Immigration – “Plan C” for Calvin Cheng

I originally wrote the below article as an exclusive for The Online Citizen under the title “False dichotomy of Singapore’s options”. I am reproducing it here with their permission.

Calvin Cheng’s recent article for Yahoo on the fate of immigration policy in the wake of the Little India riots is thought-provoking if not a little condescending. In it he juxtaposes the current plan for a population of 6.9 million, driven by the population white paper, with his own “Plan B” – a vision of Singapore with almost no immigration. In framing the debate thus, Calvin presents a false dichotomy between ultra-liberal and ultra-conservative immigration and it should be obvious that there is a third way, a more sustainable “Plan C” which balances the demographic challenges facing Singapore in coming years, with a more productive economic model less reliant on foreign workers who are often exploited.

The problem with the white paper

Calvin claims to have “seen the statistics, the facts” and states that current immigration policy is “anchored on irrefutable facts and figures”. In the context of his article, it is clear that he is referring to the population white paper and the path it lays out towards a population of 6.9 million. Yet both Calvin and the white paper make the same very peculiar mistake, and their conclusions are anything but irrefutable. The supposed link between demographics and the need for immigration relied on by both is actually extremely weak, and the “facts and figures” in the white paper make this point very clear. While it may be true that without immigration Singapore faces a shrinking citizen workforce, the demographic trends charted in the white paper state that this will not happen until 2020. So the “bleak” future described by Calvin is actually quite a long way off, and cannot be seen as a valid justification for the policy of today which he nonetheless supports. Furthermore, there is still no obvious reason why Singapore’s population should need to increase as dramatically as planned. To offset a shrinkage, one obviously only needs to add enough resources to maintain things at their current level, and for this reason the case for 6.9 million was never supported by the demographics arguments made out in the white paper. To put it simply, there is almost no correlation between the demographic challenges upcoming and the immigration policies concocted in response. This weak link between policy and its justification leaves many sceptical as to the real motives behind this most controversial of government schemes.

The problem with plan B

The plan B Calvin describes as an alternative to the population white paper appears to be not much more than a practically zero immigration straw man argument which almost no one has previously spoken for. It describes a relatively unpleasant vision for the future with Singaporeans working in construction, as well as doing “all the other manual work” now done by foreign labourers, and is a plan we are informed comes with “painful” social costs. We are warned that bus fares would have to increase if Singaporeans are to work as drivers, yet does anyone remember fares going down as Chinese drivers have been hired in increasing numbers? Conversely, no mention is made of the jobs Singaporeans do not shun, such as working as cabin crew for Singapore Airlines, but which are done increasingly by immigrants as locals are discriminated against by government-owned companies in the local labour market.

Clearly this Plan B is extremely flawed. Dependent as it is on apparently negligible levels of immigration, it is one which has apparently been plucked from the opposite end of the policy spectrum from the white paper and has been garnished with various unpalatables in the hope that Singaporeans will reject it in favour of current policy. Yet the false dichotomy presented between these two options of extremely high and extremely low immigration should be obvious. Clearly, there is a third path, one with some immigration required for example in construction as well as to offset demographic changes, but not so much that Singapore’s population balloons unsustainably towards seven (or even eight) million.

Plan C for Calvin Cheng

A more moderate and balanced immigration plan C can be characterised with a simple phrase – “steady state normality”. Steady state means we don’t need to keep growing the population indefinitely into the future, a more sustainable idea might be to plan for overall population numbers to remain steady in the long-term, and the current population can become the “new normal”.

The first immediate outcome of not endlessly inflating the population is that we do not need to continually import more construction workers to build more houses for more people. While today there may be a shortage of housing which needs to be addressed, in the long-term this need should tail off. A similar argument can be made for malls and MRT lines if not perhaps for hospitals in an ageing nation. In planning for steady state normality therefore we effectively pull the plug on some of the biggest drivers of immigration, hopefully alleviating some of the major social costs at the same time.

The flip side to not continuing to pump up the population is that the economic balloon called Singapore Inc will also not be inflated. Yet apart from government ministers with GDP linked bonuses, it is not clear who really loses out in that case. Singapore is already an extremely rich country, in GDP terms one of the richest in the world, but it is also one with an extremely unequal distribution of wealth. The challenge for Singapore today should be much less about making the pie bigger, and much more about sharing it more equally. There are obvious ways to achieve this, many of which are unrelated to immigration, but one idea would be to bring back estate duty which may have the added benefit of encouraging a few Ferrari driving wealth managers off the overcrowded roads.

In fact, if we accept a long-term steady state population plan, many of the concerns raised in Calvin’s article are diminished or removed. There won’t for example be lower tax revenues, certainly not while the local workforce continues to grow until 2020, and not after 2020 either, because we should allow some immigration to make up the difference. Even if there were a smaller tax base, the difference is likely to be tiny compared to the billions in surpluses typically collected every year, and would be further offset by a proposed estate tax. Obviously then there would also be no need to dip into the reserves.

Surely there are gaps and flaws in this plan C, but it is just a starting point. The most important thing to bear in mind is that current policy together with Calvin’s plan B represent an obvious false dichotomy which should be rejected. There are other more sustainable options available to us, which chart a path somewhere between those extremes of very low and very high immigration. I don’t claim any unique insight into exactly where that path should lead, but it is a direction that should definitely be explored.

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