A solution to protect talented, successful men from sex scandals

I am surprised the latest sex scandals to rock our country actually put me in a good light in the eyes of my wife. The guilty men are top civil servants in Singapore which is known for its squeaky-clean government officials. My wife commented that although I was a boring and unromantic engineer, she is glad that she can put her heart at rest when it comes to such deviant behavior. I do not know whether to laugh or cry. Engineers make faithful husbands not because they are more moral but because they have the least opportunities to stray. Engineers in Singapore are unlikely to be very rich. They face computers and equipments most of the time in the office, have little contact with gorgeous ladies and most do not occupy positions high enough to receive sexual favors. Men who have stayed faithful to their wives are either not rich and powerful enough to be targeted or have little exposure to temptations in their daily lives. I shall not delude myself and take the credit for staying faithful because I am a moral man. What is closer to the truth is that I am a deprived man. In this case, this is a good thing because I am naturally protected from being destroyed by sex scandals and divorces.

It is a pity to have so many talented men throughout history regardless of race and religion be destroyed by sex scandals. These are men who could have gone on to achieve greater things and this represents a serious brain-drain to mankind! In this article, a solution to stem this brain-drain will be presented.

In the previous post, some rules for men to follow to protect their money from beautiful women who are employed as Sales tools were suggested. However, rules are useful only if the rule follower is disciplined. How many married men can stay disciplined when an irresistible seductress wraps her arms and legs around him, then skilfully move towards to the soft trigger spots? Therefore, a solution cannot simply consist of moral rules like the 10 commandments. By the way, who can really follow the 10 commandments? Not even on Sunday!

Rich and successful men at the peak of their career are desirable takeover targets of scheming gold-diggers. Actually, to be fair to women, most of the time it is the men who request to be taken over. A viable solution would be to make the men who are desirable takeover targets become poison pills for the gold-digger women whether the men like it or not. This is to protect men from their own weaknesses. Even powerful men have a soft spot for sexy ladies.

The Woman's Charter entitles a woman to a big chunk of the husband's assets and his future income in a divorce. Yet this is not enough to scare the men into behaving themselves. One proposal is  instead of getting the man to pay for his misdeeds, get the 3rd-party seductress to pay for the damages. Get the mistress to pay the wife if she sues for divorce. The man will pay for the remainder after the seductress has paid until she is bankrupt. By having such a law, no gold-digger woman would dare to seduce our men because it is going to dig a big hole in their own pockets. Thus, our men will be protected from sex scandals. I implore our law-makers to protect our local men by transforming them into poison pills to the gold-diggers.

This law provides an outlet to wives who want to get back at the mistresses who break up their families. There is no better way to do this than to sue the mistress to bankruptcy.

Singapore is known for its high density of high net-worth individuals. Foreign women might be attracted to come here to make money off our local rich men. Rather than suffer an outflow of wealth from our men's adultery, the country will at least enjoy an inflow of wealth by "levying a heavy fine" on foreign women for seducing our men and breaking up their families. Fair justice.

Some men may protest that such a law will take the fun out of their life. If they love their money and family, the only woman that a married man should allow himself to be seduced is his wife. All other women are simply too expensive. Some men may say they need an outlet and their wives simply cannot fulfill them on this aspect. I have a better idea. Go to the toilet and DIY (do-it-yourself). It is free of charge, risk-free (no fear getting sexually transmitted disease), no one will make snide remarks about your sexual performance, no need to synchronize with anyone, own time own target etc. Some men will still insist this is not enough and is a stupid idea. I will still repeat the same message in a blunter way - Go fuck yourself(literally) and get over with it.

Protecting money from our soft spot for beautiful women

Throughout history, there have been many great men felled by their weaknesses for seductive women. In the East, we have the 四大美女 (4 great beauties) of China. These women got their names because they were responsible for the sinking of mighty empires and the deaths of thousands of men who got drawn into wars started by these beautiful faces. The West has its share of such women too. Think of Helen of Troy, the face who launched a thousand ships which led to the destruction of Troy.

Recently, Singapore has its own version of such a woman. She is an under-aged teen prostitute who led to the downfall of 48 men. Women throughout the developed world are protected by divorce laws which force men to give half their assets in a divorce. Here, even under-aged but sophisticated prostitutes are protected. In this particular case, the prostitute was sophisticated enough to cheat 48 successful men with distinguished careers into thinking that she was legally open for business.Why does not the law protect the men who got cheated?

