What it means is that one small class of people reap windfall benefits at the expense of all others. It is not a free market when there is a scarcity of the desired resource. It becomes a market of "rents" (wherein the amounts charged far exceed the costs of production - Apple iPhone is an example but people do this willingly).Wd40 wrote:The free market thing is interesting. What it means is businesses that are of low margin will just disappear, if they cannot pass on the cost to the customer. Already lots of kinds of industries are unviable in Singapore and stuff needs to be imported. As rents increase, we will only have the highest of margins business survive in Singapore, like the RollsRoyce manufacturing.
But restaurants are something that cannot dissappear from Singapore totally. I think in future you will have restaurants cost here in line with the UK for example and people will start cooking at home, after all.
When there is scarcity of resources, then there are only two solutions. The first is to engage the so called "free market" where only the rich have access to the product or service". Nothing really "free" about a market where only a small percentage of the population can participate.
The second is for government to control the "commons", an economic practice that goes back to Anglo Saxon law. Scarce resources are shared, have limits placed upon them.
The Singapore government has screwed up. By permitting virtually unlimited foreign investment in real estate, prices have shot through the roof, notwithstanding the feeble efforts at control such as no HDB, shop houses, or first story ownership.
And who has benefited? A small percentage of property owners who have become extremely rich as the result of a run up in prices. And the banks who finance them. Everyone else, from the renter, the shop owner, and the restauranteur has been screwed.
There was (and is) no need for this kind of property price run up, except that the government caved to foreign speculators, while ignoring the needs of the greater population.
Average SG income of $40,000 per year and a $300,000 minimal HDB flat? It doesn't work... things are only going to get much worse.