http://groups.yahoo.com/group/Sg_Review/message/1755?unwrap=1
Mellanie Hewlitt
12 June 2005
Singapore Review
Lifting The Veil On Singapore Politics
Today, we attempt to lift the thick veil which covers much of
Singapore's inner-political circles to catch a glimpse of
reality
Attached below are two articles;
a) Industrial Policy, a Tale of Two Cities, By Robert J. Barro,
Wall
Street Journal, 2 April 1992
b) Fiscal Predator, By Dan Fineman, Far Eastern Economic Review,
6
May 2004
Both touch on similiar subject matters and reach the same
basic
conclusions; that Singapore's facist policy of micro management
and
enforced savings has handicapped the private sector amd
impoverished
the citizens.
Robert Barro in his 1992 article concluded that:
"Singapore's forced saving and industrial targeting have been
mistakes. These policies have led unnecessarily to reduced
productivity and welfare."
A similiar conclusion was reached by Dan Fineman a decade on:
"Deprived of disposable income by numerous [hidden] taxes,
Singaporeans consistently consume a share of GDP 10-20
percentage
points below Hong Kong levels, while Hong Kong maintains a higher
per-
capita income. Their high-revenue, low-expenditure government
leaves
Singaporeans a smaller slice of a more modest pie."
"Austere fiscal policies hurt Singapore more than possibly
any
country on the planet. Although Singapore markets itself as a
low-tax
country with world-class social programmes, in reality the
government
taxes heavily and spends little. The resulting huge surpluses
--
largely hidden and off-budget -- strengthen the ruling party
but
weaken the economy. Unless the government drastically loosens
fiscal
policy, businesses will lose competitiveness and long-term
growth
will slow."
There is nothing new in the above comparisons between Singapore
and
Hong Kong.
What is a revelation is the date of the articles. Robert
Barro's
article was written in in 1992 while Dan Fineman's article was
more
than 12 years on in 2004. More than a decade separates these
two
articles and little has changed during this period. The
singapore
government has steadfastly persisted with its socialist
policies
against conventional wisdom.
How could anyone be so blind and for so long? Or is this a case
of
will-full blindness? Is the PAP Government really seriously intent
on
change?
After so many decades, political and economic analyst now
question
the sincerity of the Singapore Government. It is no secret
that
Government Linked Companies make up at least 50% of the total
market
capitalisation of ther Singapore Stock Exchange. And these GLCs
are
either directly or indirectly controlled by Singapore's First
Familee.
The First Famuilee has a strangle hold over all aspects of
Singapore
political and economic environment. And unlike other despotic
corrupt
governments in Africa, South America or Eastern Europe, they
have
been able to successfully hide this through a corporate veil and
also
via a process of legtimised corruption.
This regime has sucessfully resisted recommendations by the
IMF,
World Bank and the FTA as well as other free speech
pro-democracy
advocacy NGOs to maintain transparent and accountable world
standards
in state administration of public funds.
Similiar calls by Opposition political parties (and the
international
press) have been met by defamation law suites with Singapore's
very
unique brand of justice administered swiftly by a ready and
compliant
judiciary which submits to the back and call of the Ruling
Elite.
To complement this elaborate charade, Singapore GLCs and
state
administration are buried behind a corporate veil of secrecy
and
shrouded in mystery. It was a grand illusion ochestrated in
perfect
harmony by a state runned local press which would put the likes
of
great magicians and artists like David Copperfield to shame.
(Who
ever said Singapore lacks creativity?)
Even the size of the country's foreign exchange reserves are
designated as a "State Secret" for reasons of "National
Security" to bring it wiithin the ambit of the Internal
Security
Act. Previous conservative estimates of the size of
Singapore's
reserves were in the region of USD110-140 Billion, a sizeable
figure
for a small nation with a population of only 4 million
citizens.
This is money which was accumulated out of the blood and
sweat
of the working citizens. It is also money they will never see
or
touch, courtesy of Singapore's state constitution which prohibits
any
repartriation of profits earned by the government (or the GLCs)
back
to the citizenry.
So the USD150billion dollar question is, where does the money
go?
Previous queries on such senstive politically incorrect issues
were
posed by previous President Ong Teng Cheong who experienced a
short-
lived term in office due to "ill health".
He was replaced by a more compliant President Nathan who has
adopted
a more co-operative mentality towards internal politics and
management of public funds. Political Analysts expect this
compliant
President to stay another term in office. (surprise
surprise?)
But lets get back on track to whether the PAP Government really
is
intent on change. Why would a Familee who is enjoying the fruits
of
ill-gotten gains (all USD150 billion of it) ever want to put an
end
to the good-life? Afterall, it would be in the best material
interest
of Singapore's Ruling Elite to carry on this game of deception for
as
long as possible.
Is all this mere conjecture or fact? Read on and decide for
yourselves. Do open the attached file on Singapore Nepotism to
peer
behind the scenes and see the incestous close-knit ties of
the
innercircle which constitute Singapore's Ruling Elite.
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Industrial Policy, a Tale of Two Cities
By Robert J. Barro
1,217 words
2 April 1992
The Wall Street Journal Europe
(Copyright (c) 1992, Dow Jones ...
The city-states of Hong Kong and Singapore are two of the heroes of
economic development. Gross domestic product per capita grew in
both countries at a remarkable 6% a year from 1960 to 1990, and the
levels of production per person advanced in each country from
one-quarter of the U.S. level in 1960 to about three-quarters in
1990.
