2009 The Singapore Model – Where from; Where to?

4sg SG

Is the Singapore Model a “Mud Buddha Crossing the River”? (Chinese idiom: 泥菩萨过江-自身难保 Mud buddha crossing the river, can hardly save oneself). Does the Singapore model have any residual study value?

Singapore’s media has routinely lauded the PAP government’s brilliant capability. Among them is a report on 30th Nov 2008 with very typical wording: “Ever since China’s reform and opening up, many leaders have visited Singapore and also learnt from Singapore’s numerous effective methods. Moreover, in recent years many officials, academics and journalists have expressed deep interest in the PAP and Singapore’s political model.”

Clearly, the PAP and their supporters both think that the Singapore model is feasible, and can become a reference study for other developing nations. Lee Kuan Yew’s 2000 book “From Third World to First: The Singapore Story” recounts Lee Kuan Yew’s successful experience.

However, Western academics have been doubtful of the feasibility of the Singapore model for many years. The 2008 Nobel economics prize recipient Paul Krugman wrote an economic commentary in 1994 disputing the so-called Asian economic miracle, and thought that Singapore’s economic growth benefited from the increase in foreign investments and not via gains in economic productivity.

Similarly, American political academic Samuel P. Huntington had always doubted that Singapore’s political system can persist in the post-Lee Kuan Yew era. In reality, the economic policies enacted by the Singapore government are just basic necessities and not conditions leading to success, and thus Singapore’s economic performance is not decided by the PAP government’s policies.

What experience does Singapore have that is worth studying? The article “Singapore Is a Good Example” on the 21世纪网(21cbh.com) website on 30th Dec 2008 reported an interview with a NUS academic. Part of the contents include: “Singapore’s influence on China… the China-Singapore Suzhou Industrial Park… Singapore’s sovereign funds and Temasek Holdings model… for 30 years Lee Kuan Yew has always… provided sincere suggestions to China’s governmental leaders… Lee Kuan Yew also thinks that Singapore’s greatest value to China is not in the aspect of hardware, but in the aspect of software, in this area he influenced Deng Xiaoping… Deng Xiaoping said to learn from Singapore, not only Singapore’s more advanced economy, but also her good social order.”

Is this the actual case in reality? To Singapore, the China-Singapore Suzhou Industrial Park was an experience of utter failure. In 1994, China and Singapore both signed a contract to develop the industrial park, in 1997 both sides faced serious differences of opinion, in 1999 both sides agreed to let China take over the industrial park planning and then on 1st Jan 2001 Suzhou local officials formally took control of the industrial park. Singapore, in not quite 3 years after signing, already had serious disputes with the Chinese side, and by the next year 1998 had given up their sprouting offshoot. What kind of Singaporean success model is this? What are the contributions of this model in the software of attracting investment and developing industries for China?

Singapore often repeatedly mentions – in a self-congratulatory way – Deng Xiaoping’s quote of learning from Singapore. Hong Kong’s Anthony Yuen expressed his views on this topic on 8th Jul 2004: “China’s side… always holding the sentiment of compatriotism (or common heritage), treats Lee Kuan Yew leniently, not only generous with courtesy, but also generous with reverence, often talking about learning from ‘Singapore’s experience’ and Lee Kuan Yew often believed it to be true, often promoting ‘Singapore’s experience’ to Chinese officials.

4sg SG

Actually, the experience of managing a 3-million-population ‘company-like’ country is very difficult to transplant into a 9.6-million-sq-km, 1.3-billion-population country, the politeness of Chinese officials spoiled the Singaporeans.” In reality, Deng Xiaoping was only interested in “Singapore’s social order is strictly managed”. To say it plainly Deng Xiaoping was only attracted by Singapore’s political experience as a one-party-rule, atypical democracy.

Systems are very difficult to transplant, moreover Singapore’s national financial system is built on the foundation of stronghand politics, and thus it cannot be or should not be emulated by other governments. The abundant capital controlled by GIC and Temasek is commonly misunderstood by outsiders as the PAP government’s indicator of success. This is only an illusion, the real situation is not necessarily like this.

In economics, wealth can be created or transferred; the former through the reallocation of resources using prices set through market competition, and the latter by using political power to regulate the reallocation of resources. The first case is wealth by entrepreneurship, second case is wealth by exploitation. In other words, wealth creation is an economic behaviour and a display of capability, whereas wealth transfer is a political behaviour and a display of power.

To use the sale of state land as an example: in Hong Kong all proceeds from the sale of state land is used for government spending, whereas in Singapore all proceeds from the sale of state land goes into the reserves. Two different policies with different results – in Hong Kong the gains from society are used for society, whereas in Singapore is it the case that gains from society are used for GIC? If so, does the Hong Kong model or Singapore model more closely conform to the definition of a democratic society?

Besides, in Singapore many plots of state land were mandatory acquisitions by the government from the people at low prices. On 26th June 2003, the Straits Times published a piece of land acquisition news: the government acquired two plots totalling nearly 200 sq metres for a mere 1 dollar, and one of the plots was actually freehold land. This land acquisition case is a classic example of wealth transfer; the government’s payment of 1 dollar was just to fulfill legal transfer procedures, and is not the market value of the land. Is the PAP government getting wealth by entrepreneurship, or getting wealth by exploitation?

