The Limits To Growth

Finance Minister Tharman in his recent budget speech spoke of the need for growing the economy in order to forge an inclusive society. By that he means that he hopes the economy can grow enough so that the government can collect enough through operational revenue (rather than dipping into our reserves) to fund expanded social spending. All well and good provided that growth comes from productivity with EXISTING indigenous manpower resources and not by importing more cheap foreign labour.

Economic growth that can be only be sustained by the increasing use of cheap foreign labour is the EQUIVALENT of living beyond our means by getting into debt, something which Mr Tharman himself had cautioned against when replying to Mr Low Thia Kiang with regards to spending on social needs using as an example the current debt situation some European countries find themselves in today.

Debt comes with interest costs. When you need to borrow more debt to pay your existing debt and interest you've gone into loan shark victim territory. Similarly, economic growth from cheap foreign labour comes with costs. If you need to import yet more cheap foreign labour in order to sustain economic 'growth', you've entered into the economic equivalent of loan shark victim territory.

To put it in simpler terms: It's like burning your furniture to keep warm. But by the time you need to burn down parts of your house to do so, it's game over. We are already burning the furniture in our current economic situation. Unfortunately for us, the government is standing in the corner sharpening an axe while furtively glancing at the roof.

DPM Teo Chee Hean will be in charge of a White paper study on 'sustainable' population. I would like to think that the study will be impartial, but I believe the conclusion to that paper has already been written. All that is left is to curve fit the data to support that conclusion. Why? Late last year, a Channel News Asia trailer text quoted him as saying: "Singaporeans can STILL enjoy a good quality of life DESPITE an increasing population" (my emphasis in caps). You can draw your own conclusions from that!

It is easy to see why the government wants a larger population. They need a larger working population to earn tax revenues to support an increasingly aged population. But what they fail to notice or choose to ignore is that this larger population base will in due time become old too. They in turn will need an even larger population base to support them in turn. This is obviously unsustainable. But by then, the current ministers will have retired and it won't be their problem. They will already have taken their millions and retired to someplace less crowded like Australia for example... Too bad for you and your children!

The Limits to Growth is a book first published in the 70's and contains research results on the sustainability of economic growth. In every scenario (except the most optimistic and unrealistic model), their results predicted economic collapse. It should be REQUIRED reading for every member of the cabinet. And given the way the world has acted in discussions on climate change and the need to control carbon emissions, we are all pretty much screwed.