In a recent interview with Dwarkesh Patel, Former UK Prime Minister Tony Blair discussed the policies of Lee Kuan Yew—the father of modern Singapore. He suggested that Lee made three key decisions early in his administration, which led to Singapore achieving a high level of economic development:
1. Singapore adopted English as its national language.
2. Singapore became highly open to foreign capital and talent.
3. Singapore adopted a zero tolerance policy for corruption, combined with salaries for top government officials that were an order of magnitude higher than typical in the public sector.
This made me think of the similarities between Singapore and corporations based in Switzerland. Many corporations in Switzerland use English as their official language, despite the fact that their country’s main ethnic groups (German 62.1%, French 22.8%, and Italian 8.0%) all speak other languages. Singapore also has a complex ethnic mix including Chinese (75.9%), Malay (15.1%) and Indian (7.4%.) Blair noted that Lee’s decision to have Singapore adopt English was quite controversial at the time.
Switzerland is a highly open economy, which welcomes foreign investment. Approximately 30% of Switzerland’s population is foreign born, far higher than the 10% to 20% typical in Western Europe. Singapore also welcomes foreign talent and investment, with 37% of its population foreign born. Again, Lee’s policy was controversial at the time, as import substitution was in vogue at the time Singapore was founded (in 1965.)
Like Singapore’s government, Swiss companies do not tolerate corruption, and pay relatively high salaries to top executives. Lee’s policies regarding corruption and public sector salaries are quite unusual in the developing world.
Ethnic strife is a very common problem in many parts of the world. Switzerland has used political decentralization to reduce the danger of conflict between regions speaking different languages. Decentralization would not be as feasible in a small city-state like Singapore, but by adopting English as a language Singapore was able to at least somewhat reduce the salience of ethnicity.
I don’t know if Lee Kuan Yew had Europe’s most successful country in mind when he adopted these policies, but whatever the motive, Lee ended up creating a Singaporean model that looks uncannily like a successful Swiss multinational corporation.
READER COMMENTS
Matthias
Jul 2 2024 at 6:59am
Of course, Switzerland is also home to eg FIFA. Not technically multinational corporation, but full of corruption.
Peter
Jul 2 2024 at 8:32am
Sounds nice but I always feel the implicit point of these posts, interviews, etc is something along the lines “our county would be better if we just emulated them”. The proposed Xs always sound great but then it leads one to wonder why nobody else does them then and it often makes me think it’s a scaling problem.
I should also point, as it’s always left unsaid, out Singapore is an extremely illiberal state with a draconian criminal justice system. Not as bad as the US in practice but that’s not saying much as both suffer the same flaw of adopting the British system. And purely reducto ad absurdum but if we implemented Singapore drug laws we would have to immediately execute the majority of Americans.
Jon Murphy
Jul 2 2024 at 9:38am
Unless one knows nothing about the US, I don’t think there’s a subtext here of “our country would be better if we emulated them.”
-The US already has English as a major language and, for all intents and purposes, official language.
-The US is already very open to foreign capital (despite the objections of Trump et al).
-The US has (fairly) low corruption.
Rather, I think the important question that Scott (and others) ask is: “what is it about these things that matter?” One cannot simply “add institutions and stir.”
Mactoul
Jul 2 2024 at 9:46pm
Well 19c Britain also had a pretty severe criminal justice system.
So the only way a severe criminal justice system equates to illiberalism is when you believe that to be a liberal is to coddle the criminal.
Craig
Jul 2 2024 at 10:02am
To expound on your point regarding corruption, its not just corruption either, the zero tolerance extends to scofflaws. I am reminded of the case of Michael Fay who was caned after vandalizing some cars in Singapore. Caused a bit of an international uproar inasmuch, from an American point of view, the punishment would be considered disproportionate. Right or wrong the result is a society with very little crime ranging the full gradation of offenses from petty disorderly offenses to major felonies.
Scott Sumner
Jul 2 2024 at 2:25pm
Good point. It’s important to distinguish between harsh punishment and frequent punishment. There’s a sort of “Laffer Curve” effect when milder punishment may result in more state sanctioned cruelty in the long run, if the crime rate is 10 times higher than the place with more draconian punishment. The US has nearly 400,000 in prison for drug violations. How many have been punished in Singapore? I’d guess far fewer, even in per capita terms.
(To be clear, I oppose both approaches.)
