wage. This is nonsense.
You cannot raise people’s wages by force. Each of us is paid what we deserve based on our skills. Employers have the power to hire or fire. If they think you are not worth the minimum wage, you will be fired. Here is what Nobel Prize winner and economist Milton Friedman had to say about the minimum wage. The minimum wage causes unemployment among the lowest skilled people.
These are the poor. They are poor because they have low wages. But that is better than no jobs. No job means zero income. No job also means a loss of opportunity to gain skills. On the other hand, if a young person with little skills start with a low wage job, he can gain higher wages later with working experience. The only way for people to raise their wages is to improve their skills. The only way to improve your skills is through education and working experience.
Do you want to know how the minimum wage got started? The early pioneers of the minimum wage were Australia and New Zealand. The motivation was racism. In the late 19th century, Australia was flooded with Chinese immigrants.
When they came, they knew little English and so had to accept a lower wage if they wanted a job. They were (and still are) physically smaller and weaker than Caucasians in an era when manual labor was required for most jobs. The white Australians felt their jobs threatened by these immigrants and so demanded the minimum wage.
The minimum wage was imposed at a level that it is not worth it for an employer to hire the Chinese worker. So they ended up hiring white Australians. If you don’t believe me that it was racists that demanded the minimum wage check out this link and this link.
In America, the idea caught on in the 1920s. But this time, the intention was to discriminate against Blacks and not Chinese. Southern Blacks moved to the North seeking jobs. Contractors hiring cheaper Black workers clinched building contracts. The white unions were angry and of course asked for a minimum wage. The first Minimum Wage law in the US was the Davis Bacon Act passed sometime in the 1920s with the support of white racists.
Blacks, then as they still are today, were less educated than whites. So if they wanted work they had to accept lower pay. Once the law decreed they must be paid higher than what their labor is worth, they became jobless and the whites got the jobs.
Don’t believe me that minimum wage laws started in the west because of racism? I suggest you click this link and this link. Now I want you to think what would happen if the minimum wage is imposed in Singapore.
Well, unemployment will go up as those with low skills will be fired from their jobs. Employers will try to automate or replace them with more efficient workers. Which ethnic group do you think will be the most badly affected? The group that will be most badly affected will be the ethnic group with the least education among our ethnic groups - the Malays.
While they have made significant progress over the decades, they still lag behind in qualifications and skill levels. So they will disproportionately lose their jobs if Singapore imposes a minimum wage. It is not a good idea to implement a policy that will increase the suffering of poor low skilled Malays if we want racial harmony.
Jobless blacks in America, caused by the minimum wage laws, are very unhappy. These Blacks became angry at their poverty and at the slightest excuse go on a riot. That’s what happened in Ferguson, Staten Island and Baltimore recently. Using alleged police brutality as an excuse, they looted the stores to get the things they did not have money to buy.
Finally, the whole idea of minimum wage is wrong. A job is a contract between two willing parties. If someone is willing to offer a job at a certain wage and another is willing to accept it, why should the government interfere?
If the minimum wage is so bad as what Nobel Prize winner Milton Friedman said, why are there so many countries having it? One possible answer is the sheer ignorance of the politicians. Another answer is that the policy makers are aware that it is a bad idea but don’t care because it is popular. I think the second reason is the more likely reason.
Politicians need to be popular to get elected. They crave power for its own sake and also because with power they will get rich one way or another. They know that the minimum wage is popular because most people do not know much about economics.
We are lucky to have a good government who understands economics and do the right thing even though it is unpopular. Our opposition is promising the minimum wage because it is popular and they want votes. Either they are ignorant of the harmful effects or they do not care. Either way, they are not fit to govern.
2) Issues regarding the CPF
The CPF generated a mother lode of misconceptions among netizens. Many Singaporeans are angry that they are now no longer allowed to withdraw their CPF money at age 55. This has sparked off wild theories. One is that the government has lost a lot of money in their investments. Therefore, they are unable to return us the money when we reach 55.
