The Euro turns 20


January 13, 2019

The Euro turns 20

The euro’s first 20 years played out very differently than many expected, highlighting the importance of recognizing that the future is likely to be different from the past. Given this, only a commitment to flexibility and a willingness to rise to new challenges will ensure the common currency’s continued success.

euro banknotes

https://www.project-syndicate.org/commentary/four-lessons-from-euro-s-first-20-years-by-daniel-gros-2019-01

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BRUSSELS – Twenty years ago this month, the euro was born. For ordinary citizens, little changed until cash euros were introduced in 2002. But in January 1999, the “third stage” of Economic and Monetary Union officially started, with the exchange rates among the original 11 eurozone member states “irrevocably” fixed, and authority over their monetary policy transferred to the new European Central Bank. What has unfolded since then holds important lessons for the future.

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In 1999, conventional wisdom held that Germany would incur the biggest losses from the euro’s introduction. Beyond the risk that the ECB would not be as tough on inflation as the Bundesbank had been, the Deutsche Mark was overvalued, with Germany running a current-account deficit. Fixing the exchange rate at that level, it was believed, would pose a severe challenge to the competitiveness of German industry.

Yet, 20 years on, inflation is even lower than it was when the Bundesbank was in charge, and Germany maintains persistently large current-account surpluses, which are viewed as evidence that German industry is too competitive. This brings us to the first lesson of the last 20 years: the performance of individual eurozone countries is not preordained.

The experiences of other countries, such as Spain and Ireland, reinforce that lesson, demonstrating that the ability to adapt to changing circumstances and a willingness to make painful choices matter more than the economy’s starting position. This applies to the future as well: Germany’s current predominance, for example, is in no way guaranteed to continue for the next 20 years.

Yet the establishment of the eurozone was backward-looking. The main concern during the 1970s and 1980s had been high and variable inflation, often driven by double-digit wage growth. Financial crises were almost always linked to bouts of inflation, but had previously been limited in scope, because financial markets were smaller and not deeply interconnected.

With the creation of the eurozone, everything changed. Wage pressures abated throughout the developed world. But financial-market activity, especially across borders within the euro area, grew exponentially, after having been repressed for decades. For example, eurozone member countries’ cross-border assets, mostly in the form of bank and other credit, grew from about 100% of GDP in the late 1990s to 400% by 2008.

Then the global financial crisis erupted a decade ago, catching Europe off guard. The first deflationary crisis since the 1930s was made especially virulent in Europe by the mountain of debt that had been accumulated in the previous ten years, when countries had their eyes on the rear-view mirror.

Of course, the eurozone was not alone in being taken by surprise by the financial crisis, which had started in the United States with supposedly safe securities based on subprime mortgages. But the US, with its unified financial (and political) system, was able to overcome the crisis relatively quickly, whereas in the eurozone, a slow-motion cascade of crises befell many member states.

Fortunately, the ECB proved robust. Its leadership recognized the need to shift focus from fighting inflation – the objective the ECB was designed to achieve – to curbing deflation. Ultimately, the euro survived, because, when push came to shove, leaders of the eurozone’s member states expended political capital to implement needed reforms – even after blaming the euro for their countries’ problems.

This pattern of demonizing the euro before recognizing the need to protect it continues to unfold today – and it should serve as a second lesson of the last 20 years. Italy’s populist coalition government used to speak bravely about flouting the euro’s rules, with some advocating an exit from the eurozone altogether. But when financial-market risk premia increased, and Italian savers did not buy their own government’s bonds, the coalition quickly changed its tune.

In fact, the eurozone’s economic performance has not been as bad as the seemingly endless stream of bleak headlines implies. Per capita GDP growth has slowed over the last 20 years, but not more so than in the US or other developed economies.

Moreover, continental European labor markets have undergone an under-reported structural improvement, with the labor-force participation rate increasing every year, even during the crisis. Today, a higher proportion of the adult population is economically active in the eurozone than in the US. Employment has reached record highs, and unemployment, though still high in some southern countries, is continuously declining.

