Commentary: Use the right lamp to light the way forward on inequality

SINGAPORE: An old professor of mine once taught me that research methodologies are like torchlights we use to illuminate a certain part of the room.

If we use only one torchlight, we run the risk of only being able to see one part of the picture at any point in time.

But if we use more torchlights or, better yet, switch on all the lights, we can gain a much more holistic understanding of any policy issue.

This analogy can be applied to the recently released Commitment to Reducing Inequality (CRI) Index 2018 by Oxfam, which had ranked Singapore 149 out of 157 countries in its efforts to tackle the rich-poor gap.

WHAT ARE WE REALLY MEASURING?

At the heart of the debates over the Oxfam rankings is the question: How do we measure inequality? And do such international measures provide a valid representation of the extent of inequality in Singapore?

The Oxfam rankings focuses on input measures, with Singapore’s low rankings attributed to its relatively low level of public social spending. According to Oxfam, only 39 per cent of the national budget goes to education, health and social protection.

While such input measures can provide a useful indication of a country’s commitment to social spending, they do not necessarily provide a complete picture of the ways in which inequality should be managed or evaluated.

As Minister for Social and Family Development Desmond Lee has recently argued, Singapore has achieved a set of positive outcomes in health, education, jobs and housing that are redistributive in nature and have a progressive effect on those in the lower-income brackets – outcomes that most inequality indicators fail to capture.

Minister for Finance Heng Swee Keat has also similarly pointed out that the Oxfam report’s focus on input measures may have painted an inaccurate picture.

The Oxfam report suggests that there is one approach for countries to redistribute income – that is through government taxation of the rich and public expenditure in specific areas but is that really so?

When we place different sets of rankings side-by-side, we get a conflicted picture. 

Take for example a comparison of social outcomes with tax rates, illustrated in the table below.

As the table shows, Singapore’s Gini coefficient (after taxes and transfers) juxtaposes with strong performance on rankings of education and healthcare measures. This presents a paradox and suggests that countries pursue very different strategies in tackling inequality such that one model of success cannot be applied to the others to gauge commitment to tackling inequality.

To give another example, Israel was ranked 25th on the Oxfam rankings, even though its Gini coefficient is ranked 47th highest in the world and 22 per cent of its population lives below the poverty line.

Let me reiterate this: More than one-fifth of Israeli society is living below the poverty line. Yet it has fared well on the Oxfam rankings.

Perhaps an important lesson to be learnt is that we need to take these rankings, with their differing methodologies and assumptions, with a heavy pinch of salt. An over-reliance on rankings can give rise to skewed policy outcomes, when national peculiarities that give rise to inequality in the first place are not accounted for.

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SINGAPORE’S BUDDING CIVIC SOCIETY

One of the most glaring omissions of the Oxfam report is the role the grassroots sector, non-government organisations (NGOs) and other ground-up civic organisations play in ameliorating inequality in Singapore.

Harvard political scientist Robert Putnam has argued that social capital derives from the presence of civic organisations as well as their roles in providing basic public and social services.

For instance, Singapore’s “many helping hands” approach to social policy involves partnering Voluntary Welfare Organisations (VWOs) ranging from civic and religious groups, corporations, community organisations and concerned citizens, with these VWOs playing the actual role of serving beneficiaries and communities.  

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The resources and efforts that these VWOs expend in aiding the needy are not reflected in the Oxfam rankings, which only measure state social spending. Furthermore, the presence of these organisations can also be seen as a positive social policy outcome, since they represent the proliferation of a culture of giving and helping those in need. 

Seen in this light, a city or country that manages to establish a high level of social capital may paradoxically give rise to lower levels of social spending by the state. Such a situation would be ideal for most policymakers.

WE HAVE NOT ARRIVED

This is not to say that Singapore’s approach to managing inequality is perfect. Far from it.

There are various policy levers that have yet been tapped on to further reduce inequality in Singapore, such as estate taxes, universal early childhood education or minimum wages across all sectors. Indeed, inequality remains a reality for many Singaporean families and households.

But knowing the level of state social spending is cold comfort to someone working three jobs to support a family. These issues are not captured in measures of inputs either.

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Given the complexity of the issue, how can we measure a country’s efforts at tackling inequality?

Rather than measuring input factors, rankings should also incorporate measures of policy output, as well as less tangible experiences of individuals and families and their levels of assurance and confidence towards the future. 

There is a need to take an ethnographic approach that draws on the inputs and experiences of ordinary citizens. This will require taking what we in social science call a “mixed methods” approach.

But before we can get there, it will be useful to step back from these international studies and measures of inequality to gain some perspective.

Woo Jun Jie is an Assistant Professor at the Public Policy & Global Affairs Programme, Nanyang Technological University.