Mean of Means

The means testing policy has finally been announced. No fanfare. I remembered that means testing was a major issue in the last general elections and the WP was milking the unpopular concept to death. Compared to the roar of the crowd in a muddy Hougang field responding to WP Low's criticism of means testing in teochew, the general silence that followed Monday's announcement by Minister Khaw was deafening. 60% of workers will get the full subsidy, 80% subsidy for Class C beds and 65% for Class B2 beds, with Medisave most likely to pick up the rest of the check (ST 4/3/08). Factor in the unemployed living in properties with annual value of $11,000 or less who will also enjoy the full subsidy, that's 80% of Singaporeans. Even those who earned above $5,200 get 65% Class C subsidy and 50% Class B2 subsidy. If this is not universal healthcare, then what is (don't give me the example of Cuba)? Furthermore, it incorporates the principle of progressive taxation, for essentially, the richer you are, the more you pay to subsidize the healthcare of the poorer.

The sliding scale of means testing is surprisingly narrow and fine, ranging from $3,200 to $5,200 monthly income, with a reduction of 1% point for every $150. I wonder whether such a fine scale is meaningful at all, or does it just fulfill some bureaucrat's numerical aesthetic sensibilities. Or maybe it is put in place to affirm the very concept of means testing, so that future governments would have the option of stretching the scale. WP Low's question of how long the government would hold to the subsidy levels is a fair one thus, while Minister Khaw's answer that the scale would be adjusted "as the economy grew and income-level profiles changed" is vague, to say the least, though Khaw promised "so let's see how we can share [the health subsidy] as fairly as we can". In other words, it seems politics would decide, which is fine by me, as I would rather Singapore be a democracy served by technocrats than the other way round.

The only substantial whimper came from NMP Siew who called for per capita family income to be used instead so that Singaporeans with dependents won't be penalized. Khaw replied it is too tedious, time-consuming and intrusive - intrusive because medical social workers would have to probe into household income and employment situation. Right, this government of ours is worried about invading our privacy. Surely, the amazing auto-inclusive IRAS database could be used to call up the data and calculate the per capita household (not family: try making sense of the ridiculous tree diagram of a three-generation family of 27 members that is the fantastical product of some journalist's fecund mind in ST Review 6/3/08) means immediately. But there is a point here, for it may be intrusive for some people and this put our tax information at risk of being circulated. Besides, I am hard-pressed to imagine a breadwinner earning $5,201, who would probably have no more than two children on the average with a working wife as is largely the case according to statistics, going broke because the 65% Class C subsidy is not enough and he forgot to buy Medishield.

There are gaps in the almost-universal healthcare system, or what Minister Khaw calls the 3Ms. The first concern is low-income self-employed and casual workers, many of them aged aunties and uncles, who are not regular or sufficient contributors to Medisave. It is hard to part with tens of dollars a month to put into a piggy bank that demands you to fill in stupefying forms to take out a cent when one earns a six-hundred-dollar salary. Perhaps the setting up of more cooperatives (ST 5/3/2008) for casual-workers would solve the problem as these cooperatives can cut out the many layers of middlemen taking a cut of the outsourcing pie. These cooperatives can bid competitively for outsource contracts and channel middlemen-profits towards medical insurance funding. Another concern is the 23 percent of Singaporeans who don't subscribe to Medishield; time perhaps to activate the grassroots for real productive work than searching for limping terrorists. The third concern is the middle-class who should top up their Medishield with private insurance riders for Class A and B1 beds; this I care insofar because when they don't get the riders to save a penny, they would have to mingle with the masses in C and B2 beds and stick their fingers into the subsidy pie, which is fine if they don't go whiney about the threadbare conditions and suspicious chicken soup while increasing the mean of healthcare costs for the rest.

Private-but-not-quite-Public

Everyone's trying to do a capitalism-with-a-happy-socialist-face nowadays. Of course, the free market seems destined to be here to stay, so is the gaping income gap. Welfare states around the world are enacting reforms to stay competitive and yet take care of citizens, Singapore not exempted. The problem arises when we have public goods but private means of provision. Take transportation in Singapore, and I am not talking about middle-class whining about ERP. I've gotten into countless arguments with my friends, all avid drivers, because I'm an anomaly of a driver who supports the COE and ERP system with complete fervor. My grouse is that the taxation of drivers is not progressive; revenues should be channeled to improving the public transportation system for the masses. But the public transportation system has already been privatized and, thus, cannot be subsidized. Or so it seems.