These economic realities imply that, even if the euro is not particularly well loved, it is widely recognized as an integral element of European integration. According to the latest Eurobarometer poll, support for the euro is at an all-time high of 74%, while less than 20% of the eurozone’s population opposes it. Even Italy boasts a strong pro-euro majority (68% versus 18%). Herein lies a third key lesson from the euro’s first two decades: despite its many imperfections, the common currency has delivered jobs, and there is little support for abandoning it.

But probably the most important lesson lies elsewhere. The euro’s first 20 years played out very differently than many expected, highlighting the importance of recognizing that the future is likely to be different from the past. Given this, only a commitment to flexibility and a willingness to rise to new challenges will ensure the common currency’s continued success.

 

Daniel Gros

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Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

 

The Philosopher Redefining Equality


 

January 4, 2019

Annals of Thought

The Philosopher Redefining Equality

Elizabeth Anderson thinks we’ve misunderstood the basis of a free and fair society.

The thinkers M’sian politics have come to rely on


January 1, 2019

The thinkers M’sian politics have come to rely on

Opinion  Phar Kim Beng

COMMENT | If one has had the benefit of following Malaysian politics since 1970 – a lifetime to many – several thinkers who have influenced the course of Malaysian history have become household names.

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Dr. Rais Saniman

The New Economic Policy (NEP), for example, was the handiwork of Rais Saniman and Just Faarland. Both believed in affirmative action, though critics who panned NEP have often pointed out that affirmative action is meant for the “minority” – not the majority.

Come what may, Malaysia would have been a racial havoc if NEP, despite all its imperfections, have not been working. Take some of the latest statistics on household income, for example.

Research by Khazanah Research Institute has shown that four out of five Malaysians would retire without sufficient pensions when they turn 55 or 60. Indeed, 15 percent of Malaysia’s population would exceed 60 years of age by 2023, according to Muhammad Khalid, the economic advisor of Prime Minister Dr Mahathir Mohamad. At this rate, Malaysia will begin to age sooner than expected.

The works of the late professor Syed Hussein Alatas has also been wonderfully powerful, as he referred to corruption as a “cancer” that can eat away the health – and wealth – of the country. Events between 2009-2018, through 1MDB, have proven that and more. Our national debt is now at USD 280.7 billion, while our GDP is merely USD 320 billion.

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The scholarship of professors Terence Gomez and KS Jomo have proved to be just as monumental, if not powerful. Since 1990, both scholars have warned of the insidious effects of “privatisation,” which if done incorrectly, can lead to “piratisation,” where the wealth nest of the government and the people are held captive by the vested interest of the narrow band of elites.

While little has been said, or, revealed about the scholarship of Salleh Yappar, a professor at Universiti Sains Malaysia, his papers have identified various forms or varieties of “Islamism”.

They range from the sort one sees in Sufism, such as the order of Nashbandi, to the reformist movement of Angkatan Belia Islam Semalaysia. In fact, Salleh listed close to nine forms of Islamism in Malaysia between 1957-1990. Some of them involves cult like movements like Al Arqam, which has since been banned by Mahathir during his first tenure as Prime Minister.

Though, not strictly Malaysian, the works of William Case at University of Nottingham in Malaysia, have revealed the potentiality of a “pseudo democracy,” that is still “semi authoritarian,” in nature as Australian National University professor Harold Crouch called it.

Other commentators like Patricia Martinez, Noraini Othman, even Dina Zaman, indeed, Marina Mahathir, have warned about the danger of ignoring the gender bias that is embedded in most interpretations of religions.

Instead of “lowering one’s gaze,” as a man is urged by some religious scriptures to do, over domineering male preachers have insisted that women should cover themselves from head to toe.

Come what may, some of the Malaysian scholars in Borneo deserve greater mention too. Professor Jayum Jawan who has an interesting take that Sarawak was never colonised by the British government, let alone James Brooke, is interesting to say the least.

It calls into question the very fabric that makes the Federation of Malaysia: should the rights of the federal government always be greater than the states at hand, including Sarawak, even though it has a history that is unique compared to Peninsular Malaysia?

Elsewhere, professors Chandra Muzaffar,   Dr. Lim Teck Ghee, Francis Loh Kok Wai and Khoo Kay Jin have always highlighted the importance of liberating Malaysia from the iron rule of the bureaucratic or single-party state, especially the feudalism of UMNO.

