Getting Darker? The Immigration Debate

Discussing immigration often brings out the worst in people. In an ironic way, this is entirely consistent with the behaviour of Homo Economicus, the rational self-interested man. Since he cares only about his own well-being, economic science therefore finds it perfectly reasonable that he should react strongly to any threat to his livelihood or lifestyle – which immigration is perceived to be.

Wayne Soon wrote a thoughtful article that argued for the issue of immigration be settled through research – I gathered by which he meant for policy to be based on rational and substantial research into the impact of immigration. If there are indeed methods and data to support research, this is without doubt a good way forward. My fear, however, is that no amount of research or evidence can really 'settle' this issue.

This situation is analogous to the trade debate. All mainstream theories point to the fact that freer trade will always bring about overall welfare gain for the country. But the theories also acknowledge trade will create winners and losers. Similarly, while most objective research in the US/UK points to the overall benefits of immigration, there are also some segments of society that will lose out economically. This fact alone is enough to ensure that no matter how much science one puts into formulating immigration policy, it will always end up a political dance.

Watching the immigration debate in the UK gives a first-hand experience on how complicated this dance can become. In the last election, the Tories proposed an annual immigration cap ('controlled immigration' as they termed it). The Labour party duly rubbished that and extolled the benefits of immigration, and at the same time painted their opponents as a party of xenophobes. Nevertheless, when the new states (Bulgaria, Romania) entered the EU, the Labour government fearing a popular backlash, slapped restrictions on their free entry and promised to lift these only in the future. The Tories, under the new leadership, has since ditched the 'controlled immigration' line to soften their image. But this opened a gap for right-wing extremists who plied on immigration fears to hammer the Tories at local elections. Even the Tories are not right-wing enough as far as some citizens are concerned. This Financial Times article shows why. In the US, things are not much better as both parties appear fractured within themselves on how to deal with the illegal Mexicans. Immigration continues to be one of the most divisive issues confronting the main political parties.

In Singapore, the mainstream media has definitely discussed the issue in a balanced manner - pointing to the benefits of immigration while also raising the concerns of some citizens - probably only because it is state controlled. However, a dark thread is definitely emerging in some blogs: some bloggers make the claim that the ruling party is embracing immigration to dilute or even overwhelm the political power of native Singaporeans. Here are some examples I have picked from various blogs.


"VOTE VOTE VOTE VOTE VOTE.....I'm rich and you are not. I voted to keep it that way. You were too chicken to do anything. Right now we are turning so many foreign workers into citizens. In 3 years time, these foreign workers will VOTE the PAP in again. Hahahahaha....I win. You dumb Singaporeans lose AGAIN! hahahahahahah..... "

"But who cares, I suppose there are plenty of China nationals who are perfectly willing to take our places, and the economic machine will trundle on. Current residents don’t matter as long as they can be easily replaced by other units of economic productivity."

"In recent years most ordinary Singaporeans express frustration with GDP growth because it only means higher cost of living for them. They have to learn to see the bigger picture, with a bigger population, corporations especially the GLCs will have fatter profits - that to the PAP govt can only be a good thing. What do you expect the govt to do when its companies cannot grow profits because Singaporeans are unable afford more of their services, import people who can....better still, make them Singaporeans and dilute away the poverty problem. "

"The reason is simple: We are desperate for more Singaporeans -- as opposed to PRs. We need Singaporeans who love the PAP style of government, who vote for PAP and who can fill in those semi-sensitive positions in the defence and various ministries and stats board and GLCs!And what better way to brainwash them than when they are young and impressionable and when we can teach them National Education and the 5 core values via compulsory civics education lesson in primary and secondary school and teach them "the singapore story" through school outings to the Discovery Center (the one in Jurong)?"

"When it comes to elections, these foreigners will of course vote for PAP. After all, all they know is that the government has rolled out the red carpet with open arms at the painful expense of the locals for them."

Whether this is the tip of the iceberg or not, here we have a uniquely Singaporean phenomenon. As if the debate over immigration is not complicated enough, there are some early troubling signs that some Singaporeans are beginning to project their unhappiness with government policies onto immigrants, who are seen as the government's allied constituents. However nasty the immigration debate sometimes becomes here in the UK, there is at least no suggestion whatsoever that immigrants are ganging up with any particular party to marginalise the citizens.

