Emerging Asia can teach the West a lot about government

A special report on the future of the state

Go East, young bureaucrat

From the print edition of The Economist 

WHEN people talk about Singapore’s education miracle, they normally think of rows of clever young mathematicians. The hair-design and beauty-therapy training centres at the Institute of Technical Education (ITE) are rather different. The walls are covered with pouting models, L’Oréal adverts and television screens. There is a fully fitted-out spa and a hairdressing salon. It all seems rather more “Sex and the City” than Asian values, though the manicurists, pedicurists, cosmetologists and hairdressers toil diligently.

Asked whether he wants to go to university, the holy grail of most Asian families, a young barber called Noel replies that he would rather open a hairdressing salon. Mei Lien wants to set up her own beauty salon; Shuner would like to work in hotels abroad.

Until recently ITE—dubbed “It’s The End” by ambitious middle-class parents—was the dark side of Singaporean education. The city state streams pupils rigorously and is unashamedly elitist: one school claims to send more students to Ivy League universities than any other secondary school in the world. But such a system also produces losers—and many of the bottom third who do not make it to university come to ITE.

Since the 1990s the government has worked hard to change ITE’s image. It has not only spent a lot of money on new facilities and better teachers but also put a great deal of thought into it, scouring the West for best practice in vocational training. And it has encouraged students who are used to failure to take pride in their work. That has involved discipline (a list displays the names of class-shirkers) but also fun outside the classroom: ITE has sports teams and concerts just like any university.

This attention to detail has paid off. Many of the graduates have to compete with cheap migrant workers, especially in service jobs, but most of them are snapped up quickly. The hairdressers and beauty therapists are off to the new casinos, or “integrated resorts”, as they are prudishly known. Singapore, already near the top of most educational league tables, has created yet another centre of excellence that is beginning to attract foreign visitors.

Singapore is important to any study of government just now, both in the West and in Asia. That is partly because it does some things very well, in much the same way that some Scandinavian countries excel in certain fields. But it is also because there is an emerging theory about a superior Asian model of government, put forward by both despairing Western businesspeople and hubristic Asian chroniclers. Simplified somewhat, it comes in four parts.

First, Singapore is good at government (which is largely true). Second, the secret of its success lies in an Asian mixture of authoritarian values and state-directed capitalism (largely myth). Third, China is trying to copy Singapore (certainly true). Last, China’s government is already more efficient than the decadent West (mostly rubbish, see next section).

Fact or fiction?

For all the insults hurled at “Disneyland with the death penalty” (to use William Gibson’s gibe), Singapore provides better schools and hospitals and safer streets than most Western countries—and all with a state that consumes only 19% of GDP. Yes, that proportion is understated because it does not include the other fingers the government has in the economic pie, such as its huge landholdings, the Central Provident Fund (a mandatory savings scheme) and Temasek (a government-linked investment company). Yes, it is easier to serve 5m people on a tiny island than 309m Americans on a vast landmass. Yes, it has relied on immigration, which is now creating strains (and will be the main topic in the next election). And yes, Singapore’s bureaucrats can make  mistakes, such as letting an Islamic terrorist escape in 2008. But its government does pretty well.

The Chinese are fascinated by it. “There is good social order in Singapore,” Deng Xiaoping observed in 1992. “We should draw from their experience, and do even better than them.” It sends streams of bureaucrats to visit Singapore. One of the first things that Xi Jinping did after being anointed in 2010 as China’s next leader was to drop in (again) on Lee Kuan Yew, Singapore’s minister-mentor, who ran the island from 1959 to 1990, and his son, Lee Hsien Loong, who has been prime minister since 2004. The Chinese are looking at other places, too—most obviously Hong Kong, another small-government haven. But it is hard to think of any rich-country leader whom China treats with as much respect as the older Mr Lee.

