Spend More And Give More?
Recently, there were suggestions to expend more of the National Investment Returns (NIR) and revenues from land sales to meet current requirements instead of putting them into the national reserves.
1. Whatever position one takes in this regard, it’s hard to determine if it’s a right or wrong position, and to justify the position.
Furthermore, there won’t be a position that will satisfy everybody.
2. In my humble opinion, past generations spent based on their earnings.
They spent about half of the Net Investment Returns and invest the rest for our generation.
Those two principles are part of a wise, prudent and effective policy.
We should adopt a similar fiscal policy and do the same for future generations.
3. It’s likely that in the future, national expenditures will increase.
To better prepare for rainy days and the future, it’s better to build up a stronger reserves.
As they say, it’s better to be safe than sorry.
4. Singapore is a relatively small country and has no major natural resources.
We cannot model ourselves after other countries.
Few foreign experts if any can fully understand our needs, requirements and aspirations.
We can listen to their advice but we cannot adopt it completely because they don’t know for sure the risks and dangers that we will face in the future.
5. Having a strong reserves and growing it steadily is an important part of our total defence.
It can help us continue to achieve a AAA credit rating from international rating agencies.
Our credit rating provides a strong support for our trade and commerce, and investment initiatives in the global community.
6. If we have a stronger reserves, it ensures that we are in a better position to survive and succeed in a volatile, uncertain, complex and ambiguous (VUCA) environment.
We can better respond to various financial and geopolitical challenges.
7. History has taught us that we will never know when the next crisis will hit the world.
We will also never know how long the crisis will last and how much resources will be needed to survive the crisis.
8. For those who propose that we should spend more and give more, please reflect on the following questions:
a. How do you ensure that voters will not want to have more and more from the net investment returns and reserves?
b. What’s the assurance that after the ruling government has spent more and given more, it will improve voters’ self-motivation and self-reliance to do more and do better for their lives?
c. How do you prevent the voters from developing a mentality of self-entitlement and self-gratification that is common in many countries?
d. What’s the guarantee that politicians will not want to pander to desires of voters and end up spending more and giving more so as to be popular and to win votes?
e. How do we prevent unfriendly parties from finding ways and means to weaken our fiscal disciplines and financial positions?
It’s easy to spend more and give more. When will it ends?
My fear is that once the Pandora Box is opened, we may never be able to close it again.
I hope this message will find a place in your heart.
By the way, I have also recorded other reflections.
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