“If I were in authority in Singapore indefinitely without having to ask those who are governed whether they like what is being done, then I would not have the slightest doubt that I could govern much more effectively in their interests.”
– Lee Kuan Yew, 1962
The Origin of the Modern City-State
Singapore is a city-state without natural resources yet it is one of the world’s great economic success stories. It has one major comparative advantage, and that is its location on the trading route between East-Asia and Europe. As it has deep waters it was a natural location for a trading port and the origin of city-state’s history as a port city began in 1819 when the British East India Company turned the strategically located, sparsely inhabited island into a Southeast Asian trading hub. In Singapore’s unusual geography lies the first hints of the aggressive ‘developmental state’ that would later become its trademark.
Like all great port cities, London, New York, Shanghai, Singapore linked resource-rich mainland’s with global shipping routes. As it was situated at the narrow southern entrance to the Straits of Malacca and protected by the power and prestige of the Royal Navy, Singapore made its first bid as a global port city amidst the expanding trade schedules of the British Commonwealth.
Because Singapore’s trading class pioneered hinterland production, the island suffered little conflict between an agricultural class committed to protectionist trade policy and a free-trading industrial class. Instead, Singapore’s business leaders were united in their commitment to free trade and to government action, maximizing business opportunity. The raison d’etre of the state became economic growth.
The Second Most Competitive Country in the World
When Singapore gained its independence nearly 50 years ago, it was still a poor, colonial outpost in a swampland that lacked natural resources. Today, the Southeast Asian city-state of 5.4 million people is wealthier per capita than the United States and Germany.
The country’s GDP per capita increased thirtyfold from 1960 to 1980 and has risen more than tenfold in the era of globalisation, from $4,750 in 1980 to an estimated $56,700 last year, which is 292% of the Worlds average.
Measuring purchasing power per capita, $56,700 places Singapore as the third richest country in the World, behind Qatar ($88,000) and Luxembourg ($81,000), according to Singapore´s Ministry of Foreign Affairs press release of a survey from Forbes.
Last year, the IMF named Singapore the easiest country in the world to do business and number two in competitiveness. It ranks number two in the Global Competitiveness Report 2014 for the fourth year, owing to an outstanding and stable performance across all dimensions of the composite index. It is the only economy to top three of the twelve pillars that makes up the index, and it also appears in the top ten of two other pillars.
Singapore tops the goods market efficiency pillar and ranks second in the labour market efficiency and financial markets development pillars. Further, according to IMF, the city-state boast one of the world´s best institutional frameworks and it possesses world-class infrastructure. Its government budget surplus amounted to 6.9% of GDP in 2013 and its competitiveness is further enhanced by strong focus on education. We wrote an article about the new Smart Nation concept some months ago.
What did Singapore do to Become so Successful?
How did Singapore become the envy of the world? In many ways, it did what any competent government is supposed to do. It provided stability and legislative order. it developed purposeful infrastructure and quality public housing. It set up a top-notch public education system. It has developed an open, pro-business economy and the city-state also continues to develop innovative approaches to challenges such as talent attraction and immigration, and investment attraction through smart systems for taxes and debts.
Places have always been “managed”, as Philip Kotler wrote in the preface to the book Place Management, but there is a difference between keeping a place going and helping a place improve the lives of its citizens and stakeholders. Any competent city mayor basically makes sure that the city continues to deliver goods and services and maintains an adequate level of earnings and opportunities for its citizens.
However, the citizens of most cities want their city to become “more” than it is at the present time. An economically depressed city wants to revive its fortunes through some kind of economic and social transformation process. A bustling metropolis, on the other hand, may have traffic congestion, parking, power and waste disposal problems that turn off many citizens and visitors and it needs innovative solutions to these problems.
Lee Kuan Yew
Singapore owes much of its prosperity to the honest and pragmatic government by Lee Kuan Yew, who died earlier this week, aged 91. He retired as prime minister in 1990 after being in the job for 31 years, but his influence shaped government policy until his death and will continue to do so beyond.
Born when Singapore was a British colony, the young Mr Lee saw the humiliation of the colonial power by Japan and the tough years of Japanese occupation. A brilliant scholar, he thrived in London and Cambridge after the war and came back to Singapore to assume a leading role in the anti-colonial struggle, co-founding the People’s Action Party (PAP) which governs Singapore to this day. Although Singapore has been a democracy since independence, Mr Lee ruled as a despot, with a keen eye for intellectual excellence and zero patience for mediocrity.
Mr Lee published his memoirs in 1998, titled “The Singapore story”. Few political memoirs have been as blunt as the Grand Masters own Insights. A champion of Asian values, he is most un-Asian in his frank and confrontational style and one can feel that the book is written by a man who fought mediocrity and never himself became corrupt and who voluntarily retired when the job was done. His written thoughts embodies his character, exposing insecurity, vulnerability, emotional detachment, arrogance and also the restless energy that today characterize Singapore.
Plato´s Argument for Rule by Philosopher Kings
In Plato’s The Republic, there is a systematic questioning of government, as Plato dissects the roles of justice and equality in society. One of the greatest works of philosophy and political theory ever produced, The Republic has shaped western thought for thousands of years, remaining as relevant today as when it was first written in Ancient Greece. I read it more than 30 years ago when I studied philosophy and it remains clear in my memory ever since.
As Plato understands, people are not equal to any challenge. They have both different physiognomy and intellect as well as family origin and education, and this naturally sets them apart in how they can handle challenging tasks.
To deal with the problem of justice, Plato considers the ideal polis and the relationship between the structure of the Republic and the attainment of justice. Plato argues that philosopher kings should be the rulers, as all philosophers aim to discover the ideal polis, the ‘kallipolis’, or the beautiful city, which he says is a just city where political rule depends on the knowledge of philosopher kings, and not only on power. In modern society we can imagine the philosopher king as the educated technocrat, meaning extra-ordinarily talented and well-educated managers like Robert McNamara, Boris Johnson, and Lee Kuan Yew.
The definition of democracy is a key in understanding Plato’s argument for rule by philosophers. In our modern times, most countries are democratic in the sense that people have a say in the running of the state. Ever since Plato’s time there has been a debate regarding what democracy is. One side reasons democracy is the idea of absolute majority rule, the other side reasons that democracy involves the protection of minorities. To Plato, it all boils down to what democracy means, literally. Democracy is ‘the rule by the demos’, where ‘demos’ can be understood as ‘the people’, and as “‘the mob’, the uneducated and unfit who pursue their own short term self-interests. I wrote about such populism in an article last December, about the Swedish government crises.
However, for most people, it is clear that making political decisions requires judgement and skill. It should, as Plato urges, be left to the experts”, and that is exactly what has made Singapore´s success story.
Singapore’s prosperity and orderliness won admirers East and West, and came to be viewed as a model for emerging economy governance. Criticism for Singapore has pinpointed the lack of true democracy or rather, lack of multi-party system and lack of freedom of speech in society. This may be true but fails to take into account the challenges of inequality and civil unrest that naturally comes when a society trajects economic development very fast.
The main challenge for the city-state today is to develop the entrepreneurial sector that is so important in the new global economy. The prestige for talents to work in the public sector has displaced talent in the private sector, which may be why so few entrepreneurs come out of Singapore.
The main lesson for Place Managers in other locations of the World is that competent management can create astounding results over time, just as competent business management can for business companies and as history shows talented Generals can command relatively small armies to victory through smart management principles. Management matters more than resources and point of origin.
Singapore in Numbers
The graphs below, from The Economist eulogy on March 22nd, documents the developing of Singapore in the Lee Kuan Yew years.