Rising Inequality = Social Unrest?

Rising inequality is often attributed to the many social unrests that China has to tackle recently. But is this the only reason for the spike of social unrests?

Could the increase simply be due to a more open government that is willing to share news of ongoing unrests? Or rather, due to more areas in China being more accessible to foreign journalists?

Could it also be due to people that are more aware of their rights as citizens? Or simply as an act to reject the current norms of interactions between the government and its people?

Have We Arrived?

Despite the debt issues that continue to plague both US and Europe, Asia has pretty much rebounded to the point that many are experiencing overheating economy and high inflation. Presented with this stark difference, many people have made statements, which basically say that US and Europe no longer power the global economy. But are these statements entirely true?

I think as much as Asian leaders and people hope to be less reliant on US and Europe, we have to admit that our economies are still very much export-dependent. Although there is no doubt that the stimulus put in place after the 2008 crisis as well as policies designed to boost domestic demand play a part in the rebound, recovery in US and Europe also do so. If we look at the “Factory Asia” phenomenon whereby many Asian countries send parts to China for final assembly before products are being sent to the end markets, we will find that there is a 3-month lag in China’s imports from rest of Asia and US’ imports from China right around the time when Asia started to rebound. What this tells us is that once positive signs were observed in US, someone presumably called their suppliers in China to make orders. China then imported the necessary parts from the rest of Asia, assembled the products over a 3-month period and then sent them over to the US.

From this perspective, these statements do not fully reflect the reality on the ground and although we are moving towards such an environment, we have not arrived.

Freedom and Growth

The long-running downturn in the Western world and the resilient Asian economies, many of which are nominally democratic have inadvertently churned out the idea of political freedom or economic growth. This is most definitely a very foreign concept in the minds of many people in the West. Indeed, for decades and even centuries, the West has showed us that the two can co-exist and in fact, quite possibly complement each other. There is no doubt that we should not play down Asia’s achievement but is it too soon or is it even right to make political freedom and economic growth mutually exclusive?

At the heart of this idea is the belief that something productive would have been achieved as opposed to time wasted in endless negotiations among politicians in a democracy. Of course, here I am assuming a situation where no single party hold a majority in a parliament and a consensus among the relevant players need to be reached. A very recent example is perhaps the current impasse in US about raising the debt ceiling. Going by the argument and the potential impact that a default may have on the global economy as a whole, would the US have been better off if it abandons democracy altogether?

I think we need to take a step back and ask ourselves what democracy is all about. No doubt economic growth is important but in our quest for this growth, we seem to have been blinded and forgotten what democracy is all about to the extent that we made the two mutually exclusive. It is about collective decision-making. It is about taking into consideration the views of different people, different segments of the society. Surely, it does not imply that it impedes economic growth at any point in time. In fact, inclusivity could have resulted in a more balanced growth. Afterall, who are we to judge that our decisions are the best for the nation? Or superior over the others?

Even if at the end of the day, political freedom and economic growth are indeed mutually exclusive, in reaching a consensus, isn’t it worthwhile to sacrifice a bit of economic growth?

Should the Government leave the provision of medical services to the private sector?

For a while, there have been debates on whether the Government should leave the provision of medical services to the private sector. With spending cuts and debt reduction in the horizon for many developed economies, this issue has once again caught the interest of policymakers.

In my opinion, there are certainly several advantages for public provision of medical services. Letting the market does the work has the potential of causing less attention to be put in areas that are important from the perspective of a nation but less so in the eyes of the revenue-driven private sector. An example is infectious and communicable diseases. We are all aware of the crucial role played by the communicable disease center (CDC) when SARS struck in 2003.

Public provision of medical services also means that the decision to site medical facilities in certain locations are unlikely to be affected by economic factors such as whether the flow of patients will generate enough revenue to cover the cost or the economic status of the people in the surrounding areas. Additionally, by keeping fees affordable, public provision acts as a check to the private sector so as to prevent them from charging exorbitant fees that are out of reach to some segments of the society. In essence, public provision results in more equity, which I think should be the case for any society when it comes to basic medical services.

Obviously, public provision is not a silver bullet and it has its disadvantages as well. Many people have simplified the debates into equity versus efficiency. As public provision is not revenue-driven, services may be below that provided by private sector. While I have not experienced anything in Singapore that makes me question the efficiency of the public medical services, this does not mean that status quo will be maintained in the future. In the UK for example, patients have to wait for days, weeks and even months before they meet their National Health Service (NHS) consultants. Specifically for UK, the fact that patients do not have to pay consultation fees means self-censoring is non-existent and visits to local clinics appear to be their first course of action. This lethal combination of poor efficiency and waiver of consultation fees has led people to question whether equity has saved more lives or instead, caused more deaths.

Of more relevance to the current issues is the view that Government resources are limited. Any savings that can be obtained through privatization of medical services is a good thing as these resources could be used for other purposes, which the Government deemed or justified to be more important.

Likewise, leaving the private sector to provide medical services is not a silver bullet. While the disadvantages of public provision can be overcome, private sector by itself will not embrace the reasons why medical services have been mostly public driven in the first place.

A sensible model for provision of medical services is perhaps a combination of public and private sector whereby equity and efficiency can co-exist and patients have the flexibility to choose her most preferred type of services depending on her medical conditions at that point in time.

