7 ms·

How to explain Singapore’s growth despite lack of stimulus?

25 points by pragmatic 16y ago

nazgulnarsil 16y ago
an economically literate political elite that runs things instead of signaling that it is running things while frantically rent seeking (that's you democracy).
- jbooth 16y ago
  Plato? Is that you? EDIT: What, nobody read the republic?
- notahacker 16y ago
  As others have commented in the thread, the Singaporean government is rent-seeking to a much greater extent than most of the rest of the world (they have direct stakes in many of its most productive enterprises). They're just extremely effective at managing to maximise yields. It is much easier to run things when re-election isn't a worry and you can export your unemployed.
  - nazgulnarsil 16y ago
    rent seeking =/= profit maximizing. government has this funny way of working better when the incentives of the leaders align with the living standards of the governed.
    - notahacker 16y ago
      Given market imperfections, rent seeking behaviour is a logical consequence of any attempt to maximise yield. My point was that political favour in Singapore is entrenched, without the deadweight losses brought about by lobbying or changes in policy. It's not that the patronage of the Singaporean government doesn't introduce imbalance into the economy and society, it's simply that it's a stable imbalance and its monopolies are very well managed. I'm sure we can at least agree on the latter part of that sentence. I'm not convinced the incentives of Singapore's governing elite need to be particularly closely aligned with the living standards of the governed (at least not _now_ given the ruling party's almost impregnable position). Their achievement in raising the living standards is more a testament to their vision and industry than internal pressures. In general, rent seeking behaviour is at least as prevalent in less-democratic states, just less competitive and more likely to favour the already-rich
forinti 16y ago
People will embrace any speck of evidence in order to validate their economic theories. Cuba grew faster than the US in 2008. Should the US have embraced a centralized economy then?
- nazgulnarsil 16y ago
  ignoring long term trends is how we get into these messes to begin with.
- nazgulnarsil 16y ago
  ignoring long term trends is how we get into these messes to begin with.
ugh 16y ago
Contrast and compare. Population USA 310 Mio. (2010, est.) Singapore 5 Mio. (2009, est.) Area USA 10 Mio. km^2 Singapore 0.00071 Mio. km^2 Population density USA 32 per km^2 Singapore 7,022 per km^2 I don’t know how useful comparisons between countries of similar size are, never mind countries which are so radically different. What would be interesting (though not necessarily conclusive) is data on growth, stagnation or contraction in single cities (with, say, a population bigger than one million) in the US and to then to compare that data.
- lionhearted 16y ago
  Y'know what's strange? I see people with a particular political bent arguing that Singapore and the USA are apples and oranges, but these same people frequently compare extremely small, homogeneous Northern European countries to the USA in support of their political policies. > I don’t know how useful comparisons between countries of similar size are, never mind countries which are so radically different. Anyways, I agree, could you be so kind as to point out these population numbers next time someone points to the small Northern European countries as bastions of happiness, and instruct them to look at the more comparable examples that had similar policies, like the Soviet Union? Just a thought - if we let people cherrypick when to use the "apples and oranges" argument, we'd be letting them get away with all sorts of intellectual dishonesty.
  - ugh 16y ago
    Uhm, I don’t know how similar the policies of Scandinavian countries are compared to those of, say, Soviet Russia. Not very is what I would guess. Also apples and oranges.
    - lionhearted 16y ago
      The point was, if you want to compare a state-run economy to a market economy, the larger Soviet Socialist Republics are the better comparable to the USA than Denmark, with its population 5 million and massive amounts of energy reserves. Actually, the more important point is people cite statistics when they're convenient, and ignore them when they're not.
pchristensen 16y ago
The comments on that post are quite useful. Some useful points: a) lots of factories were idle in 2008 but ramped up in 2009 because of other countries' stimulus allowed them to purchase Singapore's exports. b) looking at one year's results is silly c) Singapore has a very fluid labor force, including commuters from Malaysia that contribute to GDP but don't drag down per capita numbers, and foreign workers are removed from the country within 2 weeks of losing a job d) many people echo what ugh said here, that the two countries are so different that comparison is meaningless.
- gojomo 16y ago
