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Friday, 10 May 2013

More thoughts on Model Price/Wage Fixing - A further reply to the Competition Commission

The Competition Commission responded to an interview with me about the price-fixing decision against the Association of Modelling Professionals of Singapore.

The interview is here:

The ST Forum response is here:

I have always found public battle of words on the pages of Forum pages unseemly and have chosen not to write in a reply.

I will blog a reply here insteaad.

I have said what I wanted to say in the interview - that the goals of the association was to raise wages, which we succeeded in. It was a pity that it was interpreted as price-fixing.

Two further points in response to CCS's letter.

First, on commission. CCS stated that the higher wages also increased our commission. This is a true but trite fact. Agency commissions are a fixed percentage that did not change; and given the 75-25 split to the model, the bulk of the wage increases went to the models.

More importantly, if the agencies really wanted to price-fix, they would have colluded to fix commissions, not wages. In fact, US agencies colluded to fix commissions and were taken to court in a class-action suit and also investigated by the Anti-Trust authorities there. This was something the Singaporean agencies did not do.

Secondly, CCS said that there was an "appreciable adverse effect on the market."

The question is: who makes up the market? Who was adversely affected?

The answer will surprise readers.

The modelling association was found guilty specifically of fixing 'prices' (wages to models) for fashion shows and fashion shoots.

The major client of fashion shoots are: SPH and Mediacorp.  The government-linked, Temasek-owned media duopoly. 

In a duopoly, the wage/price setting power lies with them, not the supplier of labour - in this case, models.

For years, the models have been paid a pittance until the association bargained for higher wages.

So who was adversely affected by the price/wage fixing? Answer: the 2 big magazine companies who can very well afford to pay more per hour to these young people.

Who are the biggest clients of fashion shows?

The two biggest employers of show models were the Singapore Fashion Week and the Singapore Fashion Festival.

Who are behind these two national events?

The Singapore Fashion Festival is backed by the Singapore Tourism Board, and the Singapore Fashion Week by IE Singapore.

Yes the Government.

So who was adversely affected by the rise in fashion show wages (prices) - Government Agencies.

Therefore in summary, the biggest 'clients' that were 'adversely affected' by our 'price-fixing' (which increased the wages of poor young people) was not some poor man on the street, but government owned media monopolies and government agencies themselves.

Enough said.

Thursday, 9 May 2013

The PAP and Unfair Elections: Is the ruling party guilty as charged?

On the morning after the Malaysian General Elections, I posted a status update on my Facebook Page saying “I hope people who say the PAP is unfair now have a better reference point. Today you know what unfair is”. This elicited a flurry of rebuttals, many indignant that I was trying to excuse the PAP just because the Malaysian elections are allegedly more unfair; some used all sorts of inappropriate analogies of crime to basically argue that one greater crime should not absolve a lesser one. 

This would be true if I thought the PAP was unfair or even worse, complicit in fraudulent electoral behaviour.

I believe no such thing.

My point was the contrary - if the allegations of electoral fraud in Malaysia were true, then we have a clear example of what political unfairness is, because in my opinion, much of the allegations of electoral fraud or unfairness towards the PAP are completely unjustified.

One shining light amidst all the usual nasty comments, personal attacks and fake FB accounts were rebuttals from a group of young undergraduates, in particular a Mr. Lim Jialiang who was upset enough to post a full, well-written FB rebuttal note that can be found here:

I am extremely happy that we have in our youth today people who have a strong sense of idealism and fairness. In fact, having lived in several countries, I think that our young people have some of the strongest notions of equity and fair play in the world, which ironically may put them at a disadvantage in the wider world where such high standards are seldom adhered to. But I digress.

The point is that most of the sense of unfairness is to me completely misplaced.

Take GRCs for example. This is one bugbear that I have never ever understood. One can question the motives behind the GRCs – whether it is to ensure minority representation as the PAP says, or to introduce weaker MPs on the coattails of Ministers as their opponents allege. But regardless, the rule to contesting a GRC remains that one has to put together a team of 3 to 6 candidates, including an ethnic minority person.

I do not see for the life of me how this rule could possibly be unfair to the opposition, unless one further assumes that the opposition is too weak to put a good team together to compete with the PAP.

There is absolute nothing to stop the opposition from forming a team of good candidates and take down a GRC, including heavyweight ministers, as the Workers Party has shown in 2011 in Aljunied GRC.

More, it is my opinion that the experience of 2011 has shown the PAP that running as a team means you either win as a team or lose as a team, and you could win 5 seats in one fell swoop but also lose everything. Further, even if some argue that heavyweight ministers make it harder to compete (which may not be a bad thing as in order to take them down, the Opposition team also needs to be stellar), I believe that a chain is as strong as its weakest link.