I am amazed that in a world where laws are mostly made by men, why do men treat themselves so unfairly? Why shower so much protection to women (get rich from divorces) and neglect protection for ourselves when history has thrown out so many examples that proves that men are weak and vulnerable to manipulation by seductive and beautiful women?

The lust for gorgeous women is programmed into our DNA. We need not be taught to lust. We just know it, feel it and manage it so that it does not run out of control as we grow up. Being a man, I am acutely aware of my built-in vulnerability. Firstly, I will talk about how I personally manage this weakness to protect my money. Secondly, I would like to suggest laws to protect the wealth of rich men who have poor self-discipline against ravishing and manipulative women with foul intentions.

It is a time-tested and effective business practice to employ attractive women to get men to part with their money. Some restaurants employ scantily-clad waitresses so that men can feast with their eyes while feasting with their mouths. Ever been to Hooters? Car shows employ sexy models because fast cars are associated with sexy female passengers. In the recent tragic Ferrari fatal accident, the rich PRC driver Ma Chi was accompanied by a sexy female companion (Wu Weiwei) who was said to be wearing a white spaghetti-strap tank top and hot pants at the time of the accident.

Most of us have been approached by bank relationship managers to buy financial products. So far, all the female managers whom I have encountered are highly attractive. Knowing that my judgment will be clouded in the presence of an attractive sales person, I never allow her to close the deal on the spot. Instead, I ask for printed materials to bring home so that I can analyze the numbers alone without her presence affecting my judgment. By keeping emotions away, I protect my money. Buy because the numbers look good, not because the face and body look good. If the presence of a gorgeous lady adversely affects your judgment, make sure that the decision-making process is done in her absence. Only the message matters, the messenger should not at all. Preferably, the message should boil down to a set of analyzable and fairly accurate numbers.

One reason I do not go to the casino is that there are too many beautiful faces and colorful lights inside the casino that distorts one's judgment. I think I stand a better chance of making money with my investments alone in front of the computer to analyze financial statements and price/volume movements without sexy distractions.

In my next article, I will make suggestions on protecting rich men's money from manipulative gold-diggers and their own poor self-discipline.

PS: Most married men who get into trouble with other women had it coming to them because of their own poor discipline and bad behavior. This post is not meant to push the blame to women. Rather, it is written by a man who is acutely aware of his own weakness and feels it is a pity to see so many potential great men who could have gone to greater heights in life be destroyed by this weakness.

Letter to Prime Minister on Ministerial salaries

Dear PM Lee,

I thank you for having the courage to take the unpopular measure of cutting your colleagues' salaries, including your own. The parliamentary debates have focused on setting the right level of pay to attract good people. My humble opinion is that for our country, it is more important to focus on setting the right incentives than setting the right remuneration amount. It is not only wasteful but even harmful to spend lots of money to attract brilliant people and then drive them with the wrong incentives. The best example to illustrate this point is Wall Street in 2008. Wall Street, with all the money it could throw, attracted the best minds from all over the world. Yet, it failed so spectacularly in 2008. Why? Because the people working on Wall Street were driven with a set of perverse incentives that rewarded them for behaving badly. Many of them took excessive risks because when things turn out well, they scoop up the gains but when things turn out badly, other people pay for their mistakes. In such a system, good people eventually turn bad. The smarter the people, the faster the system is driven into self-destruction because smart people know how to game the system more effectively. The world would have been a safer place in 2008 if Wall Street had hired stupider people.

I had seen how bad incentives made good people turn bad when I was in secondary school. My math teacher was a dedicated teacher. She would give the weaker students remedial lessons during the holidays. I respected her until perverse incentives made her behave badly. It came after the Ministry of  Education introduced school ranking. To get her promotion, she pressured the weaker students to drop Additional Mathematics because weak students will pull down the average and affect the school ranking. Things got so bad that one of the parents went to the Math Head of Department and threatened to report this matter to MOE. The HOD relented. Luckily, he did because the son of this parent later got distinction in 'O' Level A Math to the pride of his father. It is hard to know how many children suffered from such tactics by our educators during that period. I do not blame my teacher. I blame the bad incentives that drove her to behave so badly.

