Still, there are things we can do in Singapore to rein in costs.
Overheard conversations can be quite informative. It is quite telling that the most common topic one hears in places as diverse as hawker centres and SIA First Class lounges is that of high business and living costs in Singapore. Many complain, but some people simply shrug their shoulders, arguing that a rich country will inevitably suffer from higher costs. Is this necessarily the case?
Economic theory tells us that as a country develops, it will tend to have a higher cost structure. However, the extent to which costs rise in a given country also depends on many other factors, including how policies are formulated. This is the argument we would make for Singapore — our costs may have escalated beyond what was inevitable because of the policy choices we have made over the years. These policy choices may have made sense when first introduced, but it is possible that their cumulative costs over time could now outweigh the initial benefits. The problem is that once costs have been inflated, there is no easy path back to lower costs. Once policies are entrenched, reversing their ill effects can involve some pain.
