"With Tomorrow Clearly in Our Mind"

Mrs Belinda Charles,
Members of the Academy of Principals,
Friends, Ladies and Gentlemen,

Good Afternoon.

1. The Chinese say it takes 10 years to grow a tree, and one hundred years to educate a people.

2. As a former school student and as a parent, let me thank you all, Principals, teachers and staff, in our schools and at the Ministry of Education for being part of our national commitment to give our young the opportunity to be the best that they can be.

3. Singapore students today rank within the top 5 in the world for reading, mathematics and science standards. Our text books are used in USA and elsewhere to teach mathematics. I am not surprised. My favourite maths teacher in school took it upon herself to teach both the strongest and weakest class, using very different approaches. Today, we continue to have principals, teachers and staff who volunteer to teach our disabled or weakest students through new and innovative ideas in our schools.

4. Our students work hard. But more importantly, with the support of their principals, teachers and families, they have the character, discipline and determination to excel in many areas. You have given them the wings and confidence to fly, and the roots and compassion to commit to be a part of the larger family of Singapore.

5. To all of you, Belinda and members of the Academy of Principals, and your teachers and staff - I can only say again a simple thank you as you start another year of your mission and commitment to develop and care for our next generation.

6. We are all stewards for our future generations. As educators, you carry a great responsibility. What you do today, will shape the character and values of our people and society of tomorrow.

7. As a small, open society in a highly interconnected world, Singapore will be buffeted by deep global changes that are taking place around us.

8. Today, I would like to briefly share what I see as three major global forces which will impact our people and society of tomorrow:

• Demographics
• Digitised Society
• Global Rebalancing
   

A Growing and Greying World

9. First, demographics – the numbers and the age profile.

10. In October last year, the world population surged past 7 billion.

11. It took the world 120 years (1804 – 1924) to double from one billion people to two billion people. But it took less than the last 15 years to increase another billion, from 6 billion to 7 billion. It’s a Big and Fast Growing World of people[i], all hungry for a better life for themselves and their children. This creates enormous pressures on the use of resources and energy and thus the challenges of sustainability and global warming.

12. We don’t just live in a Big Growing World - we are living much longer too.

13. Up till the 1950s, people lived till their early 50s[ii]. When Germany became the first modern state to introduce a tax funded state pension in 1889, Prussian life expectancy was less than 45 years old[iii]. Bismarck had then set the pensionable age at 70 years old, when few people lived till 70, and those who did were generally unfit or disabled. The very few disabled elderly surviving at 70 years old would have been supported by taxing a large young working population.

14. When pension plans were drawn up in the 20^th century in Singapore, USA and elsewhere, especially in the post war period, people were expected to live less than 10 years in retirement – retire at 55 or have early retirement at 50, and we will be gone before 60 years[iv].

15. Today, the 60s are the new 40s. We live longer, thanks to better education, better nutrition and better healthcare. Developed economies have life expectancies in the high 70s. In Singapore, our overall life expectancy is 82 (84 for women, and 79, almost 80 for men) – higher than in the U.K., USA and New Zealand and marginally lower than in a handful of countries like Japan and in cities like Hong Kong.

16. Globally, among those over 60 years old, those who are 80 years and older are growing fastest - at the rate of 4per cent a year.

17. So at the older end, we not only live longer, we are having more and more old folks above 80 years old.

18. At the younger end, our fertility rate is plummeting globally. In Britain, it took 130 years[v] to go from a fertility rate of 5 to a rate of 2. But mothers in developing countries today can expect to have three children when their mothers had six or more or a dozen. Sometime between 2020 and 2050, the world’s fertility rate as a whole globally will fall below the replacement rate of 2.1[vi]. So you see, the issue of replacement fertility is not just a Singapore issue.

19. What does this mean?

20. In China, there are almost as many people above 60 years old as there are kids below 14 years old (13per cent versus 16per cent). In less than 10 years, by 2020, 28per cent of China will be above 60 years old – this is nearly 400 million Chinese over 60 years old, more than the current total population of France, Germany, Italy, UK and Japan put together.

21. In Japan, they are already selling more adult diapers, than baby diapers.

22. With the low fertility rate in China[vii], instead of the pyramid of two parents and four grandparents spoiling one single kid, the pyramid will soon invert, and that one kid will have to try to support two parents and four grandparents, not to mention his own kids if any. You can imagine the burden, expectations and weight they have to carry.

23. Back in Singapore, our fertility rate today is 1.2 – even less than China’s rate of 1.6[viii], with their one child policy. Our birth rate is a far cry from 1966 when the KK Women’s & Children’s Hospital delivered nearly 40,000 babies in one year, a world record, and continued to deliver the most number of babies at a single medical facility for a decade. With our life expectancy now at over 80 years old, and our low fertility rate, we are not only ageing rapidly, but also will shrink, with fewer and fewer young people to look after more and more of older folks.

