How to explain Singapore’s growth despite lack of stimulus?
blogs.law.harvard.edu
blogs.law.harvard.edu
The government owns much of "private" enterprise. The current prime minister is married to the CEO of Temasek Holdings, a $100 billion sovereign wealth fund that is owned by the Ministry of Finance. It owns the largest companies it Singapore, including telecon, bank, Singapore Airlines, the media, electric. For good measure, they also own the zoo and 49% of Virgin Atlantic.
The government also does a great job of recruiting talent. Males are required to complete military service - a way to build loyalty to the country and create disincentives for moving away. The government also hands out "scholarships" for US college education, but really these are loans that require one to return and work for the government for X years (5+? anyone at Stanford or Cornell + maybe others would know what I'm talking about).
All this ends up in a country thats focused, prime and nimble for economic growth. Not sure if its a good or bad thing, but certainly interesting.
Singapore is known as one of the most economically free countries in the world, consistently outranking the U.S.: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom_histo...
One measure of the percent of private industry the government owns is the tax rate (just as an investor would earn a percent of profits based on his ownership, so does the government). As the article points out, Singapore's tax rate is 12% while the U.S. is 44%.
You mention some specific companies which I'm not familiar with, but overall, wouldn't it be more accurate to say "the government owns the least amount of private enterprise compared to almost any country in the world?"
That's in addition to Temasek Holding's ~US$100 billion.
http://en.wikipedia.org/wiki/Government_of_Singapore_Investm...
newy is very right with the summary above.
Some points to add:
"The government also hands out "scholarships" for US college education, but really these are loans that require one to return and work for the government for X years"
The bond period is 4 years for local scholarships, 6 for overseas.
"Males are required to complete military service"
The conscription period is 2-2.5 years. Until you're age 40/50 (latter for officers), you are eligible to be recalled arbitrarily. This is typically 2-3 weeks a year.
The company analogy is apt. It is most certainly not a democracy. There is no freedom of speech, no freedom of press, no rule of law. Some highlights:
- NYTimes pays $114k damages and makes apology to Singapore's ruling family: http://www.reuters.com/article/idUSTRE62N26D20100324
- International Bar Association's report on how rule of law does not exist: http://www.ibanet.org/Article/Detail.aspx?ArticleUid=0081C46...
- very recent (July 2010): UK author of book on death penalty in singapore arrested for defamation: http://www.guardian.co.uk/world/2010/jul/18/singapore-britis...
- citing anti-corruption, the government pays itself very, very well. "In 2008, the annual salary for entry-level ministers was $1,924,300." http://http://en.wikipedia.org/wiki/Cabinet_of_Singapore .
Singapore also deals with countries like Myanmar; the junta leaders send their children to be educated and receive healthcare in Singapore. One of those dirty secrets Singapore doesn't want anyone to know.
Population
USA 310 Mio. (2010, est.)
Singapore 5 Mio. (2009, est.)
Area
USA 10 Mio. km^2
Singapore 0.00071 Mio. km^2
Population density
USA 32 per km^2
Singapore 7,022 per km^2
What would be interesting (though not necessarily conclusive) is data on growth, stagnation or contraction in single cities (with, say, a population bigger than one million) in the US and to then to compare that data.
> I don’t know how useful comparisons between countries of similar size are, never mind countries which are so radically different.
Anyways, I agree, could you be so kind as to point out these population numbers next time someone points to the small Northern European countries as bastions of happiness, and instruct them to look at the more comparable examples that had similar policies, like the Soviet Union?
Just a thought - if we let people cherrypick when to use the "apples and oranges" argument, we'd be letting them get away with all sorts of intellectual dishonesty.
Actually, the more important point is people cite statistics when they're convenient, and ignore them when they're not.
EDIT: Not to say comparisons between the US and Denmark are always apples to apples of course. I'm just so sick of repeating to people that no, a slightly larger public sector is not the same thing as collective farming.
The point I was trying to get across was that people will look qualitatively and ignore quantitative arguments when it suits them, and will do the opposite when it suits them.
Heck, you can see it here - "A capitalist economy with a 50% tax rate, more generous pension, health, unemployment benefits and a larger public sector is still fundamentally a capitalist economy." - You could've made a similar reply to ugh explaining why Singapore and the USA is a valid comparison for qualitative reasons despite the population difference.
