The UBI will therefore lead to an increase in taxes. Wrong!

Universal Basic Income is not a complete give-away. (Jan 6, 2017). The writer, Chris Kuan, jumps to the usual conclusion that a universal basic income will lead to an increase in taxes. It may be true for some countries. Since the article is about Singapore, the conclusion is definitely wrong. Singapore has a vast amount of resources (government held funds and huge recurring land sales, among others) which are not used in the government's operating expenditure. 

The investment returns and recurring government sales of land and car certificates are more than enough to sustain a big universal basic income year for year for eternity. Singapore can easily have a sustainable universal basic income of $10,000 without having to increase any taxes.

See the following posts for some calculations:

Singapore revenue and expenditure for 2013 IF we have a citizen dividend / unconditional basic income. 

Singapore is a resource-rich country!!!

Saintly Election Promise

"If there is a situation where Bukit Batok residents' needs would compete with my own, I would always put Bukit Batok residents' needs above mine." (Murali Pillai, 28 Apr 2016, during a by-election in Singapore)

I hope voters keep this promise safely and cash it in when their needs arise.

Although it is great to have ultra altruistic and totally selfless politicians, it will be quite sufficient for politicians to return our confiscated citizen dividend.

The truth about the Singapore reseve

This video is made by the Singapore government, and is also available here.

For those very curious about the Singapore reserve, you won't be satisfied with this video. This is not a court of law where a witness must tell the truth, the complete truth and nothing but the truth. For example, after watching this video, you still won't know how much is in the reserve. Is it $1 trillion, $10 trillion, or $100 trillion?

Singaporeans incentivized to make their parents homeless.

In the new means tested pension scheme, Silver Support Scheme, announced by the Singapore government, the eligbility criteria are mean.

Singaporean old men and women (those older than 65 years old) will get silver support of S$300 to S$750 per quarter (i.e., $100 to $250 per month). Here are the means tests. To qualify, a senior must pass all three tests.

1) Lifetime wages.
Must not have more than $70,000 in total CPF contributions by the age of 55.
(Someone estimated that those earning $800 per month for 30 years will not pass this test.)

2) Housing type
Those who own, and live in, a four-room or smaller Housing Board flat will meet the housing type criterion. Those who live in - but do not own - five-room HDB flats will qualify for a smaller payout.

3) Household support

The household must not earn more than $1,100 per member per month.

Many households will be incentivized to make their seniors homeless.

Daughter: Mom. Here's the good news. The government will give you a small pension. Here's the bad news. You cannot stay here or the government won't give you the pension.

Canada wealth distribution: The good, the bad and the ugly

This chart is from The Wealth Gap: Perceptions and Misconceptions in Canada, a report by the Broadbent Institute.

People don't know how rich is the rich and how poor is the poor.

For a comparison with the distribution in USA, see this:
People plainly do not know how unequal their society is. USA. Singapore

The Financial Wisdom and Financial Legacy of Mr Lee Kuan Yew

Mr Lee Kuan Yew was the first Prime Minister of Singapore. After he vacated the Prime Minister position, he became the Senior Minister and then Minister Mentor.  He died in 2015. He was a very famous politician. (See https://en.wikipedia.org/wiki/Lee_Kuan_Yew).

There is an aspect of him that is not much publicized. He had great financial wisdom. With him as the leader, the Singapore government kept on increasing its wealth. There is so much money, shares, bonds, buildings and land parcels owned by the Singapore government that it is doubtful anybody really knows the total wealth of the Singapore government.

The Singapore government has never put a number there. Speculations by non-government people have put the number at $500 billion to $1 trillion. (One Singapore dollar is about US$0.70). Compare this with the annual government expenditure of about $50 billion. There aren't many governments around the world that can run for 20 years without a single further tax dollar.

But the wealth of the Singapore government is really a lot more. Because the speculations have never included land value and the many buildings owned by the government. Do you know that it will take 56 man-years to come up with a number for the land value? (That means 56 man working together will take 1 year to produce the total worth, or 1 man working alone will take 56 years). Here is the official statement from the Ministry of Finance, Singapore: "The Accountant-General said that it would take 56 man-years to conduct a complete valuation of the physical assets, even though he had already produced the listing (without valuation figures)."

