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I read with interest the article "Flexibility means freedom" in Today, Jan 14th. Have yet to read the Straits Times article (assuming there is one) about the same topic, will update when i do.
Did a bit of research on the Index of Economic Freedom quoted in said article; the rhetoric and general spirit of the study is that economic freedom benefits a country and its people in every way, and therefore should be something that countries should aspire to. However, to me, some of the yardsticks used are vague and disturbing, and I question the premise of the argument as well. First off, The Heritage Foundation's measure of economic freedom is vaguely unsettling. There's such a thing as too much freedom, I feel, and the thinktank's unwavering faith that total economic freedom results in total benefits is flawed at best. An overquoted example: the current financial crisis was precipitated, at least in part, by the liberalisation of trade rules for finance firms in America and blind faith in the power of the free market to regulate itself without so-called government "interference". Some of the yardsticks by which The Heritage Foundation measures economic freedom include government size (measuring government expenditures), freedom from corruption and labour freedom. As far as I can gather, the calculation for government size seems to reward lower expenditure with a higher score. How is this even relevant? Expenditures cover an entire spectrum of spendings, and what makes hoarding the money better than say, spending it on infrastructure or improvements to living environments? Next, the freedom from corruption yardstick is taken from the Corruption Perception Index (CPI) as measured by Transparency International. My concern is that the CPI utilises perceptions and surveys to obtain values for each country, and these aren't necessarily accurate. I'm worried that this may draw more from the reputation of a country rather than the actual situation there. Moreover, acts of corruption may only surface years later or not at all. Though I acknowedge that freedom from corruption is highly difficult to measure in itself (Transparency International admitted as much), I feel the CPI and by extension the freedom from corruption yardstick in the Index should be taken with a pinch of salt. Finally, the yardstick of labour freedom. From the methodology, some of the factors weighed in this yardstick include the "difficulty of firing redundant employees", the legally mandated notice period and the mandatory severance pay. I take this to mean that The Heritage Foundation's ideal situation is one where firms may hire or fire employees at any time, with no prior warning and no consequences. While it's easy to see how this benefits firms, it's difficult to see how this benefits the economy as a whole. The economy is not made up purely of firms; there is the worker/consumer as well. The concept of total labour freedom has the potential of creating a climate of uncertainty in the workplace. When no one knows if s/he'll still have his/her job tomorrow, demoralisation and a certain paranoia would set in, possibly leading the worker to distrust or even actively sabotage the efforts of his colleagues. This would create a negative work culture. Moreover, this arrangement puts the onus on the firms to hire and fire responsibly, something which I very much doubt would happen in a large firm. And lastly, a system has to be in place to help the retrenched find jobs quickly, or they risk becoming a significant stumbling block to the concept of complete labour freedom. So simply put: It's too risky. That's all about the Index. There's something to be said about Ms Halimah Yaacob's comments as well. The tripartite (NTUC, employer, PAP) guidelines for managing excess manpower... "is [sic] a good way to ensure companies do not resort to retrenchment at the first sign of trouble"? Hello, DBS. The 2009 Index of Economic Freedom data can be found at http://www.heritage.org/index/. More information about Transparency International and the CPI can be found at http://www.transparency.org/policy_research/surveys_indices/cpi. |
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