Indeed, commentators like P. Gunasegaran and Ho Kay Tat have been invaluable to understanding 1MDB, backed by foreign scholarship by Tom Wright and Hope Bradley at Wall Street Journal.

The works of Nanyang Technology University professors Farish Noor and Joseph Liow Chin Yong in Singapore, as was the superb commentary of Dr Ooi Kee Beng, even politicians like Liew Chin Tong and Ong Kian Ming over the years, have made a “New Malaysia” more and more plausible.

That being said, two of the most tenacious thinkers are without a doubt Mahathir and Prime Minister-in-waiting Anwar Ibrahim. Both are determined in their ideals to make Malaysia stronger and better, though with some nuance too.

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Mahathir seems sold on the idea that Look East can redeem Malaysia. Anwar, on the hand, believes that the rise and fall of Malaysia depends on the extent to which it can engineer its own “Asian Renaissance.”

Come what may, 2019 and 2020, are not going to be about transition from one reigning to another incoming Prime Minister only, but the extent to which both can master the art of promoting their ideas and ideals. These ideas and ideals must work too, without which Malaysia is back to the square one of 1970 if not earlier.


PHAR KIM BENG is a multiple award-winning head teaching fellow on China and the Cultural Revolution at Harvard University.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

Trump vs. the Economy


 

Trump vs. the Economy

December 30, 2018  by

https://www.project-syndicate.org/commentary/trump-behavior-causes-stock-market-drop-by-nouriel-roubini-2018-12

Between publicly chastising US Federal Reserve Chair Jerome Powell and escalating his trade war with China, US President Donald Trump has finally rattled the markets. While investors were happy to look the other way during the first half of Trump’s term, the dangerous spectacle unfolding in the White House can no longer be ignored.

NEW YORK – Financial markets have finally awoken to the fact that Donald Trump is US president. Given that the world has endured two years of reckless tweets and public statements by the world’s most powerful man, the obvious question is, What took so long?

For one thing, until now, investors had bought into the argument that Trump is all bark and no bite. They were willing to give him the benefit of the doubt as long as he pursued tax cuts, deregulation, and other policies beneficial to the corporate sector and shareholders. And many trusted that, at the end of the day, the “adults in the room” would restrain Trump and ensure that the administration’s policies didn’t jump the guardrails of orthodoxy.

These assumptions were more or less vindicated during Trump’s first year in office, when economic growth and an expected increase in corporate profits – owing to forthcoming tax cuts and deregulation – resulted in strong stock-market performance. In 2017, US stock indices rose more than 20%.

But things changed radically in 2018, and especially in the last few months. Despite corporate earnings growing by over 20% (thanks to the tax cuts), US equity markets moved sideways for most of the year, and have now taken a sharp turn south. At this point, broad indices are in correction territory (meaning a 10% drop from the recent peak), and indices of tech stocks, such as the Nasdaq, are in bear-market territory (a drop of 20% or more).

Though financial markets’ higher volatility reflects concerns about China, Italy and other eurozone economies, and key emerging economies, most of the recent turmoil is due to Trump. The year started with the enactment of a reckless tax cut that pushed up long-term interest rates and created a sugar high in an economy already close to full employment. As early as February, growing concerns about inflation rising above the US Federal Reserve’s 2% target led to the year’s first risk-off.

Then came Trump’s trade wars with China and other key US trade partners. Market worries about the administration’s protectionist policies have waxed and waned throughout the year, but they are now reaching a new peak. The latest US actions against China seem to augur a broader trade, economic, and geopolitical cold war.

An additional worry is that Trump’s other policies will have stagflationary effects (reduced growth alongside higher inflation). After all, Trump is planning to limit inward foreign direct investment, and has already implemented broad restrictions on immigration, which will reduce labor-supply growth at a time when workforce aging and skills mismatches are already a growing problem.

Moreover, the administration has yet to propose an infrastructure plan to spur private-sector productivity or hasten the transition to a green economy. And on Twitter and elsewhere, Trump has continued to bash corporations for their hiring, production, investment, and pricing practices, singling out tech firms just when they are already facing a wider backlash and increased competition from their Chinese counterparts.