The above is just a glimpse of the wealth amassed by the Singapore government under the leadership of Mr Lee Kuan Yew.

What is his financial wisdom?

He put into law that every elected government cannot withdraw money from the Singapore reserve, except under very strict conditions. And he created an elected President to help enforce this. The elected President has to approve withdrawals from the Singapore reserve.

He put into law that any surplus money after each term of an elected government will mostly be put into the Singapore reserve.

He put into law that any sales of land must put the money into the Singapore reserve. Land is a very valuable resource in Singapore. Land sales recently have been about $10 to $25 billion a year. That is, land sales alone could be about half the size of the government budget. But it is squirreled away into the Singapore reserve.

This financial wisdom is implemented even at the lower level of Town Councils. Every term of an elected Town Council can use the town council reserve only for very specific items. Again, any surplus after one term will mostly go into the town council reserve.

Unlike some old folks who store their wealth under their pillows, he set up two sovereign wealth funds to actively manage the Singapore reserve and to grow through investment.

The Singapore government loves surpluses and reserves. Every government and semi-government organization has lots of reserve. As a side note, this love for huge reserves has permeated non-government organizations, including charity organizations.

In very simple terms, he believed that almost anything and everything that the government does must lead to a positive financial position. Even a non-financial policy to control the car population in Singapore scoops in billions of dollar every year.

The legacy of his financial wisdom is seen today not only in the gigantic Singapore reserve but, most importantly, in the many ways that the Singapore government makes huge money. Describing them all will need a long post. The important point to note is that the Singapore reserve is still growing very very fast.

(A future post: Comparing the financial wisdom of Mr Lee Kuan Yew and Mr Jay Hammond, who was an ex-Governor of Alaska)

A Singapore Problem: Rogue President, Rogue Cabinet, Rogue Citizens

Although this is a Singapore problem, it is a problem that every country faces.

Many years back, in 1988, the Singapore Parliament, almost exclusively occupied by members from the PAP (People's Action Party), changed the Singapore Constitution so that the President will be elected by the citizens instead of being appointed by the Prime Minister. The Constitution also gives the Elected President a lot of power.

The Singapore Parliament (or more correctly, the Singapore Cabinet) at that time was worried that a rogue Parliament (which would form a rogue Cabinet) would run Singapore into the ground. So the Elected President was given two types of power to check a rogue Cabinet.

1. The Elected President can block the rogue Cabinet from reaching its greedy hands into the huge Singapore reserve.
2. The Elected President can block the rogue Cabinet from kicking out good chiefs and CEOs in the police, army, and many government and semi-government organizations, and putting rogue people in those positions.

Fast forward to 2016, now people are worried about a rogue Elected President. There is no more worry about a rogue Parliament. The worry has been reversed. Will a rogue Elected President create havoc for a good Parliament?

The worries of a rogue Parliament or a rogue Elected President highlight another issue: rogue citizens. How can the same citizens elect a good Parliament and also elect a rogue President?

The problem of controlling the damage that can be done by a rogue government is a problem that every country faces. What do other countries do?

One example is Alaska. To prevent a rogue government from dipping their greedy hands into the Alaska Permanent Fund, the Alaska Constitution requires a referendum. The politicians who drafted that referendum requirement put their trust in their citizens. (Since Alaska is only a state, these "citizens" are residents of Alaska) In a freak case, a rogue politician can get elected with less than 50% of the votes, but a referendum requires a much higher percentage to get through the watchful eyes of the citizens.

So, how should countries check their rogue Prime Minister, rogue President, rogue King, rogue Queen, rogue whatever?

It is a very serious problem when countries begin to have huge wealth funds to pay a universal basic income or citizen dividend. What is there to prevent a rogue government from bankrupting the wealth fund or diverting the money to other uses?