It is my contention that if the weakest member of the GRC team is sub-par, the whole team should be voted out, even if the anchor minister is none other than the Prime Minister. If the anchor Minister makes a bad judgement in choosing his teammates, and the opposition team is stronger, then the electorate should vote for the latter, regardless if the PAP team is helmed by an important Cabinet Minister.

Absolutely nothing unfair about that.

People should really stop complaining about GRCs being unfair, because there is nothing inherently unfair about requiring each party to field a team of 5 or 6 strong candidates to compete together – the same rule applies to both the PAP and the opposition. In fact, Aljunied 2011 has taught the PAP enough of a lesson that I predict there will be smaller GRCs in 2016, purely because the PAP does not want to risk losing more Ministers to an opposition A-team.

Electoral deposits are widely accepted in many established democracies. What varies is the amount and the percentage of votes needed to take the deposits back. On the most basic level, this rule is fair given that it equally applies to the PAP as well as the Opposition – we do not have the PAP paying a lower tariff or needing a lower vote count to get their deposit back. Therefore, one can only argue that it is unfair if we make two further suppositions: firstly, that the Opposition is too poorly funded to corral the requisite deposits. Second, the Opposition should somehow play with a handicap such that they should be held to LOWER standards than the PAP, such that their vote-count hurdle should be lower than the PAPs.

I find such arguments to be absolutely insulting to the current major Oppositions parties in Singapore. Firstly, what I consider to be the two major Opposition parties, the SDP and the WP have an established enough membership base to be well-funded enough to raise the deposits required. More importantly, these deposits are returned once the candidate(s) receive above 12.5%, a level that is quite in line with other democracies such as the UK. For a major opposition party to lose its deposit, whatever the amount, is considered an embarrassment in most countries, and something I do not see happening to the SDP and especially the WP in 2016.

The next three most common complaints are slightly more controversial.

Firstly, let’s look at the tying of upgrading and estate improvements to election results.

Such tactics are commonly known as pork-barrel politics. Wikipedia gives this definition: “Pork barrel is the appropriation of government spending for localized projects secured solely or primarily to bring money to a representative's district.”

In the context of the US, this would mean for example, a Republican federal government giving priority of federal funding to Republican states; in the context of the UK, this would mean, for example, a Labour Government giving priority of government funds to Labour town councils.

Why I think it is controversial is because there is no reason to think that just because everybody is doing it, it is okay.

However it is my contention that it is precisely democracies that practice pork barrel politics as politicians have to win votes (if you are a one party dictatorship you don’t), and it is reasonable to expect them to keep promises to the people who have supported them, rather than those who did not. Is it not a bit strange if, after a General Election, the winning party decides to spend money first on the constituencies who did NOT vote for them rather than on the people who agreed with their vision and voted for it? If they did this, what exactly is the incentive for its supporters to vote them in the next election? If I voted for you, because I agree with your vision, but you put me at the bottom of your priority list and instead decide to reward those who rejected you, why should I vote for you the next time?

The tying of upgrading and estate improvement is thus not only commonly practised in many developed democracies, it is fair – you make promises, and you keep them to people who support you. The PAP in this instance in my opinion is not guilty of unfairness, but rather of being overly vindictive. Pork-barrels only work for so long; the people who are denied the ‘pork’ after a while may grow so resentful that they may decide to reject you even if they go ‘hungry’. This I feel is what happened in Hougang and the resentment against the PAP there is so entrenched after years of being victim of petty and vindictive politics, they will vote against the PAP even if they ran against Mickey Mouse.

The final most common complaints are related: Gerrymandering and the lack of an independent election commission. Again, the same points apply as pork-barrel politics: Gerrymandering is common in systems where parliamentary seats are allocated by geographical areas, and Singapore is not the only developed country without an independent electoral commission. 

Gerrymandering was arguably invented in America when Governor Elbridge Gerry re-districted Massachusetts in 1812 to benefit his own Democratic Party. It is still a practise common in the US and the article on Gerrymandering on Wikipedia gives several good examples of Gerrymandered districts in the US still existent today.  

The most blatant examples of Gerrymandering in Singapore have been in my opinion firstly the re-drawing of Cheng San and Eunos GRCs, and the disproportionate sizes of Tanjong Pagar GRC (helmed by Lee Kuan Yew) and Ang Mo Kio GRC (helmed by Lee Hsien Loong). Arguably, if Eunos and Cheng San did not have their boundaries re-drawn, Aljunied (the successor GRC to these two) may have fallen faster. 

Yet, the PAP so far has resisted re-drawing the districts of constituencies they have lost, in particular Potong Pasir and Hougang. 

Gerrymandering may be however one of those things that can never be fully eradicated in any country that allocates seats according to geographical regions. This is because any electoral commission tasked to draw up electoral districts can never be fully independent of political interference.

