GROWING RICH BEFORE GROWING OLD

 

 Why the concern with GDP? Why is the government always talking about economic growth? Why is the government so concerned with $$$? Why can't we slow down a bit and relax?

Sounds familiar?

In a speech in parliament in 2011, Chairman of WP, Ms Sylvia Lim made reference to Bhutan and their Gross National Happiness (GNH) where the prosperity of their citizens is gauged by their level of happiness and suggested that Singapore should follow Bhutan's example and focus on happiness as a national goal.

Well, Bhutan's gross national happiness is now history.

Jigme Thinley, the Prime Minister of Bhutan from April 2008 to July 2013 who had travelled the world over to promote 'national happiness' making himself a popular figure abroad did not find the same popularity at home. He was soundly defeated by Tshering Tobgay whose list of promises did not include happiness.

Tshering Tobgay said, "The bottom line is that we have to work harder. We need to grow our own food, build our own homes.”

Before you can be happy, you must have a job.

And economic growth means jobs, and GDP, simply put, is an indicator of the health of an economy.

Economic growth is needed to create jobs for every fresh batch of graduates. We also need to accumulate wealth because it is our only resource in times of crisis.

Then there is yet another compelling reason for pursuing growth and accumulating wealth. And THAT is our RAPIDLY AGEING POPULATION.

In many parts of Asia where the population is ageing rapidly, there is genuine concern that the country is growing old before they can grow rich.

Vice Premier of China Hui Liangyu, for example, has publicly said that China is ageing at a speed and scale that exceed their expectations and China is not adequately prepared to respond to an ageing population.

IMF Working Paper ((http://bit.ly/1zwX4ML) on how well positioned Asian countries are in meeting the challenges of an ageing population describes the macro and microeconomic aspects of preparing for an ageing population.

On the macroeconomic aspect, countries are to PURSUE A POLICY OF RAPID ECONOMIC GROWTH before the demography of the country shifts.

Why?

Because a rise in saving and investment rates early in the demographic transition will enable a country to meet the needs of the elderly in the population while still satisfying the standard-of-living aspirations of those of working age when the demographic shift comes.

In other words, rapid economic growth enables a country to save in advance to meet the future challenges of a greying population.

Revenue for government spending comes from income taxes, consumption taxes, assets taxes etc, all of which are related to economic growth.

A growing proportion of elderly in the population means increased national healthcare and long-term care expenditure for the elderly.

The $8 billion Pioneer Generation Package that the Singapore Government introduced last year was possible because there was economic growth to generate surpluses to fund it.

Next to come is the anticipated Silver Support Scheme that aims to provide an annual bonus to low-income elderly Singaporeans from age 65 to help them cope with living expenses.

If there is no economic growth, where will the money come from that is now highly subsidising the EASE programme to enhance the mobility of the elderly living in HDB flats? And this is just one example. (http://bit.ly/1lVjaAb)

The Singapore Government's approach to spending - setting aside now, from their surpluses, money for future spending - means that future generations of Singaporeans will not be burdened by debts (as is the case in many other countries) which in turn means that they would be able to enjoy a standard of living that is higher that it otherwise would be.

However, that window of opportunity to make good before the demographic shift takes over will soon be closed. In 2012, the population of Singapore reached a turning point when the first cohort of baby boomers turned 65.

Growing rich before growing old.

That is true for an individual. It is also true for a country.

If a country is old and poor, how will it take care of the needs of the old?

"You can be young without money, but you cannot be old without it." (Tennessee Williams)

Ref:
http://bit.ly/1AmSi7m

 http://on.fb.me/1Agjk15