24. This means more resources to support the expanding base of the elderly, with the burden falling on a shrinking base of younger people. In the USA, the government spends 2.4 times on the elderly retirement benefits compared to spending on children, including spending on education[ix].

25. The old Bismarck approach of state funded pensions will not be sustainable in a Growing and Greying World. Social security systems like those in USA or Germany where they depend on the working population to contribute into a common pool to fund the retirees just cannot carry on for long. They will have to go through a difficult and painful reform, much like what Greece is going through today. Two thirds of private sector pensions in USA have already shifted to the defined contributions plans much like our CPF system where our retirement benefits depend on what we put into our individual retirement accounts.

A Connected and Disconnected World

26. Quite apart from the pressures of a big crowded world with more and more elderly people, and less and less younger people, the most important trend is the dramatic digitalised world.

27. The human society went through three major shifts in our social structure – from small nomadic families wandering around in vast prehistoric plains, to larger agricultural communities of villages clustered around fertile land near a water source, a sea or a river, to the large thriving cities in the 19^th and the 20^th century.

28. The shift towards cities was amplified by the industrial revolution.

29. Nomadic cultures welcomed strangers from afar as a form of mutual and co-operative support.

30. On the other hand, village cultures revolved around the family, the land and the grace or tyranny of the seasons – weather, rain or drought. Children were not just family, but also future farm hands to help produce the food. Cultural norms and codes of conduct governed how individual supported and protected each other. Doors are open to each other within the village, though not necessarily to strangers from afar. This is very much the kampong spirit.

31. In 1800, just over 200 years ago, only 3 per cent of the world lived in urban cities and towns. Hence, notwithstanding the rise and fall of great civilisations with their famed cities and fabled capitals, the human race had mostly a rural farming culture with a rural based set of values and norms.

32. A century later, in 1900, 14 per cent of the world lived in cities. The great industrial revolution led to mass urbanisation as well as the globalisation of manufacturing and commerce.

33. In a village where everyone knows everyone and almost everyone is related by birth or marriage, norms of behaviours passed down through the generations to respect your elders and value your folk wisdom. The stories that grandpa told of the giant killer wave must be remembered.

34. Come the industrial revolution, and youngsters migrate to cities. No one knows you. You are anonymous amongst tens of thousands of strangers from a polyglot of other cultures and beliefs. It is scary for some, but mostly a heady brew of freedom for others. There were no accepted rules of behaviour or engagement.

35. Take for instance, the case of milk – precious milk for children. Mothers bought milk marketed as wholesome and fed them to their babies, slowly poisoning and killing them. It took thousands of sick children and infant deaths before lawmakers intervene. This is not China 2008. This is New York City in 1858.

36. How did this happen?

37. Fast growing New York saw dairymen padding their milk supply with water and flour. Some even used swill milk from cows that were fed alcoholic mash from nearby whisky distilleries. Some cows were so diseased from their alcoholic diet that their teeth rotted, their tails fell off, and their udders were ulcerated. To remove and thicken the swill, dairymen would add plaster, starch, eggs and molasses. Up to 8,000 children died every year from swill milk until a crusader and newspapers ran a campaign to close off the distillery dairies. This was New York City – in 1858.

38. Likewise, China faced a sudden surge in the movement into cities as China urbanised at a rate of 30 million people a year – that is more than one Taiwan a year. China essentially went through a modern industrial revolution within 30 years. And so, the New York experience was repeated as the rural society adapted to become an industrial community.

39. In such a raw frontier environment, we can no longer rely on shame and families to police proper code of conduct. As new examples of misbehaviours surface, societies then evolved new systems and codified laws to police and manage the temptations of freedom. New rules of engagement had to be established among the various old as well as new disparate and disconnected groups of community – standards for industrial scale milk producers, protection for workers and so on.

40. By 2050, two thirds of the world will live in urban areas. These mega cities are where people can go through life pretty much without social interaction if they so wish. People are connected and yet may be totally disconnected. Schools, families, jobs are where people connect, but yet people can remain anonymous and disconnected.

41. This change will be more dramatic in the large emerging or growing economies like  China, India and Brazil because of the much faster pace of urbanisation[x].

42. As a rural population migrates into an urban setting, new codes of conduct will take time to evolve, before the urban population settles down to a new system of behaviour, values and social norms, enforced at the margins by codified laws.

43. Amidst this rapid urbanisation with the obvious challenge of people losing roots and feeling disengaged or anchorless, we face yet another dramatic push towards a connected and yet disconnected world.

44. In 2004, less than 8 years ago, some students were toying with a new idea to connect friends with friends in the undergraduate dormitory at Harvard. Four years later, in 2008, Facebook crossed their first 100 million users. This is more than the population of most countries.

