Breaking the camel’s back

SINGAPORE – It is perfectly understandable if one perceives the PAP government as one that is being obsessed with GDP figures while displaying an indifferent attitude to the Gini coefficient. Mark Twain himself said:”There are three kinds of lies: lies, damned lies, and statistics.” Of course, no one here is insisting that the mathematics involved in the calculation of our GDP figures is aberrant. The problem is the selective bias towards a metric that gives an impression that a country is doing well while ignoring the stories told by other metrics.

The ‘foreign talent’ (note inverted commas) policy, Gini coefficient and GDP are all intertwined with each other. It doesn’t take a rocket scientist to infer their relationship and perhaps, this can be best summed up by MIT’s Nobel Laureate economist Paul Krugman – Singapore’s economic growth is fuelled by increase in inputs rather than efficiency. Our input was fuelled by an increase in labor input, more specifically, cheap foreign labor. This drives down the median wages, and the bottom 20 percentile of earners will find it difficult coping with their day to day living, especially when the costs are sky-high. It follows that our Gini coefficient which indicates income equality will only go up or stay high.

Given the economic context, allow us to dwell into the subject proper – the economic conditions that will break the camel’s back or more appropriately, the dwindling support for the PAP at the polls. The implicit assumption is that the people who are at the receiving end of the economic conditions created by the PAP will not support the latter. This group will come from the bottom 20% of earners.

It can be argued that the PAP has yet to face the wrath of this bottom 20%. The floodgates allowing in the tidal wave of cheap foreign labor opened in 1998. Its effects are only felt after 2002 onwards. Thus, it didn’t come as a surprise that the 2001 General Elections went smoothly for the PAP and the latter garnered 75.3% of the popular vote. In the 2006 General Elections, the PAP garnered 66.6% of the popular vote, or for every two persons voting for the PAP, one voted for the opposition. But, that is still a healthy margin for the PAP, and arguably it is yet to suffer from any backlash from those who suffered from the economic conditions created by it.

But it could be a different story come the next few elections assuming the PAP government persists with policies resulting in the current economic conditions. If we consider the context of an electoral contest at a closely-contested GRC, the PAP will face with the grim reality of an unprecedented loss. That is if we assume the distribution of the bottom 20% is equal in every ward, i.e. majority of wards will have 20% of its eligible voters in the bottom 20% of the income group. During the 2006 General Elections, the closest fight was at Aljunied GRC, which saw a 56.09%-43.91% margin in favor of PAP. But all that can change, if current economic conditions generated by the PAP government policies didn’t result in improvement in living conditions faced by the low income group exacerbated by the adding of new numbers to it. *Mathematically, a 56.09%-43.91% margin can be overturned with an 6.19% swing of votes (56.09% – 6.19% = 49.9%, 43.91% + 6.19% = 50.9%), and they can come from this low income group, including the new numbers who joined them.

Mark Twain has made his point about statistics. Statistics used in an inappropriate context will only lead to a false sense of security. And the reality will come home to roost when the prospects of losing a GRC becomes real; it will be boon for the opposition and bane for the PAP. Yes, the GDP figures may look good, but the Gini coefficient will tell a little bit about how much straw the camel’s back can take before it breaks. So, PAP, you have been forewarned – ignore the Gini coefficient at your own peril!

*Changes made to the calculations in vote swing. Mathematically, a minimum of 6.19% is needed to achieve a winning percentage of 50.1% in favor of the opposition