Managing Diversity In Singapore: Policies And Prospects by Mathew Mathews Wai Fong Chiang

Author:Mathew Mathews, Wai Fong Chiang [Mathew Mathews, Wai Fong Chiang]
Language: eng
Format: epub
Tags: Nonfiction, Social & Cultural Studies, Political Science, Government, Public Policy, Social Science, Anthropology
ISBN: 9781783269556
Publisher: World Scientific Publishing Company
Published: 2016-05-11T04:00:00+00:00

CONCLUSION

We have found that both life satisfaction and satisfaction with financial situation were positively correlated with income in Singapore. The middle-income group was found to be squeezed in terms of national pride and sense of belonging (i.e., seeing oneself as part of Singapore) based on a quadratic formulation of income steps. Why? Singapore and other parts of the world have seen rising income inequality and especially very skewed income distribution at the very top end, top 1% or even top 0.1%. The more recent effective strengthening13 of redistribution policies of the Singapore government could have generated the perception that the burden of redistribution falls more heavily on the middle-income group rather than the very top income group as the latter group is always welcome anywhere due to international competition for talents or top professionals — resulting in not just a middle income squeeze in national pride and sense of belonging, but also the view that income equalisation by the state is an essential characteristic of democracy.

Interestingly, the middle-income group had benefited from the redistribution policies in Singapore as documented in Shanmugaratnam (2015), and hence there could be a misperception problem in 2012 when the World Values Survey was conducted, or when the benefits of redistribution have yet to trickle down to the middle income group as perceived in 2012. If it is a misperception problem, information could be released more frequently and more comprehensively to the public and to the researchers for analysis and constructive debate based on evidence.

Another possible reason for the middle income squeeze is the perception on social mobility. Alesina, Di Tella and MacCulloch (2004) showed that inequality affected Americans who were rich negatively in terms of happiness because Americans perceived high social mobility; Europeans who were poor were affected negatively by inequality because Europeans perceived low social mobility. The middle-income group in Singapore might perceive lower social mobility (read as upward mobility) than the lower income group while the upper or very top income group may perceive low social mobility (read as low downward mobility for them). Singapore may face diminishing social mobility due to maturing of the economy towards the steady state of an advanced economy, liberalisation of the education industry, and skill-biased parental influence, as argued in Ho (2010) and shown to be as immobile as the United States in Ng, Shen and Ho (2009). Some of the factors leading to diminishing social mobility could have been curbed in more recent years due to government policies strengthening social mobility in Singapore.

As intergenerational (or upward) mobility may be diminishing, government policies should continue to focus on providing opportunity for the middle-income class and their children for both economic and political reasons. The middle class forms the core of domestic demand and contributes to the stability of the economy. Overly taxing the top or very top income group (minority) to subsidise the middle income group (majority) is not recommended as such a policy will lead to huge budget deficit and national debt. Instead, the middle-income group

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