Friday, 30 September 2011

Welfarism for Singapore

Good description and analysis of the sg welfare landscape.

But the powers that be will need to be convinced that there are benefits to a more inclusive welfare system, and in that the case for improving the TFR is probably key in the sg context.

We need to first make the argument that welfare has benefits. Tangible, immediate benefits. One argument I've seen is that Welfare frees up capital, resources, and the entrepreneurial spirit (and sg wants more entrepreneurs).

In a society with little or no welfare, everyone has to salt away money for a rainy day. If 10% of the population will experience unemployment of more than 9 months and there is no unemployment benefits, everyone will have to save in case they are ever unemployed.

Similarly, if you have an enterprising idea, you may want to strike out on your own and try to start your own business. But without unemployment benefits, you are constrained. Most new businesses fail. And without the safety net of UB, most people will think twice.

So though only 10% of people need to save for unemployment, most people will do so because they don't know if they will be unemployed. And the money they save will not be freed up for entrepreneurial endeavours, self-improvement, and just general consumption.

And people save for many things - unemployment, retirement, medical emergencies, education, housing, marriage, children, and even to start their own business.

And you can see that most of the reasons why people save are key pillars of western welfare - unemployment, pension, healthcare, education, housing, childcare, and child healthcare (including, pre- ante-, post-natal care).

Removing just one or a few reasons for saving is not enough to free up capital, resources, and entrepreneurship. Or even the decision to have more babies.

We have practically free education (up to secondary school), and mostly affordable healthcare and these are good. But not good enough. Housing tho "subsidised" is still something you need to save for. Or another way of looking at it, the Cash Over Valuation that sellers ask for is their way of "liquidating" their assets to access some of their savings they have put into their homes. Would having a welfare system reduce the fear or anxiety of the sellers so they don't need to ask such high COV?

Almost ALL of the reasons for savings have to be addressed by welfare or some alternative to welfare (health insurance, for example? Or is that also welfare?) before the anxiety levels drops enough for people to be willing to take risks, like start a business, invent something new, try and fail at some thing, get married. Have kids.

The welfarism that Sg practises is a targeted ameliorative welfare aimed at lessening pain particularly of the low income rather than removing the pain. The philosophy is that without pain or discomfit, there is no incentive to improve their own situation.

However the problems of new sg is not a problem of the low income. But that of the middle class, and that is where we need a little (or a lot) of the "western welfarism" - unemployment benefits, housing, healthcare, childcare etc. In fact we need a whole ecology of welfare components intended to relieve the anxiety of the middle class in order to convince the middle class that this is a good place to raise a family.

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