A Japanese solution to Singapore's very low birth rate

Normally I would respond to another blogger if I disagreed with the blogger's opinion but this time,  I am responding to a very well written piece about Singapore's low birth rate and how totally salah the government is on the issue.  In his piece, Nix Chin explained the correlation between population density and birth rate, illustrated by a huge aloe vera bush trying to grow in a very small pot. Well done Mr Chin, I would give your piece an A* - well researched, well structured and very convincing argument indeed. Now would someone please shove this in some minister's face and tell him, "Look, just spend 5 minutes reading this and you'll realize what the hell is going on."

Getting kinda crowded in here...

Given that Nix Chin has already given you such a good explanation, let me analyse the situation and discuss alternatives to this massive influx of foreigners. Firstly, we have a ridiculously low birth rate (0.78) which is currently way below the replacement level of 2.1 - what do we do in such a situation with a rapidly greying population? Well, let me start of by telling you what won't work and what will make the situation worse.

The government is setting itself up for a far bigger time bomb - they have been importing more foreigners to increase the workforce. Now the key ratio they are looking at in the short run is the ratio of working adults to retirees. Working adults contribute to the society and pay taxes - these taxes can then be spent on providing services for the elderly. There is also the implicit assumption that these working adults will be taking care of their own parents in the process - in theory. The picture in Singapore is quite different indeed.

I've talked about the squeezed generation - the working adults who find themselves having to support their elderly parents as well as their children and despite having a decent job, the money isn't far enough to support everyone and they find themselves trapped in a cycle of "money no enough" and end up getting into debt. Furthermore, the majority of these new foreigners brought in are Chinese - the very people who are not producing babies. Hence you have this situation, in 2012, you bring in all these PRCs in their 20s and 30s who are of productive working age but they have very few babies. What will happen in say 2050, when they are thinking about retiring? The government is just creating a far bigger grey time bomb here and by then, Singapore would be so crowded as an island that it would be impossible to then bring in another 3 or 4 million PRCs deal with the problem. It is a disaster awaiting Singapore in 2050. A man-made, or shall I say, a PAP-made disaster - you know whom to blame.

Can the squeezed generation even afford to have children?

What is the alternative then? Could we cope with a country with a very low birth rate and still carry on being a prosperous country? The answer is YES, look at Japan. Now Japan has a low birth rate too - 1.39. That is not as low as Singapore's but still way below the 2.1 replacement rate. The Japanese birth rate was at its lowest in 2001 when it hit 1.32 but it has recovered somewhat in recent years. Given the longevity enjoyed by the Japanese, they have a greying population but they are not desperately importing foreigners. Quite on the contrary, it is extremely hard to gain Japanese citizenship. Even foreigners who have been working in Japan for many years are denied citizenship in Japan and often have to return to their country of origin the moment their employment in terminated. It is quite the opposite of Singapore - with the Japanese government and people determined to keep Japan as Japanese as possible and so far they have succeeded: Japan is still 98.5% Japanese today. Gaijins are welcomed as long as they have a  work permit but that is as far as their welcome extends.

Now it's not that the door to Japan is firmly shut - but they tend to confer nationality on a very small number of people who can prove Japanese ancestry. For example, in the case of the Brazilian-Japanese diaspora, ie. the individuals are born in Brazil, but has either pure Japanese blood or at least some Japanese blood in them. Being able to prove that you have Japanese ancestry allows you to jump to the front of the queue, whilst say  Indian nationals with no Japanese ancestry would remain at the back of the queue no matter how highly qualified and talent they are. Japan is not interested in trying to increase its population through immigration - it is also allowing a very limited number in each year, simply to allow ethnic Japanese migrants to return to the 'motherland'.