Iskander
Jul 2 2024 at 11:39am
Sounds rather like Singapore before 1965?
Scott Sumner
Jul 2 2024 at 2:26pm
Sure, but that doesn’t really address Blair’s point. Britain had lots of colonies. Only one ended up like Singapore.
Matthias
Jul 3 2024 at 11:39pm
I’d count Hong Kong as close enough.
Ron
Jul 3 2024 at 2:29am
3rd-generation local Singaporean here.
“1. Singapore adopted English as its national language.”
English was adopted as a national language but only after independence in 1965. A working knowledge of English was required if one was a businessman dealing with British traders and British officials but large swathes of the population, including domestic businesses, lived without needing to know English. As an example, my grandfather worked on a British base as a civilian staff before British forces pulled out, for more than a decade, without ever learning English.
“2. Singapore became highly open to foreign capital and talent.”
This is true, even for a century before 1965. Much of Singapore’s growth before and after independence can be directly attributed to openess to foreign trade.
“3. Singapore adopted a zero tolerance policy for corruption, combined with salaries for top government officials that were an order of magnitude higher than typical in the public sector.”
This is only true after independence, and even then, it took some 2 decade for corruption to be stamped out. But before independence, it was widely known that bribes were required in almost every level of society if one wanted to get things done.
Scott Sumner
Jul 3 2024 at 12:52pm
Thanks for that info. Mea culpa for accepting Iskander’s premise without checking.
steve
Jul 2 2024 at 12:00pm
The focus on corruption and paying government staff competitive wages seems like it has been pretty effective. People compete to try to enter government service as it is viewed as favorable work. The US SCOTUS just ruled it is OK to provide government officials thousands of dollars in gratuities for favors performed. Sort fo like a bribe but you provide the money after the favor is given. Wonder if Singapore allows that?
Steve
Mactoul
Jul 2 2024 at 9:42pm
Hasn’t Singapore a conscious policy of maintaining the ethnic balance and Chinese dominance?
Jim Glass
Jul 3 2024 at 1:17am
I think you are on the money here. And Singapore’s “Inc.” nature explains the contrast of its #1 rank on the world Economic Freedom Index by Heritage, and it’s #121 of 194 (=Honduras) rank on the world Political Freedom Index by Freedom House.
A view of its unique nature of in action might be seen in its health care system. Quality-wise this is consistently ranked equal to the best in the world (for instance ) — giving Singaporeans world-top life expectancy and a lucrative “health tourism” industry to profit from — while Singapore spends only 4% of GDP on health care, compared to the OECD average 9.5% and USA’s 17% (!!!). Which must make it the most cost effective health care system in the world! (By a lot!!) How does it do it? Why hasn’t anybody copied it? Well…
The government runs a universal health care system, largely paid for by taxes (80+%), which it comprehensively designs and regulates. (Socialized mediciners cheer! Free marketers boo and hiss.)
But the system is rigorously organized on competitive market principles. Every patient must pay significant out-of-pocket cost at point of service, hospitals and doctors compete for customers on price, all prices are publicly posted, none are hidden behind insurance – as there is none for non-catastrophes. (FMers cheer, SMers booo and hiss.) Costs are financed from mandatory health savings accounts, personal income/assets, and government subsidies. The savings accounts pay for only a minority of cost, so the government pays the bulk. Because prices are driven down by market price competition, government subsidies are driven down accordingly. (More: “How Singapore Solved Healthcare“) Bingo!
So while the health care system works better than anybody else’s, it is is designed to politically really offend everybody — both socializers and free marketers. That’s why, for all its great success, it can’t be adopted in the charged health care politics of any other nation. It survives politics in Singapore only because Singapore is a one-party state — our world’s closest thing to a benevolent dictatorship. Alas, “benevolent dictatorship” is not a model that transfers well to other nations either, as a rule.
Yes. And corporations are authoritarian, non-democratic organizations structured to maximize economic efficiency, in spite of the political winds. Lee attended the London School of Economics and Cambridge, when he came to power during Singapore’s post-war reformative years evidently he had a different mental model of how a small nation should be run than did both the likes of Kim and our own liberal democratic forbearers.