Lessons from Singapore - The simple secret of Singapore's success

Lessons from Singapore (From the Telegraph)

"When British ministers scour the world for policy ideas, one country is most often singled out for praise and emulation: Singapore. In the mid-Nineties, Tony Blair and Gordon Brown travelled there seeking guidance on how to reform the welfare state, and came back promising a “stakeholder society”." 

"Whatever its democratic deficiencies, Singapore’s model has – with no resources and limited land – produced a small state, efficient public services, a competitive economy and high per capita income. There must be something we can learn from that."

The first lesson to learn is that Singapore is a country with plenty of resources.

Now, the simple secret of Singapore's success.

For every person in the country,

The person pays the government 

more than

  the government pays that person.

Money going from a person to the government is not just income tax or goods and services tax. There are many explicit, implicit and untold ways that money flows from a person to the government. The video below mentions just a few more.

Think Singapore is a “low-tax” haven? Think again

This is the simple secret of Singapore's economic success.

If you wonder how any politician can win election after election with such a social system, that's another secret.

Pension fund charges that make retirees poor

"For too long, pension savers have been at the mercy of their pension provider." 

Pension fund charges make retirees poor.

UK

Excessive pension fund fees capped by minister

"Full frontal assault" on pension charges revealed by minister could add thousands to workers' retirement pots

Pension fees will be legally capped in a move that will prevent workers from being “fleeced” of hundreds of thousands of pounds, ministers will announce on Wednesday.

Steve Webb, the pensions minister, said the limit is part of a “full frontal assault” on charges that can consume as much as half a worker’s retirement savings.

Older workers with long-standing occupational pensions are most exposed to what Mr Webb described as “excessive” fees.

The Coalition will present the cap as the latest in a string of measures they say will help households struggling with the rising cost of living.

The cap could be set as low as 0.75 per cent of the funds being managed, a lower level than previously proposed.

An Office of Fair Trading (OFT) investigation into the £275 billion pensions industry concluded that millions of workers are left short-changed and bewildered by retirement schemes that carry a complex web of up to 18 different hidden fees.

“For too long, private pension savers have been at the mercy of their pension provider. Apparently 'low’ charges such as 1 per cent per year can mount up to a huge sum over the course of a working life.”

A worker paying £100 a month into a pension with a 1 per cent charge will see £160,000 wiped off their retirement pot over a lifetime of saving, Mr Webb said.

UK announces 0.75 percent cap on annual pension scheme charges

Webb said the cap would transfer 200 million pounds ($331 million) "from the profits of the pensions industry to the pockets of savers" over the next 10 years.

But insurer Legal & General said the cap could have been set even lower and that one of the reasons people were not retiring with large enough pension pots was high charges.

"We would have liked the government to have capped auto-enrolment default schemes at 50 basis points, but we welcome the direction of travel," said Adrian Boulding, L&G's pensions strategy director.

However, even 0.75% is 10 times higher than the management fee for Norway's pension funds. Even 50 basis points (0.5%) is still very high.

Norway

According to the Norwegian Ministry of Finance report on the management of the Government Pension Fund in 2013, the management fee was only 0.07% for the Government Pension Fund Global and 0.09% for the Government Pension Fund Norway. The GPFG has about 5000 billion NOK (about US$750 billion).

The annual return, after deducting management fees, of the Norway Government Pension Fund Global is
- 9,93% for the last 12 months (Q3 2014 report)
- 6.3% over the last 10 years
- 5.6% since Jan 1998.

Singapore

The Central Provident Fund, which has a balance of S$260 billion contributed from worker salaries, is entirely managed by the Singapore Government. The government guarantees an interest of 2.5 to 4%, with an average of slightly more than 3%.

The CPF money is reportedly invested by GIC. The reported annualised returns are
- 12.4%,
- 7.0% and
- 6.5% for the five-year, 10-year and 20-year time periods respectively.