The point is this: even if you remove the electoral commission from the control of the Executive, who appoints the members of the ‘independent’ commission? The answer: Politicians.

In the UK, the electoral commission has become a tragi-comedy with politicians vying to place their own preferred political appointees into the electoral commission. Gerrymandering still occurs but in a different form: bargaining between the political appointees happen behind closed doors.  Basically, you let me Gerrymander this district and I let you Gerrymander that other one. Even if this provides some form of check-and-balance, voters can still legitimately feel cheated as their choices become subjugated to opaque political bargaining.

What is therefore more important than the ‘independence’ of the electoral commission is the transparency of these institutions. No matter if electoral districts are drawn up by politicians or political appointees, they should make clear the reasons for re-districting. Gerrymandering through political appointees is no better than gerrymandering by the Executive. Instead, Singapore should make sure its Electoral Commission give clear reasoning for re-districting and justify these with statistics e.g. change in demographics. If these rules are not clearly implemented now, if the PAP should one day lose power, one should not expect the new ruling party to behave any differently. Better to establish clear rules for transparency now than suffer the same fates as Western democracies that pontificate fairness and democratic values, but subvert the same values with hypocrisy.

Finally, on the matter of law-suits: I think this is a matter of what we want our political campaigning to be like. Personally, I think that if normally, rules of slander and libel prevent us from telling lies about people, then there is no reason that this should not apply during campaigning. Better this than to have a situation like in the US where somehow the law is suspended during political campaigns, and one can take out advertisements on TV blatantly lying about your opponents e.g. the Republicans taking ads to say that Obama was a Muslim and not born in the US. Much as I disagree with the Workers Party ideologically,  I have utmost respect for its candidates, especially Low Thia Kiang, for campaigning with integrity. If you go on stage and call someone corrupt without evidence, then you deserve to be sued, and politics is the better for it.

At the end of the day, it would take a radical to assert that the situation on Singapore is in any way comparable, even on a matter of scale, to the shenanigans that allegedly happened in Malaysia. There is a huge difference between gerrymandering, pork-barrel politics and rules against irresponsible campaign speech (which happens to varying degrees to all advanced democracies), and the stuffing of ballot boxes and phantom voters (which is outright electoral fraud). The electoral system in Singapore is not perfect, but in my opinion, not any more imperfect than in most advanced democracies. There is always room for improvement, but to compare Singapore to despotic regimes that commit outright fraud is not only inappropriate, it is very unfair.

Wednesday, 1 May 2013

Cheaper, Better, Faster ?

The question that has always bothered me is why people think that Singaporeans are losing jobs to foreigners merely because they are cheaper.

Why would an employer hire a foreigner merely because he is cheaper? If he is cheaper but worse, I wouldn't hire him.

At the very least, he needs to be cheaper but just as good.

If he is cheaper AND better, than it's a no brainer.

If Singaporeans are losing jobs because they are more expensive but not better, then the problem lies not with the Manpower Ministry but with Education.

If our education system is churning our workers that cost more but perform worse (or merely as well as a foreigner), than it has serious problems. It is the Ministry of Education that needs to soul search rather than Manpower.

By tweaking manpower policies we may be attacking the symtoms rather than the causes. Wrong medicine for the wrong disease.

We may be barking up the entirely wrong tree.

HDB Loses 1 Billion Dollars a Year - Why We Should Care

Been seeing this article doing the rounds on cyberspace and needed to debunk it.

This blogger argues that HDB makes a loss because it buys land from SLA at market rates and it does not matter since it is from one government account to another.

The alternative to buying land from SLA at market rates is NOT buying land at market rates. Some have even argued that land costs should not be included in HDB prices.

This is fine if we are starting to build HDB flats all from new.

The challenge is that there are many existing HDB flat owners, especially from the baby-boomer generation who have benefited tremendously from their HDBs increasing in price. This asset price includes land price which has become increasing valuable as Singapore developed.

If we take away land costs or if HDB buys HDB flats at a discounted rate from SLA, the new HDB flats will cost a lot cheaper than existing HDB flats, whose prices include land cost.

This will also cost existing HDB flat prices to deflate leaving current HDB owners with massively devalued property.

Young people are understandably upset that HDB prices are spiralling upwards.

But those who clamour for massive deflation of HDB prices selfishly forget that this will be at the expense of the older generation who already own HDBs and whose savings and nest eggs are locked in their property, which can be unlocked when needed.

The government needs to balance the needs of people who have yet to buy homes who need them to be affordable, and those who already own homes who do not want to see their assets deflate in value.

People who argue that it shouldn't matter that HDB loses 1 billion a year are extremely short sighted.

If HDB has to lose so much money buying land at market rates to build affordable homes , it means that it is increasingly difficult to balance the needs of the young generation with the older generation.

We shouldn't care? On the contrary - we should be extremely concerned.