Thursday, October 15, 2015

Globalization, Labor, Immigration

When you look at this issues, much of it is heavily politicized.

On one hand, businesses want cheap labor. They want to pay people below market rates and increase profits. They get government to allow more visas and open floodgates for foreigners to come in to work in these jobs.

When the foreign labor enters, the locals which cannot find work or have their wages depressed complain about the liberal immigration policies or the illegal immigration problem.

In the end, its about money.

In the case of Singapore, they attract the world richest people who pay little tax. How does the state benefit from this? Trickle down economics? Welcoming these people who don't want to pay taxes in their own countries with questionable sources of funds is not going to create jobs directly.

One thing immigrants do in most countries: They will buy properties and cause prices to go up. For Singapore, it means that the government can sell state land to private owners or developers at a higher price and gain more revenues which is not used or spent on public welfare, but rather, kept in the reserves for investment.

How does higher property prices affect residents?

1) Higher property taxes
2) Kids and next generation cannot afford properties
3) Cost of everything will have a "rent cost" -- INFLATION
4) Cost of doing business increase
5) All profits go to -- pay rent

For the small % who own a few properties, they will quickly realize that there is no point working as the yields of their properties can be more than their jobs.

How does this make sense? Why will rich people buying properties cause inflation?

Well, the liberal immigration policies in Singapore also allow other low wage workers to enter. But it does not end here. With the Free Trade Agreement signed, skilled labor can also enter Singapore to find jobs. They will also legally be allow to work in Singapore.

This will indeed create a demand which will drive up the rents and prices.

So how does this affect Singaporeans?

You get people in their 40's and 50's, university graduates unable to find jobs, and have to drive taxi or become tutors. The perceived "more hungry" foreigners from third world countries come and take the jobs at a much lower wage.

In many other countries, this is how slums are created, and in Singapore, you get HDB flats and apartments squeeze more people inside.

How does this benefit Singaporeans?

As a business owner, property owner, you do get low wages, and big demand on your properties. As an average Singaporean, you get to complain more.


Is it a problem of Globalization?

Over the years, I've been to Africa, Australia, Europe, N and S America, Carribbeans, and Australia. Both to areas where there is extreme poverty and to large cities.

I would say that this problem where foreign born people outnumber the locals is fairly rare, is a issue with UAE and Singapore. In both countries, profits seems to be above the people. The low wage workers' rights are violated constantly and immigration policies are tweaked to give the rulers an advantage in politics.

I don't really feel that having more workers or foreigners cause a very big problem. The main problem is probably due to incompetence of the government to plan ahead. To have the different departments within the bureaucracy work together to benefit the country. If the trade industry needs more workers, then the health ministry, education ministry and national development needs to increase capacity.

If the reason for having cheap labor is to be more competitive, then commercial properties and industrial land should be also cheap to keep cost low. Having the mentality of, "Businesses are making money, government should also be making money..." does not help as the government should be seen as collecting enough taxes to provide necessary services, and not having hidden taxes and finding ways to collect more funds for vanity projects.


Back to the problem with immigration in the US.

There is a fair bit of illegal immigrants in the country. I would say, most of these immigrants are in the country for work. However, this problem involves less on skilled labor and the graduates are less affected. Instead, the blue collared workers may see their wages depressed with the availability of cheaper labor.

There is also a spin of these illegal immigrants collecting benefits. And the people who are collecting benefits are probably the ones worried as there is a limited budget and the state find it hard to manage.

By looking at the military spending and corporate subsidies, social benefits are so small in the whole picture.

In the US, there is a lot more land, and property prices are not inflated by immigration and better managed.


In my opinion, the whole labor and immigration issues are politicized to get political miles. The real problem remains is the incompetence of the government to coordinate and manage change.

You get what you vote for.

-- Iron Bowl

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