In a one-man-one-vote electoral system, it is to the interest of the ruling party to peg their salaries to the masses instead of to a tiny representation of 1000 top income earners (Only 1000 votes, how to stay in power?). The right incentives should drive government servants to serve the masses and not the minority rich because that will result in the maximum number of votes won. Also, the incentives will make a big difference to the thinking and hidden agenda behind the decisions made by policy makers. If salaries are pegged to the top 1000 income earners, their internal biases will be to favor the rich. This will worsen the income-inequality problem which is already a major threat to social stability today.

I hope you would consider pegging Ministerial salaries to a high multiple of the median income of Singaporeans and bonuses pegged to the real inflation-adjusted median income growth. Real median income growth represents rising purchasing power of the people. I think many Singaporeans would not begrudge Ministers' generous bonuses if GDP growth had delivered rising purchasing power to them. Instead, Singapore's strong GDP growth benefited mainly the rich and punished the rest with rising cost of living. How could the people not be angry? There is even a perception among the people that policy makers took the easy way out to grow GDP to hit their own bonus targets by opening the floodgates to foreigners without spending the necessary infrastructural investment to accommodate the enlarged population. Whether right or wrong, perception does matter.

Rising purchasing power means cost of living got to be kept low. I hope the KPIs(Key performance indicators) of government officers would focus more on reducing cost and less on boosting profit. Profits are best left to the private sector. It is not healthy for the public sector to focus on profits because they can simply take the easy way out to raise fees and charges. Worse still, they may even transfer the cost of their mistakes to the public. Since the public services are usually monopolies, there is nothing the people can do. Let us not waste the brainpower in the government and direct them to serve the people by lowering our cost of living. I hope future KPIs will focus on how fees and charges for the people are being brought down through public-sector efficiency and not just profits which can be made from squeezing the people.

How high should the multiple of the median income be? As long as Singaporeans prosper together with Ministers, I think it is fine if Ministers get paid very well. My humble view is that Ministers should be paid as high as possible to attract able leaders but not so high until the people lose respect and trust for our leaders. I think that level has been breached and I thank you once more for taking action to restore some of the lost respect. 失民心者失天下。欲得天下，先得民心。

It is not out of jealousy (too far out of the league to be jealous) that I support cutting Ministerial salaries but out of concern as a citizen that it will harm our country's long-term future. I hope you will forgive me for being brutally honest on this issue.

As you have mentioned in Davos in Jan 2012, Singaporeans and the government have to work together. It is hard to work together if the people no longer trust and respect the government. If there is no respect, unpopular but sensible messages will be lost on the people when delivered by a messenger who is not respected. If there is no trust, new policies will always be interpreted by the people in a bad light (They are just doing this for selfish reasons. Just want to make money for themselves etc).

When salaries are too high, it actually worsens your problem of attracting the best candidates to join you. When the people start to associate politicians with greedy Wall Street bankers, potential candidates who actually want to serve the people will stay out for fear that their own image will be tarnished. This makes it very hard for our country to attract able people from the private sector to come forward. Able people from the private sector usually have to take a pay-cut when they join the government. They will probably join if they are compensated with non-monetary rewards like having a higher standing and respect in the public eye. I think one of the greatest rewards of holding a political office is when strangers thank you and you could genuinely feel the sincerity of their respect for you. It will be better for our country to use the respect commanded by the office to attract able people rather than throw money at them and risk attracting the wrong kind of people.

When salaries are set too high, it is unfair to Ministers who do not need the extra money but want more respect from the people. When annual salary has already exceeded the million dollar mark, that extra hundreds of thousands do not matter anymore. If a public servant says otherwise, then it is dangerous to have him around because he probably has a very expensive lifestyle to maintain. Such a person has a higher risk of falling victim to corruption and bribery. Singaporeans will prefer senior public servants to lead simple lifestyles because these people tend to be incorruptible (that extra money is immaterial because I already have enough). I am glad to learn from your sister's letters to the Straits Times that your family lead a simple lifestyle. Past high Ministerial salaries have unfairly tarnished the image of Ministers who lead simple lifestyles and do not need that much money. I think they would rather trade for more respect than more money. When Ministers don't feel respected, it will surely affect their job performance to a certain extent.

