Trump, Kim can learn a few things from Singapore
Since independence in 1965, Singaporean leaders have cultivated an ethos of public service in the bureaucracy
US President Donald Trump and North Korean leader Kim Jong Un spent such a short amount of time in Singapore this week. Maybe they should have stuck around to see what makes its economy tick. Singapore is an especially wealthy nation, with a per capita income of about $90,000, well above that of the US. But how is this prosperity maintained, and why has Singapore commanded so much admiration from liberals and conservatives alike?
Singapore has many features shared by other wealthy countries, such as a high capital stock, a predictable legal environment and a well-educated workforce, but what are some of the less common factors behind its success?
Strikingly, Singapore is one of the few countries where there is brain drain into the public sector. This stems partly from the high salaries paid. Top bureaucrats typically receive more than their American equivalents, and cabinet level pay may exceed $800,000, with bonuses attached that can double that sum for excellent performance.
Yet it’s not just about the money. Since independence in 1965, Singaporean leaders have cultivated an ethos of public service in the bureaucracy. The country moved from being relatively corrupt to having one of the best ratings on transparency indexes. There are now complex and overlapping incentives whereby top public sector workers are paid well, respected highly, and develop the personal networks for subsequent advancement in either the public or private sectors.
Is Singapore a small government or a big government country? The correct answer is both. Government spending is about 17% of GDP, which makes it look small and helps hold down taxes, which is good for business and productivity. (And there are no additional state and local governments.) But if you look at stocks rather than flows, the government owns shares in many critical Singapore businesses, plus it de facto controls lucrative sovereign wealth funds. These days, it is best to think of Singapore as a democracy with legitimate elections, although it is a democracy with some restrictions on political entry and political speech (attacking political figures by name and character can lead to expensive libel suits). The most significant barrier to entry probably is that the dominant political party, the People’s Action Party, has amassed so much talent, and is such a vehicle for career advancement, that potential competitors find it hard to mount serious challenges.
Overall, I see the government of Singapore as more responsive to public opinion than the federal government in the US, or for that matter the European Union. You don’t have to approve of everything that goes on in Singapore to grasp what a unique blend of politics and economics the nation has created.