Speech by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat at the National Economics and Financial Management Challenge 2021 on 25 July 2021.
The National Economics and Financial Management Challenge is in its 14th year.
Organised by the NUS Economics Society, this competition aims to raise the interest and appreciation for economics and finance, among our pre-tertiary students. Although this is the second year that the Challenge is held virtually, I am glad that students remain enthusiastic.
Building A Better Future
COVID-19 is the one of the gravest challenges that the world has seen for a long time. More than 4 million people have died. Even with vaccination, the world is experiencing new waves of infection as more virulent strains emerge. The virus will likely be with us for some time.
The pandemic has also delivered a deep shock to the global economy. It created the worst economic crisis since the Great Depression, with the equivalent of 250 million jobs lost.
Globally, there are concerns over a lost generation of youths. Millions of children have not been back to school for almost a year. Youth unemployment has risen in many parts of the world. Many governments have also borrowed heavily to fund their crisis measures, which will have to be repaid by the youths and future generations.
In Singapore, we are fortunate to be in a better position. We have kept our schools largely open. Strong government support has helped to save jobs and create new ones. And we did so without having to incur a single cent of debt, because of the fiscal reserves that our forefathers painstakingly built up over the years.
But COVID-19 has put many plans on hold, some permanently. The future is much more complex and more uncertain. So the theme for this year’s Challenge – Building a Resilient Post-COVID-19 Economy – is most apt.
For youths like yourselves, you may be wondering – what does the future hold for me? Do I have the same opportunities as my parents? I believe that while COVID-19 has closed some doors, it has also opened many new ones. The post-COVID-19 world will be quite different from the one before, but it will be no less exciting.
COVID-19 has accelerated structural changes that were already in motion – including the digital revolution, and the emphasis on environmental sustainability. Our youths are well-placed to seek out these new opportunities. Your education has given you a strong foundation, and nurtured you to be a confident, lifelong learner. In a world of rapid changes, lifelong learning will help each of us to stay up-to-date and relevant.
The Learning of Economics
An understanding of economics and finance provides a valuable foundation for lifelong learning. I personally benefited greatly from my study of Economics in university. I was an accidental economist, because I actually wanted to become an engineer. But when I received my scholarship offer, it was conditional on me taking up economics. This turned out to be invaluable for me – many of my responsibilities – in the Monetary Authority of Singapore, the Ministry of Finance, and now as Coordinating Minister for Economic Policies – are related to economics.
But the value of an understanding of economics goes beyond preparing one for a job. I believe economics can help each of us to make better choices – for ourselves, and for our society.
Economics deal with the most basic question – that of ‘scarcity’. Humans have unlimited needs and wants, but resources are limited. So how do we organise our system of production to maximise the use of these limited resources to meet these needs and wants? How do we distribute the fruits of our labour, across the world, and across our society, in a fair and sustainable way, both socially and environmentally?
These basic questions have shaped, and are still shaping, the course of human history – the Cold War was a contest premised on two very different economic visions – centrally planned economy and market economy. With the end of the Cold War, almost all economies today function on market principles. But across the world, there are important debates and differences in: how the fruits of labour are distributed – whether these are more oriented towards the return on capital or the return to labour; the extent of redistribution to weaker segments of the population; and the extent to which we take into account what economists call ‘externalities’ – positive or negative spillovers which the immediate consumers and producers do not pay for.
One good example is climate change – the most important global challenge of our time. Climate change is a classic example of the tragedy of the commons – where individuals, each acting in their own interest in the absence of coordination, exploit a resource to a point of depletion. But I am glad that countries have come together through the Paris Accord to agree on emission targets. There has also been good progress to properly price the externalities of carbon emissions.
Another example is the changing demographics in Singapore and in other parts of the world. With ageing, countries will need to spend more, to take better care of their seniors. But with ageing, economic growth will also slow and government revenues will not grow as fast as before. Countries either have to raise revenue from those who are still working or scale back services for seniors, or both. In Singapore, to keep public healthcare affordable and provide for other spending needs, we will have to raise GST in the coming years. In some countries, this has led to an increasing inter-generational divide. But fortunately for us in Singapore, we have a strong social compact. We had earlier introduced the Pioneer Generation Package and the Merdeka Generation Package. Our unity has been further strengthened during this crisis.
These two examples – climate change and changing demographics – show how we can apply the basics of economics and finance to public policy. The discourse is not just theoretical, but it can lead to better outcomes that can improve the lives of billions of people on earth.
So I am glad that this Challenge is helping our young people to build these perspectives, by linking economics and financial concepts to real world problems, and by developing your ability to think critically and work in teams. I thank the NUS Economics Society and the organising team for putting together another successful edition of the competition.
To all our participants – you have made it through several rigorous rounds of competition. After this, you will have the opportunity to present your ideas. And I understand that there is also a surprise round – which has been kept under very close wraps!
I wish you all the best for the rest of the event. Regardless of the results, I trust that you would have learned something, and made new friends. I hope that you will continue to deepen your interest in economics and finance, and use this knowledge to become active citizens and make a difference. This is the spirit of Singapore Together, where we can all play a part in building a better shared future.
All the best!
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