Friday, March 29, 2013
When it comes to economic inequality, can America learn from Singapore?
By BEIF Team
Although BEIF’s focus is on the relationship between economic inequality and business, it is imperative to note that governments can do a lot to reduce inequality and its negative effects on society. In a recent article, famed economist Joseph Stiglitz highlights the response of the Singaporean government to economic inequality.
Stiglitz notes that the Singapore government has (i) encouraged individuals to take responsibility for their future through a mandatory comprehensive savings plan for their individual healthcare, housing, and retirement needs. (ii) introduced progressive social welfare programs funded by the government and the rich, (iii) redistributed pre-tax income, and (iv) has made heavy investments in education and scientific research.
Critics may argue that Singapore is a centralized state, which makes it easy for it to take such measures. But Nordic countries such as Sweden, Denmark, Finland, and Norway, which are democratic too, have managed to decrease the levels of inequality in their societies.
Indeed, much can be done by states and specific policy prescriptions differ based on the type of government or socio political situation of the country. But, there are several ways in which governments can respond and we need more conversations on the effect inequality has on societies and how governments and other stakeholders (such as business) can address it.