So what lessons are the Chinese learning? There is an odd imbalance between the things that Singapore and others make so much noise about and the reasons why the place works. In particular, the “Asian values” bits of Singapore—its authoritarianism and its industrial policy—that the Chinese seem to find especially congenial are less vital to its success than two more humdrum virtues: a good civil service and a competitively small state.

The island that Lee built

Singapore is certainly a fairly stern place. It has been run by the People’s Action Party for half a century. The older Mr Lee, a Cambridge-educated lawyer who was originally seen as a bit of a left-winger, set up a parliamentary system in which it has proved curiously difficult for the opposition to do well. From 1966 to 1981 Mr Lee’s PAP won all the seats. It has opened up a bit, and in the most recent election in 2006 it won only 66% of the votes and 82 of the 84 seats. The media, and particularly the internet, have also got a little freer.

The Singaporeans argue that they have the perfect compromise between accountability and efficiency. Their politicians are regularly tested in elections and have to make themselves available to their constituents; but since the government knows it is likely to win, it can take a long view. Fixing things like ITE takes time. “Our strength is that we are able to think strategically and look ahead,” says the prime minister. “If the government changed every five years it would be harder.”

There is more truth in this than Western liberals would like to admit. Not many people in Washington are thinking beyond the 2012 presidential election. It is sometimes argued that an American administration operates strategically for only around six months, at the beginning of its second year—after it has got its staff confirmed by the Senate and before the mid-terms campaign begins.

Yet even assuming that voters are happy to swap a little more efficiency for less democracy, Singapore still seems a difficult model to follow. Not only is it manageably small, but balancing authoritarianism and accountability comes down largely to personal skills (and even the opposition admits that the two Lees have been extremely good at it). More generally, Singapore’s success as a planning state has a lot to do with the sort of people who run it.

One thing that stands out in Singapore is the quality of its civil service. Unlike the egalitarian Western public sector, Singapore follows an elitist model, paying those at the top $2m a year or more. It spots talented youngsters early, lures them with scholarships and keeps investing in them. People who don’t make the grade are pushed out quickly.

Sitting around a table with its 30-something mandarins is more like meeting junior partners at Goldman Sachs or McKinsey than the cast of “Yes, Minister”. The person on your left is on secondment at a big oil company; on your right sits a woman who between spells at the finance and defence ministries has picked up degrees from the London School of Economics, Cambridge and Stanford. High-fliers pop in and out of the Civil Service College for more training; the prime minister has written case studies for them. But it is not a closed shop. Talent from the private sector is recruited into both the civil service and politics. The current education minister used to be a surgeon.

Western civil services often have pretty good people at the top, but in Singapore meritocracy reigns all the way down the system. Teachers, for instance, need to have finished in the top third of their class (as they do in Finland and South Korea, which also shine in the education rankings). Headmasters are often appointed in their 30s and rewarded with merit pay if they do well but moved on quickly if their schools underperform. Tests are endemic.

How much strategic intervention takes place in the economy? The Lees have dabbled in industrial policy, betting first on manufacturing and then on services. Temasek manages a portfolio of S$190 billion ($150 billion). The country is now trying to push into creative industries, with limited success thus far, as ministers admit.

These attempts at dirigisme have made Singapore a more reserved, less entrepreneurial place than Hong Kong with its feverish laissez-faire. It certainly has far fewer larger-than-life billionaires. But it is hard to hail Singapore as a success of top-down economic management in the way some Chinese seem to think. Indeed, the core of Singapore’s success—its ability to attract foreign multinationals—owes far more to laissez-faire than to industrial policy.

Come in, the water’s lovely

Rather than seeing foreign investment as a way to steal technology or to build up strategic industries, as China often does, Singapore has followed an open-door policy, building an environment where businesses want to be. The central message has remained much the same for decades: come to us and you will get excellent infrastructure, a well-educated workforce, open trade routes, the rule of law and low taxes.