Now the Japanese economy is stagnant at best - but it is by no means poor! Yes their GDP per capita (at PPP) has slipped behind that of Singapore and Hong Kong - but they are still on par with countries like the UK, France and Italy. As discussed in my previous post, the big cities like Tokyo, Osaka, Nagoya and Kobe are subsidizing the poorer, rural areas of Japan and if you were to compare Tokyo to Singapore, rather than Japan to Singapore, a very different picture emerges indeed. Anyone visiting Tokyo today would still find it a very expensive city indeed - it is not as if Japan has become some kind of third world Asian country just because their economy is stagnant. On the contrary, the Japanese still maintain and enjoy a very high standard of living on par with any first world country today without Singapore-style economic growth.

Japanese culture is far more clearly defined than Singapore's. 

Don't forget, for a long time, certainly when I was a child growing up, Singapore's claim to fame was to be Asia's second richest country after Japan. Whilst Singapore had a point to prove, Japan was not that worried about giving up that crown to Singapore. Their national pride is not defined by their GDP figures - their sense of being Japanese is far deeper rooted in their culture and it is this unique cultural identity that has seen them through both good and bad times. Never mind that sense of national pride, Singapore doesn't even have that sense of national identity that Japan has and thus it is relying on economic growth to define itself on the world stage.

Now, without this massive influx of foreigners, Singapore would not become one of the world's richest countries - instead, it would enter a period of economic stagnation like Japan. This is when a lot of people do not understand that concept of economic stagnation - they think that if your economy doesn't grow you will become poor. That is wrong - Japan was a rich country, their economy didn't grow, guess what? They're still a rich country because they remained the same they were. It is only when you experience economic meltdown (eg. German Weimar Republic in 1922-23, Hungary in 1946, Zimbabwe in the 2000s) then yeah you're in trouble. But stagnation is not the same thing, as proven in the case of Japan in the last 20 years.

Downtown Shinjuku - Tokyo is still a vibrant, thriving and expensive city today.

With a smaller working population and a larger retired, grey population, it would mean a few things.

Firstly, there would have to be greater economic prudence on the part of individuals. It means living within your means and being responsible for yourself when you are old. This is something I think people do not give Singaporeans enough credit for - this culture of saving for a rainy day rather than living beyond your means and getting into debt. Maybe it is an Asian thing, maybe it is a cultural thing or maybe it's the CPF factor. Compared to say British and American people, Singaporeans are far more financially prudent than their British and American counterparts who are far more likely to be in debt, rather than have money in the bank.

The fact that the birth rate in Singapore has fallen this low can be interpreted as a good thing - it means that people like Bill's parents are in the minority and Singaporeans are waking up to the fact that they shouldn't have children if they cannot afford it for it would be terribly irresponsible, if not downright stupid to do so. Singaporeans have demonstrated that they are learning, they are evolving and have modified their behaviour - so actually, the government has little to worry about on that front. Let's give Singaporeans credit where credit is due - they are able and prepared to deal with the situation Japan-style.

Actually Singaporeans are pretty good with money.

Secondly, it would mean some of the elderly remaining economically active into old age. Note that I only say "some" not "all" - big difference there! Being able to retire really boils down to a simple question: do I have enough money to sustain me? By that token, some people can retire at 40, even 30 - it all boils down to your financial situation and there's no substitute for sound financial planning. It is not about how much you earn - it is how much you save and how those savings are managed. So even if you are not earning a lot of money, if you manage to save half of what you earn every month, you're still better off than someone who earns a lot of money but spends every last dollar he earns. Everyone will have to become wiser and more responsible when it comes to financial planning - rather than expect the state or the next generation to bail them out when they end up old and destitute.

We also need to fundamentally change the way we view the elderly. It is so wrong to see them as inactive old folks who only like to watch crap on TV or taking long naps in the afternoon, incapable of offering anything of value to society. Whilst they may not be as physically fit as they used to be, many still have plenty of brain power to offer to society. Agatha Christie - one of the world's most popular authors - lived to the ripe old age of 85 and she kept on writing almost within a few months of her death. She certainly did not retire and stop writing at 60. Yes the elderly may need certain adaptations to continue working, but we should respect them as people who have had a lifetime of interesting experiences, rather than treating them like young children, incapable of caring for themselves.