Lastly and ironically, when salaries are too high for senior public servants, they no longer have a stake in the long-term future of Singapore. With globalization, the rich can simply migrate to greener pastures and take their money along with them. It is middle-class people like me who have a bigger stake in the future of Singapore and this is why I am writing this long letter. When public policies take decades to realize their effect, it is important that policy-makers have a long-term stake in the country's future. Otherwise, they will game the system by taking short-term monetary gain at the expense of the long-term good. Earn as much as you can while you can, place low priority on the long-term good because if the country crumbles later, just migrate! It is very hard to set incentives to get people to focus on the long-term because they come and go. Pensions are effective in that regard. Perhaps a return to the pension system would be desirable but you may consider putting a significantly higher percentage of the remuneration into the pension.

I am not sure if you are still reading at this stage. If you are, I sincerely thank you for sacrificing time to read a letter from an insignificant but sincerely concerned citizen of Singapore.

What Singapore can learn from the US financial crisis of 2008

Wall Street has always been able to attract the best minds from all over the world because Wall Street pays the highest salaries in the world. Wall Street drives its people very hard. They work very long hours. Wall Street people are by nature highly ambitious, driven and self-motivated. With unparalleled intelligence, diligence and energy, you would expect such an organization to be unparalleled in performance. Yet in 2008, instead of scoring an unparalleled success, Wall Street screwed up big-time and its failure was unparalleled in history. Wall Street failed so spectacularly that it almost brought down the whole world.

Many people have attributed the cause to evil Wall Street bankers full of greed who do not hesitate to cheat the financially illiterate public of their hard-earned savings in pursuit of big bonuses. I do not think that Wall Street people are evil by nature and this is not because I am one of them. If you were rewarded to be evil, would you become evil over time? To cut a long story short, Wall Street folks were rewarded to take excessive risks because when things turn out well, they scoop up the gains but when things turn out badly, other people pay for their mistakes. If you work in Wall Street, wouldn't you behave the same? This system of perverse incentives reward bad behavior. Over time, even good people become bad, not to mention the people who are already rotten. How do you expect highly driven, ambitious individuals who are used to winning in school since childhood to behave otherwise? Do you think they are willing to perform poorly?

At the risk of oversimplification, Wall Street collapse was caused by a combination of high intelligence/energy and perverse incentives that drove the system to self-destruction at the hands of its own people. All other problems stem from this fundamental flaw. The world would have been a safer place if Wall Street had hired stupider people. At least, they would not have been so intelligent bringing about destruction to their employer, transferring the cost to taxpayers and becoming fabulously rich in the process.

The Singapore civil service is able to attract the best minds in the country because it pays very well with very good job security. There is nothing wrong in paying well to attract smart people in the government. Indeed, one of the causes for the 2008 US financial crisis was that the US government was not able to attract regulators who were smart enough to deal with much higher-paid, smarter Wall Street folks who ran circles round the lower-paid, mediocre regulators. Paying high salaries to government workers is a good policy to be continued. However, one has to acknowledge that there is a limit beyond which people start losing respect for the government. Effective but painful policies that are hard for the people to swallow become much harder to implement because the message will get lost if delivered by a messenger who is not trusted by the people.

Having smart people(civil servants) working for you (me and my fellow citizens) can be a double-edged sword. If you drive them with the wrong incentives, they will drive you faster down the road to destruction. This is where my worry comes in. In terms of brainpower and paypower, our Civil Service holds similarities with Wall Street. If you mix that with perverse incentives, the combination will be lethal to our country. I hope our government pays particular attention to this risk when they set KPIs (Key Performance Indicators) that determine the bonuses and promotion of their civil servants .

What concerns me is when government puts in place incentives for their people that are at conflict with the interests of the Singaporean people at large. For example, the Government collects more tax revenue when more people go to the casinos. By pegging their own salaries to GDP growth, there is a tendency for policies to overheat the economy leading to a rising cost of living for ordinary folks. To carry this point to the extreme, an unscrupulous government can simply print money to grow GDP while the ordinary people suffers under inflationary conditions. Of course, this is not happening in Singapore based on the strength of the Singapore dollar. (I am losing big money in my US investments just by sitting on cash alone. ) However, there is a risk that policy-makers are taking the easy way out to hit their KPI to grow GDP by opening the floodgates to foreign labour. While foreign immigration is necessary given the low birth-rate in Singapore, it should not be done in a manner which creates another problem - raising the emigration rate and killing the loyalty of local Singaporeans. In a crisis, Singapore requires a core group of rooted Singaporeans to stay behind to fight for its survival.

The risk of self-destruction caused by perverse incentives is very real. Let us learn something from the US debacle and prevent it from happening to us.

