The Myth of the PAP Singapore’s Miracle part II

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Part I is here.

Many people argued that PAP created the environment that led to the boost in manufacturing sector. Let’s see. During the same period that Singapore experienced tremendous growth, countries such as South Korea and Hong Kong grew even faster than us, without a PAP in charge. It was really a no-brainer to leverage on the industries and infrastructure that the British left us, and fill the void in manufacturing countries at that time, especially when China was facing its own turmoils, and other countries such as Indochina(Vietnam) was undergoing the Vietnam war. Since Singapore was relatively poor during the 1960s, it also had an abundance of cheap labor. The only problem was how to keep the population docile and peaceful, so as to ensure economic growth for Singapore. Lee Kuan Yew once said in 1956.

“Repression, Sir is a habit that grows. I am told it is like making love-it is always easier the second time! The first time there may be pangs of conscience, a sense of guilt. But once embarked on this course with constant repetition you get more and more brazen in the attack. All you have to do is to dissolve organizations and societies and banish and detain the key political workers in these societies. Then miraculously everything is tranquil on the surface. Then an intimidated press and the government-controlled radio together can regularly sing your praises, and slowly and steadily the people are made to forget the evil things that have already been done, or if these things are referred to again they’re conveniently distorted and distorted with impunity, because there will be no opposition to contradict.”

He has certainly made it a habit ever since, but that’s an issue for another day.

Certainly, one of the people who actually had a hand in the continued development of modern day Singapore, and whose plans are still existing today, is not from the PAP. He was a Dutch economist from the United Nations, known as Mr Albert Winsemius, who formulated Singapore’s economic policy from 1961 to 1984. He managed to attract big oil companies and companies to set up shop in Singapore. Such companies include Shell and Philips. He also proposed a blue-print in which Singapore can be developed into a financial hub and a transport hub to take full advantage of Singapore’s strategic location. Therefore PAP’s and Lee Kuan Yew’s claims that it built Singapore up, and that without it, there wouldn’t be Singapore, runs really hollow when one truly examines the conveniently hidden history of Singapore.

Mr Paul Krugman, 2008 Nobel Prize winner for Economics, wrote that rapid Asian growth was not impressive, if one considers the capital input. Growth based on input was not sustainable, as evident from his writing here.

Economic growth that is based on expansion of inputs, rather than on growth in output per unit of input, is inevitably subject to diminishing returns.

He also made comparisons between Singapore and the former Soviet Union, by pointing out the parallels between the two countries, which was that the huge growth experienced was due to a non-sustainable huge capital input.

Between 1966 and 1990, the Singaporean economy grew a remarkable 8.5 percent per annum, three times as fast as the United States; per capita income grew at a 6.6 percent rate, roughly doubling every decade. This achievement seems to be a kind of economic miracle. But the miracle turns out to have been based on perspiration rather than inspiration: Singapore grew through a mobilization of resources that would have done Stalin proud. The employed share of the population surged from 27 to 51 percent. The educational standards of that work force were dramatically upgraded: while in 1966 more than half the workers had no formal education at all, by 1990 two-thirds had completed secondary education. Above all, the country had made an awesome investment in physical capital: investment as a share of output rose from 11 to more than 40 percent.

I personally believe that makes sense too. Despite the numerous PAP government’s claims, the stagnation of the working class since 1990s has been obvious for all to see. The GINI coefficient(indicator of rich-poor gap) is ever growing, and average wages have been hovering at the same amount, or increasing only marginally since the 1990s. The above mentioned problem is also the same reason why Singapore under-went three recessions in just a decade, with each recession becoming more and more acute. The fact that Singaporeans have been repeatedly told to accept “competitive wages” aka lower wages, and that foreign workers are brought in to lower our cost of business is testament to the fact that we are just not moving up the productivity chain and that the planners have realised that capital input for output has already peaked.

We must look beyond the claims of Singapore being heavily reliant on exports hence we are heavily exposed. It is already obvious to all that such a problem in Singapore’s economy exists. In fact, it has existed since the British times, and PAP has done nothing to solve it, but only to claim its merits. Our domestic consumption is one of the lowest amongst the developed countries, and a stagnant local private sector that is drowned by behemoth government linked companies makes our country way too exposed to overseas fluctuations. We cannot compete on ever-lower wages, given the rise of countries such as China and Vietnam. The only way out is to move up the productivity chain, and Mr Krugman has this view on Singapore that is extremely worrying, to say the least.

Even without going through the formal exercise of growth accounting, these numbers should make it obvious that Singapore’s growth has been based largely on one-time changes in behavior that cannot be repeated. Over the past generation the percentage of people employed has almost doubled; it cannot double again. A half-educated work force has been replaced by one in which the bulk of workers has high school diplomas; it is unlikely that a generation from now most Singaporeans will have Ph.D’s. And an investment share of 40 percent is amazingly high by any standard; a share of 7O percent would be ridiculous. So one can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to those of the past.

Haven’t we been living through such a scenario for the past decade? Since the government has been repeatedly saying that we are overly exposed to overseas fluctuations, what changes has the PAP government brought us then, if all they did was to inherit, copy and claim credit shamelessly for past successes by Singapore’s real forefathers? After all, we did identify the problem, so where is the solution?

Finally, the government’s claims of a lack of resources run hollow when examined critically. Historically, countries with huge amount of natural resources that have been controlled completely by the State have remained poor, corrupt and inefficient. Think about countries like Nigeria, Venezuela, Iraq etc. Resources are only as good as the people using them or making use of them to create other things. After all, oil on the ground came from fossiled remains. Without proper refining and the creation of equipment designed to harness the power from the oil, oil will always remain as fossiled remains. It is clear that the greatest assets a country can ever have is its own people. This is clearly seen by the past when our hardworking forefathers toiled day and night in conditions we will never imagine to build this country known as Singapore. The fact that the PAP is trying to claim credit for this “economic miracle” is proof that people are the greatest assets, not natural resources.

In conclusion, we can see that PAP, while it has played a role in Singapore’s development, did not play as important role in Singapore’s development as it would like everyone else to think. It had the luck to inherit a country that is located in one of the most strategic locations in the world. It had the fortune to inherit a flourishing trade sector which was already built up painstakenly by the British and the early immigrants. Even the “import foreign workers to sustain economic growth” idea was not their own. The US has been doing it for decades. The capital-input output growth in the early years of modern Singapore cannot be sustained anymore and PAP has clearly ran out of ideas on how to maintain growth. It is time Singaporeans truly question PAP’s real role in Singapore’s development, and step up the ante to push for change that Singapore clearly need, and not clearly accept what the PAP government has to tell us about what they have done in the past. Even if I am wrong about PAP’s role in Singapore’s development, isn’t it clear that living in the past(perhaps self-delusional) glories like what our government is doing now will never bring Singapore forward?

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Tags: albert winsemius, economic miracle, four asian tigers, history, Hong Kong, lee kuan yew, miracle, myth of singapore, pap, paul krugman, peoples' action party, south korea, taiwan