"Foreign Talent" Issue is a Symptom of the Power Struggle between the Political, Corporate Elite and the Working Class

There has been a lot of argumentation about whether the "foreign talent" policy is the right policy for Singapore and the PAP Government as the primary proponent of Singapore's hyper liberal immigration policies, has given all sorts of reasons why Singapore needs a massive influx of foreigners. These reasons consist of arguments regarding Singapore's need for foreign labor to supplement economic growth, and to "top-up" the shrinking population." Meanwhile the opposition and other critics of the foreign talent policy usually fall into the trap of engaging the PAP on their terms and use counter arguments as to why the policy doesn't really work. Such arguments usually run along the lines of foreigners overloading the infrastructure, depressing wages, lowering the standard of living, lowering productivity etc.



While these counter arguments are mostly valid, harping on the illogical nature of the policies often misses the point, and the point that I would like to make is that the "foreign talent" policy is in place because large segments of the corporate and political elite benefit from the policy and have the power the implement it. To illustrate this point, all that is needed is an enumeration of the benefits of the policy and the parties who benefit from the policy:

• Business owners and managers benefit because they are able to increase their profits by cutting their labour costs using cheap foreign labour
• The list of low productivity, labour intensive industries in Singapore is long and many of these industries include some of the largest Government linked corporations in Singapore, and the list includes:

1. Property developers and construction companies (Capitaland, Keppel land)
2. Shipbuilding (Keppel Corp, Sembcorp
3. Transportation (SBS, TIBS)
4. Banks & Telecoms companies benefit greatly from cheap call center personnel, IT back office personnel (DBS, SingTel, Starhub)
5. Hawker operators & restaurants (cheap waiters, burger flippers)
6. Retailers (cheap sales staff)
7. Hotels, Casinos & hospitality (cheap bell boys, cleaning staff, counter staff etc.)

• Businesses are able to expand their operations faster using foreign labour inputs and do not need to focus on the difficult process of training and productivity enhancement
• Perversely, some businesses benefit from the massive influx of foreigners because it creates increased demand for the goods & services that they produce! Instead of having to compete in new markets in order to acquire customers, why not bring the customer to your front door where you already have a dominant competitive position! Great examples of companies which benefit from this include the transportation companies (SMRT, Comfort, SBS), telecoms companies (SingTel) and the property developers (more people in the country means more demand for residential real estate at higher prices!)
• Rapid expansion of GDP brought about by the foreign labour influx allows the ministers to pay themselves BIG GDP BONUSES!!!

It is clear to see that large segments of the corporate and political elite in Singapore have lots to gain by the 'foreign talent' policy, whether or not the policy is truly beneficial to Singapore as a whole and whether or not there are segments of society which suffer as a result of the policy. Once we understand this, it is easy to realize that the politicians do not really have the interests of the working class (which forms the majority of Singaporeans) at heart, but instead are acting out of their self-interest. At the same time, it is also easy to realize that there is significant regulatory capture in Singapore, and that instead of acting in the public interest, the PAP Government has been advancing the special interests of a small minority of corporate elite that has come to dominate economic policy agenda setting.

The close intertwining between the political elite and the corporate elite exacerbates the regulatory capture and incentivizes politicians to act in the corporations' interest rather than in the interests of Singapore as a whole. Just consider how many retired politicians and civil servants have proceeded to take up senior positions in GLCs, and how many corporate executives there are who have taken positions as MPs in parliament, and it is clear that the corporations and the PAP are in bed with each other.

But such a phenomenon is not an anomaly. According to Wikipedia, regulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether.

Regulatory capture has been well studied, and the economist George Stigler has won the Nobel prize in economics for his work in the field. But even thinkers as far back as Adam Smith anticipated the phenomena. Rick Bookstaber notes that "Smith recognizes that workers and employers would jostle for an advantage by using political influence, and he also recognizes that this would be an unfair fight, with the employers having stronger influence and, because they were a far smaller group, being better able to do their lobbying behind closed doors."

So where do we go from here?

Well if the foreign talent policy is ultimately a power struggle, then the working classes need to struggle for their power. That means standing up against the oppressive talent policy, whether through voting for opposition politicians or through other means. If the corporations want to play dirty, then the people need to call them out on their bullshit and put them in their place.

Harping on the logical fallacies of the foreign talent policies seems like the right thing to do, but is ultimately ineffective, and falls on deaf ears. The only effective way to reverse it is to repel the private vested interests by force and to hit the politicians where it hurts the most. There is no other way, and the sooner Singaporeans realize this, the better.

References:
Wikipedia (2012) "Regulatory Capture"
Rick Bookstaber, Credit Writedowns (Feb 15, 2012) "Adam Smith and Joseph Schumpeter on
the Bifurcation of Society"