Womanizing - things to avoid to preserve your wealth

This post is about women and money. It is written from the perspective of a man and is not relevant to women readers.

I do not want to approach this topic of womanizing as a moralist because I am not qualified to do so. I cannot guarantee to behave like a gentleman should a stunning temptress throws herself freely onto my lap. Rather, I would like to approach this topic from the financial angle.

Womanizing is extremely costly to a married man. Depending on the laws of the country, the woman who sues for divorce can grab half the man's assets plus a chunk of his future income as alimony. The richer the man, the more expensive it is. This is the price you pay to your wife for womanizing.

Even if the wife does not discover your philandering, you still have to pay for the most expensive pets a man can ever keep - mistresses. Mistresses cost much more than a car in Singapore. It is easy to give in to them. It is sad fact of life that men spend more on their mistresses than on their wives. They are more willing to buy expensive jeweleries to please their mistresses than their wives. This is unfair to the wife who made sacrifices to the family for bringing up the children and taking care of the old folks. This is irrational to the pocketbook because if the jewelry had been spent on the wife, it could at least be pawned when the family falls into hardship.

The expensive pets can quickly turn into even more expensive pests when the man tries to disown them. Men, especially men of status, are subjected to blackmail from their mistresses when they fall out. This can be a bottomless pit for your pocket.

The cost of womanizing drops exponentially for bachelors. For men who suffers from sex addiction, it is much cheaper to indulge themselves as swinging bachelors than as cheating husbands. Tigerwoods who reportedly has a sex addiction problem has to pay USD750 million to settle his divorce. For that price, he can hire a high-class prostitute every night to indulge his wildest sexual fantasies till the day his machinery wears off.

When a bachelor womanizes, he might even be respected among his circle of men friends for his conquests. When a married man womanizes, he will be condemned universally. It is a pity so many prominent public figures who could have gone on to do more social good have been destroyed by such scandals.

While the cost of womanizing for bachelors is lower, it is nevertheless an expensive lifestyle to maintain and should be discouraged. The optimal financial scenario for your romance life is to marry the first woman you kiss. Money spent on girlfriends who do not become your wife offers zero returns. If you change girlfriends several times, you have to write off a substantial sum of money spent on useless relationships. It can be worse than useless as former lovers can become sworn enemies if the fall-out is not handled properly. Having too many girlfriends before marriage can be an emotional baggage for the marriage. I would not advise my sister to marry a man with a history of womanizing. Few fathers would want such a man for their daughters unless they are betting on a lucrative divorce settlements.

The most money-saving outcome is to have your first girlfriend become your wife. However, it is better not to marry at all than to marry the wrong one because of the huge cost of getting it wrong.

When my son grows up and seeks advice on such matters, this is what I would tell him;

Take your relationships seriously. Enter into one only if the woman is of marriage material. After marriage, keep your eyes to your wife exclusively. Roving eyes for a married man are simply not affordable, even for the rich.

As a father, I hope to set a living example for my son to follow. One should not womanize out of love for the wife and money. Should one womanize, one runs the risk of losing both wife and money. What happiness is there left?

Smoking - Things to avoid to preserve your wealth

I have never smoked a single cigarette in my life ever. The purpose of this post is not to talk down to smokers like a parent lecturing his child on why smoking is bad for you. I am not qualified to do that. On an intellectual level, which smoker does not know smoking kills and is harmful to the family? I would like to list down the reasons why I avoid cigarettes the way I avoid the casino with a ten-foot pole.

- Smoking is particularly injurious to your pocket in Singapore.  

Like cars, Singapore is one of the most expensive place to buy cigarettes. Cigarette prices range between SGD8 to SGD15. I am not aware of other countries which sell cigarettes more expensive than Singapore. Smoking is a very expensive indulgence in Singapore.

- Easy target to be picked on by government to raise tax revenue

Smokers are the easiest target group to be picked on by the government to raise tax revenue. It is politically acceptable because most people are non-smokers and they are more than happy to see cigarette prices go up to discourage smokers from polluting the air. To appease the smoker, the government can offer the political viable reason that it is raising the levy for the good of the smokers themselves to stop them from harming themselves and their family.

All governments love to implement policies that can make money off the people while at the same time be seen as doing something good for the people.

Governments need not fear tax revenue from cigarettes will drop drastically due to price increases. In economist terms, cigarettes are price inelastic. This means that demand for cigarettes will hardly change despite price increases. Any product of an addictive nature enjoy the price-inelastic characteristic. A wonderful business will sell products with this kind of characteristic.