In 1965, right after Singapore’s independence, Lee Kuan Yew immediately made amendments to the original constitution articles pertaining to fair compensation for the acquisition of private land. In the 43-year span between 1965 and 2008, how much money has the PAP government accumulated from the sale of land? Clearly, this money is in essence the flesh and blood of the people.

The Singapore model also seemingly represents what the outside world admires as a highly-efficient administration. So what about the reality? Singapore’s ERP system is often – both inside and outside the country – praised as number one in the world.

Firstly, the source of this concept was from the UK and not originated in Singapore. Next, the fact that Singapore is able to implement this system, only reflects the strong-weak relationship between the government and the people; from the policy perspective, the people are powerless to resist and the PAP government can do as they wish.

The PAP government has been adopting this system since the 70’s of the last century. In these 30-plus years, how much road fees have been collected by the government? And how much has Singapore’s traffic jam situation improved? Until today, congestion on the roads remains an evergreen phenomenon. Is the ERP a traffic management system or a reserve-generating mechanism?

Are Singapore’s land and traffic policies worth emulating by other developing nations?

In the Singapore model, the core axle that moulds the relationship between the people and the government is public housing and the CPF. This does not mean that Singapore’s social welfare is also not worth emulating.

Firstly, Lee Kuan Yew strongly dislikes welfare systems, thinking that the poor have an attitude of insatiable greed. Secondly, a relief fund is a waste of precious resources. Thirdly, Lee Kuan Yew also thinks that wealth inequality can stimulate the poor into working more diligently thus contributing to economic development. As you can see, the Singapore model is not accommodating of social welfare.

The two most valuable properties that ordinary citizens of Singapore have are their flats and CPF. However, from the strict definition of property rights theory, these so-called private properties are in reality public properties; governmental properties. This is because flats do not comply with 3 necessary conditions of private property: the right to freedom of use, the right to freedom of transfer and the right to freedom of income-generation.

In the case of housing property, the most significant right of use is residency that comes with conditions, the other rights of use, transfer and income-generation are all subject to HDB restrictions; compare the rights of flat and private condominium ownership to clearly understand what is meant by private property rights.

Is there any assurance in the contract of a flat? Under redevelopment law, the original 99-year lease can be terminated at any time; if the government tells you to move, you have to move. Very clearly, of the two parties in a contract, if one party can terminate the contract at any time or amend its contents at will, then he is necessarily the true, and sole holder of the property; and essentially the owner. To put it simply, the people are the tenants, the government is the owner, although the people paid money to buy the flat.

Bank accounts and CPF accounts are also different, the former can be freely used, freely transferred and freely invested etc., while the latter clearly does not confer these private property advantages.

Lee Kuan Yew, through the policy of acquiring land at cheap prices, produced a result that effectively liquidated homegrown capitalists, and this is the main reason that caused the utter failure of the homegrown economy. Besides, look at the result of how many multi-millionaires that China has produced in a brief 30 years, isn’t it possible to realise that under the governance of the PAP government, Singaporeans’ opportunity for prosperity has long disappeared without a trace? In Singaporean society, building an enterprise from scratch has become an ancient, remote myth.

The political consequences of the Singapore model is crystal clear. When the government completely controlled the people’s most valuable properties, the government also controlled the people’s lives and thoughts.

Under this strong-weak relationship structure, economically the people has degenerated into productivity statistics. Politically, the people have to ensure the stability of the ruling party, because their land ownership rights and fate of their CPF funds are controlled squarely in the hands of the government and the bureaucracy. This is also the main reason why the PAP was able to have such a long period of one party rule.

Thus it can be seen that the Singapore model is not democratic, but a reverse socialist model. According to socialist theory: the people are the masters and make decisions, while the government serve the people. But the Singapore model is: PAP is the master and make decisions, while the people serve the government. Clearly, those countries that intend to pursue democracy and free-market economy definitely would not be happy and should not want to emulate this type of Singapore model.

So, what is the essence of the Singapore model? During an interview on Dec 2006 with 财经 (Channel 8 TV show) Lee Kuan Yew frankly said: “The Singapore model has no essence to speak of but has the ability to continue to change in accordance to changes in the world.” This can be reasonably interpreted as meaning that the Singapore model has no essence but has the characteristics of a chicken weathervane: to change direction based on changes in the situation. Thus, currently it’s the East wind that blows with vigor, the chicken’s head of course looks towards the East.

In early years, Singapore was in a precarious position (一夫当关，万夫莫开 If one man guards the pass, ten thousand are unable to get through) acting as the Western capitalist world’s anti-communist frontier in Southeast Asia. In 1963, Lee Kuan Yew’s “Operation Coldstore” was to prevent Singapore from degenerating into a “Third China”. Not long after, in Nov 2004 Taiwan’s Mark Chen used Taiwanese language to criticise: “Nose-booger-sized Singapore is carrying Communist Party balls. One way then and the other way later, concretely demonstrating Singapore model’s true colours as a chicken weatherwane. In retrospect, the chicken weathervane is an indispensable characteristic of the Singapore model, and is also the face of this spirit. Pragmatism at another level is opportunism: to steer by the wind (nearest English equivalent = trimming one’s sails).”