This compromise may not be a novel idea to many people. Afterall, Singapore’s healthcare sector already has a good mix of public and private players. In other words, this model has been achieved. To this, I think I would add the word ‘to a certain extent’ because this is certainly not the end of the road. There are still many rooms for improvements pertaining to this synergy. In the long run, the Government may want to pre-empt a situation whereby Singapore is presented with the healthcare dilemma faced by many developed economies now. Coming from the perspective of the Government, the more relevant question is how the private sector can be given a bigger share of the pie without affecting too much the basic tenet of public provision.

Several options can be explored to achieve this outcome. Through its land planning, Government can effectively pinpoint the best locations to site medical facilities. Instead of choosing locations based on revenue considerations, private sector has to choose designated locations. In doing so, the Government has ensured that people in different parts of Singapore are not disadvantaged when it comes to obtaining medical services. A good example is the Khoo Teck Phuat hospital.

Related to the issue of location is consolidation. In a further attempt to cut down spending, the UK has decided to close down several medical facilities that are deemed to be replicative. However, the huge distances across some facilities means that consolidation is not a viable option as it will affect provision in areas where the facilities have been closed down. In the context of Singapore, this is less of a problem because its small size and improving transport infrastructure essentially allow for more flexibility.

One worry with regards to consolidation is the strain that it will put on the remaining public medical facilities. To overcome this issue, regulations targeting both the patients as well as the private sector should be put in place. Pertaining to the patients, self-censoring behaviour can be instilled through for example the increase in the consultation fees. Of course, the possibility of exemption should always be in place to ensure equity. With regards to the private sector, the Government can establish a list of regulations that potential players should abide to if they win the tender to operate. One example is the requirement to allocate a certain percentage of their practice time to patients opting for public provision.

The options mentioned above are definitely non-exhaustive. Most importantly, their applicability in the context of Singapore should be thoroughly studied before they are implemented.

In conclusion, the issue on whether the Government should leave the provision of medical services to the private sector is a multi-faceted one and likely to be driven by the issue of the moment. Until now, no single country can claim that they have the perfect answer and debate by the two camps is likely to continue.

The unintended outcome of Japan’s successful nuclear PR

About two weeks ago, I read an article on Japan’s nuclear safety myth in NYT. In essence, the writer was talking about the amount of resources that are spent on convincing the public on the safety of using nuclear energy. The relevant authorities and/or the companies operating the power plants appear to spare no effort in achieving this goal to the extent that they created information centre that looks a lot like theme parks with characters to appeal to children.

The interesting part of the article is its argument that these public relations exercises are so successful that they start to have the same effect on the planners in addition to the general public that they intend to convince. In other words, people who are involved in the exercises begin to believe that what they are selling to the public is true. As a result, even the authorities and/or companies begin to become complacent and neglect the need to improve safety protocols, infrastructure, etc. To me, this is something extraordinary because you end up being enslaved by the very information that you create.

This brings me to a question about the circumstances on how this may happen considering that we are humans endowed with the ability to enquire. In this case, the original reason for having these exercises appears to have been lost in time, either accidentally or deliberately. One may think that sometime in the process, people who knew the original reason were no longer involved and when they left the scene, they somehow did not manage to pass this on to the subsequent planners. While this information blackout is ideal from the perspective that if you want to convince others, you jolly well convince yourself first, it may have undesirable consequences. One wonders whether the Fukushima incident would have been better handled or even prevented.

Unipolar or bipolar?

My father once told me that when the world was bipolar, Indonesia had one of the strongest military in the southern hemisphere. Then, I could not understand why that was the case because I was born and spend my entire life in a unipolar world. Recent events however have made me understand things better.

To put it quite simply, you cannot play one power against another in a unipolar world but can do so in a bipolar world. When one does not want to provide you with assistance, you always have the alternative option of engaging the other. The lack of military assistance provided to the East Timorese by the Australian has led them to request for assistance from China. In a unipolar world, there will be no gunboats and army barracks for the East Timorese. Additionally, in light of the delay in the funding promised by several developed nations to the Libyan Transitional National Council, one wonders if the ongoing visit by Mustafa Abdel-Jalil to China has got anything to do with this.

Whether the desired wishes of countries are good or bad remain open to debate. What is clear is that these wishes are more likely to be fulfilled in a bipolar world.

China’s migrant workers: In search of prosperity or is it?

In search of better lives for themselves and their families, many people who live in rural China become migrant workers and work in large cities. While the practice of rural-urban migration is common across countries, the presence of traditional registration system that is still operating in China meant that it is not possible for the children of these workers to follow their parents to the cities because they will not be able to have access to services such as education and healthcare. As such, families break up and the children are usually taken care by the elderly in the villages.

At first glance, this seems to be a perfect arrangement. After all, it is unlikely that one’s parents will ill-treat one’s children. With this in mind, migrant workers move to the cities with the sole objective of earning enough money that they hope will get their families out of the cycle of poverty.

But is this true? Perhaps not. While money is important, it is not the only ingredient to get out of the cycle. In the words of an economist, money is a necessary but not a sufficient condition. While money can grease your way out, you need to have the capabilities and the right qualifications to be able to obtain jobs that can get out of your subsistence condition.

When migrant workers leave their children, they inadvertently take parents’ care away from their children and this is not really wise to do when children are in the stage of growing up. This may then affect them psychologically and start to have collateral effect on their education for example. With no good qualifications, the entire cycle seems likely to repeat itself for the next generation.