The Business Times, Wednesday 14 September, 2005

By JOSEPH CHONG

I WAS pleasantly surprised by the positive response to my contribution, 'Facing up to income inequality' (BT, Aug 3). The article spoke of the undesirable downside to any society and economy with escalating income inequity - a result of globalisation. Indeed, at the recent National Day Rally, our Prime Minister announced several initiatives to help the poor in Singapore. Affirmative action or meritocracy?

However, some say that these initiatives amount to affirmative action, which distorts the natural efficacy of our meritocracy. On the other hand, there are those who say that pure meritocracy is cruel. It is the law of the jungle: survival of the fittest.

Indeed, anthropologists and geneticists have ascertained that at one time, there were quite a few sub-species of human beings, for example, the Neanderthals of Europe. However, within 200,000 years, homo sapiens (that's 6 billion plus of us today) pushed the other sub-species of human beings to extinction as they pushed out of Africa. No wonder we are the rulers of this earth. If our Neanderthal brothers could not compete with us, which animal could?

Unbridled 'survival of the fittest' in the modern era is dangerous. Hitler's push for Lebensraum (living space) in Eastern Europe led to a genocide which claimed more than 20 million lives within four years. In our era of weapons of mass destruction, a threatened society could do the same damage in a few hours. Hence, the natural logic of 'survival of the fittest' and global capitalism has to be tempered if we are to live in peace. A middle ground solution needs to be found.

In Singapore, we are probably heading towards the middle ground. However, I believe more can be done - not in terms of throwing money at the problem but ensuring long-term upward social mobility. And the key to this, I believe, is through our education system. Let me explain: Recently, I registered my daughter for Primary One and this was an eye-opener. Although there is a clear and transparent system, it took my wife and I a while to master the minutiae and to develop a strategy for ensuring that our daughter got into a school of our choice.

Indeed, we discovered that many other parents were exploiting the system in order to get their children into their schools of choice. Among the many tricks, one is to rent a house near the school of choice for a short period. As many of these good primary schools are located in private residential areas, the rentals would not be cheap. As such, very few of the lower income could afford this game. What is clear to us is that the better off and educated have the edge because they understand the rules better and have the means to arbitrage the system.

Unfortunately, the starting line is uneven - the children of the lower income appeared to be disadvantaged even at the Primary One registration. To ensure ongoing upward social mobility, of which I have been a personal beneficiary, we need to make the starting line more even. I propose that 20 per cent of the Primary 1 places in the top primary schools be reserved for children from the lower income group. This would also ensure that these schools, which are the training ground of our future leaders, would not be an enclave of uppity kids with little contact with others from a lower socio-economic stratum.

In the same BT article of Aug 3, I wrote that there is also a need for those of lower income, who generally have less education and savvy, to be helped in their financial planning. One such initiative is to rank the financial institutions offering financial advisory services. As a first step, this could be based on the number of complaints over the past year received by the financial authorities against these institutions. I understand that this information has been compiled and is readily available.

Alternatively, it could be based on a ratio, for example, complaints per dollar of revenue generated in financial advisory or assets under advice or management. This concept would be similar to the hygiene ranking of eating establishments by the Environment Agencies in Singapore. Ironically, Singaporeans know more about the hygiene and cooking skills than we know about the potential mis-advice of our financial advisory firms. Surely, this cannot be less important. Perhaps this is a case for CASE?

The author is CEO of financial adviser New Independent. He welcomes feedback at josephchong@ni.com.sg This article is for information only. Readers should seek independent advice before making any investment decisions.