Others believe in the reverse. Instead of losing their money, they think that the government is making money out of our CPF money. They think that government is getting a better return with their CPF money than what CPF pays us because Temasek reported a 16% rate of return since it started. Therefore, the theory goes, the longer they hold on to our money, the more money our government makes. Some are wondering who is managing their CPF investments, accusing them of lack of transparency. Is it Temasek or GIC? Or who else?
I will tell you the facts based on publicly available sources. Let me start with the most stupid misconception floating on the internet.
2a) Government lost a lot of money in their investments and so can not pay CPF members at age 55.
This is the most laughable theory, revealing the sheer ignorance of some Singaporeans. Even if the government did lose every single cent of our CPF money, they can still pay us. How? Simple. They can always print more money.
The US government has US$18 trillion in debt. They overspend each year, but they always managed to pay the bills, including the interest on their debt. That’s because it simply prints or borrows money whenever they are short of money. Besides printing and borrowing money, all government can also raise taxes to pay their debts. So even if this wild rumor is true, CPF members will get paid. Of course, printing money is a drastic step as it will cause inflation and the currency depreciation.
But it is not even remotely true. Temasek has made 16% rate of return since inception. That is very good. On March 2014, its net portfolio value was $223 billion. Total CPF balances amounted to $253 billion in 2013. GIC reported a rate of return of 4% in US$ terms over a 20 year period. Its net asset value is unknown but at least we know that it is not losing money. Both companies are audited by large international accounting firms. So you can be sure the numbers are accurate.
2b)The government is underpaying CPF members with a low interest rate because it wants to make money by investing it. This is also why it does not want to return all our CPF money at 55.
It is ridiculous to say that the interest rate is low. Government has been generous with the CPF interest rate.
The CPF is paying us 3.5% on our ordinary account and 5% on our Special, Medisave and Retirement accounts. This is very generous. To see how generous, you have to ask yourself how much interest you can earn if you invest elsewhere in a risk free asset.
Investing in CPF is risk free because the return of 3.5% to 5% is fixed and guaranteed by the government. The government cannot go bust because it can always print more money. If you were to put it in a fixed deposit in a bank, your return is also fixed, but is not risk free because the bank can go bankrupt. The bank, unlike the government cannot print more money to pay you. Currently, the one year deposit in OCBC is 0.25%.
If you invest in a longer term asset, you will get higher return. The longest term asset with a fixed return and zero risk is the 30 year Singapore government bond. This bond is currently yielding about 2.75%. This means that if you are willing to hold the bond for 30 years, you will get a rate of return of 2.75% which is less than what CPF is paying you.
So much for that theory that our government wants to hold our CPF money as a cheap source of funds. Why “borrow” our CPF money at 3.5% to 5% when it can borrow money in the bond market for only 2.75%? Don’t you think that people who come up with these cockamamie theories are a little soft in the head? If CPF were to close down and the money returned, could you find a risk free investment that pays you an interest rate of 3.5% to 5%?
I know what some of you are thinking. You will be saying that since Temasek has made a return of 16%, shouldn’t they pay us 16%? But that would not be fair or prudent. Temasek invests in risky assets. They can and do sometimes lose money. There is no guarantee that they can make 16% return in the future. The rate of return must be related to the riskiness of your asset. Since CPF is risk free, you must compare the interest rate with other risk free assets or at least very low risk assets. If you don’t believe me, go ask any professor in Business or Finance at the National University of Singapore (NUS).
If all these theories as to why our government is not returning our CPF money at 55 are rubbish, what then is the reason? The answer is simple. We are all living longer than at the time when CPF was first started.
In 1955, the average life expectancy was 63 years. So after retiring and collecting your CPF at age 55, you got an average of 8 years to enjoy your retirement before kicking the bucket. But today, Singaporeans live till an average age of 84 thanks to having the world’s most efficient health care system.
Common sense will tell you that you can no longer retire at 55. Therefore, you cannot take out all your CPF money at 55 as before. The government has converted some of it into an annuity so as to prevent some Singaporeans from squandering away all their money on China girls or gambling or whatever. I know what some of you will say. It is my money and I can do what I like with it.