Some of the remarks almost insult the intelligence of immigrants, as if they will become undiscerning PAP voters once they join Singapore. It is too too easy to mix unhappiness with government policies with fear and prejudices against immigrants, as the above quotes suggest. This is highly counter-productive and makes it ever less likely for the society to form some sort of a consensus on how to move forward on this issue. Thankfully, most bloggers remain commendably balanced in their views when discussing the issue of immigration. This is a sense of decency we could all do well to uphold.

The Rise of Nations

This is not a real post, but a description of a computer game that I had spent hundreds of hours playing. Actually, I was so drained after writing the piece on Economic Geography that I had decided to stop writing for a while. But then I saw this post Wurk Wurk that described what seemed to be an interesting game -Warcraft. Praise be due first, Xenoboy is one of the best writers in the Singaporean cyberspace, his prose is so beautiful that it sometimes brings a tear to my eye. I don't know whether Singaporean life is quite so dark, or it is just Xenoboy's morose style of writing.

Anyway, on the topic of computer strategy games, my game of choice is Rise of Nations. I don’t think it is too dissimilar to Warcraft (I have never played the latter, so pardon my ignorance). Like most of these strategy games, the basic idea is to build an economy in order to support an army, which then allows you to expand your territory or defend against invaders.

Instead of peons, there are only citizens in Rise of Nations. One builds the citizens, and they can be employed to farm, mine, collect wood, oil and the various resources needed to build an economy. When there is nothing to do, the citizens will just go into idle mode and sit around. Citizens are not quite so helpless. When the invaders arrive, one can garrison the citizens into forts, from which they will shoot at the enemies around them. Or, one can turn them into militia and fight off the invaders, although they are understandably not as powerful as the regular army.

The second version of the game is called Thrones and Patriots. In this version, you will have to choose your system of government. Each type of governance will give a particular advantage. A despotic government is good in building military units; socialism allows you to assimilate conquered territories faster; capitalism allows you to collect resources much faster; and democracy is best for technological advancement. You choose the type of government depending on the strategy you wish to employ.

But one has to be careful with the choice of government though, it also depends on the characteristics of your opponents. If your enemy is the Mongols for example, be warned that they usually employ the ‘rush’ strategy – attack you very early on in the game, and try to overwhelm you quickly. If you sit back and take your time to build your economy, you can get caught by the Mongol horde and it will soon be game over – “Your nation has been defeated”, damned! But if your opponents are the more peaceable sort, you do have the luxury of time to do more technology upgrades, have more social advancement, and then try to beat your opponents economically.

Admittedly, this game is a little old already. But it is still good fun. Before I forget, in all these strategy games, remember to save every now and then. You can always go back to the previous point if any thing bad happens in the game.

Tipping Point – the Lessons of Economic Geography

This is an overly ambitious post, to tackle a broad range of subjects that had been discussed in Singaporean cyberspace over the past couple of weeks (population, budget, income inequality etc). It would be near impossible to present detailed arguments within each topic, so there will be gaps in some arguments that are left unplugged. The reward that comes from running this risk is being able to see the various arguments in totality, within a single post, and allowing them to be strung around the single theme of economic geography. This post is also my reflection to a recent article by Prof Anthony Venables, who has had a career analysing spatial economics at the LSE.

A Barely Noticed Seismic Shift

Back in 2001, Singapore was in her worst recession. As the factories relocate to China, the whole country was paralyzed with fear. How could we compete against the behemoth? The statistics were frightening - more than a billion consumers, millions of skilled graduates each year with quality to match, at a fraction of our cost. Fast forward to 2006, and Singapore's job creation and stock market were at record highs. What happened? Good policies? CPF cuts? The effect of casinos? Luck? Perhaps.

For me, the single most important shift came almost imperceptibly – a seismic change in the mindset towards seeing Singapore as a global city. This was the all important change in semantics; I only began to appreciate the effect belatedly. When it became clear that we were not fighting sure-to-lose battles against the whole of China or India, but competing against other global cities, the intellectual vision started shifting. As the intellectual vision changed, the fear lifted, and one began to see the options and tradeoffs in ever greater clarity. Do we want to become a gambling society or country? No. But can the casinos help us become a global city? Yes, so it is the correct decision to have them and manage the risks. What was previously an ‘over my dead body’ decision became a no-brainer yes overnight.