Emerging markets have also been shaken by US policies. Fiscal stimulus and monetary-policy tightening have pushed up short- and long-term interest rates and strengthened the US dollar. As a result, emerging economies have experienced capital flight and rising dollar-denominated debt. Those that rely heavily on exports have suffered the effects of lower commodity prices, and all that trade even indirectly with China have felt the effects of the trade war.

Even Trump’s oil policies have created volatility. After the resumption of US sanctions against Iran pushed up oil prices, the administration’s efforts to carve out exemptions and bully Saudi Arabia into increasing its own production led to a sharp price drop. Though US consumers benefit from lower oil prices, US energy firms’ stock prices do not. Besides, excessive oil-price volatility is bad for producers and consumers alike, because it hinders sensible investment and consumption decisions.

Making matters worse, it is now clear that the benefits of last year’s tax cuts have accrued almost entirely to the corporate sector, rather than to households in the form of higher real (inflation-adjusted) wages. That means household consumption could soon slow down, further undercutting the economy.

More than anything else, though, the sharp fall in US and global equities during the last quarter is a response to Trump’s own utterances and actions. Even worse than the heightened risk of a full-scale trade war with China (despite the recent “” agreed with Chinese President Xi Jinping) are Trump’s public attacks on the Fed, which began as early as the spring of 2018, when the US economy was growing at more than 4%.

Given these earlier attacks, markets were spooked this month when the Fed correctly decided to hike interest rates while also signaling a more gradual pace of rate increases in 2019. Most likely, the Fed’s relative hawkishness is a reaction to Trump’s threats against it. In the face of hostile presidential tweets, Fed Chair Jerome Powell needed to signal that the central bank remains politically independent.

But then came Trump’s decision to shut down large segments of the federal government over Congress’s refusal to fund his useless Mexican border wall. That sent markets into a near-panic, and the government shutdown was soon followed by reports that Trump wants to fire Powell – a move that could turn a correction into a crash. Just before the Christmas holiday, US Treasury secretary Steven Mnuchin was forced to issue a public statement to placate the markets. He announced that Trump was not planning to fire Powell after all, and that US banks’ finances are sound, effectively highlighting the question of whether they really are.

Recent changes within the administration that do not necessarily affect economic policy making are also rattling the markets. The impending departure of White House Chief of Staff John Kelly and Secretary of Defense James Mattis will leave the room devoid of adults. The coterie of economic nationalists and foreign-policy hawks who remain will cater to Trump’s every whim.

As matters stand, the risk of a full-scale geopolitical conflagration with China cannot be ruled out. A new cold war would effectively lead to de-globalization, disrupting supply chains everywhere, but particularly in the tech sector, as the recent ZTE and Huawei cases signal. At the same time, Trump seems to be hell-bent on undermining the cohesion of the European Union and NATO at a time when Europe is economically and politically fragile. And Special Counsel Robert Mueller’s investigation into Trump’s 2016 election campaign’s ties to Russia hangs like a Sword of Damocles over his presidency.

Trump is now the Dr. Strangelove of financial markets. Like the paranoid madman in Stanley Kubrick’s classic film, he is flirting with mutually assured economic destruction. Now that markets see the danger, the risk of a financial crisis and global recession has grown.

Nouriel Roubini, a professor at NYU’s Stern School of Business and CEO of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.

 

 

In Defense of the Fed


December 26, 2018

jerome powell fed

In Defense of the Fed

Despite howls of protest from market participants and rumored threats from an unhinged US president, the Federal Reserve should be congratulated for its commitment to normalizing interest rates. There is simply no other way to break the US economy’s 20-year dependence on asset bubbles.

 

NEW HAVEN – I have not been a fan of the policies of the US Federal Reserve for many years. Despite great personal fondness for my first employer, and appreciation of all that working there gave me in terms of professional training and intellectual stimulation, the Fed had lost its way. From bubble to bubble, from crisis to crisis, there were increasingly to question the Fed’s stewardship of the US economy.

