Friday, August 28, 2009

Welfare – Good or Bad?

I am reading the article US economic myths bite the dust written by Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington D.C. He writes:

As economist Paul Krugman noted after reading [a study on US economy]: “One more American myth bites the dust.” Indeed it has. And as both the authors of the paper and Krugman note, there is a plausible explanation for the US’s low score in the small business contest: our lack of national health insurance.

There are enough risks associated with choosing to start a business over being an employee, but the Europeans don’t have to worry that they will go bankrupt for lack of health insurance.

(SBW17, The Star, Aug 15, 2009)

Mark Weisbrot’s comments on the US small businesses deserve the attention of Malaysian government and, more so, the Singapore’s government. Lee Kuan Yew, the first prime minister of the city state – and now the Minister Mentor – has always scorned at the Western welfare states. He believes that welfare has made the Europeans lazy, and argues that Singapore should never follow the Western model.

Somehow, welfare is a double-edged sword. For those who are willing to take risk, it serves as a safety net. Europeans and Americans are more willing to start their own businesses because they know that should they fail, they can still survive on unemployment fund or other forms of welfare.

By comparison, Singapore has one of the lowest rates of entrepreneurial activities among the rich countries, and its people are risk-aversive. Even the poorer Malaysia has produced some famous entrepreneurs such as Genting’s Lim Goh Tong and AirAsia’s Tony Fernandes. Singapore’s most famous companies, such as Singapore Airlines, are mostly state-owned. Temasek Holdings, the republic’s sovereign wealth fund, has made one blunder after another.

Both Malaysia and Singapore should rethink their welfare policies. Welfare should be seen as a safety net and given to those who ‘deserve’ it. If well-implemented, such policies can encourage the people to take risk and ultimately lead to a more vibrant economy.

Heck, if Malaysian government provides decent safety net, I also want to be my own boss!


  1. Lee Kuan Yew was right, welfare has made people lazy. California is a good example. When people lost their job, don't worry because they will receive money from the unemployment department. When those people have too many kids and cannot afford their livings, the government will make sure their kids have enough food and cloths. In addition, the government will take care of the kid's education as well. Do you know the octomom? Do you think she deserves the welfare from the overnment? That's just a joke! In my personal opinion, welfare encourages people not to work hard or harder to make a living. It is just very sad!

  2. If you are waiting for this, you'll never start your own business....

  3. Yoke-Yin
    Well, I already said welfare is a double-edged sword. It has its pros and cons. In any case, California still has Silicon Valley, right?

    Hmm... maybe I need to take more risk...

  4. Like they say, no risk no gain.

  5. And like in the Transformer's movie...No Sacrifice, no victory right? :p

  6. Yup... it's still there. You've been there?

  7. Mei Ting, Tekkaus
    At my age, the risk is considerably higher :(

  8. At least welfare is for everyone, like rainfall, unlike what we are having here, if you know what I mean.

    At your age...? I thought experience counts when it comes to going into biz besides, at least you don't have a wife and kid to worry about. Eh?

  9. Happysurfer
    I know what you means. The race-based policies...

    Actually, wife can be the 'safety net', but unfortunately I don't have one.

  10. I support welfare state! Well, I guess I'm French ;)

    I don't understand when people say unemployment insurance makes people lazy. The amount given is usually very small and one can not possibly live comfortably with that. People don't enjoy being on welfare, even though a minority will always trick the system, it is what it is: a minority.

    Most people just want to work and make a living, but sometimes life is difficult. Is the state doesn't help, who will?

  11. Zhu
    I think there are different kinds of people. Some would abuse the welfare, others use them wisely. But usually the first group gets the most attention.