

How to explain Singapore’s growth despite lack of stimulus? - pragmatic
http://blogs.law.harvard.edu/philg/2010/07/19/how-to-explain-singapores-growth-despite-lack-of-stimulus/

======
newy
Singapore is run very much like a company. Despite being a democracy, power
very much lies in the hands of the government elite. Lee Hsein Long, the
curent prime minister, is the son of Lee Kuang Yew. Together, the Lees have
been in power for 37 out of the 51 years of the country's existence. The
People's Action Party has ruled since, well, the country started become self-
governing in 1959.

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.

~~~
barmstrong
I was surprised to see you say "The government owns much of 'private'
enterprise".

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...](http://en.wikipedia.org/wiki/Index_of_Economic_Freedom_historical_rankings)

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?"

~~~
Avshalom
I'm pretty sure Newy mean 'owns' in a pretty literal sense
<http://en.wikipedia.org/wiki/Temasek_Holdings>

~~~
barmstrong
Gotcha - yur right.

------
ugh
Contrast and compare.

    
    
      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
    

I don’t know how useful comparisons between countries of similar size are,
never mind countries which are so radically different.

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.

~~~
lionhearted
Y'know what's strange? I see people with a particular political bent arguing
that Singapore and the USA are apples and oranges, but these same people
frequently compare extremely small, homogeneous Northern European countries to
the USA in support of their political policies.

> 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.

~~~
ugh
Uhm, I don’t know how similar the policies of Scandinavian countries are
compared to those of, say, Soviet Russia. Not very is what I would guess. Also
apples and oranges.

~~~
lionhearted
The point was, if you want to compare a state-run economy to a market economy,
the larger Soviet Socialist Republics are the better comparable to the USA
than Denmark, with its population 5 million and massive amounts of energy
reserves.

Actually, the more important point is people cite statistics when they're
convenient, and ignore them when they're not.

~~~
jbooth
Actually, it's really not. 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. That's without even getting into the
political, speech and rights differences. Little things like "being allowed to
trade with other countries or get on a plane to paris if you want". Denmark is
still far more similar to the US than to the USSR.

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.

~~~
lionhearted
At the risk of getting downvoted, I'm going to try to reply to show something.
Give me the benefit of a read through before downvoting? Discussion is
welcome, too.

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.

~~~
jbooth
I wasn't saying that comparisons between Denmark and the US are always valid,
I was saying that comparisons between Denmark and the USSR are idiotic.

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.

------
forinti
People will embrace any speck of evidence in order to validate their economic
theories.

Cuba grew faster than the US in 2008. Should the US have embraced a
centralized economy then?

~~~
nazgulnarsil
ignoring long term trends is how we get into these messes to begin with.

------
pchristensen
The comments on that post are quite useful. Some useful points:

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.

~~~
gojomo
There are two fallacies that come into play when an American considers
Singapore.

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.

~~~
ugh
I should have made it clear that I don’t think that any comparison is useless.
There is a whole world of already implemented policies out there, it would be
stupid not to take advantage of that.

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.

------
jplewicke
They had a fairly decent chunk of monetary stimulus:
[http://www.businessweek.com/news/2010-04-13/singapore-
centra...](http://www.businessweek.com/news/2010-04-13/singapore-central-bank-
seeks-one-time-revaluation-of-currency.html)

------
1gor

       How to explain Singapore’s growth despite lack of stimulus?
    

The simplest explanation is its proximity to and focus on Chinese market.

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.

------
heatdeath
As if government stimulus was the only cause of economic growth.

------
nazgulnarsil
an economically literate political elite that runs things instead of signaling
that it is running things while frantically rent seeking (that's you
democracy).

~~~
notahacker
As others have commented in the thread, the Singaporean government is rent-
seeking to a much greater extent than most of the rest of the world (they have
direct stakes in many of its most productive enterprises). They're just
extremely effective at managing to maximise yields.

It is much easier to run things when re-election isn't a worry and you can
export your unemployed.

~~~
nazgulnarsil
rent seeking =/= profit maximizing. government has this funny way of working
better when the incentives of the leaders align with the living standards of
the governed.

~~~
notahacker
Given market imperfections, rent seeking behaviour is a logical consequence of
any attempt to maximise yield.

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

------
starkfist
What happened to philg? Is this just what he does now, spends his retirement
writing quasi-political rants?