In return for the guaranteed return of about 3%, the Singapore government takes away any investment returns over that. For example, for the last five-year period, the investment return is 12.4%. The CPF interest is about 3%. The government management fee works out to be about 9%. This is 100 times more than the management fee rate (0.09%) for the Norway government pension funds.

Citizen dividend: Everything is ready, except for the East wind.

Red Cliffs Battle. Waiting for the East Wind (From Wiki)

In the famous Battle of Red Cliffs during the time of the three kingdoms in China 2000 years ago, the defender had all the battle materials and soldiers prepared and waited for the East wind to blow, to bring the fire across the river to the attacker.

In Alaska, the Alaska Permanent Fund was set up 3 decades ago. Within a few years, the wind of citizen dividend started, and the investment money from the fund has been flowing in to Alaskans' pockets for 3 decades. This year, every Alaskan will get US$1884.

In Singapore, the permanent Singapore reserve was set up a few decades ago. Money has been pouring in to the permanent reserve with nothing coming out. It is big enough to easily distribute a citizen dividend of $10,000. When will the wind of citizen dividend blow?

In many countries, e.g., UK and Switzerland, that are looking at a citizen dividend or a universal basic income, their biggest problem is looking for the money. In quite a few countries, e.g., Singapore, Kuwait and Norway, the money is already there. Waiting. Waiting for citizens to really believe that they are owners of their country's sovereign wealth funds and other public properties.

Everything is ready, except for the East wind.

The Founder of the Singapore Permanent Reserve

Singapore

The Singapore Reserve is permanent. It cannot be used by the Prime Minister, Cabinet or Parliament without an explicit written agreement from the elected President. Half its investment income can be used by the Parliament.

For comparison, the Alaska Permanent Fund is permanent. It's income is distributed as an annual citizen dividend to all residents. It's income can be diverted and used by the Alaskan politicians with a change to the Alaska Dividend law.

Return our Citizen Dividend. "People need to quit demanding jobs and start demanding justice."

Why you have the right to a $5K dividend from Uncle Sam | Making Sen$e | PBS NewsHour: (Aug 27, 2014)

This post on citizen dividend has quite a few gems.

"Dividends from common wealth, by contrast, unite society by putting all its members in the same boat. The income everyone receives is a right, not a handout. This changes the story, the psychology and the politics."

"A national dividend system would be simple, fair and immensely popular. It would rest on the principle of shared ownership, not redistribution. Once set up, it would be market-based rather than tax-funded. And it could gain support across the political spectrum: conservatives from Sarah Palin to Bill O’Reilly have lauded Alaska’s dividends."

"Our times demand a reliable flow of supplementary income as well. The best way to provide that is to pay dividends to everyone from wealth that’s logically ours."

From progress.org (Aug 28, 2014), on the above post about citizen dividend:

"What’s needed is for regular people to feel enough self-esteem to demand a fair share of what’s already ours just like the rich feel when winning an enormous share of what’s not theirs. We’re not broke. There is a surplus. It just needs to be shared. People need to quit demanding jobs and start demanding justice."

When will more people around the world be more like Alaskans, demanding their share of their own state's resources?

When will the Alaskans be more Alaskan, demanding a better share of their own state's resources? They only get a quarter of what the state gets from the oil companies, which is a small fraction of the oil wealth. I think Alaskans get less than 10% of their oil wealth in citizen dividends.

I envy Scotland: "free prescriptions, no student tuition fees, social care for elderly people."

Scottish writers on the referendum – independence day?

In the above article, a writer highlights Scotland's "free prescriptions, no student tuition fees, social care for elderly people."

I envy Scotland, because Singapore is the opposite: expensive prescriptions, high student tuition fees, zero social care for elderly people.

It's not that Singapore has no money for that. There is enough to easily pay a universal citizen dividend of $10,000 a year.

South Korea introduces almost universal pension

(From koreaherald)

The “basic pension” program, which is one of President Park Geun-hye’s key pledges, is to benefit the poorest 70 percent of Koreans aged 65 or older by giving them a monthly allowance ranging from 100,000 won to 200,000 won depending on their income level.