In other words, Singapore’s competitive advantage has been good, cheap government. It has worked hard to keep its state small; even education consumes only 3.3% of GDP. But the real savings come from keeping down social transfers and especially from not indulging the middle class. The older Mr Lee thinks the West’s mistake has been to set up “all you can eat” welfare states: because everything at the buffet is free, it is consumed voraciously.

Singapore’s approach, by contrast, is for the government to provide people with assets that allow them to look after themselves. Good education for all is one big part of it. The other mainstay is the  Central Provident Fund. A fifth of everybody’s salary goes into their account at the CPF, with the employer contributing another 15.5%. That provides Singaporeans with the capital to pay for their own housing, pensions and health care and their children’s tertiary education.

There is a small safety net to cover the very poor and the very sick. But people are expected to look after their parents and pay for government services, making co-payments for health care. The older Mr Lee especially dislikes free universal benefits. Once you have given a subsidy, he says, it is always hard to withdraw it. He is convinced that if you want to help people, it is better to give them cash rather than provide a service, whose value nobody understands. China, he thinks, will eventually follow Singapore’s model.

But arguably the place that should be learning most from Singapore is the West. For all the talk about Asian values, Singapore is a pretty Western place. Its model, such as it is, combines elements of Victorian self-reliance and American management theory. The West could take in a lot of both without sacrificing any liberty. Why not sack poor teachers or pay good civil servants more? And do Western welfare states have to be quite so buffet-like?

By the same token, Singapore’s government could surely relax its grip somewhat without sacrificing efficiency. That might help it find a little more of the entrepreneurial vim it craves.

from the print edition of The Economist | Special reports

Online Comments:

Tai Chi wrote: Mar 17th 10:14 GMT
There is an unmentioned ingredient to Singapore's success. If Old Lee wanted to leave the future generations one last message it would be: You only have one chance. The national psyche is driven by the fear that a serious mistake will lead to some national calamity, putting an end to the city state. The country is a small island in a difficult, less enlightened, neighborhood so the message has continued resonance.

boilercanuck wrote: Mar 18th 12:26 GMT
Where is this magical civil service the Economist keeps writing about. All can agree that there are a select few who are chosen young, groomed and do very well in the civil service. Other than that, it is just like the rest of the west: probably 70% of the people doing enough to get by, knowing they have decent job security with the other 20-30% doing any real work. All earning starting salaries between 2500-3500/month.

Nayia wrote: Mar 20th 9:41 GMT
Singapore is indeed a fascinating place. It is striking how individuals have been convinced that only by watering down their civil rights they can have economic prosperity. It seems that the Singaporean psyche has (almost) collectively agreed that having a state-subsidised flat is more important than having freedom of expression. Yes, it’s true that Singapore’s administration is so efficient that makes Denmark look bad and certainly in terms of governance management there are plenty of good ideas for Western leaders to take on board. But Singapore is also a country where arrest and detention without warrant or judicial review is allowed by Law; where human rights defenders and political opponents are subject to legal harassment, are fined, jailed, bankrupted, and  forbidden to travel abroad; where caning and the penalty are ordinarily used in the context of a judicial process that is “subject to political and economic pressures, including from the Party, and biased against the weak, poor, or less-educated”.

SebasGuerrero wrote: Mar 20th 7:39 GMT
Sure we can see Singapore as an example for how a Small country with disciplined people should be run. Technocratic states that champion industry and hard work have been quite successful, just look at Taiwan, South Korea and Japan. All these countries grew quickly with good top-down governing, but then liberalized economically and politically to preserve stability once growth slowed. China has a much more difficult task ahead in its desire to emulate this model because of the following two reasons. (1) Top-down (Statist) countries are efficient if the country is small or very homogeneous like Japan, and tend to fail when the economy gets too complex. China is seeing signs of this with its faltering Banking sector (many respectable economists predict a banking crisis coming shortly) and general decreases in the rate of return of investment. It is easy (relatively) to plan large scale infrastructure projects and get GDP growth from that, but it a whole different thing to organize an economy to serve 1.2 billion people. The low-hanging fruits of development have already been picked. (2)The liberalization of the political system (like those other model countries) will be much harder in china because of the heterogeneity in wealth and identity between different peoples in China. Will all these mostly independent and self-sufficient peoples in china (the West, Tibet, Canton, North-east, Center) be able to live in harmony with each over when growth inevitably slows down?

