As the world heads towards more wealth accumulated in fewer hands, governments must act, and philanthropists can do their part, to put the brakes on this speeding unsustainable car.
By Laurence Lien, Published The Straits Times, 18 May 2013
I DRIVE a six-year-old Honda Civic Hybrid. Some people who see me in it have remarked that they are surprised that I drive a modest car. In status-conscious Singapore, they think that if one can afford it, one purchases a luxury car to signal one's social standing. I would demur and say that I think my car is already an excellent car.
Obviously, I do understand where these friends and acquaintances of mine come from. We live in a consumerist society, driven by instant gratification and the use of visible signs to mark our social status.
The proverbial practice of "keeping up with the Joneses" is very much alive in Singapore. Ultra-luxury car brands have seen high growth of more than 40 per cent over the last five years. We must also be the only country in the world where BMWs and Mercedes-Benzes are the two top selling cars, making up 34 per cent of all cars sold in 2012, up from 8 per cent in 2007.
Our society tends to put people with worldly achievements on the pedestal. We celebrate people who make a lot of money, no matter how they made it. Prospering people feel that they are fully entitled to their own success and to enjoy the fruits of their labour. What's wrong with that? And let's get real, is this not how we keep people driven and hungry?
Stewards of resources
DON'T get me wrong. I do not have communist tendencies. Since the failed communism experiment, we can affirm every person's right to private property. However, I do believe that humans are stewards of the earth's resources, which are for the enjoyment of the entire human race.
It is not wrong to want to live better. What is wrong is a hedonistic lifestyle that assumes having more is more important than being more, that the aim of life is the singular pursuit of individual material enjoyment. What is also improper are people indulging in mounting excesses, even while their fellow humans are mired in poverty, without their basic needs met.
Some commentators maintain that consumerism is necessary for economic growth. James Livingston in his book, Against Thrift, contends that people need to spend more to take the United States out of its economic doldrums and goes on to make a moral case for spending more and saving less.
Livingston claims savings that fund private investments have become less relevant to economic growth. This is related to the conundrum that with technological advances, economies of scale through mergers and acquisitions, and global supply chain optimisation, all the products and goods that people demand today require a diminishing workforce. Full employment, by this reasoning, requires people to splurge more.
However, I would argue the problem is not over-saving by the general population per se, but the growing income and wealth divides and their impact.
According to former McKinsey chief economist James S. Henry, a 2012 study found 1 per cent of the world's population owned 81 per cent of the wealth. In Singapore, the Gini coefficient has been rising and has led to a growing wealth gap. This leads to lower consumption as the marginal propensity to consume is higher for those on lower incomes than for those on higher incomes.
This is borne out by local data. In Singapore, according to the 2008 Household Expenditure Survey by the Department of Statistics, for every dollar earned by households in the lowest quintile income group, they spent $1.38 on consumption items - the spending by the highest quintile income group was only $0.33.
Tackling the wealth gap
ACCUMULATION of wealth and idle private savings in increasingly fewer hands fuels both conspicuous consumption and speculative markets, with its attendant asset bubbles and inflation, even while there is high global unemployment.
Around the world, government leaders, political observers and civil society actors have been discussing the challenge of dealing with the wealth gap, not just for economic reasons but also for political and moral ones.
There is a political imperative to deal with the income divide, which has clearly manifested in growing political problems and increasing labour unrest around the world, like the Occupy movements. Singapore is not spared the tensions either.
Importantly, there is a moral imperative to want to deal with the income gap. We should feel uneasy when we see how grossly overpaid top dogs are, when so many toil to eke out an honest living. And it should assault our moral sensibilities when people flaunt their ostentatious toys so blatantly without a care for people who are suffering unrelenting hardships through no fault of theirs.
Politically, socially and environmentally, we cannot sustain this escalating consumerism that is plugged as human progress.
We need more redistributive justice and regulation to rein in the excesses of the free market. Interestingly, Adam Smith, who is considered the father of free market economics, envisaged the pursuit of self-interest as guaranteeing an equitable society, more efficiently than the government could.
The results of Thatcherism and the "big bang" deregulation of the late 20th century amply show that mutual self-interest alone does not create a society that achieves conditions of equality, which was Smith's goal.
Dignify the human person
WE NEED to modify our economic structures and place emphasis on the dignity of the human person in the workplace and protect the worker from the dehumanising aspects of production. We need to protect jobs and avoid driving down wages below a fair and just level.
Instead of merely chasing after the latest gadgets, luxury collections and lavish experiences, I hope to see more philanthropy from the uber-rich. Philanthropy is not just for wealth redistribution but also about spreading compassion and empathy, and showing solidarity for less advantaged brethren.
We ought to make more ethical and sustainable choices in purchasing, caring about the morality of the entire production chain, including environmental impact and the treatment of workers. We should also demand more services that feed the soul, like the arts and culture.
And even if there are those among us who are realists and cynics, they should perhaps consider the constant chase for the superfluous may be nothing more than an addiction leaving us dissatisfied at the end of the day. Many happiness studies have shown that happiness is found in healthy relationships, in having fewer wants and being content with what we already have.
Hence for me, not living an extravagant lifestyle is an entirely self-interested choice. Not just for my own happiness but more importantly, for my children's.
The writer is a Nominated Member of Parliament, chief executive of the National Volunteer and Philanthropy Centre, acting chief executive of the Community Foundation of Singapore and chairman of the Lien Foundation.
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