45. Last year, active Facebook users crossed the 800 million mark, making it the 3^rd largest “nation” in the world. As many as one in nine of the world population has a Facebook account. Maids returning home to get married post pictures of their weddings for their friends and former employers, mothers connect with sisters, and like-minded strangers coalesce around both benign and radical ideas. Niche marketing can target the world, unhindered by traditional national boundaries.

46. In 2008, the World of Warcraft garnered 11 million gamers who logged on regularly into a virtual world to fight each other and kill monsters. It is the size of a Mega City of players gathering from across the world.

47. This Mega Nation of Facebook or Mega City of the World of Warcraft is connected in ways that were unimaginable a generation ago. Yet there is a paradox as well. People know like-minded people half way around the world yet remain disconnected from their immediate neighbourhood, not even knowing the names of their neighbours and perhaps feeling disconnected even with their own families.

48. Teachers of today no longer compete with the Wuxia sword fighting novels and Spiderman comics of the 70s, or the Atari games of the 80s. Instead, we have to teach our kids to protect themselves from the dark side of the internet. Primary one kids now start their school learning how to deal with cyber bullies – not just physical bullies.

49. The cloak of anonymity on the internet is heady freedom. It can create unimaginable havoc.

50. Take the case of Korean hip-hop megastar Daniel Lee - stage name Tablo with the group Epik High. Daniel spent more than 6 months in 2010 defending against false allegations about his academic credentials from Stanford University spread by an anonymous group. The scandal affected not just the artist and his band but his friends, family and officials at his alma mater. Daniel became so distraught that he didn’t trust the medical staff at a hospital when his first child was born. Daniel since filed charges against 20 of his attackers, but could not move against the leading agitator, a 57-year-old Korean American living in the USA, a complete stranger just out to make mischief.

51. As we all know, this cloak of anonymity can encourage bad behaviour; overtime we must evolve new rules of engagement and behaviour in our cyber community.

52. But until then, who will be the accepted guardian of public good in this borderless world of the internet? How will we stop another case of extreme harassment which has led to suicides in some cases?

53. Disconnected individuals self-radicalise. Extreme views develop, fanned by like-minded malcontents. Gen C or the connected generation can be deeply disconnected whether in pockets or in large swathes.

54. Classrooms will have to evolve as knowledge is freely available on the internet. Doctors have to learn to advice patients who turn up with stacks of internet articles as part of their self-diagnoses.

55. How do we connect as a people, a community or a country? How do we evolve shared values in the internet world? How will the internet disenfranchise a big segment of our population? How do we police and punish cross border crimes of identity theft, harassment or espionage?

56. Thus, we expect the world to evolve a new set of laws and regulations over time to police the worst effects of the new connected world as criminal and other nasty elements begin to take advantage of the lawless virtual space. Our young today will shape those values, norms and laws of tomorrow’s connected and disconnected world.

A New and Old World

57. Finally, amidst these two very large and deep undercurrents of the big growing and greying world and the connected and disconnected world, there is another turbulent undertow tugging and pulling at people and nations.

58. Two thousand years ago, India and China were the two largest economies in the world, comprising more than half[xi] of the world economy. Within India, a number of empires traded with each other and with nearby regions of Greece, Persia and Central Asia. China was in her first golden age with the Han emperors firmly in power. To the West, Italy was a distant third at 6 per cent of global economy under its first emperor, Augustus Caesar of the Roman Empire. The USA did not exist then, and Japan, France, Germany and Britain had relatively tiny economies.

59. This shape of the global economy remained unchanged largely for centuries.

60. Then, something remarkable happened in the mid-19^th century. The share of China and India economies fell from almost 50per cent to less than 20per cent. By 1900, USA took the top spot in the world economy, and remained there ever since. In the post war period, China and India closed themselves off to the outside world, and by 1970, the contribution of both China and India together was just 5 per cent of the global economy.

61. Over the last 30 years, first China and later India reconnected to the world. In 1978, Deng Xiaoping visit Singapore, and was told what Singapore could do, China could do better. He kicked off major economic liberalisation and reform. In that process, he laid the foundation for China to rebuild her pre-eminent economic powerhouse. Similarly, after India faced a balance of payment crisis and had to be bailed out by the IMF, Narashima Rao launched economic reform in 1991.

62. Suddenly, the international labour pool doubled from 1.5 billion people to 3 billion people[xii] within a short span of time.

63. This first wave of low cost unskilled labour depressed unskilled wages the world over. Exporting countries found themselves suddenly uncompetitive. Labour in Mexico, Columbia and South Africa was four times more expensive than Chinese labourers, who were just as productive. Even within the developed economies, companies were relocating their manufacturing and corporate services wholesale to China and India. No wonder corporate profits had been growing robustly while labour share of GDP in Japan, USA and EU were flat.