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That now appears to be changing. Notwithstanding howls of protest from market participants and rumored That now appears to be changing. Notwithstanding howls of protest from market participants and rumored unconstitutional threats from an unhinged US President, the Fed should be congratulated for its steadfast commitment to policy “normalization.” It is finally confronting the beast that former Fed Chairman Alan Greenspan unleashed over 30 years ago: the “Greenspan put” that provided asymmetric support to financial markets by easing policy aggressively during periods of market distress while condoning froth during upswings.

Since the October 19, 1987 stock-market crash, investors have learned to count on the Fed’s unfailing support, which was justified as being consistent with what is widely viewed as the anchor of its dual mandate: price stability. With inflation as measured by the Consumer Price Index averaging a mandate-compliant 2.1% in the 20-year period ending in 2017, the Fed was, in effect, liberated to go for growth.

And so it did. But the problem with the growth gambit is that it was built on the quicksand of an increasingly asset-dependent and ultimately bubble- and crisis-prone US economy.

Greenspan, as a market-focused disciple of Ayn Rand, set this trap. Drawing comfort from his tactical successes in addressing the 1987 crash, he upped the ante in the late 1990s, arguing that the dot-com bubble reflected a new paradigm of productivity-led growth in the US. Then, in the early 2000s, he committed a far more serious blunder, insisting that a credit-fueled housing bubble, inflated by “innovative” financial products, posed no threat to the US economy’s fundamentals. As one error compounded the other, the asset-dependent economy took on a life of its own.

As the Fed’s leadership passed to Ben Bernanke in 2006, market-friendly monetary policy entered an even braver new era. The bursting of the Greenspan housing bubble triggered a financial crisis and recession the likes of which had not been seen since the 1930s. As an academic expert on the Great Depression, Bernanke had argued that the Fed was to blame back then. As Fed Chair, he quickly put his theories to the test as America stared into another abyss. Alas, there was a serious complication: with interest rates already low, the Fed had little leeway to ease monetary policy with traditional tools. So it had to invent a new tool: liquidity injections from its balance sheet through unprecedented asset purchases.

The experiment, now known as quantitative easing, was a success – or so we thought. But the Fed mistakenly believed that what worked for markets in distress would also spur meaningful recovery in the real economy. It raised the stakes with additional rounds of quantitative easing, QE2 and QE3, but real GDP growth remained stuck at around 2% from 2010 through 2017 — half the norm of past recoveries. Moreover, just as it did when the dot-com bubble burst in 2000, the Fed kept monetary policy highly accommodative well into the post-crisis expansion. In both cases, when the Fed finally began to normalize, it did so slowly, thereby continuing to fuel market froth.

Here, too, the Fed’s tactics owe their origins to Bernanke’s academic work. With his colleague Mark Gertler of NYU, he argued that while monetary policy was far too blunt an instrument to prevent asset-bubbles, the Fed’s tools were far more effective in cleaning up the mess after they burst. And what a mess there was! As Fed governor in the early 2000s, Bernanke maintained that this approach was needed to avoid the pitfalls of Japanese-like deflation. Greenspan concurred with his famous “mission accomplished” speech in 2004. And as Fed Chair in the late 2000s, Bernanke doubled down on this strategy.

For financial markets, this was nirvana. The Fed had investors’ backs on the downside and, with inflation under control, would do little to constrain the upside. The resulting “wealth effects” of asset appreciation became an important source of growth in the real economy. Not only was there the psychological boost that comes from feeling richer, but also the realization of capital gains from an equity bubble and the direct extraction of wealth from the housing bubble through a profusion of secondary mortgages and home equity loans. And, of course, in the early 2000s, the Fed’s easy-money bias spawned a monstrous credit bubble, which subsidized the leveraged monetization of housing-market froth.

And so it went, from bubble to bubble. The more the real economy became dependent on the asset economy, the tougher it became for the Fed to break the daisy chain. Until now. Predictably, the current equity market rout has left many aghast that the Fed would dare continue its current normalization campaign. That criticism is ill-founded. It’s not that the Fed is simply replenishing its arsenal for the next downturn. The subtext of normalization is that economic fundamentals, not market-friendly monetary policy, will finally determine asset values.