jbchamberlin wrote: Mar 21st 12:45 GMT
The US too has public sector managers paid in excess of $2 million per year...they are the head football and basketball coaches at numerous state-funded universities. Troy Mclure wrote: Mar 21st 2011 4:09 GMT Thought it was a good article. Though I do think it downplayed central planning as part of the reason for Singapore success too much. While I agree it's not the only reason and more specifically it's certainly not the main reason Singapore does well now. I think that it was an important part of it's growth from third world to fist and is still a basis for it's current success. Reading Lee Kwan Yew's biography I remember him remarking that he visited another country and saw lots of trees everywhere and thought this was a good thing. So he implemented a green singapore policy and started planting trees everywhere. Nowadays you go to singapore and you see many areas lined with trees... ok they are placed exactly 25 metres apart in perfectly boring rows but they are there at least. The same thing more practically applies to housing. Human filing cabinets they may be but it moved people out of shacks and huts and bamboo structures. Ok he had to ban people keeping livestock in them at first but it did provide safe and very affordable housing for a quickly growing population. Add in the reservoir system, various industrial policies and probably many other more relevant ones i'm not familiar with... Of course it is easier to do central planning in a country that would fit into Lake Taupo(NZ). Still I mostly agree with SebasGuerro that central planning and command economies are limited. It is IMO a possibly effective stage for an emerging nation to go through but it's not an end-game strategy. Of course it'd be nice if the west realised that it can for a time be an effective policy tool for countries who aren't at OECD levels of development. ps:- Yeah I actually think matching public service pay to private industry pay-scales is a good idea. You increase the talent pool to choose from and it helps reduce corruption. It is also a rather important job (running a country). pps:- I also very much agree with Naiya in regards to their attitudes toward civil liberties and human rights. It just feels less free over there, like the people are self-censoring themselves due to fear of reprisal. Which is IMO not conductive to better governance. You can't solve a problem if no-one tells you it exists. Though to be fair I think every legal system is biased against the weak, poor and less-educated.

Troy Mclure wrote: Mar 21st 4:34 GMT 
Oh one other advantage that Singapore has. Family units. They can have less of a government safety net because of the way family works over there. Because of the shortage of housing (and the great expense) my uncles/aunties/cousins over there all lived with their parents until they got married(which is AFAIK fairly normal). They also go back to visit my grandmother about once a week and my cousins lived in my Grandma's house as much as theirs. Lee Kwan Yew talks about this in his biography IIRC. The notion was that rather then having the government provide a social safety net, it would be the family that does this. If someone gets sick or injured then everyone else pitches in to help out. I believe the theory was that people would be less willing to "buffet" at their families expense then the governments. And in fact this probably does work... though despite it's success I can't agree with the policy. Two main reasons. What of people who do not have a large family? Or even a family? Do they just fall through the cracks? And what of the poor? I got lost on the bus one time over there, sat down in some tiny shopping mall to figure out how to get back, a man who sat down next to me, gave me a cigarette. We got to talking, he was very nice... he made $15 or so a day sweeping the floor at the mall. He lived with his wife and i'm not sure at all what would happen if a member of their family couldn't' work for some reason. It's important to remember that a society of one for all, works best when it's also all for one.

rsoder wrote: Mar 22nd 5:38 GMT
So, the West can take in a lot of self-reliance and management theory "without sacrificing any liberty." Perhaps. Nowhere in this article does the author suggest that Singapore ought to be able to  figure out how to have prosperity, safe streets, et al. without having to deny vitually all civil liberties? Surely Singapore and the rest of us ought to be able to figure out how to have reasonable prosperity and order and still have free speech, free inquiry, free press.

