How many constituencies will the Opposition win? The Cube Rule speaks.

With Nomination Day over, we can predict to some precision the likely outcome of this GE. This insight is derived from the Cube Rule, which allows us to forecast the number of constituencies won based on vote share alone.

Basically, the Cube Rule states that : In an 2-party electoral system like ours, the number of constituencies won by each party will generally follow the ratio of  (A: B)^3, with A and B being the opposing parties.

This rule worked well for the last GE, in which 16 constituencies were contested. The PAP won the election with approximately 2/3 of the vote, suggesting that the Opposition would win only 1 constituency to 8 PAP wards, or in other words, slightly less than 2 wards. This proved to be true, as the Opposition retained control of Potong Pasir and Hougang.

So how about this year? Out of 27, 1 (Tanjong Pagar) was uncontested, and another (Punggol East) has a 3-cornered fight. This leaves 25 contested constituencies with 2-way contests.

With that, take your pick at the result this year! A list of realistic outcomes (in our view) are shown below.

The maths suggests that even if the PAP does not lose vote share this year, the Opposition stands a good chance to win another ward. Of course, take that with a pinch of salt!

EDIT: Corrected a calculation error!

Making Sense of the Workers’ Party Manifesto 2011

At 67 pages long, the WP manifesto is far more detailed than the SDP Shadow Budget, or the recent PAP manifesto (which is mainly an extension of current policy). Much thought has evidently gone into the creation of this document, and it is an important contribution to the debate over our future.

The remainder of this document will summarise what (in our views) are the largest proposals in the WP manifesto, be it for good or for bad.

Good

1. Unemployment insurance scheme

This is a proposal worth considering, especially given our heavy reliance on foreign trade, leaving our economy extremely vulnerable to cyclical unemployment in which workers are retrenched through no fault of their own. In the 2006 Budget Debate, Finance Minister Tharman Shanmugaratnam questioned the need for an unemployment insurance scheme, given our existing retrenchment protection scheme, “a well-established scheme which is more or less working”. However, under the current scheme, the amount of retrenchment benefits “is subject to negotiation between the employee and employer” which is far from a level playing field. Even Shanmugaratnam himself later acknowledged that there is scope for improvement.

Rather than dismissing this proposal straightaway for ideological reasons, it makes better sense for the government to adopt a policy along these lines, drawing lessons from successful case studies such as Germany and South Korea.

Yes, it may encourage some to put off looking for work, but we must remember that this will be a small minority, especially if coupled with Workfare (payments to low income workers) and a well designed unemployment insurance scheme.

2. Mandatory basic hospitalisation insurance scheme

Our skimpy social security net needs improvement. It is tragic that the most important element of our health insurance system, Medishield, automatically sunsets after 85 years of age, when recipients need the care most. It is even more tragic that Medishield could impose exclusion of certain congenital conditions from claim while still offering coverage. A mandatory basic hospitalisation insurance scheme, as raised by the WP, would go some way in addressing the problem.

That is not to say it is perfect. Several proposals, like the inclusion of HIV/AIDS treatment and preventing the scheme from adjusting premiums with age, will vastly increase premiums on the young and able bodied. It is also unclear if removal of subsidies to government hospitals after this would fully pay for this new program. But the key ideas behind the proposal (universal coverage and a capped lifetime payout) together will represent a vast improvement from the status quo, where those after 85 are left to fend for themselves using their savings.

Bad

1. Abolition of Nominated Member of Parliament Scheme

This seems to run counter to WP’s aspiration towards a ‘First World Parliament’. Since its inception in September 1990, Nominated Members of Parliament (NMPs) have provided constructive alternative, and often critical, views on government policies, making valuable contributions to public policy. In the event that our Parliament has a higher proportion of Opposition seats, the role of NMPs becomes even more pertinent: as non-partisan members, they would be able to keep check on both the ruling and opposition parties, ensuring that political parties put national interests first. With checks and balances coming from both opposition parties and non-partisan NMPs, Singapore can then strive to build a First World Parliament which we can truly call our own.

2. Pegging prices of HDB flats to the median incomes of eligible Singaporeans

As far as possible, government intervention should be avoided due to its attendant inefficiencies. WP’s call for price control in the housing market, albeit well-intentioned, would open a can of worms, including shortages and possibility of a black market, as real-world examples in New York City and Finland illustrate. Instead, as proponents of market-based solutions, we prefer that MND abandons its current policy stance of ‘asset enhancement’ and reverts back to ‘affordable housing for all’. From there, the government can then focus on policies to curb demand (controlling the influx of immigrants and restricting speculation in the residential property markets) and increase supply (building more high-rise apartments, designing high-density cities). These, we believe, are better and sustainable solutions in the long run.

Rather than debating over land values, subsidies and price pegs, isn’t it far more intuitive to target the root causes to regulate prices? That has stumped us throughout the fiery salvos exchanged between the PAP and WP recently. The people deserve a better debate than what we are having now.

To sum up, for all its flaws, the WP has put up a credible manifesto to the people. Though some critical details remain missing (e.g. funding some programs), it should be remembered that this is ultimately not a Budget. In fact, the document is far more detailed and audacious than the PAP manifesto!

If the detail behind a manifesto is what makes a party credible, then the WP easily has outshone the PAP.

Political Factcheck: Land prices are a total distraction to the housing debate

With the elections coming, the PAP and WP are squabbling about the cause of rising housing prices. Recently, both parties have focused on the cost of the land used to build these homes.Yet, land prices are at best a distraction to the entire housing debate. At their worse, they are entirely irrelevant. High land prices are the symptom, not the cause of high housing prices. This insight can be derived from David Ricardo’s analysis of rent, easily found in any economic text, and instantly applicable to everyday life.

For example, why is food in Newton Circus that much more expensive than the typical hawker? It is tempting to claim that the high prices are due to the high rents there. But that gets the order wrong. Hawkers in Newton Circus can command higher prices due to the much higher traffic there, that are mostly willing to pay for food.Newton Circus fully well knows that, as do all other potential tenants who want to rent shop space there. The large potential profit from selling food at Newton Circus leads to tenants bidding up the cost of renting shop space.The high demand for space in Newton Circus is derived from the high prices tenants there can charge. To say the reverse is confusing cause with effect.What relevance does this have on the housing situation? Everything!

Homes are getting expensive not because the Chief Valuer is valuing land so highly. Rather, the Chief Valuer knows that people demand land not for land’s sake, but for its utility in building homes and the like. And thus they, just like Newton Circus, respond to this and mark up the price of land. They closely follow the changes in the housing market

All this has no effect whatsoever on the prices of homes. Only the profit margins of the HDB and property companies are affected. The reason why resale prices are spiking has everything to do with the lack of supply and excessive demand in the housing market. And we will all be better off if both the PAP and WP focused their attention on the real issue instead.