A tiny island of some 700 sq km at the foot of the massive Asian land mass, equally endowed with opportunities as well as threats, Singapore has always possessed unique challenges.
At the heart of a vibrant, populous region and occupying a nodal position in the East-West trade routes, the deep harbour made it a natural stopping point along the Indian Ocean littoral for the trade upon which we focused our early economic endeavours.
Vessels of old transhipped en route to China bringing sailors from the four corners of the globe. Archaeological discoveries on Fort Canning Hill and the richness of Malay culture suggest that foreigners made their way to Singapore from at least as early as the fourteenth century.
The early British administrators assiduously attracted ‘new citizens’, tempting them with free port status that brought vast wealth through Batu Berlayar or Long Ya Men, the rock outcropping marking the entrance to Keppel Harbour. (Photograph above: Long Ya Men Gate sketch 1825)
By the time of the British withdrawal, Singapore was one of the most prosperous and developed states in all of Asia. (When my grandfather was posted by the Malayan Railways to Singapore in 1949, my father and his brother – hitherto denizens of small towns on the Malay Peninsula – cycled all the way from Kampung Bahru down Eu Tong Sen Street to marvel at Frank Brewer’s Cathay Building, photograph on right, then the tallest building in Southeast Asia.)
Fast forward. In 1966, KK Hospital reputedly entered the Guinness Book of Records for having mid-wifed the largest number of babies ever born in a public hospital. Population growth on the successful island had so far outstripped capacity in the preceding 150 years that the young PAP Government mounted an urgent population planning policy.
At the same time, it enacted an export-oriented industrial (EOI) framework designed to exploit the space and manpower available on the island, replacing the import substitution approach of the 1959 – 1965 era. This made sense since the post-War boom was expanding multinational investment potential. The phenomenal results of the 1965 – 1990 period, the ‘Second Industrial Revolution’ notwithstanding, suggest that the policy of the era was sound and sensible.
So successful were these arms of policy that by the early 1990s, Singapore’s economic and population growth had progressed in such converse directions as to raise entirely contradictory pressures. On the one hand, economic growth was reaching capacity levels. On the other hand, the population was beginning to decline.
Unfortunately, by this time, the imaginative guidance of the original PAP leadership had also begun to decline. All of the original Cabinet had departed the scene, allegedly at the behest of the first Prime Minister, so as to prepare a smooth, opposition-less path for the third generation leadership.
The subsequent period, headed by a constrained, tradition-bound leadership unwilling or unable to seize the potentials of the moment, resulted in the reification of policy approaches determined in the 1960s: labour-intensive, factor-driven manufacturing and construction.
Secondly, a nation instructed by the salutary lessons of three Internal Security Department sting operations, silencing of the newspapers and the academe, and a chopped-and-changed education system resulted in a cowed, uncreative population on whom limited creative resources were expended. Into the mix came a further ingredient: the marriage between the leadership’s remuneration and GDP growth which led to a narrow determination of national well-being.
The result? As we moved into the 21st century, we hosted an economic structure out of whack with the pressures facing our small island as other countries’ productive capacity improved.
The roots of the White Paper in distant historical happenstance
The population White Paper, released recently, evinces a government struggling to understand the challenges of the moment. It is based in the economic idiom of the past where national vis-à-vis international output is viewed as a zero sum equation.
Each tranche of industrial investment secured by the nation state means less of the pie for others and the way to attract and retain investment is to provide an investment environment friendlier and workers more skilled and docile than competitor nations. While such a policy might have made economic sense in the tough but promising post-War period, in the age of high technology and advanced services in a highly developed society such as ours, a race to the bottom, factor-wise, has become outdated.
The general schema of the White Paper is founded on a quartet of assumptions:
That economic growth is based on factor inputs;
That among these factors, cheap labour, makes a nation competitive;
That more workers give rise to the agglomeration effect both in the industrial and productivity spheres; and
That social well-being is principally dependent on the dependency ratio.