- More expensive insurance premium

Smokers have to pay more expensive premiums for their health insurance policies to compensate the insurer for the increased health risk they are undertaking. Smokers can lie to the insurer but they face the risk of being denied claims later. It is not worth the risk. Why risk buying an umbrella that cannot open when it starts raining?

- Increased risk of higher medical bill

Doctors can be highly damaging to your pocket. Unexpected medical problems is a commonly cited reason for middle-class families to slip into poverty. Smokers put themselves and their families (if they are breadwinners) at higher risk of slipping into poverty house.

In Singapore, the poor complains that it is better for them to die than to fall sick. While doctors can save you from a heart attack, their bills can send you another round of heart attack. Smoking brings you one step closer to the doctor. A cigarette a day ensures the doctor's pay (at the smoker's expense).

- Loss of health which impact earnings

Our greatest asset, as able-bodied people, is our ability to earning a living. A failing health will take this asset away. As advertised on every cigarette pack, smoking kills and harms your health. Otherwise, why would insurer charge the extra premium?

- Harmful to pregnant women and kids

Smoking is harmful to pregnant women and raises the chance of having babies with defects. Inhalation of smoke is also bad for the brain development of growing infants/kids. If you want to depend on your children to take care of you in old age, you have to ensure they grow up in a healthy environment.

- Non-smoking bosses do not like smokers

Smokers take breaks during work to smoke. Bosses frown upon the lost productivity from smokers although most keep quiet about it. Some smokers claim smoking helps them concentrate better and aids their memory. Don't say this to your non-smoking bosses. They will probably take this as some kind of bullshit. It is hard to quantify how career prospects are affected when appraised by a non-smoking boss.

- Smokers are not welcomed by non-smokers
Non-smokers do not like smokers who smoke in front of them. They are just being polite when they say ok to a smoker who asks if it is ok to smoke. My wife has made it clear to me that she would not marry me if I were a smoker. That would be a tremendous, unmeasurable loss personally.

Smoking, like the consumption of alcohol and other harmful addictive chemicals, is like spending hard-earned money to harm myself and my family. Therefore, it is not rational to smoke.

Minimum wage - not easy to get it right

The minimum wage has lofty goals of helping the poor. Prominent figures whom I deeply respect have voiced their public support on this policy. I am sure these people have the kindest of intentions. However, it is highly questionable whether the effect of the minimum wage is really beneficial to the poor.

If the minimum wage is set too high, it will create unemployment to people who are worth less than the minimum wage. No employer (unless he is your father) will pay a worker more than what he thinks the worker is worth. Anything more will be charity. It is not fair to expect charity from bosses because they set up companies to make money, not give away money. In a capitalistic economy, a minimum wage which is set too high will lead to higher unemployment among the young, the old and the unskilled. The young will be hit because they still have not accumulated enough work experience to be worth more than the minimum wage. The old will be hit because their market value has depreciated below the minimum wage over the years. The unskilled obviously do not have the skills to be worth the minimum wage. They will be condemned to permanent unemployment because they will not be employed in the first place. Not being employed denies them the opportunities to acquire useful skills on the job which can lead to higher salaries. At least exploitation gives the low-wage worker hopes of gaining useful skills which allows him to command a higher salary later. By protecting workers against exploitation with minimum wage, more potential damage is done. It is exploitation that allows low-paid workers to have on-the-job training opportunities that hopefully will raise their worth later on. They can job-hop to higher-paying jobs after getting enough experience, thanks to exploitation. I think if people recall their job history, some probably felt exploited during their younger days with low salary. But it was this exploitation that allowed them to job-hop to higher-paying jobs later on. Surely, temporary exploitation is better than permanent unemployment.


The most seriously hit will be the poor because they are the group with the most number of people whose market value falls below minimum wage. Instead of helping the poor, the minimum wage may end up raising unemployment among the poor. Given that social welfare in Singapore is near non-existent (due to low taxes), the consequences will be terrible for these people.


If the minimum wage is set too low, one might as well not have this rule in the first place. Why scare off investors and businessmen unnecessarily and create new administrative inconvenience? 

Even if the minimum wage is set optimally initially, it will not stay optimal for long. The optimum level will be fluctuating with economic conditions. It is impossible for government officers to adjust the minimum wage optimally with changing economic conditions. If they can be so in tune with the economy, they might as well speculate in the financial markets and make a bundle.

