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Abstracts of essays; news; announcements; short takes.
About Me
- Yawning Bread Sampler
- This blog carries summary abstracts of Yawning Bread essays, with space for comments.
Here too are other tidbits that are too short for the main Yawning Bread site.
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Blog Archive
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2007
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December
(17)
- Blogging is a criminal hobby, part 1
- Happy to eat apart
- Supreme Court victory in Nepal
- DIY self-portraits, part 2
- Tips for the vision-impaired
- My mother's Christmas
- Futsal on International Migrants Day
- New highs in ministerial salaries, new lows in med...
- After 24 years, passing through, speaking up
- Christopher de Souza's four rebuttals
- Hady did Singapore proud, part 2
- Hady did Singapore proud
- DIY self-portraits
- What lurks beyond globalisation and capitalism
- A skipped floor
- Who shall watch the Watchmen?
- Migrants should be required to take English courses
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December
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Posts
6 comments:
Globalisation is all about the 'greater good', that consumers will benefit in the long run. Usually it is the same argument for outsourcing. But a lot of times these greater good and benefits are captured only in quantitative terms and not qualitative ones. There is a story in the papers today about Ngiam Dong Tow talking about how influx of cheap foreign labour has driven economic growth but ignores the consequences - qualitative ones such as overcrowding, social stability, and so on.
The gahment's obsession with growth numbers may have something to do with their own performance evaluation (kpi) and how much they are paid as a result. It is not healthy. Kind of like the old NKF way of accumulating reserves and using that to measure the ex-CEO's performance. The priorities are all wrong nowadays. :(
>Globalisation is all about the 'greater good'
maybe, but criteria for "good" is usually defined by the people in charge, as are the rules of the game, so they always claim to be playing by the rules and achieving the greater good
The widening gap between top executive compensation and workers' wages is due to several reasons: (1) outsourcing of operations/admin to lower cost nations (2) top executives having undue influence over board of directors & executive compensation board (3) top executives assuming unreasonable risks or unethical means to achieve profit growth to satisfy their greed for high pay.
Reason (1) has everything to do with globalisation & capitalism. The US leads in this area due to 2 key reasons: (a) their "macro" economic & military power; (b) their "micro" intellectual properties & financial engineering sophistication. The US controls most of the world's major commodity futures at Chicago Board of Trade & Chicago Mercantile Exchange. Most commodities are priced in USD. Secondly, the US is a leading global military power with state of the art arsenal. The US leads in intellectual & market innovations eg. iPod - who makes money? Apple or PRC subcontractors? The PC - Intel/Microsoft or hardware makers? Coke/Pepsi or local bottler? Wall Street leads the world in financial engineering. Most major mergers & acquisitions are arranged by Wall St merchant bankers. The US coined & created "Globalisation" just to dominate the world. The reason why top executive pay increased & widen so much is the US companies consolidated their market position thru M&A & outsourced their operations to 3rd world countries like Spore (many, many moons ago), then Msia/Thailand & now PRC. With data & voice network technologies - accounting, call centres & tech/service centres & admin are now outsourced to India, the Philippines, etc. The profits from these moves are captured at the top executive level though pay & share options. Remember a time when Sporeans could get cheap pirated PC software from Sim Lim Sq - the US govt twisted our govt's arm & BSA was enacted to weed out piracy - but for whose benefit? The recent furore over iPhone sales in Spore serves to remind us who are the technology master - Apple or Spore govt? Spore suffers from reverse outsourcing ie, "insourcing of foreign labour" to keep wage levels down & contribute to a lowering of service standards, spoken english proficiency & social instability. How did Spore govt & mainstream press come to label this as globalization is beyond anyone's intellectual comprehension. Foreign talent? my foot! Australians recently turf out John Howard in the elections including his own ward at Bennelong at the ballot box because the coalition's workchoice regislation hurt Australian workers' rights & wage benefits. Conversely, Sporeans continue to suffer in silence over this area while our govt encourages & expand foreign workers into Spore is beyond comprehension. At the end, the ones suffering the most are the ones that support the govt the most! How ironic, isn't it?