The Perils of Being Small

But global cities like New York, London, Tokyo, Shanghai and Hong Kong are all big, thick and dense. A 4-million city is more likely to be an also-ran city. KTM recently wrote about the perils of 6.5 million people in Singapore. Some of the perils, like congestion and environmental stress are real enough. However, the lack of jobs to go around is not one of them. Notwithstanding the demographic argument, there is a greater danger to being small.

Professor Venables sums up the stakes in this game: Concentration of people and firms is good for productivity. Who benefits most from this concentration? The intuitive answer is that since the rich are getting richer, they must be the biggest beneficiaries.

Scratch beneath the surface of this argument and one soon realises that local immobile factors benefit most (obvious once you understand that mobile factors can seek higher returns elsewhere). Singaporeans therefore, particularly those who do not have the option of moving away, gain most from growing the size of an economy that exploits the productivity gains arising from concentration. Fear not when foreigners come to Singapore. Start worrying when they stop coming!

Those 2 percentage points

The denser the network, the higher its productivity. The fact that advantage begets more advantage has important ramifications for policy. What is a 2 percentage point shift from direct to indirect taxation? Not much, if the world is static. But in a dynamic world, a little shift may make all that difference. Prof Venables writes, “whichever country gets slightly ahead will have higher productivity and become the more attractive location for further investment, while the other country will fall behind . . . small initial differences will generate large differences in outcomes.”

It may first be one firm that moves to Singapore. But in coming here, it adds more jobs, incentivises more local workers to train, and encourages foreign talent to come. More firms then come, to access the thicker labour market, and further reinforce the initial small change. Economic theorists call this ‘cumulative causation’, but the idea is in fact a simple one: snowballing effect. Past the tipping point, it becomes an avalanche.

Progress is not without price or pain. Some will find this adjustment difficult. One immobile factor – land – will become too expensive for some locals to bear. As native Londoners worry about being priced out of the property market, Singaporeans look with bleary eyes as high-end condominiums spiral out of reach. The condos used to be objects of aspiration, now they feel like another universe. The rising prices of flats, road use, car taxes, rent, and many components of living costs reflect this space premium. Singaporeans are fed, up with progress, so said Mr Brown. But was he right?

If indeed advantage feeds on itself, slowing down becomes a non-option. If Singapore stops growing, the snowball forms elsewhere. While society should definitely care for its poorest, it should not be paralyzed from moving forward. Remember, when investment stops coming, it is the immobile local factors that suffer most – the highly mobile professionals or the rich will just pack and go to where the party is. We end up hurting those we are trying to help.

A Sticky Situation

EPL fans cannot fail to notice that it is often the newly promoted teams that are relegated soon afterwards. It is always the same four teams that qualify for the Champions League. Again, in a world where advantage feeds on itself, this is not a coincidence, nor should it come as a surprise. The longer a team stays in EPL, or the more it plays in CL, the more TV money and experience it amasses. Soon enough, it becomes quite impossible to dislodge the top teams. Globalisation amplifies this, since the top dogs are getting an ever larger pile of TV money from a growing global audience. Fact of life: Advantage can stick.

Likewise, London has become stickier than ever as a global financial centre, almost impossible to dislodge in the foreseeable future. LSE and LBS charge students an arm and a leg for the privilege to be here. Every one puts up with congestion, poor infrastructure and high rent. But you cannot afford not to be here because every one else is. It is also for the same reasons why Singapore has so far failed to dislodge the US even after pouring billions into bio-sciences. Once the avalanche occurs along a certain path, it is difficult to shove the snow to the other side of the mountain.

Which industries should Singapore try to tip? Where are the tipping points? It is hard to know for certain. Prof Venables acknowledges, “The role of pro-active industrial policy remains intensely controversial.” This was clearly attested to by the public salvos over Singapore’s life sciences effort only very recently.