The Fed, it is to be hoped, is finally coming clean on the perils of asset-dependent growth and the long string of financial bubbles that has done great damage to the US economy over the past 20 years. Just as Paul Volcker had the courage to tackle the Great Inflation, Jerome Powell may well be remembered for taking an equally courageous stand against the insidious perils of the Asset Economy. It is great to be a fan of the Fed again.

Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm’s chief economist, is a senior fellow at Yale University’s Jackson Institute of Global Affairs and a senior lecturer at Yale’s School of Management. He is the author of Unbalanced: The Codependency of America and China.

 

Book Review: This is What Inequality Looks Like


December 13,2018

Book Review:

This is What Inequality Looks Like

by Serina Rahman 13 Dec, 2018

https://www.newmandala.org/book-review/this-is-what-inequality-looks-like/

Teo You Yenn (Ethos Books, Singapore, 2018)

In an ideal world, “dignity doesn’t have an expiration date attached to economic productivity. It affirms the worth of personhood. It feels different from what we have” (p221). In This is What Inequality Looks Like, Teo You Yenn writes a moving collection of essays that shine the light on a reality long swept under the carpets of gleaming, green and glamourous Singapore. In the home of Crazy Rich Asians, statistics that indicate growing numbers of millionaires every year conceal the lived realities of those who fall through the cracks and are barely acknowledged.

The stories on these pages are not a mere dry academic dissertation on poverty. Teo writes candidly accessible tales of real people and relationships, encountered and made familiar over years of academic fieldwork. It is her long study and thorough understanding of the policies and institutional systems that compound the difficulties of these lower-income citizens that make this book a powerful commentary. While she lays bare the processes that prevent many of them from moving out of the cycle of poverty, she appeals for awareness, and even empathy—as much needs to be done to review and revise some of the structures that trap the lowest segments of the population into immobility.

Sometimes it is the most basic and subtle of differences that have the most impact. Teo describes the run-down clusters of rental units she spent many hours visiting, hidden between internationally-acclaimed high-rise government apartments, yet a world apart. She describes them as zones “marked not only by the visual but also something quite primal and physical” (p46). She does not mean to ghettoise these homes, but she pinpoints for the reader the details that make the difference: the ubiquitous presence of police and narcotics officers, as well as loan shark and crime notices. She draws a sharp comparison between this oppressive negativity and the cheerful ambience and positive messaging of owner-occupied blocks—just one example of what inequality looks like.

Teo makes it clear that members of Singapore’s bottom percentiles are not tucked away and alienated from the island’s daily hustle and bustle. But they are made invisible by the roles that they play and denied a presence by wilful or unintentional blindness on the part of many who benefit from their services. “Low-income persons are in reality highly present in most Singaporean’s everyday lives… when we say we cannot see poverty in Singapore, it is partly because its manifestations are masked and partly because we do not look” (pp192–193). Working among every other Singaporean are those for whom a rental unit is a step up from homelessness; where the “typical” trajectory of finishing school, getting married, buying a home and having children (p80) is either out of reach or follows a different order. “Normalcy” is defined by the mainstream majority. The neighbourhood and lived reality of those who can just barely afford to rent are a world far beyond the imagination (if at all contemplated) by the average Singaporean—and deemed “inferior” and “problematic” (p29).

Through Teo we experience the warmth, generosity and hospitality of low income families who genuinely come together to help each other in the most difficult of times, whose kindness to those who have less than themselves belie the struggles that they face. This community is common in other parts of grossly poor Southeast Asia, and a stark contrast to hollow top-down orchestrations to engender a kampung (village) collective in many owner-occupied constituencies. Teo shows us that the mainstream caricature of those who “deviate” from societal “norms” are far from accurate. These communities that she has grown to appreciate comprise hard-working, self-reliant, family-centric citizens that not only actively contribute to Singapore’s economy but constantly strive to improve their lot in life.