British TV celebrity Nick Hewer - still working at 68 and very popular indeed!

I was worried about my parents having the burden of helping care of my disabled nephew - after all, they're in their 70s. I remember how I was utterly horrified to see my dad run after my nephew in the playground and I was like, "好心你啊爸! 不要跑啊! 好心你小心一点!" (Good grief please dad, don't run! Please be more careful!) And my dad looked at me and made a face, as if to say, "don't treat me like a child, I'm perfectly capable of taking care of my grandson." So there you go, even I am guilty of treating the elderly in a condescending manner. It's not that I doubt my parents' abilities, it's more my impression that elderly people may easily fall and break their hips or legs and thus shouldn't be doing anything physical at all - especially if it means running after an active 9 year old child in the playground! I'd be quite happy for my parents to do "brain-power" activities with my nephew but tolong, please, no more physical activities. My parents had worked all their lives - without the responsibility of taking care of my disabled nephew, without this raison d'être , I think they would be incredibly bored. Whilst caring for a disabled child is a huge undertaking and challenging task, my parents have actually done quite a good job despite their age.

If you were to look at the situation in Japan, some rich Japanese people can retire at 55, or even at 50 - whilst some continue working till nearly the day they die. You cannot assume that just because the country has a greying population, everyone will be forced to work till 70. No, that is not the case, you simply cannot assume that - it really varies on a case by case basis. Can you seriously expect to retire comfortably at 60 when you've earned no more than $$1500 a month all your life? Get real. So, get busy, make loads of money and save up for your retirement now. The reality is that only low-income folks with many liabilities (eg. aged parents, too many children, extended family members to support etc) would be the ones unable to accumulate a sufficient nest egg to retire on - so if you don't want to end up in that situation, it's time for you to think about where your career is going and how much money and what kind of lifestyle you aspire to!

There is no substitute for sound personal financial planning. 

Oh and as for those of you who are going to attack me for that with your "my family may not be rich but we have a lot of love and love matters more than money blah blah blah" - I have this to say to you. There is a huge difference between being poor and living beyond your means. I'm talking about fiscal responsibility here. If you earn $800 a month, then you should have a kind of lifestyle which does not cost more than $700 a month. And if you think you can bring up children with that little money in Singapore, stop deceiving yourself. You can be poor without being in debt - such is the difference between being frugal and being irresponsible. Having 3 or 4 children when you earn very little money is the latter. All I am saying is this: live within your means and be responsible for your own finances.

Thirdly, it would mean much slower economic growth and a lower GNP per capita, like Japan. Yup, you know what that means. Less chest beating for Singaporeans. Can you live with that? Frankly, the Japanese aren't that bothered about not being the economic superpower they once were in the 1980s, their sense of national pride and identity is not tied up with their economy's performance but it is something that goes far deeper and is far more profound than that. There's a lot Singapore can learn from Japan in that aspect.

The Japanese response to their greying population is more brain power!

Fourthly, another vital lesson that we can learn from Japan. One of the ways they have reacted to a greying population is to innovate - the current working generation cannot work any harder to increase economic output, instead, they can work smarter. We're talking Japanese-style brain power as opposed to Chinese-style muscle power & man-hours. Here are some facts about the Japanese economy:

"Japan is the world's 3rd largest automobile manufacturing country, has the largest electronics goods industry, and is often ranked among the world's most innovative countries leading several measures of global patent filings. Facing increasing competition from China and South Korea, manufacturing in Japan today now focuses primarily on high-tech and precision goods, such as optical equipment, hybrid cars, and robotics. Japan is the world's largest creditor nation, generally running an annual trade surplus and having a considerable net international investment surplus. As of 2010, Japan possesses 13.7% of the world's private financial assets (the 2nd largest in the world) at an estimated $14.6 trillion. As of 2011, 68 of the Fortune 500 companies are based in Japan. The economy of Tokyo is the largest metropolitan economy in the world."

Brain power, not muscle power. 

