Monday, 7 May 2012

The S'pore takeaway for Uncle Sam

May 5, 2012

By Matt Miller

IF YOU'VE spent much time enduring the hassles, filth and indignities of Los Angeles International Airport, Dulles International Airport in Washington and John F. Kennedy International Airport in New York, Singapore's Changi Airport is a revelation. As former prime minister Lee Kuan Yew decreed, you get from the gate to a taxi in 15 minutes. The men's room is sleek and immaculate, and even asks you to rate your experience (and thus the attendant) via a handy touchscreen ranking as you leave.

As close readers of this column will have noticed, I've been a gushing fan of Singapore's public policy achievements since I began looking at them a few years back. Singapore spends 4 per cent of gross domestic product on health care versus America's 17 per cent, yet it delivers equal or better health outcomes. It's at the top of global school rankings because (unlike us) it routinely recruits exemplary students into the teaching profession. Yes, I know, Singapore still denies press and assembly freedoms we take for granted, and has awful anti-gay laws on the books (which I'm told go unenforced). But a few days spent talking with officials, business people, students and government critics in the city-state that now boasts one of the world's highest per capita incomes have deepened my admiration for Singapore's accomplishments.

I also came away convinced that last year's watershed elections - in which the ruling People's Action Party won just 60 per cent of the popular vote and lost a group representation constituency (and two Cabinet ministers) for the first time since independence in 1965 - mean a more democratic political era is unfolding.

Start with what Singapore has delivered for its five million people. The place is a policy wonk's paradise. Thanks to what may be a historically unique blend of dedicated, highly educated technocrats and the 'luxury' of decades of one-party rule, the Government has always taken the long view. Pragmatic problem-solving is its creed. Benevolent dictatorship never looked so good.

Beyond world-beating health-care and education systems, some highlights:

Development. Back when most developing countries shunned multinationals as evil exploiters, Singapore smartly embraced global firms as indispensable sources of training, technology and jobs.

As a result, Singapore grew in real terms by a stunning 8 per cent a year on average between 1965 and 2010, and has become a site of choice for top firms serving Asian markets. Even Uncle Sam now tries to emulate Singapore's savvy in courting foreign direct investment. The state's latest economic strategy document, crafted with input from stakeholders across the island, reads more like a strategy consultant's analysis than the usual blue-ribbon mush. 'We're like a company,' says Mr Philip Yeo, who ran the globally admired Economic Development Board for years before launching a new agency that's an innovative cross between the National Science Foundation and a venture capital firm. 'We have a plan.'

Clean talent. Singapore's Government has always been clean and exceptional. The tone was set early on by Mr Lee, who flew commercial to international meetings and was repulsed by African leaders who came in on private jets while their people starved. He ruthlessly punished officials who tried to use their post to line their pockets, insisting that the rule of law meant just that. Top students are offered full rides to places such as Oxford University, the Massachusetts Institute of Technology and Stanford University, and then 'bonded' to do, say, six years of government service thereafter.

Twenty years ago, this culture was bolstered by the introduction of the world's highest public sector salaries, so that the Government could compete for the best and brightest. I'm talking about roughly US$2.5 million for the prime minister and US$1.3 million for Cabinet ministers (with bonuses tied to gross domestic product growth). Pay became an issue in the last election and was recently scaled back for top officials by roughly a third in response. But whatever the right balance, pause and think how smart it is to pay for the talent a country needs to govern - and how differently we'd view, say, Treasury Secretary Tim Geithner's approach to Wall Street reform if everyone wasn't expecting him to cash in when he leaves.

Transport. Singapore runs the world's best airline (despite being based in a nation the size of New York City, with no internal flights). The subways are gorgeous. The city uses Electronic Road Pricing - every wonk's dream - to ease traffic at peak hours. Digital signs advising where ample parking places can be found dot the main thoroughfares.

Housing. In America, 'public housing' means 'ghetto'. In Singapore, 80 per cent of people live in public housing and virtually all of them own their homes, having received mortgage assistance from the Government. It's part of the national strategy to build assets and foster the positive social behaviour that comes with ownership.

Urban planning/climate change. A big chunk of the downtown bay area is now a reservoir via a feat of engineering I don't pretend to understand, but which experts tell me is remarkable. Meanwhile, Singaporean officials don't debate whether climate change is real but instead are taking such impressive steps to cope that one US guru told me 'it's actually embarrassing as an American to look at what they have done'.