There are qualitative similarities between Singapore and the USA (market economy, dominant emerging industry is information sector, high personal freedom in some areas but strong anti-drug laws, economy is facing falling global demand and a banking system with downward pressure on interest rates due to other countries cutting theirs to rock bottom)... and ugh tosses those qualitative differences due to population size.
People don't do the same when the arguments suit them. So people will be skeptical of Singapore data because of its different population size and landmass, while they embrace Denmark... despite the fact that it's a different population size and landmass. This should be noticed and ideally transcended if we want to get to what actually works.
In the case of this particular comparison to Singapore, Singapore is a manufacturing-oriented export economy with low consumption levels. They benefit directly from stimulus in any other country. So the comparison to the US is entirely beside the point -- instead someone should ask, why are they growing? Ok, there's your answer.
That does happen but I hope to be not one of those people.
Economic policies tend to to get discussed with those dichotomic arguments. I really do think that’s wrong. As though the majority of people in Europe or even just the political elites are in favor of state-run economies! That’s so wrong, it’s ridiculous.
There is a whole wealth of decisions you can make about economic policies, not just one.
(I personally tend to think that free market mechanisms are a incredibly valuable tool which work in many, probably a large majority of cases, but I don’t think we are lucky enough to always get what we want with them. If the free market would always work there truly would only be one decisions to make – i.e. free market everywhere without restrictions – but I don’t think it’s quite so easy. But that’s just my opinion.)
I veer wildly off-topic so I better say that, in the end, I agree that the US would turn into Denmark if they adopted their economic policies 1:1. That wouldn’t work and would be a bad idea.
I'm going to assume the Soviet Union comparison was facetious.
Cuba grew faster than the US in 2008. Should the US have embraced a centralized economy then?
a) lots of factories were idle in 2008 but ramped up in 2009 because of other countries' stimulus allowed them to purchase Singapore's exports.
b) looking at one year's results is silly
c) Singapore has a very fluid labor force, including commuters from Malaysia that contribute to GDP but don't drag down per capita numbers, and foreign workers are removed from the country within 2 weeks of losing a job
d) many people echo what ugh said here, that the two countries are so different that comparison is meaningless.
One is to look at Singapore's positive results and assume we could have the same clean streets, low crime, efficient public works, growth-friendly environment with a tiny government sector if we only had the will.
The other is to look at some of the key differences in culture/population/geography/governance and thus assume we have nothing to learn from them, "comparison is meaningless".
The truth, and all interesting discussion, should come from somewhere in between. The USA is far from optimal and could learn a lot from other countries -- though we rarely look. (Indeed it's amazing how little US states like California seriously look at how other states are doing some things better.) But we'd best not cherry-pick the factoids that help our preferred side of some debate-of-the-moment.
It’s just that general statements about whole bundles of policies (“Look at Singapore and their policies, they brought them massive growth! We should adopt them.”) or even individual policies (“Look at France’s healthcare system! It’s working perfectly, we should copy it 1:1.”) are probably not enough.
You will have to look at specific policies, their environment, the conditions under which they could succeed (or whether they did in the first place) and how they were implemented. Only then can you begin to judge whether those policies would also be a good idea for different countries.
How to explain Singapore’s growth despite lack of stimulus?
China's growth is not cyclical. It is driven by demographics mostly and it can be described as a secular trend. Rural population migrates to cities, they become consumers and bring down their abnormally high savings rate to the levels common for developed consumer societies. China today is what Japan used to be in the 60s. Its growth will continue for a while, crisis or no crisis.
EDIT: What, nobody read the republic?
It is much easier to run things when re-election isn't a worry and you can export your unemployed.
My point was that political favour in Singapore is entrenched, without the deadweight losses brought about by lobbying or changes in policy. It's not that the patronage of the Singaporean government doesn't introduce imbalance into the economy and society, it's simply that it's a stable imbalance and its monopolies are very well managed. I'm sure we can at least agree on the latter part of that sentence.
I'm not convinced the incentives of Singapore's governing elite need to be particularly closely aligned with the living standards of the governed (at least not _now_ given the ruling party's almost impregnable position). Their achievement in raising the living standards is more a testament to their vision and industry than internal pressures. In general, rent seeking behaviour is at least as prevalent in less-democratic states, just less competitive and more likely to favour the already-rich