Good day folks. Today i shall enter my reply to kheng meng’s counter on the GE, but before that just some side stuff.
I just returned from an awesome trip to vietnam. I shall elaborate and talk more about this trip at a later posting, i shall just leave it aside for now, just to say its awesome!
During my trip, i learnt of great news that Barack Obama has destroyed and remove the man that is Osama bin laden, the head of al Qaeda, a symbol of terrorism in our world. This marks a great victory for all of humanity and also for Obama. He has achieved what his predecessors cannot and has showed great leadership skills and abilities, proving that he is a worthy president of the most powerful country in the world. His decision against releasing photos of bin laden’s body is also a good one. To release the photos may trivialise the event, turning it into an argument of the usage of violence, instead of the symbolic meaning this was suppose to be. Anyway public opinion of Obama has surged since the news, and we shall celebrate and rejoice.
Lastly i just want to share a GE related posting from my friend Daryl Yong. This is his link on facebook. http://www.facebook.com/notes/daryl-yong/my-thoughts-on-ge2011/10150276681229152 Feel free to share it.
Reply to Counter
Alright i shall start the reply proper. Here is KM’s link. http://theloneentity.wordpress.com/2011/05/01/general-elections-counter-reply-to-jack/
KM suggest that HDB builds more smaller flats in order to deal with the problem of supply of housing in Singapore. A worthy suggestion, except i have certain issues with it. First of all to build smaller flats for our citizens may suggest that they only deserve to live in smaller flats, which though well designed may still indicate a reduction in the standard of living. Everyone wishes to live in bigger and more spacious homes. I am not suggesting we give everyone what they want, but rather allow the market to decide what kind of flats should be built according to the demand. Secondly, having smaller flats may deter young couples from wanting to expand their family. This is against the government’s plan to increase the fertility rate of our populace.
At the end of the day, we come back to the same board which i have talked about earlier. We have limited land. No matter how innovative or creative or tolerant we can get, whether its building taller buildings or smaller flats, its still the same thing in the end. We face a real shortage of land that cannot be dealt with in the long term using these solutions. Ultimately Singapore can only support a set number of people, and the determination of who should and can stay in Singapore should be based on how valuable that person is to his country.
KM then proceeds to talk about land valuation and how difficult it is to value land. I agree with his assertions and therefore will suggest allowing the market to handle it. The market works effectively in determining the price of land base on demand and supply. Taking into account the price of land of mature estates can give a good estimate of how to charge for land for the new flats. The problem with pegging it to the land it was acquired is a little warped in logic. This is because throughout all this time we can expect the value to have changed quite a bit, especially since the population of our country has increased so dramatically over the past few years. Naturally land will cost much more than the past, and rightly so.
I agree with KM that the valuation of the land should be transparent, but not according to KM’s methods. The question of fairness in pricing is subjective. Pricing ultimately tells us the value of a certain commodity or resource and the best way for that to be accurately reflected is to allow the value mechanism inherent in good and fundamentally sound economic concepts run its natural course. As to whether the price obtain is fair is totally up to a variety of opinions. Pricing has to be accurate before we can even start to debate if it is fair, and even if it is not, proper procedures must be followed to ensure market regulation is controlled so as not to affect the value mechanism.
Assuming that the profits of land is indeed used to pump up our reserves, it is a good thing. Our reserves allow us to help the poor and to run programs that will benefit the society and community. All this assuming that no premium is charged above the market value for land in the first place.
KM again says that there is no relation between the resale and first time buyers market and claims that there is no effect from the actions in either market on one another. I beg to differ from this point of view. As i said in my earlier post, every Singaporean will be at some point a first time buyer, so a huge portion of the resale market maybe from the first time buyers market in the past. Additionally he has also failed to address my example of how people will be willing to sell off their flats cheaply in the resale market in order to earn a quick buck. This will definitely put downward pressure of prices and values of the flats in the resale market.
My argument on MOP remains the same. It maybe used to regulate the market and to keep out unwanted problems, but ultimately we need a stronger and better solution.
I agree to KM’s suggestions with regards to PR housing, just that the problem maybe that it is difficult to find a good balance between how much should be allocated to them. May i also suggest keeping the same market for PRs and locals, except that the PRs have to pay perhaps about 10% above the market rate. This will ensure a value mechanism and at the same time give singaporeans an advantage for pricing, but yet not too strong an advantage so as to remind them to work hard so as not to lose the race. Ultimately the handicap is 10%. This handicap should be kept as small as possible in order to reduce the distortion to market principles.