There is too little competition in a cozy market dominated by SMRT and SBStransit for the privatization to make sense. And thus, there is little incentive to improve efficiency. In any case, since the corporatization of government boards and companies has led to their highly efficient operation, there is little distinction between public and private in terms of efficiency. Besides, the government had determined fares with a ridiculously uncompetitive cost+x formula, thus passing the cost to commuters and giving the privatized transport companies no incentive to cut costs. As a result, the government earns from drivers, the transport companies earn from commuters. All this is going to change, as Transport Minister Raymond Lim announces the plan to introduce more competition and a new fare cap policy, with direct governmental support on transportation given to low-income families (ST 7/3/08). This will be an interesting move, albeit contradictory, to liberalize and institute price controls at the same time. I hope that that the latter doesn't scare off would-be competitors and leave us with the dancing SMRT and SBStransit duo, who then end up lobbying that the fare cap be determined by the old cost+$$ formula, so we all end up back in the limbo between NS24 and NE6.

Since I criticized the government's green energy policy a couple of weeks ago, it has been announced that the government is setting up a $20 million fund called the Solar Capability Scheme to give grants to offset the cost of integrating solar panels into new buildings attaining a certain level of Green Mark standard (Today 4/3/08). This, it seems, is as far as the government would go in terms of subsidies, and MTI Minister of State S Iswaran explicitly rejects feed-in tariffs, where the government would pay a higher price to buy surplus renewable energy compared to conventional energy. Subsidies, Minister of State Iswaran says, would "distort the market in terms of production and consumption decisions". Yes, I agree, but that's assuming we have consumption decisions in the first place; the utilities sector is the same as the transportation sector. Second, the subsidy logic for feed-in tariffs is linked to the high start-up cost of installing solar panels, which is the same logic as the Solar Capability Scheme. Besides, feed-in tariffs would make better sense than giving outright subsidy grants since it gives the government the ability, like the transportation fare cap policy, to flexibly manage the incentives for both the renewable energy producer and conventional energy producer to cut costs.

Entrepreneurial Jelly Beans

Brief thoughts on the decision to have a small liberal arts college to be affiliated with NUS or SMU rather than to have it as the fourth university, making way for a fourth varsity focused on engineering, design and business. Education Minister of State Lui Tuck Yew cites Stanford University's Institute of Design as the model (ST 5/3/08). Singapore has been looking to Stanford and Silicon Valley for quite a while now, and this caps the mimicry. Today newspaper is a bit melodramatic, its analysis by Loh Chee Kong offered the title "How to produce a Steve Jobs?" (5/3/08). Loh makes a good point by warning that the fourth varsity should not repeat the mistake of the other universities, which tend to focus on business plans to develop entrepreneurial thinking and spirit. He quotes Prof Allen Gibb on his observation that business plans "were not invented by entrepreneurs but by banks, accountants and other professional service providers". The formula, Loh argues, is entrepreneurial values + strategic thinking capacity + intuitive judgments made with limited information. The learning process is dominated by "doing, solving problems, grasping opportunities, copying from others, making mistakes and experimentation". This may very well described any inventive enterprise and ... stockmarket investment.

I'm intrigued with this Economist article here on the anomalies of otherwise efficient stockmarkets filled with rational investors seeking to make the best returns. It describes an old experiment that asks people to estimate the number of jellybeans in a jar - the average estimate is usually better than the majority of individual guesses. But when the diversity of the collective is taken over by "groupthink", then the efficient wisdom of the collective average also breaks down - when investors no longer guess the number of jellybeans but what other people's guesses might be. So, this is my counterpoint to Loh and Prof Gibb, your formula is way too complicated. The situation in Singapore is very simple and Occam's razor applies. We are not focused on the jellybeans but are always second-guessing each other's business plans concerning the jellybeans. It seems we need a diversity of educational tracks, to create a diversity of jellybean guessers, and the fourth university, a liberal arts college and a plethora of specialized schools would do the trick. But not if the graduate entrepreneurs are all hooked on getting their business plans funded by a central government agency which would then impose the groupthink. We need a liberalized venture capital market not a liberal arts college. Gosh, I don't believe I just proposed such a neoliberal view unbecoming of my left position. Alright, then slap a venture capital gains tax to fund education programs for the poor.