In the article, “Why it’s time to take a good, hard look at wealth inequality in Singapore”, Jeff Onn (2014) summarized Sudhir Thomas Vadaketh’s article about wealth inequality in Singapore. Vadaketh argues that wealth inequality results in social strain and discrimination. He states that it affects a person’s sense of fairness which can lead to the loss of confidence in the fair ways of meritocracy among people. In addition, wealth concentration can exert an influence on the public which would question a country’s state of equality. Wealth inequality also results in monetary wastage and social instability. The solutions he provides are taxation, such as capital gain tax and inheritance tax, and redistributing of wealth to improve educational, employment and general life states for the low income. Indeed, wealth inequality is a problem we should be concerned about, however, there are also positive impact of wealth inequality such as a highly motivated workforce and entrepreneurship.

Undeniably, Vadaketh’s statement on monetary wastage that resulted from wealth inequality is agreeable. However, these monetary wastage can actually serve as a motivation for people. A car would bring convenience, but a BMW car would also bring self-satisfaction and pride. It’s the sense of achievement in having bought a luxury good after working hard for it that makes people motivated. According to tradingeconomics.com, Singapore’s productivity, which is volatile on a short term basis, is on an increasing trend overall.

It is agreed that wealth inequality would result in monetary wastage such as buying of luxury items, however, this actually serves as a motivation for people. Have you ever look at the 1% of the world and thought ‘One day, I would be part of the 1%’, or look at an item and promised yourself to get it? These thoughts serves as motivation for people to work harder as they have a goal in mind and a reward to look forward to. Getting data from tradingeconomics.com , Singapore productivity, while volatile throughout the years, is on an increasing trend overall. This can be seen as there was an increase of Singapore productivity that ranges from 60 to 100 index points during the 1980s, to currently 2000s, where it ranges from 100 to 140 index points. In comparison, Singapore consumer spending is also on an increasing trend from 4086.60 SGD million in 1975 to 34337.30 SGD million in 2015. It can be implied that people are motivated by the consumer products to work harder and increase one’s wealth.

Singapore being a financial centre with low tax rate, it is easy to increase one’s wealth through many approaches, one being entrepreneurship. Entrepreneurs are encouraged by the large increase in wealth and low tax rate to take risks and start up their businesses. This in turns helps to grow Singapore’s economy. According to Global Entrepreneurship Monitor 2012 Singapore Report, Singapore placed second among 25 chosen global economies in having one of the highest percentage of Total early-stage entrepreneurial Activity (TEA) of 11.6%. Furthermore, in the 2014 report, it is stated that the TEA for Singapore has remained higher than 10% over the years and Singapore is still one of the top few entrepreneurial nations. In addition, this would result in more job opportunities for others. SPRING Singapore is an enterprise that helps nurture start-ups, and stated in their 2014/2015 annual report, SPRING managed to create 22,280 new jobs from their projects. This has been an increase from 15,895 in 2010.

In conclusion, there are many Cons of wealth inequality that we should be concern about. However, there are also Pros of wealth inequality that we should not overlook such as motivated citizens and growth in Singapore’s economy. If wealth inequality was removed, or capital gain tax is enforced, would you still be as motivated and risk taking?