neutrino123 wrote: Mar 22nd 4:33 GMT
@Nayia
Singapore's Internal security act(ISA) isn't unique, USA have their Guantanamo bay. Obama wanted to shut down Guantanamo but why is it operating till this very day? Because there is a need for it! Probably every nations have their ISA/Guantanamo, thus why are you highlighting/criticizing ISA alone? There's a trade-off to many things in life, the computer you are typing on, you can have premium laptop with premium prices, a budget laptop with budget prices, or a mixture of both. But you won't find a premium laptop at a budget prices. Is the trade-off worth it, that's the most important question. perkmashin wrote: Mar 23rd 2011 4:37 GMT Another article where The Economist does its best to find Good Ol' Western Values as the secret ingredient behind a country that has been successful precisely by refusing to emulate the West. In reality, Singapore's success can be found in precisely those things we would consider reasons for success in any organisation but a nation state: they don't arbitrarily change their bureaucracy every few years for the sake of some pointless, irrational vision of "freedom", they haven't adopted a system that limits all political dialogue (and thought) to party politics and the next election cycle, they don't value dubious "political rights" over actual consequences, they haven't dismantled their cultural and moral heritage in the name of even more dubious "freedoms" (i.e., the "freedom" to lead a purposeless life of fleeting hedonism AKA "liberalism"), and so on. If the election cycle weren't a part of the Western Ideology we have beaten into us at a young age and continually throughout our lives, nobody would be surprised to learn that a country that hadn't adopted such bizarre and irrational practices is having greater long-term success than those that have. v4v wrote: Mar 25th 2011 3:32 GMT Much is made of Singapore's meritocratic form of democracy. Odd, since Lee Kuan Yew has been in power for 45 years and his son has inherited the job.

whatever... wrote: Mar 25th 4:18 GMT
There is a recent book out comprising of interviews with Old Lee, titled,"Hard Truths to keep Singapore going". The policies and direction taken by its government should be understood in light of its fragile geopolitical environment, history, and the dire want of any natural resources or hinterland. It has nothing but people. It has to even import drinking water for its people. We can begin to appreciate the paranoiac vigilance of its government against the backdrop of these challenges alongside its need for economic growth through attracting foreign investors, stable government, good work force; etc. The notion that there is only one chance permeates the whole city state and keeps its government on its toes.

Ben Ten wrote: Mar 28th 1:43 GMT
Our decades old central theme of attracting foreign multinationals to manufacture for global export has often been mistaken to be the Lees dabbling in industrial policy. That idea actually came from Dr Albert Winsemius instead, an economist sent by the United Nations in the 1950s to help Singapore industrialise. In fact, when MM Lee first took charge in 1959, he favoured the strategy of import substitution with Malaysia as the target market instead. Luckily for Singapore, that dream didn’t materialise when Singapore became separated from Malaysia. Perhaps the most appealing reason why the West should learn most from Singapore instead of from East Asia in general is Singapore’s appearance to be a pretty Western place. How deceiving appearances can be. While Singapore is arguably the most English speaking Asian nation, it is hardly Western in culture. Our self-reliance is not of the Victorian nature but of the East Asian nature. American management theory has been adapted to suit our East Asian culture. Since much of what Singapore is, is largely a consequence of us being East Asian, to learn from Singapore is to learn to be East Asian. This entails a fundamental shift in culture which can be a monumental task. Also, in trying to be more East Asian, the West runs the risk of becoming less Western. Imagine if Western societies were as obsessed with academic results as East Asians, how would Bill Gates be convinced to give up his Harvard education to start Microsoft? Perhaps the reason why Singapore hasn’t found our Bill Gates yet is because that person is busy counting his $2 million salary.