On the discussion on CPF, the thing is that most Singaporeans have already invested a huge portion of their savings, retirement or otherwise, into their flats, allowing the value to drop is not a good thing. Just to add, i have seen many forum posts on how the value of housing is bullshit because they cannot obtain that value unless they sell their flat, and that is not possible because then they will have to buy another flat. The thing is, although the rise is paper value, there are ways to tap into this value without selling your house. Reverse mortgage is just one example, others include using your house as collateral for loans or as leverage. The number of options can really be huge. The problem is just that many singaporeans lack the financial know how.
KM then went on to talk about inheritance. In my opinion, how a person wants to deal with his assets is his business. If he wants to leave it for inheritance then he should have proper planning to ensure that. How can he expect to have his cake and eat it. To conduct reverse mortgage and expect to leave an inheritance?! The number of financial options out there as i said is amazingly huge and i feel that how a person wishes to construct his own financial planning is up to his personal discretion. Ultimately you get to choose your path. Consult an estate planning attorney for more information and advice.
The rise of housing prices in singapore reflects the value of staying in singapore. It is a good sign that People want to stay here and for good reasons. In any good economy one will expect rising housing prices. Of course we need to keep it in check, but once we remove elements of speculation the remaining becomes the intrinsic value which we should not distort too much. This so called illness KM speaks of is inevitable.
NS: the reason why i quoted JFK because it holds deeper meaning than what appears to be on the surface. We cannot and should not impose NS on foreigners because that will be ridiculous. How can we expect others to take care of our national interest? Singapore needs to be protected. This problem can be properly managed by dealing with manpower. Perhaps better management of manpower by the defence department could solve such issues, however NS cannot and should not be removed.
For KM point 3 is the exact point im trying to make about FT/FW in the first place. Because foreigners can ask for lower wages, this will pressure singaporeans to either work harder or more creatively to improve productivity. If KM is just going to focus on the problems on singaporeans then this discussion is not very fair afterall. Foreigners also face problems like adapting to a new life, as well as other personal problems unique to each individual we may not know about.
I am not suggesting that singaporeans are not competing among themselves. My point is very simple. If we want to be world class we need to compete with the world and not just among ourselves. This healthy competition will encourage us to work better and keep us constantly on our feet. I am afraid that protectionistic principles may cause slack to enter and works like a slippery slope where people will keep demanding more of such policies.
Grow and Share
KM is suggesting that it takes a lot of money to invest. This is not true. In fact from Eric Tyson’s book to personal finance, he claims that it is the time that matters more than the capital you have. Starting young at 17 and investing about 1 dollar a day can reap you a very good profit compared to investing much more at a late age at perhaps 40. This is due to the magic of compounding returns. Shrewd investing also helps. I shall not give specifics here, but feel free to check it out. I am against investing on others behalf, especially we are talking about a huge portion of savings and a nationalised program. This is because each investor has different objectives which will be difficult for a national program to address. Also investment managers are expensive, which will reduce returns of investments. People may also demand good returns unreasonably because they don’t know how investing works but simply demand the profits.
Market distortion is actually market regulation and i support its use. However i believe that it be used as little as possible in order to maintain the value mechanism that distributes resources base on how deserving that person is. Regulation is important because if some people don’t play by the rules, the value mechanism itself will suffer from distortion. This will affect its accuracy. With regards to cars, the COE ensures that our roads will not get congested. If there is no COE, the number of cars in singapore will depend on the global demand and supply, without taking into account any form of land shortage consideration whatsoever, disregarding an important element in ascertaining the cost of driving in singapore. I agree that land supply may not only be affected by Nature, but it is the major element. If singapore was as big as Canada or Russia, maybe the cost of land will be cheaper.
For taxis. KM said that cars stay in CBD all day, whereas taxis go in and out. This may sound like as if it were reducing congestion. However the reality is that most of these cars KM is talking about is parked in the car parks, and not along the roads. Taxis however like to loiter at road sides to solicit business. They also have a habit of stopping illegally at the road side to pick up passengers. This will cause greater congestion. This will also encourage those who already take the MRT to work to take taxis instead due to the lower cost. Private car drivers to work already pay the ERP when entering the CBD. There is no reason why the sudden lack of need to pay ERP will appeal to them, especially since the cost of cars are far more than ERP itself. Moreover they might think it a waste of money since they already own cars.
As said i agree with having more voices in politics. However these voices must contain good value and substance. A brief sweep of the current opposition tells me that save for a few good ones, the rest are really just trash. If we allow trash into parliament, they will waste time and effort by talking and adding trash. There is also nothing to say that opposition parties will work together as a unifying voice. Already there are conflicts with regards to which party will contest which constituency. I shall just end this by saying that the time is not yet right to open the gates.