I REFER to the debate on the widening income gap in Singapore
and growth benefits not accruing to the lower-income, or even the
middle-income group.
The problem lies in the low- and even middle-income deriving
almost all of their income from work. On the other hand, the rich
tend to have most of their income coming from returns from capital.
There is a limit as to how much one is able to work as well as the
level of productivity any single worker can achieve. On the other
hand, there is virtually no limit to the amount of capital one can
hold.
Indeed, when the labour force already has a high level of
productivity, further increases to productivity would generate
relatively fewer returns. On the other hand, increase in
productivity would actually increase the returns to capital.
The way to solve the income disparity is to boost the poorer
segment's financial literacy so as to encourage them to hold more
capital, and to do so in an informed and educated way.
Only through proper savings and investment would they be able to
raise their standard of living significantly.
MoneySense Singapore is doing a fabulous job but on a very
limited scale. Perhaps the Government could enlarge the scope and
scale of the MoneySense project.
Goh Ching Soon