  There are two fallacies that come into play when an American considers Singapore. One is to look at Singapore's positive results and assume we could have the same clean streets, low crime, efficient public works, growth-friendly environment with a tiny government sector if we only had the will. The other is to look at some of the key differences in culture/population/geography/governance and thus assume we have nothing to learn from them, "comparison is meaningless". The truth, and all interesting discussion, should come from somewhere in between. The USA is far from optimal and could learn a lot from other countries -- though we rarely look. (Indeed it's amazing how little US states like California seriously look at how other states are doing some things better.) But we'd best not cherry-pick the factoids that help our preferred side of some debate-of-the-moment.
  - ugh 16y ago
    I should have made it clear that I don’t think that any comparison is useless. There is a whole world of already implemented policies out there, it would be stupid not to take advantage of that. It’s just that general statements about whole bundles of policies (“Look at Singapore and their policies, they brought them massive growth! We should adopt them.”) or even individual policies (“Look at France’s healthcare system! It’s working perfectly, we should copy it 1:1.”) are probably not enough. You will have to look at specific policies, their environment, the conditions under which they could succeed (or whether they did in the first place) and how they were implemented. Only then can you begin to judge whether those policies would also be a good idea for different countries.
jplewicke 16y ago
They had a fairly decent chunk of monetary stimulus: http://www.businessweek.com/news/2010-04-13/singapore-central-bank-seeks-one-time-revaluation-of-currency.html http://www.businessweek.com/news/2010-04-13/singapore-centra...
heatdeath 16y ago
As if government stimulus was the only cause of economic growth.
newy 16y ago
Singapore is run very much like a company. Despite being a democracy, power very much lies in the hands of the government elite. Lee Hsein Long, the curent prime minister, is the son of Lee Kuang Yew. Together, the Lees have been in power for 37 out of the 51 years of the country's existence. The People's Action Party has ruled since, well, the country started become self-governing in 1959. The government owns much of "private" enterprise. The current prime minister is married to the CEO of Temasek Holdings, a $100 billion sovereign wealth fund that is owned by the Ministry of Finance. It owns the largest companies it Singapore, including telecon, bank, Singapore Airlines, the media, electric. For good measure, they also own the zoo and 49% of Virgin Atlantic. The government also does a great job of recruiting talent. Males are required to complete military service - a way to build loyalty to the country and create disincentives for moving away. The government also hands out "scholarships" for US college education, but really these are loans that require one to return and work for the government for X years (5+? anyone at Stanford or Cornell + maybe others would know what I'm talking about). All this ends up in a country thats focused, prime and nimble for economic growth. Not sure if its a good or bad thing, but certainly interesting.
- barmstrong 16y ago
  I was surprised to see you say "The government owns much of 'private' enterprise". Singapore is known as one of the most economically free countries in the world, consistently outranking the U.S.: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom_historical_rankings http://en.wikipedia.org/wiki/Index_of_Economic_Freedom_histo... One measure of the percent of private industry the government owns is the tax rate (just as an investor would earn a percent of profits based on his ownership, so does the government). As the article points out, Singapore's tax rate is 12% while the U.S. is 44%. You mention some specific companies which I'm not familiar with, but overall, wouldn't it be more accurate to say "the government owns the least amount of private enterprise compared to almost any country in the world?"
  - avoidinglawsuit 16y ago
    "In 2008, The Economist reported that Morgan Stanley had estimated the fund's assets at US$330 billion, making it the world's third largest sovereign wealth fund." That's in addition to Temasek Holding's ~US$100 billion. http://en.wikipedia.org/wiki/Government_of_Singapore_Investment_Corporation http://en.wikipedia.org/wiki/Government_of_Singapore_Investm...
starkfist 16y ago
What happened to philg? Is this just what he does now, spends his retirement writing quasi-political rants?
1gor 16y ago
How to explain Singapore’s growth despite lack of stimulus? The simplest explanation is its proximity to and focus on Chinese market. China's growth is not cyclical. It is driven by demographics mostly and it can be described as a secular trend. Rural population migrates to cities, they become consumers and bring down their abnormally high savings rate to the levels common for developed consumer societies. China today is what Japan used to be in the 60s. Its growth will continue for a while, crisis or no crisis.

