17 March 2011, The Interpreter
Dr Michael Barr is Senior Lecturer at Flinders University. His most recent book, written with Zlatko Skrbiš, is Constructing Singapore: Elitism, Ethnicity and the Nation-Building Project.
Australians looking at Singapore as a model for pulling the poor up by their bootstraps (such as Noel Pearson in The Australian) will be disappointed. Singapore's success is not replicable or desirable.
Singapore had its economic take-off by turning itself into a regional manufacturing and exporting base while China and India were sleeping and the US was booming and buying. If China or India had been competitors in the global market during the 1960s, '70s and '80s, then Singapore would never have followed the path it did and could not have succeeded as it did. Needless to say, China and India are no longer sleeping, and the US is no longer booming or buying.
Furthermore, the manufacture-for-export pattern of development upon which Singapore relied and continues to rely to this day, is already past its prime. The Singaporean Government recognises this, and is desperately trying to find alternative models. To suggest that Australia revert to a model that worked for Singapore in the 1970s and is being systematically abandoned as we speak would be a foolish move indeed.
Pearson argues that Singapore has developed without the creation of an underclass and that the country has 'free(d) itself from poverty'. In fact Singapore has two underclasses. The first consists of poor Singaporeans who live in a high-cost city, but who work without significant political or industrial protections: without a minimum wage, without independent unions, without much by way of welfare or health benefits and without much hope of themselves or their children ever climbing out of the poverty trap.
There are many Singaporeans working 10 and 12 hours a day, 7 days a week, for as little as Singapore $3-4 per hour (S$1 is worth about 80c Australian) with few social security benefits. Members of this underclass become very visible late at night in food courts, where aged grandmothers and grandfathers work for a pittance serving food and cleaning tables and toilets.
This Singaporean underclass includes people of most of Singapore's races, but the indigenous Malays are over-represented because they are the victims of systemic racial discrimination by the Chinese-dominated Government. Furthermore, the entire system is sustained politically by a system that tells the 'losers' it is their own fault. The 'self-help' systems that have so impressed Mr Pearson as a substitute for welfare are part of the story of this marginalisation. Because communities are forced to look inwards for assistance, 'self-help' becomes a system of restricting the pathways of public assistance: resources are redistributed within the poorest sections of the community, with minimal contribution from either government or from the better-off segments of society. The middle and upper classes are then free to focus their resources on helping themselves and their own children.
The second underclass is comprised of 'foreign guest workers' who come from other parts of Asia and work for even less than the locals. They make up nearly 40% of the island's population and they have the added vulnerability that they can be repatriated in an economic downturn or if they get sick, pregnant, or make trouble.
Let us take just one of the arguably more positive examples of Singapore innovation: the Central Provident Fund (CPF). The CPF is a national superannuation scheme in which all employees and their employers contribute proportions (at one time 50%) of their salaries to a Government-managed retirement fund. The British saw it as a cheap way of providing a hint of social security, but Lee Kuan Yew's Government used it to fund national infrastructure projects, housing and mortgage schemes, and eventually even 'self-help' health cover. For several decades it was central to funding economic development, and I do not dismiss its contribution to the Singapore success story. Furthermore, I think Singapore's emphasis on systematic personal saving and the deliberate conversion of those savings into a resource for national development is worthy of note by those looking for a development model.
But — and it is a big 'but' — let us not forget that this project operated on the basis that the Government kept most of the profits from personal savings and commanded their investment choices. It has loosened up a bit in the last couple of decades, but in the crucial period in which Singapore's success was built (1960s-late 1980s), the Government was appropriating most of the profits of the retirement investments of millions of Singaporeans, and paying nominal interest rates to the account holders. Is such a proposal politically possible (or necessary) in Australia in the 2010s? I doubt it. In any case, one of the unintended but entirely predictable consequences of the Singapore practice is that it never came close to providing security in retirement.
There are lessons from Singapore's experience on matters such as strategic investment for job creation, the creation of a savings pool for strategic investment, and the advantages of professional management, but we should be cautious about thinking that Singapore's model of success can be transplanted in any significant degree to Australia. Such a model probably does not exist anywhere. It is certainly not found in Singapore.
Photo by Flickr user Amizyo.