(07-02-2013, 10:19 AM)level13 Wrote: Title: Is 6.9M population too much for singapore?
I will leave it to you ladies & gents to think about this article.
Is 6.9 million really too much for Singapore?
Some common fallacies about immigration and population
By ng yew-kwang
SINGAPORE is debating whether the estimated 6.5-6.9 million population projection for 2030 is too high. While not discussing all important relevant aspects, this article discusses some common fallacies about immigration and population.
When people encounter serious congestion, it is very common to think: "If the number of cars on the road were halved, how nice it would be!" or "If the number of passengers in the carriage is halved, how nice it would be!"
Thus, many people blame congestion and pollution on the population size. One should also consider this: Given the amount of per capita investment, if the population size and number of cars were halved, the width of the road would also roughly be halved. There would then likely be more instead of less congestion!
With fewer people, the MRT could not have so many lines; the frequency of trains and buses would also be much lower. I live inside the NTU campus and have occasions to catch the No 179 bus. Once, just before reaching the bus-stop, I saw two 179 buses passing. I thought I would have to wait at least 15 minutes, but the next 179 bus came in less than two minutes. This is the advantage of a larger population most people ignore.
Another common belief is that immigration reduces the per-capita amount of resources and hence is bad for locals by reducing per-capita incomes. This is wrong because generally immigrants cannot take away the resources owned by local people and government without payment. Immigration need not reduce per-capita incomes; even if it does, it does not normally makes locals worse off economically.
The immigration of unskilled workers may lower the wages for these workers and make local unskilled workers worse off. However, other factors of production, including land, capital, and skilled workers have more unskilled workers to work with and hence have higher productivities.
It can be shown rigorously that, even in the absence of economies of large-scale production, the gain accruing to other factors of production will be more than the loss suffered by local unskilled workers. See my
Common Mistakes in Economics: From the Public, Students, Economists, and Nobel Laureates which is available for open access online.
Principles of efficiency
It is true that as unskilled workers tend to have low incomes, the greater gain of richer people in money terms need not be enough to offset the loss in welfare terms. However, it is better to help the poor through the general tax/transfer policies rather than by violating the principles of efficiency.
By focusing only on efficiency (a dollar is a dollar) on specific issues including immigration, we can achieve the same degree of equality at lower cost, as I showed in the American Economic Review in 1984.
Some people are against immigration because they think that immigrants take away jobs that could have been taken by locals; they fail to see that immigration also creates as many jobs elsewhere because these are less direct. They also fail to see the many benefits of immigration like higher diversity and creativity. Without immigration, Singapore would still be a small fishing village; Melbourne would not have so many restaurants serving delicious, diverse, and cheap food.
If we take into account the widely existing economies of large-scale production and the economies of specialisation from the division of labour, the advantages of immigration are even larger. Apart from the conceptual analysis in the book mentioned above, we may also look at the real world.
In the same country, which groups have higher incomes: the people in the sparsely populated countryside or the people in densely populated cities? On the same Earth, do people in sparsely populated Africa or do people in the most densely populated continent (Europe) have higher incomes? Did the spectacular scientific/ technological flowering and the Industrial Revolution take place in sparsely populated or densely populated areas? Without huge immigration, how could the US have become the most powerful nation on earth?
True, Singapore may not be comparable to the US. However, if we take into account the importance of defence, the importance of increasing returns to scale, and specialisation through having a larger population, that is even more important for Singapore.
Harry Clarke and I also showed that, even if more people (either through immigration or natural growth) lead to the greater incidence of pollution and congestion, existing people still benefit from a larger population, provided appropriate taxes are imposed on the pollution and congestion.
In this respect, Singapore is doing the right thing in requiring car owners to have Certificates of Entitlements (COEs) and imposing Electronic Road Pricing (ERP) for the use of certain roads and expressways. The ownership and usage of cars impose external costs (costs that affect others) in terms of congestion, pollution, noise, accidents, and conspicuous consumption.
Thus, high taxes on cars and petrol are efficient taxes. Many car drivers and prospective drivers believe that these taxes are against their interest. This is an incorrect belief.
Without these measures, Singapore would likely become another Bangkok. I would rather be in Singapore without owning a car than be in Bangkok and be trapped in traffic for hours.
Moreover, high COE prices and taxes on these external costs bring in huge government revenues which may help to reduce taxes elsewhere or be used for providing public facilities. Unless the revenues are thrown into the ocean or largely corrupted away, taxes on these external costs are beneficial to taxpayers.
The author is Winsemius Professor in Economics at the Nanyang Technological University
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