25 points by pragmatic 16y ago

an economically literate political elite that runs things instead of signaling that it is running things while frantically rent seeking (that's you democracy).

jbooth 16y ago
Plato? Is that you? EDIT: What, nobody read the republic?
notahacker 16y ago
As others have commented in the thread, the Singaporean government is rent-seeking to a much greater extent than most of the rest of the world (they have direct stakes in many of its most productive enterprises). They're just extremely effective at managing to maximise yields. It is much easier to run things when re-election isn't a worry and you can export your unemployed.
- nazgulnarsil 16y ago
  rent seeking =/= profit maximizing. government has this funny way of working better when the incentives of the leaders align with the living standards of the governed.
  - notahacker 16y ago
    Given market imperfections, rent seeking behaviour is a logical consequence of any attempt to maximise yield. My point was that political favour in Singapore is entrenched, without the deadweight losses brought about by lobbying or changes in policy. It's not that the patronage of the Singaporean government doesn't introduce imbalance into the economy and society, it's simply that it's a stable imbalance and its monopolies are very well managed. I'm sure we can at least agree on the latter part of that sentence. I'm not convinced the incentives of Singapore's governing elite need to be particularly closely aligned with the living standards of the governed (at least not _now_ given the ruling party's almost impregnable position). Their achievement in raising the living standards is more a testament to their vision and industry than internal pressures. In general, rent seeking behaviour is at least as prevalent in less-democratic states, just less competitive and more likely to favour the already-rich

forinti 16y ago

People will embrace any speck of evidence in order to validate their economic theories. Cuba grew faster than the US in 2008. Should the US have embraced a centralized economy then?

nazgulnarsil 16y ago
ignoring long term trends is how we get into these messes to begin with.
nazgulnarsil 16y ago
ignoring long term trends is how we get into these messes to begin with.

ugh 16y ago

Contrast and compare. Population USA 310 Mio. (2010, est.) Singapore 5 Mio. (2009, est.) Area USA 10 Mio. km^2 Singapore 0.00071 Mio. km^2 Population density USA 32 per km^2 Singapore 7,022 per km^2 I don’t know how useful comparisons between countries of similar size are, never mind countries which are so radically different. What would be interesting (though not necessarily conclusive) is data on growth, stagnation or contraction in single cities (with, say, a population bigger than one million) in the US and to then to compare that data.

lionhearted 16y ago
Y'know what's strange? I see people with a particular political bent arguing that Singapore and the USA are apples and oranges, but these same people frequently compare extremely small, homogeneous Northern European countries to the USA in support of their political policies. > I don’t know how useful comparisons between countries of similar size are, never mind countries which are so radically different. Anyways, I agree, could you be so kind as to point out these population numbers next time someone points to the small Northern European countries as bastions of happiness, and instruct them to look at the more comparable examples that had similar policies, like the Soviet Union? Just a thought - if we let people cherrypick when to use the "apples and oranges" argument, we'd be letting them get away with all sorts of intellectual dishonesty.
- ugh 16y ago
  Uhm, I don’t know how similar the policies of Scandinavian countries are compared to those of, say, Soviet Russia. Not very is what I would guess. Also apples and oranges.
  - lionhearted 16y ago
    The point was, if you want to compare a state-run economy to a market economy, the larger Soviet Socialist Republics are the better comparable to the USA than Denmark, with its population 5 million and massive amounts of energy reserves. Actually, the more important point is people cite statistics when they're convenient, and ignore them when they're not.

pchristensen 16y ago

The comments on that post are quite useful. Some useful points: a) lots of factories were idle in 2008 but ramped up in 2009 because of other countries' stimulus allowed them to purchase Singapore's exports. b) looking at one year's results is silly c) Singapore has a very fluid labor force, including commuters from Malaysia that contribute to GDP but don't drag down per capita numbers, and foreign workers are removed from the country within 2 weeks of losing a job d) many people echo what ugh said here, that the two countries are so different that comparison is meaningless.