These economic success stories motivate us to look at the histories
of the two countries to find clues about the policies that enhance
growth. The investigation is especially revealing because the
governmental actions pursued by Hong Kong and Singapore have, in
major ways, been polar opposites. Hong Kong has been largely
laissez faire, whereas Singapore has pursued an aggressive form of
industrial policy. (One would therefore identify Singapore's
policies with Paul Tsongas's and Hong Kong's with Ronald Reagan's.
Bill Clinton's policies fit better with those of the formerly
socialist economies of eastern Europe. I have no idea which
countries' economic policies to identify with George Bush's or
Jerry Brown's.)
One should begin with some of the many similarities of the two
countries: small city-states that began under British colonialism
as trading centers with immigrant populations from China. Neither
country has significant agriculture or natural resources, except
for harbors. Both economies are highly open to international trade
and have remarkably high ratios of exports and imports to GDP.
Neither government imposes much direct regulation on business, and
neither has high ratios of government consumption purchases or
transfer payments to GDP.
Each has been politically stable for some time, although Singapore
had difficulties in the 1960s and Hong Kong's prospects for 1997
are uncertain. They are nearly identical in age-adjusted fertility
and mortality rates, although Hong Kong had somewhat higher
population growth due to greater in-migration. Both countries are
strong on education, although Hong Kong had an educational
advantage in 1960 and continues to enjoy that advantage
today.
I could start the list of differences by noting Singapore's
constraints on civil liberties, illustrated by its limitations on
the circulation of The Asian Wall Street Journal (a constraint that
no doubt limited the Singaporeans' access to the latest innovations
in economics). More important contrasts from an economic standpoint
involve the government's role in three areas: the volume of saving
and investment, the role of foreign investment and the amount of
spending on public infrastructure. Singapore has been far more
activist in these areas, especially in using the tax and pension
systems to compel private saving and in subsidizing foreign
investment and entrepreneurship in targeted industries. Its direct
public investment has also been much greater than Hong
Kong's.
Hong Kong has, in general, been far less interventionist. The major
exception is its monopoly position in landholding. The government's
land policies have allowed vast, potentially valuable holdings to
lie fallow and be brought into productive use only at a remarkably
slow pace.
The differences in government policies have led to dramatically
different behavior of investment and the balance of international
payments. In this story, I am using the purchasing-power adjusted
national-accounts data reported by Robert Summers and Alan Heston
in the May 1991 Quarterly Journal of Economics. (I used data from
the International Monetary Fund and the World Bank to update to
1990.) The Summers-Heston data show that Hong Kong's gross
investment has been reasonably stable since 1960 at around 20% of
GDP, and its current account has typically been near balance.
Singapore's gross investment was 13% of GDP in the early 1960s,
reached 21% between 1965 and 1969, and then soared to an average of
nearly 40% since 1970. This staggering amount of investment has
been financed partly by the highest saving rate in the world
(thanks to governmental coercion, rather than an especially thrifty
disposition of the populace) and partly by massive borrowing from
abroad (until the mid-1980s). Another way to put this is that
Singapore's prosperity in terms of production has not been
translated nearly as much as Hong Kong's into high levels of
consumption. In 1989-90, when Singapore's per-capita GDP was 104%
of Hong Kong's, its per-capita private consumption was only 71% of
Hong Kong's.
Prof. Alwyn Young of MIT's Sloan School discussed many of these
facts in a recent study ("A Tale of Two Cities: Factor Accumulation
and Technical Change in Hong Kong and Singapore," forthcoming in
the National Bureau of Economic Research's 1992 Macroeconomic
Annual). His stress was on the effects of the different
governmental polices on productivity and growth. The main findings
follow from the facts already presented: Although Singapore has
plowed twice as much of its GDP into investment, the growth rates
of GDP have been about the same.
Singapore has, in other words, gotten much less out of each unit of
investment. This low return involves two effects: First, there has
been so much investment that the real rate of return on capital has
fallen to near zero, and second, the growth of productivity (output
per unit of quality-adjusted labor and capital) in Singapore has
been much slower than in Hong Kong.
Prof. Young attributes Singapore's low productivity growth to its
industrial policy of picking winners to target for investment. The
problem has not been so much the choice of the wrong winners, but
rather the tendency to select new winners too often. Since the late
1960s, Singapore has shifted from a trading-post economy that had a
large role for the British military and non-export-oriented
manufacturing to an emphasis on export-oriented textiles and
clothing, petroleum refining, various electronic products,
computers and financial services.
Allegedly, Singapore is now targeting biotechnology and striving to
become the Asian center for corporate headquarters. All of this in
20 years in a country of less than three million. One can admire
the initiative in tackling one technology after another, but
productivity would likely have been better if they had stayed in an
area long enough to gain the production efficiencies that result
from learning and experience.
I should recall that this discussion concerns two of the great
success stories among the world's economies. Hong Kong and
Singapore are co-champions in growth rates of per-capita GDP since
1960, and these performances reflect many favorable elements, such
as friendly economic climates and political stability. Singapore's
shortcomings have to be interpreted relative to Hong Kong's
strengths, not relative to the many economic disaster areas of the
developing world.
A fair conclusion, however, is that Singapore's forced saving and
industrial targeting have been mistakes. These policies have led
unnecessarily to reduced productivity and welfare. This lesson is
important for developing and developed countries, but the
implications for the 1992 presidential election in the U.S. are
unfortunately unclear. None of the prospective candidates offers
the free-market policies of Hong Kong, and Ronald Reagan and the
leaders of Hong Kong are ineligible for the office.
