- I remain unconvinced that the lock down in Singapore is justified. There is a growing scepticism over the economic costs we will incur due to lock downs, which does not appear to be getting any attention at all in local discourse. And economic costs translate to an increase in death rates from suicides, exacerbation of mental health issues, less funding for the already-sick and a general lower standard of living. (For more comprehensive versions of this argument, see for example here, here and here) Is the cure worse than the disease? As I write this, Singapore has 2,108 reported cases of which there are 7 deaths and 492 recoveries. MAS projects an average 2.5% decline in GDP growth for 2020, which comes up to about 125 million dollars. Even at half that amount, the economic costs are gargantuan for a very small number of deaths.
- It seems like the constant barrage of pessimistic media reports on Covid-19 is prompting many to abandon common sense cost-benefit analysis. Many people are appalled by the idea of putting a price tag on a life, but the reality is that we do it all the time. Whether or not we want to think of humans in terms of cold, hard numbers on a spreadsheet, it doesn’t change the fact that we have to. Every dollar spent saving a life is a dollar not spent towards saving another life. Covid-19 alarmism does not negate the sheer logic of opportunity costs.
- But wouldn’t the healthcare system be overwhelmed if the government doesn’t impose strict lock downs and allow Covid-19 cases to rise? This is a serious consideration — but what is the actual likelihood of that in Singapore? Not high. Even if this was a real threat, it would be a better idea to enact strict social distancing measures in a partially-running economy and have the government fund hospitals with tax dollars to accommodate the increased capacity.
- I’ve heard stories from friends going on virtual hangouts via Houseparty and even movie dates via Netflix Party. It appears entrepreneurs are already offering innovative solutions to fill up the social gap in our lives left by the home quarantines.
- The government is introducing a total of three fiscal budgets of a total S$60 billion. I noted in a Facebook post (that surprisingly went viral) that this rainy-day spending is only possible precisely because Singapore is one of the few countries in the world that has practiced a consistent fiscal discipline. This goes back to the 1960s when the early leaders made a decision to peg the SGD to our foreign reserves, imposing a strict fiscal ethic of prudent saving and spending. Interested students in the history of Singapore’s monetary/fiscal policy should check out Peter Wilson’s excellent chapter in Linda Lim’s “Singapore’s Economic Development”. An excerpt:
… when the Monetary Authority of Singapore (MAS) was setup in January 1971, the BCCS was retained as the sole issuer of the currency, and this continued until 2002 when it was finally merged with the MAS. All that then remained of the currency board system was the law that all currency in circulation must be backed 100% or more by reserve assets, which was not, by then, a binding constraint. It appears that MAS was established primarily to preserve the stability and purchasing power of the SGD, supervise and develop the financial system and manage the reserves. Currency issue, however, was deliberately left with the BCCS to signal to the world and to Singaporeans that the fledgling central bank would not be able to print money to finance government deficits, as was common in other newly-independent countries, and that government spending would have to be financed by taxation. The decision to retain the BCCS, despite the fact that the currency board “system” had, for all intents and purposes, disappeared, is thus explicable given Singapore’s colonial past. There was no longer a need to fix the exchange rate or supply reserve money at a fixed rate in unlimited quantities, as in Hong Kong after October 1983, but the BCCS was retained to provide confidence that the value of the SGD would be preserved and that the government would not run budget deficits.
6. The Singaporean government’s lock down (what is being branded with the “circuit breaker” euphemism) went into effect 7th of April, where residents will still be able to exit their homes only for grocery shopping and exercise. Just a mere three days into Singapore’s partial lock down however, it appears the government is already ramping up punitive measures to bar all social gatherings in light of clusters of people exercising at stadiums that it did not anticipate would happen. This whole development is an excellent reminder of a central insight from Scottish Enlightenment thought, that is, how little governments can achieve what they plan to set out to do. Adam Smith’s famous “man of system” passage illustrates it well:
“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.”
7. A discussion has erupted around blue-collared foreign workers after a new cluster was reported in their residences. There is a striking parallel to sweatshop debates here. The usual critics have emerged to condemn the living conditions of workers against a first-world standard of living.
I’m sympathetic to the claim that the government should encourage assimilation of migrant workers into local culture, rather than isolating them. There are highly commendable efforts by migrant civil society groups in Singapore who work in these areas (see Backalleybarbers and Geylang Adventures).
But the main problem with these criticisms is that the right evaluative benchmark for comparison would be the conditions of the foreigners in their own home countries, rather than that of Singaporeans. The simple reason for this is because mandating an improvement in living conditions of workers would inevitably come at an economic cost that is borne by employers, reducing the opportunity for foreign workers to be employed in Singapore at a superior wage (relative to their home countries) in the first place.
It’s easy to pound the moral high ground when you’re not the one internalising the increased costs. Do I wish foreign workers enjoy the same standards of living as the average Singaporean? Yes. But the next best alternative for them is not a cushy job and comfortable home, but unemployment in their own home countries where living conditions are far worse (that is, if they even get employment).