THREE WISE MEN OF MAS - THE GOOD, THE BAD AND THE ....ROGUE?

"As the water shapes itself to the vessel that contains it, a wise man should adapt himself to circumstances" ... Confucius

JY Pillay headed MAS from 1985 to 1989. I had seen Pillay up close on only one occasion. It was some banking symposium at the DBS auditorium. Boy, was I in for the surprise of my life. Pillay was such a disappointing public speaker. I was seated between two foreign western bankers. They were uncomfortable and I was embarassed. Perhaps Pillay just was'nt top notch on the podium. He has been lauded a brilliant manager and shrewd real estate investor who picked up pre-war properties, going where the brave, or un-informed, dared not go. Pillay is a loyal consumate civil servant, who, according to LKY, is "equal to the best brains in America". Apart from MAS, Pillay has helmed big public entities like SGX, SIA, DBS, and GIC. The highlight of his MAS tenure was the stock exchange crisis of Pan Electric which resulted in some players going to jail and some left untouched. Pillay is well respected in the establishment and the awardee of the Temasek Star, the highest honour for a civil servant.

The late Michael Wong Pakshong was the first Managing Director of the MAS. He was an esteemed central banker from 1971 to 1981 who steered our monetary policy through those tumultuous times of the breaking up of Bretton Woods Agreement. He had an aura of the impeccable English gentleman and a presence. Wong, together with his chief manager Elizabeth Sam, was a very well-regarded central banker team in the banking community.

In late 70s, Joshua B Jeyaratnam insinuated that approval of a banking licence to Tat Lee Bank was iniquitous. After a failed attempt, Tat Lee eventually received a banking licence. JBJ had claimed that Lee Kim Yew, the Prime Minister's brother, was roped in as a shareholder and director to bolster the application. JBJ was sued for libel by the government. The plaintiff's case rested on the banking licence being granted prior to Lee becoming a subscriber and director of the bank. The date of the application was pivotal and Wong was called to give evidence. I remember this very well. Wong's evidence dropped some jaws of those who were attentive to the details, including mine. Wong basically affirmed B's claim that the re-application was dated after Lee Kim Yew joined Tat Lee. It almost threw the case into jeopardy for plaintiffs. I had predicted it was bye-bye Wong after the trial.

Not too long later. Wong took the brunt of the accusation of mismanaging MAS by massive over- hiring. He was removed and Deputy PM, Dr Goh Keng Swee, stepped in to rationalise the organisation structure. Dr Goh trimmed headcount drastically. This event is etched in my memory by the works of the one and only Singapore political cartoonist, Morgan Chua, from the Far Eastern Economic Review. Who can forget his caricature of Dr Goh in the quintessential OO7 James Bond pose, arms crossed and pistol at the cheek, and the caption DR GOHFINGER. For those in the know, the circumstances for the 'over-hiring' was in preparation for the merger of MAS and the Currency Board. A merger that was put on the back burner and eventually consumed in 2002.

Current MAS MD Ravi Menon has been vocal lately on some local hotbed issues. He has commented on issues very much outside the purview of monetary policy matters. Ricemedia has made a nice summary of the points Ravi has brought up. You can read about them in this article by Ivan Wu :

"Has Ravi Menon Gone Rogue? Or Do His IPS-Nathan Lectures Signal a New Direction?"

The key controversial points Ravi discussed (the italics are Ravi's position, the comments are mine):

1. Meritocracy is at risk of becoming heritable.
This is Ravi's gentle way of saying what we all have known all along. Meritocracy has embedded a ruling elite class. There is an incestious relationship of this elite class in all facet of life on our little island. In government, in licensing or regulatory authorities, judiciary, grass roots, GLCs, etc. Conflict of interest situations are everywhere. This has resulted in economic capture and inequitable opportunities and wealth distribution.

2. Discontinue depending on cheap foreign labour and depress wage levels.  
I interpret this as a criticism of CECA, unless anyone can convince me otherwise. Ravi shares the ordinary Singaporeans' experience of massive job displacement and suppressed wage levels.

3. A higher wage does not mean loss of Singapore competitiveness.
Ravi is right that a highly digital and service-oriented economy can compete with a higher labour cost. Whilst policy focus is moving Singapore head on into the digital world, the government's model is to build it on the back of cheap labour. We can't have our cake and eat it too.

4. Ravi is pro-wealth tax.
Real estate valuation has been a major cause for growing wealth gap in Singapore. Ravi shares the view that some form of wealth tax is necessary to lower the wealth inequality. Some forms of property gains and inheritance taxes may be required. Well, we all know millionaire parliamentarians will all wake up and protest with legacy warnings of capital and talent flight hurting the economy and loss of jobs. Wealth tax is always a good option, just don't take mine.

5. Some form of minimum wage is necessary.
The government has rejected minimum wage and adopted the progressive wage model. Minimum wage has always been rejected in a free economy which prefers market forces to determine the level. However, this is frustrated by the non-protection from entry of foreign cheap labour. Progressive wage is a nanny-state model to be implemented by various sectors. In theory sounds nice, in reality is a cobweb for abuses and non-compliances. My view is stop the CECA free flow of cheap labour and market forces will find its equilibrium for wage levels.

6. Ravi suggested some form of unemployment benefits or insurance.
Of course Singapore government always frowns on such socialist policies as counter-productive. This is actually one social umbrella Singapore lacks in comparison to other advanced economies. I think a few months cover is good for the specific situation for loss of job due to redundancy or company closures.

It does seem Ravi's voice is bold and in consonance with many progressive minds all over the world. Here is a representative for the Singapore Proletariat. Yet what Ravi expounded above are nothing extraordinary. They are narratives of many ordinary Singaporeans and opposition members. Many influencers who have spoken out on these matters have been criticised as promoting destructive pathways for our economy. What will the Bolsheviks think of an internal criticism by a very pro-establishment personality?   

Ravi has been very careful to make it known his views are personal and not official central bank thinking. He certainly needed to make it known it is a non-political articulation. Has he ruffled some feathers? That is obvious. The first indication that the ground has soured for him will be when some underlings in the echo chamber of parliament revisits the issues and dumb down his contrarian views. Are there progressives within the cabinet who share his views? If there are, we have not heard from them. That this has'nt happened could be the management of the pandemic has priorities at the moment. It does not signal that the emperor is happy with a challenge of ideas. The traditionalist clique within the ruling party are still very much alive. Ravi may have to watch his back for the ghost of GOHFINGER.