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Far Eastern Economic Review
During the national Day festivities last month, Singapore Prime Minister Lee Hsien Loong’s gloomy prognosis for the economy—a “bumpy year” ahead—was overshadowed by even more dire warnings that the city state is about to start running low on its main resource, people. With an aging society and one of the lowest fertility rates in the world at 1.29, the government is pulling out all the stops, doubling the budget of baby-making incentives to $1.13 billion. Meanwhile, in order to make Singapore a more tolerant and pluralistic place, political videos will be allowed, as well as protests in a downtown park.
It’s all straight from the ruling People’s Action Party’s standard playbook. Play up the anxiety of a small nation beset on all sides, in need of a strong government to take positive action to avert disaster. Individual citizens who are failing to live up to the expectations of society need to be brought back into line. At the same time, leaders are willing to give those citizens a few of their rights back, as long as they are not used to undermine harmony.
Since Mr. Lee took over the premiership in 2004, Singaporeans have been watching for any sign he plans to reform substantially the authoritarian state created by his father, Singapore’s founding Prime Minister Lee Kuan Yew. So far there has been little indication that in his heart the prime minister is a liberal democrat. But the system of control is coming under increasing stress due to the changing structure of society. A process of subtle change will continue to be driven by pressure from below, rather than a change of heart at the top.
Last month’s gestures far fall short of lifting what the opposition calls the climate of fear—past experience, such as the detention of former Solicitor General Francis Seow in 1988, suggests that retribution for challenging the PAP can come in many forms, from bureaucratic harassment to detention without trial under the Internal Security Act. The government is making a virtue out of necessity by lifting the 10-year-old ban on making or showing political films, and allowing political podcasts during election campaigns. Oppositionists were successfully skirting the restrictions, so that they only served to hamstring the PAP’s own efforts to utilize online media. The opening of a protest area is a token gesture, which no doubt will be raised to deflect international criticism the next time police arrest dissident politician Chee Soon Juan for illegal assembly. In that sense, the move suggested that Mr. Chee’s campaign of civil disobedience is causing some heartburn within the regime.
But the real problem is not Mr. Chee—the stressors on Singapore’s political machine lie elsewhere. The PAP’s legitimacy has always rested on its performance, backed by trust in the party. Given its chaotic past and neighbors, Lee Kuan Yew argued, the tiny country could not afford the risks associated with liberal democracy. In the past that argument was largely taken at face value by the Chinese working class, despite the experiences of other Asian nations that contradicted it. Today, however, there is more apathy than agreement. No one seriously questions the PAP’s track record of governance or probity of its top leaders, yet trust is giving way to resentment at the party’s arrogance.
The main proof is in the erosion of the party’s share of the popular vote in elections. In 2006, it hit 66.6%, down from 75% in 2001, and 75.6% in 1980. In the past, opposition parties deliberately refrained from contesting more than half of the seats, since they found that while some Singaporeans wanted to cast a protest vote, they would not vote for the opposition if there was any chance the PAP would be thrown out of office. But in 2006, the opposition contest 47 of 84 seats, suggesting that the PAP’s hold on voters’ loyalty is not as fearsome as before.
Why is this? For one thing, Singaporeans are better versed in critical thinking. During the 1980s and ‘90s, people may have grown wealthy, but they remained politically unsophisticated. Development happened so quickly that it took decades for education levels to catch up. According to the government statistics, between 1990 and 2005 the percentage of the population with a university degree grew to 17% from 4.5%. That is matched by an even more dramatic shift in individual age cohorts—in 2005, 32.1% of 30-34 year olds had a university degree, as compared to just 6.6% of 50-54 year olds. The language spoken at home is now predominantly English, meaning that Singaporeans are increasingly able to learn about and interact with the outside world.
Moreover, the PAP has pushed the economic structure of the country in a direction that is no longer win-win for all classes. A certain amount of economic inequality is tolerable as long as there is a sense that everyone’s lives are improving. But inequality and real hardship are on the rise, as inflation running at 6.5% erases the 3.3% wage gains that the poorest tenth of the population enjoyed last year, even as the top tenth picked up an 11.1% increase in income. PAP loyalists control a lucrative web of government-linked companies, while ministers have also picked up big pay rises, since their salaries are indexed to the private sector, making them some of the world’s highest paid politicians. As for social mobility, the top scholarships, which are a ticket into the elite, increasingly go to students from wealthy families that live in private apartments, rather than public housing.
Despite this trend, the PAP is unwilling to dismantle its policies of holding wages low in order to attract multinational companies to invest. This was a strategy born of necessity in the 1960s, when Singapore was short of capital and struggling to catch up with Hong Kong’s model of creating an export-oriented growth. Today it is economically obsolete, yet it suits the government politically because the combination of state-owned companies and politically quiescent multinationals prevents the emergence of an independent commercial class that might push for political change.
The result is a top-down economy which is running up against the limits of its capacity to drive growth. Without an entrepreneurial class and successful home-grown companies, Singapore’s productivity growth has historically lagged behind that of its laissez-faire twin, Hong Kong. As University of Chicago economist Alwyn Young showed in a 1992 paper, Singapore had one of the lowest returns on physical capital in the world. Its growth has been fueled by forced savings programs shoveling ever increasing amounts of capital into the furnace, rather than by innovation or managerial efficiency.