gojomo 16y ago
There are two fallacies that come into play when an American considers Singapore. One is to look at Singapore's positive results and assume we could have the same clean streets, low crime, efficient public works, growth-friendly environment with a tiny government sector if we only had the will. The other is to look at some of the key differences in culture/population/geography/governance and thus assume we have nothing to learn from them, "comparison is meaningless". The truth, and all interesting discussion, should come from somewhere in between. The USA is far from optimal and could learn a lot from other countries -- though we rarely look. (Indeed it's amazing how little US states like California seriously look at how other states are doing some things better.) But we'd best not cherry-pick the factoids that help our preferred side of some debate-of-the-moment.
- ugh 16y ago
  I should have made it clear that I don’t think that any comparison is useless. There is a whole world of already implemented policies out there, it would be stupid not to take advantage of that. It’s just that general statements about whole bundles of policies (“Look at Singapore and their policies, they brought them massive growth! We should adopt them.”) or even individual policies (“Look at France’s healthcare system! It’s working perfectly, we should copy it 1:1.”) are probably not enough. You will have to look at specific policies, their environment, the conditions under which they could succeed (or whether they did in the first place) and how they were implemented. Only then can you begin to judge whether those policies would also be a good idea for different countries.

jplewicke 16y ago

They had a fairly decent chunk of monetary stimulus: http://www.businessweek.com/news/2010-04-13/singapore-central-bank-seeks-one-time-revaluation-of-currency.html http://www.businessweek.com/news/2010-04-13/singapore-centra...

heatdeath 16y ago

As if government stimulus was the only cause of economic growth.

newy 16y ago

Singapore is run very much like a company. Despite being a democracy, power very much lies in the hands of the government elite. Lee Hsein Long, the curent prime minister, is the son of Lee Kuang Yew. Together, the Lees have been in power for 37 out of the 51 years of the country's existence. The People's Action Party has ruled since, well, the country started become self-governing in 1959. The government owns much of "private" enterprise. The current prime minister is married to the CEO of Temasek Holdings, a $100 billion sovereign wealth fund that is owned by the Ministry of Finance. It owns the largest companies it Singapore, including telecon, bank, Singapore Airlines, the media, electric. For good measure, they also own the zoo and 49% of Virgin Atlantic. The government also does a great job of recruiting talent. Males are required to complete military service - a way to build loyalty to the country and create disincentives for moving away. The government also hands out "scholarships" for US college education, but really these are loans that require one to return and work for the government for X years (5+? anyone at Stanford or Cornell + maybe others would know what I'm talking about). All this ends up in a country thats focused, prime and nimble for economic growth. Not sure if its a good or bad thing, but certainly interesting.

barmstrong 16y ago
I was surprised to see you say "The government owns much of 'private' enterprise". Singapore is known as one of the most economically free countries in the world, consistently outranking the U.S.: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom_historical_rankings http://en.wikipedia.org/wiki/Index_of_Economic_Freedom_histo... One measure of the percent of private industry the government owns is the tax rate (just as an investor would earn a percent of profits based on his ownership, so does the government). As the article points out, Singapore's tax rate is 12% while the U.S. is 44%. You mention some specific companies which I'm not familiar with, but overall, wouldn't it be more accurate to say "the government owns the least amount of private enterprise compared to almost any country in the world?"
- avoidinglawsuit 16y ago
  "In 2008, The Economist reported that Morgan Stanley had estimated the fund's assets at US$330 billion, making it the world's third largest sovereign wealth fund." That's in addition to Temasek Holding's ~US$100 billion. http://en.wikipedia.org/wiki/Government_of_Singapore_Investment_Corporation http://en.wikipedia.org/wiki/Government_of_Singapore_Investm...

starkfist 16y ago

What happened to philg? Is this just what he does now, spends his retirement writing quasi-political rants?

1gor 16y ago

How to explain Singapore’s growth despite lack of stimulus? The simplest explanation is its proximity to and focus on Chinese market. China's growth is not cyclical. It is driven by demographics mostly and it can be described as a secular trend. Rural population migrates to cities, they become consumers and bring down their abnormally high savings rate to the levels common for developed consumer societies. China today is what Japan used to be in the 60s. Its growth will continue for a while, crisis or no crisis.