Beyond the link between poverty and inequality, Teo deftly weaves in the importance of dignity and illustrates how there is a distinct lack of social justice in the treatment of the very poor where “every day is a struggle with (in)dignity” (p194). The problem of poverty in Singapore should not be one “of the ‘other’” (p250). The narrative that their issues are “are an exception” (p196) needs to be disrupted so that the search for solutions becomes a national effort. It should be a quest bred on a sense of responsibility and morality; of helping one of our own—simply because we can.

In a poignant concluding chapter, Teo peels back the layers of a wound as she recollects the reactions to her work over the years. Responses ranged from those who are surprised that poverty exists in swanky Singapore, to those who trivialise the plight of the people she describes, or deny their existence. More tellingly is the reaction of one particular audience member who chastises her for publicly going against the great “Singapore Story” and “airing dirty laundry” to an international audience. This chapter (p225) exemplifies the narratives and blind spots that we have perpetuated both to the world and ourselves. Nationalistic tendencies and the discomfort of discussing the ugly realities of those who have always remained hidden need to be overcome. Perceptions attributed to petty folk beliefs of “race”, which are discussed in an additional epilogue, need to be discarded.

To be fair, the discussion of inequality has been all the rage in Singapore recently. In May 2018, a Channel News Asia documentary hosted by a member of parliament, Regardless of Class, examined Singapore’s social divisions but was met and countered by netizens and online portals for its lack of the sort of analysis that Teo lays out in her book. Another MP referenced her book in an opinion piece on the government’s promotion of self-reliance—a topic that Teo herself dissects and illustrates as she chronicles the lives of those who do everything they can to not ask for help. Teo points out that this is because of the futility these families face in their appeals for assistance, and how the process erases any last shreds of dignity that they held. If nothing else, then, Teo’s book has already succeeded in taking the debate on inequality in Singapore out from behind closed doors.

In response to Oxfam International’s Commitment to Reducing Inequality Index, released in October 2018 (where Singapore was placed at number 149 out of 157 countries) a number of ministers were quick to point out the outcomes achieved by the city-state. These include 90% home ownership, high life expectancy, and extremely low infant mortality. In a post-National Day dialogue, Singapore’s prime minister brought up the issue of social mobility, also eloquently expounded on by Teo in her book. Most recently, another online news portal published a feature on a number of young people who were able to escape and overcome the difficulties of growing up in the lowest strata of Singaporean society. While the national response (whether explicit or implicit) to Teo’s work has been varied, it is clear that she has made a point in the corridors of power.

As she closes her book, Teo invites her readers to consider how their lives can be understood from the perspectives that she has presented. She asks that the middle and upper class majority in Singapore understand the consequences of their decisions and actions and how they inadvertently enhance the inequality and indignity faced by some fellow citizens.

For me personally, this book is a breath of fresh air that resonates vividly with my experiences across the border in poor rural Malaysian communities.  At a recent conference I attended, a scholar mentioned that while Singapore leads ASEAN this year, the rest of the region seems to look at the island with some disdain. Teo’s revelation of a rough underbelly makes the nation seem more “normal” in the eyes of the region. Smudges in the sparkling sheen that Singapore tries to portray may oddly endear it to the rest of Southeast Asia, as it is turns out that the island-state is not very different after all.

This is What Inequality Looks Like has clearly raised the blinds on a topic once hidden far out of sight. It is a book that needs to be read by all Singaporeans. Conventional tropes of meritocracy and social mobility need to be examined with a critical yet empathetic eye.

The poorest citizens of the nation need to be embraced into the mainstream and their struggles surfaced as national priorities. Only then can Singapore truly declare itself a first world nation. In the meantime, as Teo robustly concludes, we need to harness the values, beliefs, habits and aspirations that she believes exists within us as a nation to ensure that inequality can be refused and dignity restored.

 

Serina Rahman is a Visiting Fellow in the Malaysia Programme at the ISEAS-Yusof Ishak Institute, Singapore, conducting research in the fields of sustainable development, environmental anthropology and the economics of the environment. Serina co-founded Kelab Alami, an organisation formed to empower a Johor fishing community through environmental education for habitat conservation and economic participation in coastal development. She received her PhD in Science from Universiti Teknologi Mara in 2014.  Read her recent account of rural Malaysia post-GE14 here, and her review of Living With Myths in Singapore.