That's the Japanese response to the challenge: work smarter, more brain power, get creative and innovate, add more value rather than simply put in more man-hours. After all, you need more money to support the elderly - not more people per se. It is the money that matters at the end of the day - there is no guarantee that this extra people will generate the tax revenues necessary to foot the bill of caring for the elderly. If all you need is the money at the end of the day, then Japan's approach of using brain power to generate that income has certainly worked very well indeed. The evidence is clear: the Japanese are famous for their innovation and technology, some of their best brands include Hitachi, Sony, Honda, Toyota, Panasonic, Nissan, Mitsubishi, Canon, Sanyo, Mazda, Yamaha - need I go on? How many famous Singaporeans brands can you name? Really, the only Singaporean brand that is globally recognized for its quality is Singapore Airlines - it is time for other Singaporean companies to focus on improving their quality and international reputation like SQ and all these other famous Japanese brands, rather than simply increasing output and revenue.

Hence if one were to adapt the Japanese approach in Singapore, it would mean stopping this influx of foreigners right away (or severely curtailing the numbers) whilst investing far more money on the upper end of the high-tech sector, nurturing selected industries like finance, electronics, green-technology, pharmaceuticals and cosmetic surgery. It would mean betting that the top 2% or 3% of the best brains in Singapore could innovate and add great value in their sectors. The government would nurture them, give them special treatment and all the support they need in the hope that most of this small group of elite brains would be able to generate more revenue than thousands ordinary working class folks working in mundane jobs. The result is a very high-tech economy with less people, more brain power and more revenue. Hmmm, aren't we kinda doing that already? So why are we still importing thousands of PRCs then?

The PAP can learn a lot from Japan.

Given that Singapore does pride itself in having a good education system and with all this emphasis of tuition to drive students to the best universities, why oh why isn't Singapore using the Japanese brain power solution? Didn't anyone at the PAP have a look at the situation in Japan and spend a few moment contemplating how the Japanese have reacted to their greying population? Unbelievable. Un-freaking-believable. You don't even need to come up with a new solution PAP, there is no need to come up with a new solution when Japan has tried and tested a formula that works very well and is suitable for Singapore. But oh no, you have to set up a grey time bomb for 2050. The sheer stupidity of the PAP is un-freaking-believable.

Lastly, I did think about the comparison with South Korea - they have a very similar approach to Japan on the issue and are also facing a rapidly greying population. South Korea is slightly different though - as they are a bit more relaxed with emigration compared to Japan and receives a small but regular stream of North Korean refugees and 조선족/朝鮮族 Chinese-Koreans, ie. ethnic Koreans who were living in China, usually in Jilin or Liaoning provinces. Note that these immigrants are welcomed as overseas Koreans returning to the motherland, rather than foreign talent and indeed, some North Korean refugees are so poorly adaptable to life in the modern world that many of them are not economically productive for many years and could remain a burden on the South Korean state for life. There is also a small trickle of migrant workers from Central Asia and South-East Asia - but I stress, this is a small trickle, they are using these workers to plug a gap in the South Korean labour market, not reverse the greying population trend. Their door is not as tightly shut as the one in Japan but it is only just slightly ajar, unlike Singapore.

The South Koreans are coping with the challenge of a greying population the same way Japan is: brain-power. One notable similarity between the South Koreans and the Japanese is their ability to innovate. Here are some famous South Korean brands for you: Samsung, Hyundai, Lotte, Daewoo, Hanjin, LG, Ssangyong, Maybe the list isn't as long or as glorious as the list from Japan, but it is still pretty impressive for a country that is less than half the size of Japan in terms of population.

OK, so that's my take on the issue. I think the PAP has been incredibly stupid in not following the Japanese response to the challenges of a greying population - but there you go, that's my opinion. What do you think? Do you think the PAP's approach has been appropriate? Or do you think I am seeing Japan through rose-tinted lenses? Have you lived in Japan and are able to compare & contrast the Japanese and Singaporean situations? Let me know what you think - please leave a comment, domo arigato どうもありがとうございました!