Mr. Lee’s administration has found that the only way to defuse public dissatisfaction is to do something the PAP consistently condemned as the hallmark of Western democracies: Give away money. The government used to damn welfare as a dirty word, yet transfer spending is on the rise. This year, $2.1 billion in giveaways were planned. Then last month Mr. Lee announced a 50% increase, totaling $179.8 million, in utility rebates and “growth dividends”—cash payments to households that started in 2006. The new prime minister has brought in other social spending programs for the poor. For instance in the 2008 budget, the Ministry of Manpower’s expenditure rose by 184%, almost entirely due to a new scheme of workfare, the $306 million Income Security Policy Programme.
The pressure for more entitlements will only grow as retirees find that their savings do not provide enough of a cushion. The compulsory government-run Central Provident Fund sucked up a huge percentage of income to finance the state’s development goals, but offered dismally low returns. As a result, many of the generation that built the Singapore miracle now finds itself eking out a retirement in public housing while the government surpluses remain under the management of the PAP.
Beside the carrot, there is also a stick. Starting in 1985, the PAP began to warn voters that if they supported the opposition, their government-built apartment buildings would not get priority for maintenance. This was gradually refined to the point that in 1997, then Prime Minister Goh Chok Tong explicitly campaigned on the promise that individual precincts would get housing renovation spending according to their votes. When the U.S. State Department condemned this as undemocratic, the interference of foreigners was used as another rallying cry.
Indeed, it seems that Singapore is increasingly cursed with the shortcomings of a democracy without enjoying the benefits. During the 2006 campaign, Prime Minister Lee inadvertently blurted out his fears of what would happen if there were more opposition members of parliament: “Instead of spending my time thinking what is the right policy for Singapore, I’m going to spend all my time thinking what’s the right way to fix them, to buy my supporters’ votes….” Putting aside the ominous sound of “fixing” opponents, the remark was ironic because the PAP now expends so much effort to buy the support of the populace with giveaways, all in order to avoid the transparency and accountability that a vibrant opposition would bring.
Some younger Singaporeans with skills respond to this by voting with their feet, moving abroad to find greater freedom and a higher standard of living working with the kind of entrepreneurial companies that Singapore has yet to create. In order to eventually win some of them back, the possibility of recognizing dual nationality is increasingly discussed, a move that would represent a huge concession for a nation-building party that demands self-reliance and sacrifice of its citizenry.
In the place of the émigrés, foreign workers are flooding in to man the factories, docks and construction sites, as the government steadily opens the doors wider. Foreign workers already account for more than one million of the total population of 4.6 million. Among the immigrants are talented individuals like the Chinese table tennis players who provided the country with its first Olympic medal last month. But they lack the loyalty to the country that the PAP has put a premium on.
If Singapore were a plural democracy, it would no doubt have developed an independent civil society capable of binding together the native-born and immigrants, providing mutual support. But the PAP and Lee Kuan Yew are like the African baobab tree, whose spreading canopy hogs the sun and prevents other trees from growing up underneath. Such a society may be easier to control, but it is also alienated and rootless, jealous of others’ gains—the oft-quoted national characteristic, kiasu, literally means “fear of losing.” In a developed economy that depends on attracting and retaining creative individuals, this has become a significant handicap.
The arrogance of the winners in society is becoming a major issue. The elder Mr. Lee’s ego is legendary, but given his accomplishments it is perhaps understandable. When his minions take on similar airs, however, it is a different story. In one extreme example two years ago, a furor erupted after the daughter of MP Wee Siew Kim used her blog to berate a man afraid of losing his job as “one of many wretched, undermotivated, overassuming leeches in our country” who should “get out of my elite uncaring face.” To make matters worse, Mr. Wee tried to defend her remarks.
Naturally the PAP is aware of these trends and that its monopoly on power has become an important issue in itself. Over the years it has tried to come up with mechanisms for citizens to register their complaints and blow off steam. The government no longer seeks to destroy all opposition, leaving alone and even praising those tame MPs who focus on constituents’ issues rather than the PAP’s system of social control. Yet ultimately there is no solution to this problem, since the party is unwilling to share power in any meaningful sense.
A siege mentality has been the hallmark of Singaporean politics for four decades, often with good justification given hostile neighboring governments to the north and south. Yet it is increasingly hard today to see how that anxiety can be justified and maintained. The generation now coming onto the political scene grew up in at least moderate prosperity, and may not be so easily bullied into voting for the PAP. It is eager to put down roots and create a civil society. So far the PAP has finessed this aspiration without compromising its control.
Prime Minister Lee can afford to be sanguine for now, with the security apparatus, corporatist economy and civil service all at his command. Yet if this economic downturn worsens, he will be confronted with a more difficult choice of whether to accede to demands for greater pluralism. As academic Michael Haas once wrote, “Whenever the public exercises the independence of thought that better education brings, ‘a danger to be nipped in the bud’ or some similar cliché is articulated as the basis for repression.” It bears remembering that the laws like the Internal Security Act that have been used in past such exercises remain on the books. If pushed too hard, Lee Hsien Loong still has the means to prove he is his father’s son.
Mr. Restall is editor of the REVIEW.