However, this form of unprincipled, utility-seeking model of governance definitely will not be acceptable to those national cultures with political ideology and patriotic spirit. In international politics no country would sell out their political beliefs or sacrifice patriotic spirit for short-term benefits.

To reiterate, as a post-colonial body, the Singapore model has no national culture, political beliefs and also lacks patriotic spirit. To tell a society with a national culture to accept a Singapore model with no national culture is an unthinkable thing to do. So, will there be an international market for such an immature political model as Singapore? The idolisation of the Singapore model is only a plaything of Singapore’s media, not to be taken seriously.

Undeniably, Lee Kuan Yew is extremely intelligent, and proficient at adapting to circumstances; in his younger years Lee Kuan Yew’s idea of survival was to emphasise the inevitability of change. Indeed, he who knows the Singapore model like the back of his hand, Lee Kuan Yew knows that the Singapore model that he personally moulded has long started to head towards decline.

The old version of the Singapore model looks to be a depreciating model. This is because the financial crisis at the end of the last century and the economic rise of China has fundamentally altered the landscape in world politics and economics. However, lacking in political and economic resources, Singaporean society is unable to change existing social restraints to adapt to the times. That is why in 2002 Lee Hsien Loong’s Remaking Singapore campaign attempted to create a second version of the Singapore model in order to adjust to the new world reality.

In 2005, Lee Kuan Yew declared Confucian ethics to be outdated. In 2006, Lee Kuan Yew talked about the Singapore model having no essence. This kind of political trick is just to drum up support for changing direction, to facilitate the future adoption of new ideas in society, and furthermore to give the old version a respectable stage exit. The PAP has always strategised before they act.

Is the new version of the Singapore model an improvement over the old? (青出于蓝胜于蓝 Green comes from blue and surpasses blue) Or is it worse than before? (一蟹不如一蟹 Each crab is smaller than the one before) Until now this trial version of the Singapore model seems unable to emerge from a stepwise fumble, unable to grasp a direction. Singapore’s manufacturing section today is neither high nor low, without top talents producing research results and also without bottom line competitive advantage. Singapore’s high-salary elite team was no match for mere Suzhou local officials, and so the idea of Singapore’s manufacturing industry turning China into an economic hinterland vanished into thin air.

Didn’t the government’s investment of large expenses to import and forge ahead with life science technologies result in a clash of opinions? Different officials individually insist on their own research directions. Using massive funds to attract world-class scientists who engage in rotating horse lantern games (nearest English equivalent = playing musical chairs), people come and people go, but who knows if they have produced any breakthrough world-class results?

The second wing (referring to sovereign fund investments), which earlier on had flown so high with such unabashed glee, looks today to have fallen hard, part of the investments have now degenerated into long term investments? Isn’t that equivalent to saying that the future government will have to clean up the mess? In 20-30 years, who will be the ruler? Who will be the beneficiary? However, from today’s perspective, people who look forward to getting back their retirement funds on schedule will perhaps face an unforeseeable risk of CPF policy change.

Now, the fate of the IT2000 Intelligent Island plan is unknown. In 2005, Lee Hsien Loong announced the construction of the casinos. In 2006, Singapore became a tax-evader haven and money laundering centre. Xie Guozhong pointed out that Singapore is a failed economy that relied on money laundering to thrive. In the eyes of the Taiwanese, Singapore along with some other third world countries are money laundering centres. In 2008, the F1 racing that was rejected by the government for many years finally kicked off amidst much elation but ended up all sound and no fury. Now the Italian racing world are even more doubtful about the wisdom of holding street races?

In 2010, when Singapore legally begins betting, will sex-based economy follow suit in the legalised market? Singapore degenerating into a money laundering centre already makes people sorrowful, looking for a way out by rummaging rubbish heaps is even more heart wrenching, has the creativity of Singapore’s ultra-high-salaried elite completely dried up? Is the new Singapore model proceeding towards a “eating, drinking, whoring and gambling” and “don’t care black money or yellow money as long as can make money” model? Will Singapore degrade into a “laugh at the poor but not at the whore” kind of pragmatic society? Perhaps this explains why Lee Kuan Yew had to say the Confucian ethics was out of date.

Today, ravaged by the financial thunderstorm, under the climate of a decelerating world economy, the Singapore model is a Mud Buddha in the water. The residual value of the Singapore model is to act as a negative educational example: one-party-rule, one-person-party is not beneficial to the long term development of a society. The post-Lee Kuan Yew era has already begun, Singapore must proceed towards political openness; moulding a society where a hundred flowers can bloom is the only feasible direction for Singapore’s transformation. Hopefully after the Mud Buddha disintegrates, out of the muddy puddle will emerge an untainted and fresh new lotus blossom.

http://sgblogs.com/entry/singapore-model-where-from/365037