Because it is so hard to set the optimum minimum wage, I think we should leave wages to be set by the invisible hand of the free market than the well-intentioned but clumsy hand of bureaucrats.

Gambling - Things you must avoid to preserve your wealth

I hate to write a blog post using someone's misery as a starting point. However, I think the case of the Singaporean businessman who lost SGD26 million in 3 days at RWS casino can be converted into a good social cause. His predicament can serve as a useful lesson and reminder to Singaporeans on the danger of gambling. Dear Sir, your misery will not be in vain if this is of any consolation to you. I am sorry.

A businessman without proper risk management is subjected to high risk of failure when bad luck strikes. The gambler was a successful businessman who built up and grew his company over a few decades. So, he probably is armed with the proper risk management concepts. Had he applied his business training to gambling, he would not have sustained the heavy losses. This tells us something about the nature of gambling. There is something about human nature and our basic instincts that drive us to self-destruction once gambling become an addiction. An intelligent well-trained mind is no protection against this vice.

I have stepped into a casino only once and am no authority on it. Read on if you are still interested.

In all the games, the casino always has a winning edge. This is not surprising, otherwise the more visitors the casino receive, the more money it will lose. Although the odds of losing is higher for the gamblers, it does not mean that the gamblers will surely lose on every visit. However, every gambler must surely lose eventually if they play long enough with the odds against them. The mathematical law of large numbers guarantees that.

This is why the casinos intentionally set their house edge low. The purpose of the low house edge is to offer gamblers some hope of winning, thereby enticing them to play more and lose. If the house edge is too high, the gamblers will simply walk away or play less. Then, the law of large numbers cannot work its magic for the casino. You have to let the gamblers win sometimes to keep coming back. Mathematics ensures that gamblers will eventually lose with 100% certainty as long as they keep coming back.

The SGD100 tax that deters Singaporeans from visiting the casinos actually work against them once they are inside the casino. Once you pay SGD100, you will be tempted to stay longer to fully utilize that SGD100. The longer you stay, the more you play, the surer you will lose. The law of large numbers guarantees your loss.

Being a retail investor, I have given some thought to sizing one's bet. When your winnings odds are high, you bet big. When your winning odds are smaller, you bet smaller. In both cases, your winnings odds must be positive to your favor. If your winnings odds are negative against you, the optimal betting size is zero. If the odds are against you, you don't bet. In other words, you should never ever visit the casino. If you love money, please don't.

Even in the unlikely event that you make money from your casino visits, you will lose out in other ways. Your career prospects will be negatively impacted. No boss feels comfortable with an employee who likes gambling. Your boss will consider you a risk to the company if he learns of your regular visits to the casino. Will you embezzle company funds? Will you receive kickbacks from the suppliers? Even if your job has little contact with money (like my engineering job), your boss will still be worried that your performance will be affected by the distractions - distracted by the worries from the losses or distracted by the easy winnings and the greed to make even more. Either way, productivity suffers. All bosses hate that.

Some people think they can become professional gamblers and beat the casinos, drawing inspiration from the MIT card-counters. Making money in this way is possible in the short-term but not sustainable in the long-term. The casinos can simply bar you from entering once you become a consistent winner. Then, all your long hours of training become wasted. The odds of getting rewarded by working hard at your day job and doing something useful is higher than training hard to become a professional gambler.

If you have to visit the casino, set a pre-determined amount that you will lose. Once this amount is lost, leave the casino. The time to set this amount is before you enter the casino, not after. Once inside, one may be too carried away by the beautiful faces and colorful lights to make proper risk-management decisions. By following this practice, the casino becomes a place of entertainment minus the harmful social effects. At the same time, our fellow countrymen working at the casinos can keep their jobs. Treat the gambling losses as entertainment expenses. If you are lucky, you might even get paid for the entertainment.

As for myself, my personal policy is to avoid the casino totally. Some people think they are disciplined enough never to become addicted. They think they can keep their gambling trips as a source of entertainment only. It is like telling yourself I will try drugs just for the sake of experiencing new things but I will not get addicted to it. In the first place, why take the chance? Is there a meaningful gain in exchange for the risk? Hence, I do not even want to give myself a chance to get tempted by getting near to the casino. If smarter and more successful people like the SGD26m businessman have succumbed to this vice, what more for mere mortals like me?