All this is based on stats; I haven’t said anything about the recent studies on the psychology of inequality, which tell us that in highly unequal contexts even affluent people may feel poor. (For more on that, read https://www.newyorker.com/…/01/15/the-psychology-of-inequal…)

It’s also quite interesting that people here are sympathetic to the idea of the “squeezed middle” in the abstract but when they are confronted with a family which is exactly that, they react negatively and pass judgement on its failure to prioritise or to distinguish between needs and wants. We’re fast becoming a low trust society that views everything in zero-sum terms: more for the middle income necessarily means less for the poor, or higher taxes on the rich.

The fact is that this trade-off is neither necessary nor inevitable. There are collective ways of financing and providing social goods (such as childcare or kindergarten education, or even tuition and CCA classes) that cost us less than the current method of relying mostly on private financing. Yes, public financing of these things increases the state’s outlay, and this may require higher taxes. But this increase is likely to be much smaller than the reduction in household expenditures on these things because of the economies of scale and scope of public financing and provision. Financing these things collectively, and making their provision universal, is likely to be cheaper for society as a whole. People are likely to quibble about the higher taxes they have to pay, but that’s because they ignore the fact that their private spending on these things will go down by more.

However, I’m pessimistic about the prospect of Singapore heading in this Pareto-improving direction. Why? Because I’m also reminded of the fact that in highly unequal societies, social trust tends to be low. This, in turn, reduces one’s willingness to accept higher taxes to finance the provision of social goods collectively. When we don’t trust fellow citizens, we are more likely to see them as undeserving scroungers exploiting society’s largesse. And when most citizens don’t support higher taxes, the state is unable to enact the programmes and provide the services that are necessary to reduce inequality.

(Edited to make the assumptions behind my calculations clearer.)

source : FB post by Donald Low