Fiscal stewardship. This may be the founding generation's most distinctive legacy. The giants of Singapore's independence - Mr Lee, economic architect Goh Keng Swee, and others - were educated in Britain and started out as Fabian socialists. But they concluded early on that Britain's post-Beveridge Commission welfare state would become unsustainable as the population aged and risked undermining incentives to work, which they saw as the foundation of a strong society. The path they chose for social security was thus a different form of nanny state - high forced savings, under which workers typically must contribute 20 per cent of earnings to their account in the Central Provident Fund, with employers adding 15 per cent more. The aim is to build up assets that can be tapped to buy homes, cover medical expenses and prepare for retirement. To be sure, there are serious questions today as to whether middle- and low-income people have adequate savings for these purposes now that Singaporeans live to 80, not 60, and new health treatments are pricey. But the culture of self-reliance this approach has imbued is strong.

What's more, the fiscal strength it has given the Government to address emerging challenges is arguably unique at a time when Western democracies groan under the weight of trillions in unfunded entitlement liabilities. Singapore, if you've followed how this works, has exactly zero unfunded liabilities. Since the forced savings accounts are done by the individual for the individual and are not legislated entitlements, there's no redistribution involved. While critics and reformers tell me the years ahead will almost certainly see Singapore redistribute more amply to elderly and poor citizens at risk of falling through the cracks, no government is in a stronger fiscal position to update its social compact to cope with the age wave. In part that's also due to conservative budget rules and endowment-ethic investment practices that have left Singapore with more surpluses and reserves than virtually any other nation.

Singapore is hardly perfect. Critics make a good case that the long rule of the People's Action Party has left it complacent and out of touch. In some ways, the Government's decades of exceptional performance have also created expectations that are impossible to sustain. What's more, the great fruit of the Government's success, Singapore's educated middle class, naturally seeks a greater voice now in politics (and is ushering in a fascinating new era).

But the big thing to take away from the Singapore story thus far is this: While Americans fight endlessly about 'big government' versus 'small government', yet do nothing to meet our biggest challenges, Singapore has ignored ideological claptrap and focused relentlessly on what works. Its low-tax, business-friendly environment is matched with major government activism in education, health care, infrastructure and housing.

Singapore thus stands as the leading modern example of how the government as a pragmatic problem-solver can dramatically improve people's lives. This ethos has virtually disappeared from US governance at the national level. Liberals are wrong to ignore Singapore's progressive achievements because of its (rightly criticised) shortcomings on civil liberties. Conservatives are wrong to miss the lessons of Singapore's activist, hyper-competent government.

It was roll-up-your-sleeves pragmatism that catapulted Singapore from Third World to First in a few scant decades and it is pragmatism, not ideological power games, that will be needed for American renewal. When it comes to effective governance, to paraphrase that famous scene in When Harry Met Sally, we could do a lot worse than to have some of what Singapore's been having.

The writer is a co-host of public radio's Left, Right & Centre, and writes a weekly online column for The Washington Post.


[My comment on the article:

I think the point is not to attempt to recreate wholesale the lessons of Singapore. That would be a mistake and in any case would be impossible.

What is feasible is to understand the principles that made things succeed and adopt those. I'll just take the example that Miller calls "clean talent". Singapore takes a simple approach: running a country is too important a job to leave to idiots. Preferably (or essentially), we should have smart people at the top. Leadership and talent needs to be identified early. Get them early, give them scholarships, and pay them well to apply their minds to the problems of the day.

The alternative is smart people take their talent and use it to game the system. So Wall Street comes up with CDOs and other financial instruments that regulators barely understand let alone project the risks of such financial instruments. The result is Wall Street geniuses making millions if not billions and the People and the Govt holding the bag to save those "too big to fail".

The simple matter is that the financial system is too important to fail, and too important to be held ransom by a few "too big to fail" entities.And the regulation of the financial sector is too important to be left to b-listed graduates who couldn't make it to Bears & Stearns, and Goldman Sachs, and who are now trying to outplay or outmaneouvre the best minds who did.

Politics in the US seesaws between thesis & anti-thesis but never quite getting to synthesis. "Small Govt". "Big Govt". Never quite getting to "Competent" or "Effective" Govt. Size of govt is not important. I'd rather have a big competent (if a little inefficient) govt, than a small, incompetent incapable govt that does not have the bandwidth to deal with the problems of the day, let alone look ahead for some forward planning.

I've long tried to decide if Singapore's Govt is Liberal or Conservative. It is both and neither. In his Mar 2010 article on Singapore's Healthcare system, Miller pointed out that Singapore's system is further to the left and right of what Obama and the Republicans want from the US healthcare reform.

The point is liberals have valid views and positions, and so do conservatives. The answer lies somewhere in between - in synthesis. That requires compromise. Something Congress seems unable to reach.]

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