If a corporation could be a nation, it might indeed look a lot like Singapore. High economic freedom and success, not so good political freedom. I mean, apply those tests to Apple, Microsoft and Tesla today. How much “poltical freedom” to criticize how the company’s being run do Elon’s employees have?
steve
Jul 3 2024 at 12:10pm
The Singapore health care system is pretty complex and few Americans understand it very well. When I was actively writing on health care I corresponded actively with several people in health care who lived there, initially because after hours of reading and convinced I had a handle on it I wrote stuff that was totally wrong. It has aspects some liberals might not like and some that conservatives/libertarians might like. However, overall it is a universal system that covers all citizens. (It has been about 4 years since I stopped actively reading about their system so I may be out fo date.)
They did try an almost purely free market approach but costs increased rapidly as providers realized they could increase profits by offering more profitable care, much like in the US. The govt responded by requiring govt approval on expensive goodies and they regulate the number of doctors. Finally, it’s a small place and a healthier population which saves them lots of money.
Every health care policy writer and economist I have corresponded with and read that might be classified as liberal have indicated they would jump at the chance to try to replicate the Singapore system but with some expressing qualms about the explicit tiering in their system. It’s the concern about tiering that would derail it by the politicians on the left. Those on the right want to emulate the free market parts of their system but leave out the parts where the govt is involved.
https://www.nytimes.com/2017/10/02/upshot/what-makes-singapores-health-care-so-cheap.html
Steve
Scott Sumner
Jul 3 2024 at 12:51pm
Great comment! All I’d add is that Singapore isn’t completely non-democratic. Its leaders know that they need to deliver quality services if they hope to continue winning 60% to 70% of the votes in elections. Yes, there are restrictions on free speech, but that would not be enough if things went seriously off course.
Of course, corporations are also not completely undemocratic. In day to day operations, the CEO is a bit like a dictator. But in the long run he or she must keep shareholders happy.
Jim Glass
Jul 4 2024 at 1:12am
It’s a tribute to how far democracy has come in the past century that near all today’s authoritarian and dictatorial regimes officially describe themselves as ‘democracies’ or ‘republics’. (Xi calls China a democracy all the time.) IIRC, only four states officially deny any semblance of democracy, the Arab theocratic states, and even they are liberalizing in practice.
That’s a long, long way from the 1930s, ’50s, even 70s. Dictators now wear business suits and most do hold elections to test the waters and bolster their credibility. (Putin.) None of today’s dictators are violent mega-murderers of civilians as so many were during 1930s-1970s.
Many people today are afraid that democracy is failing, but let’s keep in mind how close to its all-time high water mark it still is — and how the low water mark regimes of today are much less low than before. (Putin isn’t Stalin. Orban is less bad than any ruler of Hungary before 1990 maybe ever. Xi isn’t Mao.)
The always entertaining and informative Joe Pesci, er, Stephen Kotkin talks to a CATO audience about our modern “new version of authoritarianism” (in 2018, and he has an interesting take comparing the US-Russia-Ukraine post 1991 to Britain-Germany post Treaty of Versailles.)
Matthias
Jul 3 2024 at 11:46pm
If you have the hypothesis that healthcare doesn’t do much for health, especially as measured by eg life expectancy statistics, then Singapore’s success is mostly one of keeping costs down; not so much of necessarily providing good healthcare?
In any case, you say that there is no non-catastrophic health insurance in Singapore. That’s wrong: there’s plenty of private companies offering all kinds of health insurance plans that you can enroll in to top up the mandatory system set up by the government.
Btw, I wish Singapore was a benevolent dictatorship!
The government seems to have the right instincts on eg (skilled) immigration or the absence of a minimum wage, but more and more gives in to populist demands, because they still have elections to win.
Thomas L Hutcheson
Jul 3 2024 at 7:18pm
It is rather the American system. Too bad we are backtracking on openness and civil service pay.
Thomas L Hutcheson
Jul 4 2024 at 6:29am
Singapore copied the best part of the American system, English, open to foreign talent and capital, well paid civil service. We should go back to openness and a well paid civil service.
Trina Halppe
Jul 12 2024 at 7:02pm
Use of English plus openness means there is a size effect that explains Singapore’s high per capita GDP. Number of ESL plus English-listening-from-birth people in the world times the mean per capita income of those people is the relevant size. That number is bigger than comparable numbers for other languages. Some other countries are quite open, such as the U.K. before Brexit and Australia and Canada but they lose a lot of people to the U.S.. It may be that Singapore and Switzerland are less likely to lose people to the U.S..
Comments are closed.