2/6/96 No winner-take-all society for Singapore
|Sunday, June 2,1996
The Sunday Times, Page 4
No winner-take-all society for Singapore
In the six factories- four of them owned by South Korean contractors who had relocated from home base and two by local enterprisesñIndonesian girls worked 11-hour days to sew the shoes and earned at most US$2 a day.
Sounds grossly unfair? But that is the way of the world.
People around the world are willing to part with US$60 to US$100 for a bit of rubber and nylon mesh, which cost US$5.60 to produce, because they are not just buying a pair of athletic shoes, but a bit of the magic that is Michael Jordan, a global basketball icon.
When the Institut Teknologi Bandung and the Asian-American Free Labour Institute complained that Nike was profiting from the exploitation of Indonesian workers, John Woodman, Nike's general manager in Indonesia said: "Exploitation? Yes, they are low wages. But we've come in here and given jobs to thousands of people who wouldn't be working otherwise."
He was right, of course. If the Indonesians were not happy, he could always pack up and go to Thailand and China, where Nike already had factories. In the five years before, Nike closed down 20 production sites in South Korea and Taiwan precisely because wages had rlsen.
In Indonesia, 2.5 million people enter the labour market every year. Many end up without jobs.
In Singapore, Zoe Tay and Fann Wong are paid $6,500 and $6,000 respectively (TCS takes a cut of course) just for showing up at business ceremonies to cut ribbons and pose for pictures with the hirers. The two stars also take a lion's share of the lucrative product endorsement market. Moses Lim is the only other TV star who comes anywhere near them in terms of demand by advertisers.
Channel 5, in launching its own productions last year had also aimed to market its actors and actresses and to merchandise their bits of stage businessñ Gurmit Singh's silly yo-yo, for instance- but too bad they do not have the critical mass that the three stars have. Their audiences are too small.
The station should not be blamed for trying to turn its stars into cash cows. All TV stations do that. When I was in Atlanta last month, I met CNN talk show host Larry King, whose nightly programme is so influential that American presidential candidates use it as a platform to announce their candidacy. He disclosed that fashion designer Donna Karan had offered to go into a joint venture with him to design and merchandise his trademark suspenders under the label DKLK. King had the luxury of turning down the offer because Ted Turner is paying him millions to stay with CNN.
Meanwhile, Channel 8 announced recently that, in its Fame Awards next month, there will be five most popular male stars and five most popular female stars, instead of one each as was the case last year.
Some reason was given, but I rather suspect that the station is hoping to enlarge its stable of stars who can earn extra revenue through product endorsements and public appearancesñas well as spread out the pie among more of its better stars and not just restrict it to Zoe and Fannñand to lock them in as well.
But unfortunately, that's not how the market works. If I were an advertiser with a big budget to spend, I would want to spend it on only the best, not on someone who ranked among the top five and whose exact position I did not know for sure.
In sports, Fandi Ahmad is perhaps the only name that gets all the top advertising contractsñ Royal Sporting House, Pioneer, Snickers.
In property, Ong Beng Seng made $90 million and $130 million on two relatively small, but by now highly publicised, developments at 18 to 36 months' holding cost. "What more do you want?" he asked at the press conference where he disclosed details of the sale of flats to SM Lee and BG Lee Hsien Loong.
When OBS- as he is fondly called by his associates and staff- bought into Planet Hollywood recently, he also bought into the American entertainment elite, and- eat your heart out, Virginia-he can now schmooze with the likes of Sly Stallone, Bruce Willis (US$15 million plus a percentage of gross receipts for Die Hard 3), Arnold Schwarzenegger (who got the same amount for True Lies in 1994), and Demi Moore (US$12.5 million for her latest movie, Striptease).
I am quite sure he can get a good table at Spago's where, if you are not a big star, you will be lucky if you can get a table next to the toilet or the kitchen.
THE celebrity market is a "winner-take-all market". Reward by relative performance, rather than absolute performance, is the most important feature of the winner-take-all market.
For example, Steffi Graf received more than US$1.6 million in tournament earnings and her endorsement and exhibition earnings added up to several times that amount. The absolute quality of her play was outstanding, yet she consistently lost to archrival Monica Seles.
In the months following Seles' withdrawal from the tour after she was stabbed by a deranged fan in April 1993, Graf's tournament winnings accumulated at almost double her 1992 pace, although there was little change in the absolute quality of her play.
In TCS, there must be actresses who are attractive and can act well, relative to Zoe and Fann. They may also work as hard if not harder. Yet, because they do not have that extra something, and so cannot make it to the top, few or no offers come their way from advertisers to endorse their products or to cut ribbons. Their TCS salaries are not exactly crumbs, but they lag far behind the two stars in terms of total incomes.
When I spoke to Zoe Tay in an interview three years ago, she said there was always an undercurrent of resentment from the others on the sets. But too bad for the others; this is the way business is run. At that time, a well-placed station source revealed to me that Zoe's annual income could easily amount to $200,000. She earns much more now.
A second feature of the winner-take-all market is that rewards tend to be concentrated in the hands of a few top performers, with small differences in talent or effort, often giving rise to enormous differences in incomes, according to the two authors of the book, The Winner-Take-AII Society (1995).
Robert H. Frank and Philip J. Cook's contention in the book is that America has become a winner-take-all society. Top performers, not just in sports and entertainment, but also in the professions, in corporations and even in educational institutions, are bid for and retained at astronomical salaries, even as millions of blue and white collar workers are losing their jobs. More and more Americans are competing for fewer and bigger prizes and income inequality has widened as never before.
Less than half of I per cent of the population exerts unprecedented power over the American economy, affecting the lives of some 250 million Americans. This small elite owns 37.4 per cent of all corporate stocks and bonds and 56.2 per cent of, all US private business assets.
The knowledge class, which represents 20 per cent of the population, receives US$1,755 billion a year in income, more than the other four-fifths of the population combined. The incomes of this class continue to rise by 2 to 3 per cent a year after inflation, even as the incomes of other American wage earners continue to decline.
What has brought this about? The twin forces of globalisation, which leads to intense competition, and, increased automation, which makes more and more jobs redundant. And these two forces are accelerating at a speed which no one seems able to control. The future scenario is alarming.
Lester Thurow, in his book The Future Of Capitalism (1966), sees "a vicious cycle of individual disaffection, social disorganisation, and a consequent downward spiral".
The United States and other developed countries may plunge into a period not unlike the Dark Ages (476 to 1453), when social disruptfns and declining productivity of those at the bottom of the ladder gradually spread upwards. Random violence ruled, as the rich retreated into walled communities. Decay set in.
SINGAPORE must guard against the winner-take-all market, now limited to the entertainment and perhaps the property sectors, becoming pervasive. I hope the day will not come when junior colleges bid for a handful of the best principals and teachers so as to attract the best students, which will allow them to be at the top of the rankings. Able CEOs should be well rewarded, be paid $1 million or more in bonuses if need be, but do not let the small guy be marginalised.
Globalisation and increased automation are forces on which Singapore has to ride to stay competitive. But they will inevitably put a wide wedge between the incomes of those who can manage and work with information and the incomes of those who cannot.
It is a problem the Government has anticipated, and has set about tackling. The real test, though, will be if both the better off and the less well off can find a common bond, a Singapere Dream that goes beyond property, and surge into the new century as one people, victorious.