Singapore the Corporation (Part 1)

I recently passed through Singapore on the way to the United States for a product exhibition. Most acquaintances and friends I met were surprisingly vitriolic of the recent government ministers’ pay raise, and had stories to counter-point, such as the growing income disparity there.

Most were of the opinion that the PAP would face a substantial backlash in the next election and lose more seats. One was quick to point out that in the last few elections, the PAP had won as few as 51% of the total electoral vote, and that if anything, the PAP might implode in internal fissures and factionalism similar to the fates of other former one-party states (the KMT in Taiwan, the GNP in South Korea). Only in this way would democracy come to Singapore.

I think I have to disagree. Not only do I support the PAP unreservedly, I think Singaporeans should abandon the language of western liberal democracy and embark on a new political journey, embracing the Corporativist regime they have created and pull the study of political science out of history and into uncharted waters.

Everyone knows that Singapore is structurally now more a corporation than a country. The GLCs have a major if not total share of the commanding heights of the local economy. Capable and well-run, the GLCs operate in those industries which favour natural monopolies (roads, airports, ports, mass transit) or compete against each other in those that don’t (power, retail banking, telecommunications, media). The PAP is a profit maximising regime in the “New Institutional Economic” sense – it seeks to maximise profits in the form of tax revenue, returns on state investment, and rents from ownership of local infrastructure.

In that sense, one understands why foreign investment is and always has been fundamentally a favoured policy. When a company sets up shop in Singapore bringing in expatriate workers, it bolsters local tax revenue through corporate, income and consumption taxes, and also provides rent revenue to the local monopolies and employment of the local workforce. FDI-driven export revenue in electronics, petrochemicals and pharmaceuticals remains a mainstay of the economy.

Besides revenue, Singapore's education system is geared towards identifying talented, driven individuals and streaming them at an early age depending on aptitude. Properly administered, it identifies the best and brightest to serve in the civil service, the aforementioned GLCs or statutory boards.

The success of this carefully implemented model of export promotion, FDI inflows and human capital management is undeniable. From 1966 to 2006, the economy grew over 20-fold from a GDP of S$9.7bn to $209.6bn. Growth in 2007 is estimated to be above 5% and based on current extrapolations, the economy of the island of Singapore (pop. 4.5m) might actually overtake its hinterland Malaysia (pop. 25m) within the next 10 years.

Which brings us to the issue of Minister wages. The uproar over this issue betrays a mental disjunct between the angry populace and the administrators of this economy, a disjunct partially created because the language of political science has not caught up with the economic reality of the way Singapore is governed – simply put, minister wages in Singapore should be aligned to private sector wages simply because Singapore now functions as a corporation. However, Singaporeans seem unable to accept this reality, as it has not been properly framed for them by the literate elite.

And that’s where bloggers come in. To be continued.