In that case, why not simply ask for the CPF to be abolished? You will be paid in full each month, including what the employer would have contributed to your CPF account. The whole idea of CPF is compulsory savings. This implies that whoever started CPF believed that most people are too stupid to save and invest wisely for their retirement. That’s why they must be compelled to save.
There are people who will not only spend every cent they earn but also get into credit card debt. I have a strong feeling that the people who are most unhappy about not being able to completely withdraw at 55 are the ones most likely to squander away their CPF money. Thanks to our government’s wise policies, our CPF is ranked one of the world’s best retirement fund. As in the case of the minimum wage, our government’s policy is correct though unpopular. To do the right thing even though it is unpopular is a sign of good government.
Some people have asked who is managing our CPF money. Is it GIC or Temasek? It is a lot more complicated. You see our government has at least four sources of funds - 1)taxes 2)CPF 3)land sales 4)bond sales.
They will spend some of this money on civil servants' salaries, building infrastructure and so on. The remainder is our "reserves" or in layman's terms our savings. This is held by Temasek, GIC and MAS. So the key thing to note is that our CPF money is conmingled with our sources of funding.
This means that nobody is specifically tasked with managing our CPF money.
3) Our taxes are too high.
This perception came about because of the GST, ERP, COE and other charges. They conclude that our government is taxing us too much. Is this true? Let us look at the facts. The main taxes in every country are income tax, GST or VAT and Company tax. Other minor taxes are property tax, estate duty, capital gains tax, stamp duty, road tax etc. In the case of Singapore we have COE, and PARF which, to the best of my knowledge, do not exist in other countries.
You can compare worldwide taxes for the three main taxes in this link and this link. Singapore’s company tax of 17%, the top income tax rate of 22% and GST of 7% makes it one of the lowest tax jurisdictions in the world. Let me give you an example for comparison. In the UK, company tax is 20%, the top rate of income tax is 45% and VAT is 20% for most things. There is no VAT for food.
You will no doubt ask, “What about the car taxes like COE?”
These don’t generate much revenue for the government. You will notice from our 2014 Budget, COE, ARF and PARF (called vehicle quota premiums) amounted to only $3.67 billion or only about 6% of Operating Revenue.
To see if our government taxes us heavily you have to look at total tax revenue as a percentage of our GDP. Then we compare this number with other countries. Fortunately, the CIA has done a comparison for us.
In 2014, Singapore government's tax revenue amounted to only 15% of GDP. In layman’s terms, it means that our government only took away 15% of what we earned on the average. “What we earned” includes all the salaries, profits, rent, interest earned by people living in Singapore.
Now let’s see what other governments did. The comparable number for the UK, Australia and New Zealand are 40%, 33% and 41% respectively. This means that they have taken a bigger chunk of the people’s hard earned money.
What have the people gotten in return for the money they paid the government? A government is supposed to provide services to the people. This includes security from external and internal bad guys. This means protecting us from foreign enemies and local criminals. The government must also provide education, healthcare, infrastructure and so on for the taxes we pay them. Besides all this, it must create jobs by attracting investors.
So with the little money it taxes away from us our government must of necessity spend less money on education, health care, police, infrastructure, etc. Are we more unhealthy, uneducated, crime ridden with crumbling infrastructure as a result?
The answer is ‘no.’ We are healthier, have better schools, have lower crime, have fewer jobless people than most western countries. If you don’t believe me, here are the facts. Our health care system is ranked the most efficient in the world as stated above. The World Health Organization ranked Singapore’s healthcare as the 6th best in the world.
As a result, Singaporeans’ life expectancy is the 3rd highest in the world at 84 years. Those who say that our government does not spend enough on health care just because western countries spend more have missed the point. Our tax $ is well spent and it is the results that counts. The Ang Mo governments spend taxpayers’ money wastefully and that’s why they spend more. That’s why we are ranked the most efficient healthcare by Bloomberg. We spend less but live longer.
Our education system ranks 3rd best in the world. Our top University, the NUS, is ranked 25th best in the world. That’s better than any Australian university or NZ university. But NUS loses out to Cambridge, Oxford and Imperial College. The crime rate is low in Singapore. The Homicide (murder) rate is 0.2 per 100,000 people in Singapore. The comparable number in the UK, Australia and NZ are 1.0, 1.1 and 0.9 respectively.
