Yesterday (10 Jun), during his holidays in Australia, PM Lee was interviewed by Australia’s ABC Radio National. He told ABC that globalisation can create jobs and raise salaries for Singaporeans.
PM Lee sees globalisation as a creator of jobs and booster of workers’ wages. This is because as a globalised nation, “we can play a role which is servicing the region, which is servicing the world”.
In doing so, “we can have jobs in Singapore which are better paying for a wide range of our people,” he said.
However, Nobel laureate Joseph Stiglitz doesn’t see it that way. In an article he wrote last August before Trump became the President, he argued that globalization needs to be tamed.
At the time, he criticised the 2 economic initiatives of President Obama – the TPP between US and Pacific Rim countries (which include Singapore), and the TTIP between the US and EU – are “moves in the wrong direction”.
Prof Stiglitz saw problems managing globalization 15 years ago
Fifteen years ago, Prof Stiglitz wrote a book entitled, ‘Globalization and its Discontents’, describing growing opposition in the developing world to globalizing reforms. He observed that despite being told globalization would increase overall well-being, the people in developing countries were hostile to it.
And now, “globalization’s opponents in the emerging markets and developing countries have been joined by tens of millions in the advanced countries,” he noted. Opinion polls carried out by Roosevelt Institute where Prof Stiglitz is also the resident Chief Economist showed that trade is among the major sources of discontent for a large share of Americans. This was before Trump was elected as President.
“How can something that our political leaders – and many an economist – said would make everyone better off be so reviled?” he asked.
Untamed globalization causes stagnation of wages and global inequality
The globalization advocates would argue that people are indeed better off but they just don’t know it. Their discontent is a matter for psychiatrists, those neoliberal economists said.
“But income data suggest that it is the neoliberals who may benefit from (psychiatric) therapy. Large segments of the population in advanced countries have not been doing well: in the US, the bottom 90% has endured income stagnation for a third of a century,” Prof Stiglitz countered.
“Median income for full-time male workers is actually lower in real (inflation-adjusted) terms than it was 42 years ago. At the bottom, real wages are comparable to their level 60 years ago. The effects of the economic pain and dislocation that many Americans are experiencing are even showing up in health statistics.”
Trade in goods is a substitute for the movement of people, Prof Stiglitz noted. For example, importing goods from China – goods that require a lot of unskilled workers to produce – reduces the demand for unskilled workers in Europe and the US.
“This force is so strong that if there were no transportation costs, and if the US and Europe had no other source of competitive advantage, such as in technology, eventually it would be as if Chinese workers continued to migrate to the US and Europe until wage differences had been eliminated entirely,” he added.
“Not surprisingly, the neoliberals never advertised this consequence of trade liberalization.”
Thus, the failure of globalization to deliver on the promises of politicians has undermined people’s trust and confidence in the “establishment”.
Strong social-protection measures needed
Prof Stiglitz argued that if globalization is to benefit most members of the society, strong social-protection measures must be in place to help the affected.
“The Scandinavians figured this out long ago; it was part of the social contract that maintained an open society – open to globalization and changes in technology,” he cited the Scandinavia countries as examples.
And the advanced countries could have introduced policies to ensure that the gains were widely shared by most members of society, he said.
But instead, Prof Stiglitz observed that advanced countries are pushing for policies that restructured markets in ways that increased inequality and undermined overall economic performance; growth actually slowed as the rules of the game were rewritten to advance the interests of banks and corporations – the rich and powerful – at the expense of everyone else. Workers’ bargaining power is weakened. Financialization continues apace and corporate governance worsens.
In conclusion, Prof Stiglitz said that the problem was not globalization, but how the process was being managed.
“Unfortunately, the management didn’t change. Fifteen years later, the new discontents have brought that message home to the advanced economies,” he noted.
Problem with PM Lee’s solution to globalization
In Singapore, PM Lee’s solution to those Singaporeans affected by globalization is “training, skill upgrading, skillsfuture”.
He launched the so-called skillsfuture initiative to provide “Singaporeans opportunities to develop to their full potential”. He created the SkillsFuture Credit, which allows Singaporeans to get an initial $500 of credit to spend on training programmes so as to upgrade themselves.
PM Lee: SkillsFuture provides Singaporeans opportunities to develop to their full potential, whatever their starting…
“At the heart of our economic transformation is the need to ensure that Singapore continues to offer the right jobs, our workers have the right skills, and there is a good match between the two,” he said.
So, looking at the SkillsFuture website, one might ask that how does attending a $285 1-day time and stress management course or a $185 advanced accounting course help a Singaporean affected by globalization to get a new job?
How is globalization boosting our workers’ wages by upgrading themselves with such courses? How are we servicing the world with such courses?
Instead, for example, we are finding foreigners on tourist visa able to get jobs easily here like this Briton, depriving our own people a chance to get the job:
“A Briton writing in a Forum for Expatriates explained how he came to Singapore with the explicit intention of securing a job, and how he got one two months after arriving here on tourist visa. He said that his Employment Pass was approved recently and that he would be starting his new job on 12 June. The foreigner was enquiring at the Forum if he could go on a short trip out of Singapore for a holiday with his wife before starting work.”
Of course, PM Lee might just argue that the Brit has got the skills for the job and we don’t.
Prof Stiglitz a true economist while PM Lee a mathematician
Prof Stiglitz is truly a renowned world economist.
He is the recipient of the Nobel Prize in Economics in 2001 as well as the John Bates Clark Medal in 1979. He teaches at the prestigeous Columbia University and co-chairs at the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD. He is the Chief Economist of the Roosevelt Institute and a former SVP and Chief Economist of the World Bank.
During the Clinton administration, he was also the Chairman of the US president’s Council of Economic Advisers, advising President Clinton on US economic policies. The federal budget went into surplus during Clinton administration.
Meanwhile, PM Lee is said to be very good at Mathematics according to the Cambridge professor who taught him. So, who would you like to believe as far as issues of globalization are concerned?
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