While Singapore may not yet be a life sciences hub, we are certainly succeeding in other areas. Are the casinos the catalyst? Is it the tax cut? Is it the foreign talent policy? The effect of each by itself may not be exactly quantifiable, or statistically meaningful to GDP growth. But clearly, the more decisions Singapore gets right, the more likely it will trigger the snowball effect. Globalisation has made Derek Wee’s and everyone else’s lives, tougher and more unpredictable. But it also has the potential to entrench Singapore’s location advantage if the correct decisions are made now. If Singapore can forge ahead into the league of global cities, the advantage gained will also stick for some time to come. This is the valuable lesson of economic geography.

Careful with the Gini

It now stands at 0.472 – which is roughly the same as the US at 0.469. But take this number with a pinch of salt, it has some serious drawbacks.

(a) Singapore is a country but it is also a financial centre, there should therefore be no surprise at the greater income disparity. The City of London recently paid out record bonus, and a Hyde Park apartment recently sold for S$250 million, no typo here. On the other hand, London also has some of the most deprived neighbourhoods. When you mix bankers with workers into the calculation, is there any surprise at the Gini outcome? Global city, global disparity. If one could compute the Gini for London or New York, my guess is that it would show far greater income disparity than their respective national averages.

(b) Non-income redistribution is not effectively factored into the calculations. HDB, healthcare, and education policies for example can lead to sizeable fiscal transfers between income groups – since the higher income group pays more taxes but uses proportionately less government services. Social provision of key services matter as much as income differences.

(c) Gini is a snapshot of the income disparity today. It says nothing about social mobility, which I argue has far more important social consequences.

Income differences are essentially market outcomes. Insofar as society is not destablised by the income differences, there is no right and wrong about it unless one prescribes a certain political view. However, there is a real market failure if good people become less productive or fail to fulfil their potential because they are weighed down by their parents’ circumstances. I am therefore arguing that we should care less about present income disparity than whether the next generation of the lower income group becomes trapped there. The more long-term concern is that Singapore may have become a less mobile society compared to a generation ago.

Ninjas and Samurais on the Internet

It was in feudal Japan where the samurai was elevated to the status of the most esteemed warrior. It was also feudal Japan that gave the modern world the stereotype of the ninja, the dark, masked, silent assassin. Where the Samurai fought under the strict warrior code, the ninja was effective but only by stealth and trickery.

With a broad brush stroke, one can classify Singaporean bloggers into samurais and ninjas. Mr Brown (Lee Kin Mun) is clearly a samurai. He has made his views and identity known, battered but unbowed. You can disagree with the man’s views, but you cannot question his honour. There are unfortunately too many ninjas out in cyberspace - anonymous bloggers with views that can be attributed to nobody. Almost stranger than fiction, the mainstream media even reported that PAP was also employing ninja tactics in cyberspace to counter the anti-establishment views. Since Mr Brown has already identified himself, he is certainly standing on solid moral grounds to protest at the double standards.

Xenoboy, probably a ninja himself, recently posted his reaction Deep Throat. His theory was that PAP was using anonymous bloggers to infiltrate the internet community, to plant doubts and prevent dissenters from coalescing around a single view. And more to the point, coalescing around his pessimistic view that Singaporeans were miserable, and that their misery was compounded by a system that failed them. Rather ironically, here we have a ninja complaining about the other side using ninja tactics. More importantly, just exactly how the public could find a focal point in the Singaporean cyberspace of bloggers without names is beyond me. One couldn't even ascertain if the person behind the pseudonym was a Singaporean, a foreigner, a real blogger or a spy. Or it could well be one man writing on twenty different blogs to fan anti-establishment views. Who is out there, how many exactly are there, all unknown unknowns. Ninjas.

Just as I wonder how society can properly interact with a population behind veils, I also find it difficult to imagine how proper discourse can take place when every one takes on a hidden identity. The content and message of the blog are obviously important, but the identity of the blogger is no less so, for with it frames the entire context - background, history, credibility, vested interest.

Signing your name to your views is like making a small investment into social trust, a bona fide token that shows you believe others will match you in openly stating their views, honest people speaking honestly, nailing the colours to the mast if you like. It is therefore a pity that even as bloggers claim they are pushing for a more open society, they are doing so behind hidden identities. A proper democratic discourse needs faces, real views attached to real people, not the Mr Pseudonym vs Miss Anonymous variety. More ninjas cannot be good for debate or civil society.