As in reason (2), for US companies without the direct benefit from globalisation, the trick is to manipulate the board of directors & executive compensation board to boost their pay levels & to grant them "Golden Parachutes" . Warren Buffet have wrote much about this unethical method of boosting executive pay & unaccountability. Anyway, this type of company didn't last long! - either they collapsed or were taken over. Increasing shareholders activism & activist investment funds in the US have reduced much of such behaviour. Some political dictators follow a similar concept where they have boost their pay & surrounded themselves with their cronies as citizens chose to be silent or passive. Alas, citizens have to voice out thru activism or forever lose that right!
Reason (3) is a cause for concern. Like narcotic drugs, the need to satisfy high executive greed brings about unethical behaviour & unreasonable risk taking. Recent cases include China Aviation Oil, Sembawang Maritime, etc. The most infamous example is Enron where top executive manipulated gas commodity futures market via off-balance sheet business entities. The Enron top executives actually encourage such unethical behaviour through accounting fraud in order to maintain their high executive pay & share options & to keep a false charade of high profitability growth going to Wall Street when everyone knew that gas utilities were virtually stable at the consumer end but was subjected to volatile pricing at the supply end. The top executives quietly sold off their share options whilst kept encouraging their employees to keep their Enron shares & buy more, if possible. At the end, the losers were the Enron employees who not only lost their jobs when Enron collapse but also their 401K retirement funds which were solely in Enron shares (now worthless). The tragic conclusion was even the US govt for all its powers could not do anything for them. Arthur Andersen, an accounting accomplice in the Enron case also collapsed in the aftermath. NKF is another key example of high executive greed. The US mortgage subprime credit crisis is another Wall Street con job that the world fell for. The credit rating agencies were accomplices for this con job.
The bottom line is that beyond globalisation and capitalism is (1) it is a US-concocted concept & serves to promote US hegemony over the rest of the world (if you believe it-you're a fool, sucker!) (2)It is a game where only a few win whilst everyone loses eg. casinos. The Big Corporates & Wall Street are winners here whilst govts & citizens are losers.
The Bush Administration is a proxy for US big business & Wall Street. Iraq invasion (on WMD pretext), huge govt budget deficits, tax cuts, reduced health & education spending etc, are all symptoms of a US big business/Wall St proxy. His time to go is coming. His accomplices Tony Blair (UK) & John Howard (Aust) have gone! The next elected US govt will have to deal with a crippling budget deficit, declining USD, health & education crisis. It will be the biggest wealth transfer con job from the poor to the very rich using the pretext of globalisation and capitalism to undermine workers' rights & destroy social fabric of society. Already our "overworked" Spore MPs are seeing more & more poor Sporean caught out by this phenomenon created by the govt.
The issue is not the income gap, but rather whether the lower income earners would rise as the economy grows. So long as the low income earners rise with the tide, then there is no harm to see the top earners getting more. But, should the low income earners be getting small increases (or worse, no increase) while cost of living continues to rise, then we are in for trouble.
Concerned 11.15 is right.
The near unlimited influx of semi-skilled and unskilled foreign workers is depressing wages in this segment of population, ie their willingness to do the same job for less pay and there is no guessing who employers would prefer. And if semi-skilled Singaporean loose their jobs, the likelihood is that they will have to move into the unskilled jobs thereby depressing the wages further. Already we are seeing a sustained fall in wages of cleaners etc. I think we have a problem already.
I second concerned's point.
No doubt income equality might indicate how likely the lower rungs of society might revolt against the upper rungs. However, it is not a direct indicator of the quality of life at all.
It doesn't matter if the richest are obscenely rich, as long as the poor are also comfortable.
In arguing for any economic policy, we should be looking at the efficacy of the policy (how will this policy affect the lowest common denominator in society?), and not the "fairness" or "egalitarianism" of the policy (how wide is the income gap).
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