The unemployment rate is 2.8% in Singapore as compared to 5.7% in Australia, 6.2% in New Zealand and 7.5% in the United Kingdom. I chose Australia, UK and NZ to compare with because, like Singapore, they are all wealthy countries that have the British Parliamentary system and use English as the working language.
In general, we can say that our government has taxed us less and in exchange gave us better schools, healthcare, more jobs and security than the others. I think 99% of Singaporeans focus on the ministers’ pay. I prefer to look at the taxes we pay and what we have got in return. It seems that we got more for less than most First World countries.
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stats has 2 ends , which end u talking?
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Hope the ivory tower you are living will not be demolished.
a mpfp.
go post this article in TRE ......
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The posting of this topic reflects how fearful pap supporters are that their dearly beloved pappies will lose in the coming election.
cool down, no matter what nonsense (pap give to people) and how badly pap treat the nation they will still win. The thing to look out for is their % of winning continue to go down down down or not.
It does not help at all to curb freedom of speech on the internet. Call people stupid is totally uncalled for. if so fearful internet will drive them out of their comfortable highest paid govt jobs in the world then stop access to internet in singapore.
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if nonsense why u read and share?
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Don't know what happened to my reply. So I will do it again.
The fact is that none of you has refuted me. All you could do is to insult. Do yourself a favor. Go show this article to someone learned such as a University lecturer in Economics, Business or Finance. Ask him if what I wrote is correct or not.
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maybe we should institute a rule to say long posters will be banned
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Originally posted by SJS6638:
The posting of this topic reflects how fearful pap supporters are that their dearly beloved pappies will lose in the coming election.
cool down, no matter what nonsense (pap give to people) and how badly pap treat the nation they will still win. The thing to look out for is their % of winning continue to go down down down or not.
It does not help at all to curb freedom of speech on the internet. Call people stupid is totally uncalled for. if so fearful internet will drive them out of their comfortable highest paid govt jobs in the world then stop access to internet in singapore.
The internet is full of rubbish and misinformation that misleads people. I am not a member of the PAP. I just got irritated with all this rubbish I see and decided to publish the facts. Notice that my article has full of links to prove to you that what I say is the truth.
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u think u correct can already lah
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Truth with eyes shut or open?
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Eyes open of course. What I am trying to do is to open other people's eyes who were misled by so much nonsense on the internet.
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Pappies supporters have propensity to deny being supporters of pap.
I have this to say, those truly who want the good for the nation are able to tell what are those doing. No need to read from internet also can tell. Read STs, watch local news can tell.
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Eyes open but mind open or shut?
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then what are u still doing here?
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Internet is nonsense only to a closed mind. I agreed this thread is nonsense. Read objectively.
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Nothin right or wrong
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Originally posted by FireIce:
then what are u still doing here?
I told you. I am here to correct the nonsense I read on the internet.
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fifi can correct you too. May be you like ban mian.
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"Even if the government did lose every single cent of our CPF money, they can still pay us. How? Simple. They can always print more money."
You sure bo?
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ban mian is good
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the minimum wage is to set the proper standard so as to protect workers from manipulation by employers.
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Originally posted by SMB145B:
the minimum wage is to set the proper standard so as to protect workers from manipulation by employers.
Ah finally! Someone has started a real conversation. Thank you my friend. I was getting bored. Did you go through the links I provided? They explained that the minimum wage causes unemployment.
The original purpose of minimum wage was to prevent certain groups - like Chinese and Blacks from getting jobs. Now it is preventing the lowest skilled from getting jobs. Employers are not affected.
Go through those links I gave you and see if you understand. If there is anything you don't understand, ask and I will explain.
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what if the employer underpays you?
right now SC/PRs only takes home 80% of their total pay (annual bonus+incentives+others on top of their basic pay). new PRs have a progressive change from 100% to 80% accordingly.
foreigners come to SG for better pay or better conditions. they came on work permits, S-pass, E-pass or other passes. the S-pass holder have a minimum wage.