It also depends, though this is largely unstated, on greater tax yields through consumption taxes such as COE, ERP, GST and foreign worker levies. Indeed, the investment monies provided by the CPF also essentially impose a tax upon CPF members since the investment returns of CPF monies are hugely at variance with the ultimate returns provided to members.
How did we arrive at this formula? And will it measure up to our current challenges?
In the post-War period, nation states fell into three camps: developed economies (the First World), developing economies (Third World), and the Communist countries (Second World).
Mutual suspicions, limited communication and Cold War sensibilities resulted in economic production being viewed as precarious, nation-bound and overshadowed by an expansionary Communist threat.
Furthermore, a scheme was promulgated by the US National Security Council in the aftermath of World War Two to entrench a particular geopolitical configuration. General principles included the containment of Communism, the preference for military over diplomatic solutions to global conflict, and an economic structure that slotted the various (formerly colonial) regions of the world (ie the Americas, Asia-Pacific and Africa) into market relationships with the key economic powers (the United States, Europe – with Great Britain operating slightly apart from the continental nations – and Japan).
Known as NSC-68, the policy document which President Truman approved in 1951 was essentially principally at Communism pursuant to the Truman Doctrine and ensuring an uninterrupted supply of raw materials (and later overseas markets and investment opportunities) to the economic powers (the Grand Area Doctrine). Its effect was to lock non-Communist nations of the southern hemisphere into a particular industrial category that hampered their capacity to transform their economies.
The weltanschauung of Lee Kuan Yew and his colleagues were deeply shaped by these ideas emanating from the historical backlash of World War Two and the spread of Communism which Churchill articulated in his famous 1948Iron Curtain speech. Lee and his compatriots, schooled in an internationalist and historical approach to world affairs, and exposed to a wide range of inputs during their sojourns in England, possessed an expansive and at the same time fine-tuned understanding of Singapore’s pressures and potentials.
The new global settlement
The global settlement, however, shifted decisively when the Berlin Wall fell and Communism capitulated – including China’s shift under Deng Xiaoping. The rapid expansion of communication technologies, the development of the former colonial nations and technology transfers to the so-called Third World ushered in a new global settlement. The status quo ante has outlived its usefulness.
The vigour and assertiveness of the original PAP leadership, its uncompromising belief in the correctness of its worldview, was its strongest attribute. Through a muscularly repressive approach to government – “We decide what is right, never mind what the people think; that’s another problem” – Lee and his Cabinet colleagues put in place a policy framework that endured. But, as results over the last twenty years have shown, it was also its weakest.
Its longevity is not testament to flexibility and relevance against the facts of history: the political elite it built and the alternative sites of policy determination it dismantled created a decision-making mandarinate conformed so thoroughly to the same viewpoints that it became powerless to ponder anew challenges which were alien to Lee and his colleagues.
The world of 2013 is a far cry from that of 1966 when the first population policy measures were laid. The balance of geopolitical power is shifting, democratic government has come to most Asian nations, the global financial system is unstable, there are bellicose murmurings in several East Asian nations, nuclear weaponry is now available on an unprecedented scale, and the Cold War has been replaced by a new enemy: international terrorism. People are living longer, healthier lives and migration and communication are at unprecedented levels. The impact on small nations such as ours could be acute.
The Singapore Democratic Party began to engage with these factors from 2010 when we published our alternative economic strategy, It’s About You, and subsequent policy papers and Shadow Budgets from 2011 onwards. Our population paper, Building a People: Sound Policies for a Secure Future, has weighed the impact of geo-economic factors against our ability to respond and have proposed an actionable policy programme which is holistic and systemic.
As this article has proposed, we need to approach the task of policy-making with a clear understanding of the historical development of the policy framework. The concluding part of my essay will sketch some of the historic economic features which continue to surround the assumptions on which the White Paper is based.
Dr Vincent Wijeysingha is the Treasurer of the Singapore Democratic Party.