64. This also contributed to the growing income disparity between the unskilled and skilled earners throughout the world, including Singapore.

65. However, this will not continue forever. China’s working population has already peaked a few years ago, and it is increasingly difficult to find labour in the coastal regions. Wages in coastal China have started rising.

66. Yet the rebalancing is not yet over. We are now in the midst of the second wave of adjustment. China produces 5.3 million graduates a year – that is more than the population of Singapore - 40 per cent of these graduates are from the science and engineering disciplines[xiii] – almost 2 million engineering, science and technical graduates a year in China – that is more than half the number of Singaporeans in Singapore. In contrast, USA produces about 120,000 engineers and declining.

67. The number of doctorates in China grew an average of 40 per cent between 1998 and 2006; India doctorates grew by 8.5 per cent over the same period; the doctorate pool in USA grew by 2.5 per cent while doctorate growth in Germany was flat.

68. This second wave of highly skilled labour competition is hitting the pockets of the middle class in developed economies, from professionals and technicians to managers and executives. Singapore will not be spared. This will continue for a generation, as China and India invest in the education of their people and their middle income group continues to expand. This also explains why the middle income wages have been relatively flat in the developed economies over the last decade.

69. Very soon, in less than 10 years, China will overtake the USA as the largest economy on a purchasing power parity basis. By 2050, India will reclaim its position as the second largest economy in the world on a PPP basis. The USA will be the 3^rd largest economy, about two thirds the size of China.[xiv]

70. This shift in economic power will invariably also lead to a shift in political and military power. Institutions created in the last century and dominated by Western powers, such as the IMF or the World Bank will be forced to become more inclusive. This is already happening.

71. The recent and on-going sovereign debt crisis is but one facet of the shift in economic power, as emerging economies become creditor nations, while the developed economies have become indebted by spending beyond their means.

With Tomorrow Clearly in Our Mind -

A Growing and Greying, Connected and Disconnected, Old and New World

72. I have just described the three major undercurrents in the reshaping of the world of tomorrow, trends that will shape our next generation. There are other consequential effects of these trends. For example, as populations and economies grow, their appetite for resources will grow, and they will add heaps more carbon dioxide to our atmosphere.

73. As a race, humankind has not fully adapted to the great transition to an urban age. Yet, we are already in the throes of a faster and bigger scale transition into the digital age of global connectedness and disconnectedness.

74. It took many generations to have recognised codes of behaviour in order to protect the village green, and not have everyone rush their sheep over to graze the green bare.

75. Easter Island was once a thriving civilisation. They gradually chopped down the forest to make canoes, firewood, carvings and transport. Eventually, they chopped down all the trees, and their society collapsed in an epidemic of cannibalism. They forgot to protect their forest for their future generations. They had gotten onto an unsustainable path. The collapse of the Soviet Union in 1990 was yet another example of an unsustainable system.

76. Will our next generation get onto an unsustainable path or will they know how to break out just as Deng Xiaoping made the courageous decision to break out from an unsustainable system?

77. There are no easy answers.

78. At the core, we can only hope that we can continue to equip our next generation with the best gift we can give them, as teachers and parents, and as a country and a people: the gift of education and thinking – education in values and character, education in knowledge and critical thinking. Wisdom they will have to acquire – to know when they have to make calculations for the larger good and for the longer term, instead of just optimising for themselves as individuals at the expense of society as a whole.

79. As Singaporeans, we are recognised around the world as a highly competent, disciplined, and upright people. These values are our national identity and our Singapore spirit. We must continue to build on this core, and avoid the development of an entitlement mentality.

80. With the internet, knowledge takes on a different dimension. Instead of simply book knowledge, we need to learn to transform knowledge into wisdom. We all know that we can be clever without being wise. Can we be wise enough to know how to separate the fluff from the substance, to discern the difference between the trifling and the fundamental essentials, and to have the courage to make the hard choices?

81. There are no models for us, for the world, to follow, just as Singapore had no model to follow. Singapore had to create its own path, thinking through what makes sense not just from an overall perspective but also from a long term perspective. That was why we started our CPF system based on individual accounts on a defined contribution basis, and not a common pool which essentially steals from future generations to fund the present generation.

82. We, teachers and parents, as well as our students and next generations, will have to cross the river by feeling for the stones.

83. Modern Singapore will be 50 years old in another 3 years. We’ll have to wait for another 50 years before we know if we have educated or nurtured a people through more than 3 generations.

84. In this great enterprise, I wish you the clarity of mind and the firmness of purpose in the decades ahead. And in this New Year ahead, I wish you all good health, and much happiness, as we continue this very fascinating juncture of human history.

Thank you.