LAST Saturday’s commentary (“Circle of trust in welfare system: Is S’pore ready?”) focused on whether Singaporeans are ready for a Scandinavian-style welfare state, but nothing was said about whether it is desirable in the first place.

It is ironic that some Singaporeans think a Scandinavian-style welfare state is desirable at a time when the Scandinavians have cut back on welfare spending following a financial crisis in the 1990s.

Indeed, the present financial crisis has led to welfare spending cuts in other European states.

The Netherlands’ King Willem-Alexander, in a speech last year, said the traditional Dutch welfare state is coming to an end and needs to be replaced by a “participation society”, in which people must take responsibility for their own future and create their own social and financial safety nets, with less government help (“End of Europe’s welfare state?”; Sept 19, 2013). This sounds like the system of meritocracy that Singapore has always practised.

If the Europeans are having a rethink about the welfare state, why are we heading towards it? A European or Scandinavian welfare model involves more than just free health care; unemployment benefits and pensions are also given out.

Having a European-style welfare state here would be a serious mistake.

First, a welfare state is inherently unfair. It means that the healthy will have to subsidise the sick, and those who are more hard-working and able will have to subsidise those who are less so.

Second, a welfare state means high taxes. In Scandinavian countries, the sales tax is typically around 20 per cent to 25 per cent, though food is exempted.

High taxation comes at a price – it is a job killer. Companies would prefer to relocate elsewhere and there would be less incentive for one to take the risk of starting a business.

That is why the unemployment rate in Europe is much higher than that in Singapore.

There would eventually be a permanent class of unemployed people who survive on welfare cheques funded by taxpayers, and economic growth would slow down.

Third, a welfare state would likely lead to increased ethnic tensions in Singapore, as a group with lower educational qualifications, for instance, would tend to have a higher unemployment rate and have to be supported by others, breeding resentment.

Tan Keng Soon

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