President Park had initially vowed to offer 200,000 won to every senior citizen regardless of income level. The opposition party criticized her for deceiving the public after the government announced that the pension would only benefit the poorest 70 percent of seniors.

The first installment of the basic pension program will be given out on July 25.

Good, civilised countries have universal public pension. According to ILO, Public pension is essential for basic income security for older persons.

“It’s shameful for a rich country like ours to be tolerating such levels of poverty."

From
Largest study of UK poverty shows full-time work is no safeguard against deprivation

We can try to eradicate poverty, or

we can console ourselves that the poor "are not that poor".

Smug ministers keep saying they are helping people out of hardship

"Smug ministers keep saying they are helping people out of hardship"

"The study blows apart the idea peddled by the Government that getting a job tackles poverty."

"It found the majority of children living below the breadline have at least one parent in work."

From: Breadline Britain: One in three now living in poverty as chasm between rich and poor widens

It is time for unconditional basic income or citizen dividend.

Forget everything else, we just want our citizen dividend back. 

World ranking for public social expenditure on children

ILO Report. World Social Protection Report 2014-15: Building economic recovery, inclusive development and social justice.

"Under-investment in the social protection needs of children is particularly critical in low-income countries, which on average allocate less than 0.1 per cent of their GDP to child and family benefits. This points to a significant under-investment in children which is likely to have negative effects on the future productivity of these countries' workforce, and their future economic and social development prospects."

Public social protection expenditure on child and family benefits (excluding health), 2010/11 (percentage of GDP).

	Country_code	Public social protection expenditure for children
Low-income economies	Gambia	0
Low-income economies	Tanzania, United Rep.	0
Low-income economies	Myanmar	0
High-income economies	Bahamas	0
High-income economies	Barbados	0
High-income economies	Saint Kitts and Nevis	0
High-income economies	Bahrain	0
Middle-income economies	Belize	0.004
High-income economies	Singapore	0.009

World ranking for old-age pension

ILO Report. World Social Protection Report 2014-15: Building economic recovery, inclusive development and social justice.

Old-age pension beneficiaries as a proportion of the population above statutory pensionable age, latest available year (percentages)

	Main regions	Country_code	Elderly receiving old age pension (Total)
High-income economies	Asia and the Pacific	Singapore	0.0

ILO: Public pension is essential for basic income security for older persons

World Social Protection Report 2014-15: Building economic recovery, inclusive development and social justice. (June 2014)

Th first table shows the non-health public social protection expenditure on pensions and other benefits for older persons, 2010/11 (percentage of GDP). The second table shows the proportion of pensionable persons receiving pensions.

"It is essential that [older] persons are provided with reliable sources of income security throughout their old age.

Private, intra-family transfers may be important  ... but are very often far from sufficient and not always reliable, in particular for families already struggling to live on a low income.

For these reasons, public pension systems became in many countries a foundation on which at least basic income security has been built."

Where does your country stand?
Singapore is near the bottom. This is the root cause of the protest by older persons in Singapore.

Public Pension: Singaporeans lack this essential component for retirement

Pensions at a Glance 2013
OECD and G20 Indicators

This report by OECD shows the public and private pensions in many countries. Private pension comes from mandatory employment contribution and other private sources. Public pensions come from the money from the state.

"The OECD average for replacement rates of an average earner from public schemes alone is 41%, compared with 54% with mandatory private pensions included."

For an average earner, the public pension from the state alone is 41% of the salary when working. For example, if a worker earns $3,000 while working, his public pension will be about $1,230.

Here is a small sample from the OECD report, with Singapore added:

	Public pension replacement rates for Earners at 0.5 median wage	Public pension replacement rates for Earners at 1.0 median wage
Australia	52.4	13.6
Austria	76.6	76.6
Israel	44.5	22.2
Japan	49.8	35.6
Switzerland	48.6	32.0
UK	55.2	32.6
USA	49.5	38.3
Singapore	0	0

Singapore does not have a public pension.
It is not a matter of affordability. Singapore is a very resource rich country.