The Global Guru

Singapore: Asia’s Politically Incorrect Success Story

A city-state located at the tip of the Malay Peninsula with a population of 5.2 million, Singapore is arguably the most successful among the four “Asian Tigers” — a group that also includes Hong Kong, Taiwan and South Korea.

When this former British colony became a fully independent country in 1965, its per capita gross domestic product (GDP) was a lowly $511. Today, that figure has risen to $60,900, making Singapore wealthier per capita than the United States.

Singapore appears at the top of the annual global economic rankings with astonishing regularity, outranking the United States by almost every measure. Singapore has been ranked as the easiest place in the world to do business. It also boasts the #1 airport in the world. And by 2020, Singapore will likely surpass Switzerland as the world’s largest offshore wealth management center.

Lee Kuan Yew: Singapore’s George Washington

I’ve written about Singapore before and a Singapore-based exchange-traded fund (ETF) was also a recent recommendation in the Alpha Investor Letter.

But it wasn’t until I read Lee Kuan Yew’s “The Grand Master’s Insights on China, the United States, and the World” this week that I realized how much Singapore owes its success to the vision and determination of a single man.

Lee Kuan Yew was prime minister from Singapore’s independence in 1959 until 1990, when he allowed his hand-picked successor and now his eldest son to succeed him.

Although few Americans have heard of him, Lee Kuan Yew is the eminence grise of the global diplomatic community, and is universally admired across several political generations. Even Richard Nixon speculated that, had Lee lived in another time and another place, he might have “attained the global stature of a Churchill, a Disraeli, or a Gladstone.”

At the same time, Lee Kuan Yew is a controversial figure. And his methods for lifting Singapore by its bootstraps to developed market status are both jarringly honest and relentlessly politically incorrect.

Although Lee Kuan Yew defines himself as “a liberal in the classical sense of that word,” chances are you’ll disagree with him whether you stand on the left or the right of the ideological spectrum.

If you are a bleeding heart liberal, you’d be appalled at Lee Kuan Yew’s insensitivity to diverse points of view.

If you are a conservative or a libertarian, you’d be equally angered at his views on the power government and its right to regulate and punish your personal behavior.

In reality, Lee Kuan Yew is more about street smarts than an overarching philosophy.

As he puts it:

I am not fixated on a particular theory of the world or of society. I am pragmatic. I am prepared to look at the problem and say, all right, what is the best way to solve it that will produce the maximum happiness and well-being for the maximum number of people?

Lee Kuan Yew’s Harsh Words for the United States

Lee is both a great admirer — and a critic — of the United States. And his position as the father of the planet’s most remarkable economic success story gives him a lot more credibility than, say, an anti-American rant by the late Hugo Chavez or even France’s President Francois Hollande.

On the one hand, Lee Kuan Yew admires the focus of the United States on individual freedom. He’s always encouraged Singaporeans to emulate America’s self-help culture. It is this trait that has made Americans into great entrepreneurs with the verve, vitality and vigor to adapt and to change much better than Europeans or the Japanese.

On the other hand, Lee Kuan Yew views the guns, drugs, violent crime, vagrancy and unbecoming behavior in public that he sees in America as simply unacceptable. They are, in his view, a symptom of the breakdown of civil society.

According to Lee Kuan Yew, the United States has not functioned well since the Vietnam War and the Great Society. Academic liberals have convinced some Americans that failure isn’t a matter of individual responsibility, but rather, a failure of “the system.” As a consequence, too many Americans believe that their problems are solvable by government. And many of those government programs have become a charity — an entitlement without any stigma attached. And these well-intentioned social policies have produced meager results at best.

Lee Kuan Yew believes discipline trumps democracy. Airing diverse opinions and competing ideas don’t guarantee a country’s success. The Asian Tigers could not have succeeded under a U.S.-style constitution where gridlock exists on every major issue.

Lew Kuan Yew declares that multiculturalism may end up destroying America. As he puts it, “The key question is whether America will make Hispanics Anglo-Saxons in culture or will Hispanics make America more Latin American?” That said, Lee Kuan Yew is optimistic that the United States can integrate readily all religions and races into the fabric of American society. The one exception? Islam.

Singapore Today: In Lee Kuan Yew’s Image

Lee Kuan Yew’s solution has been to turn Singapore into a one-party state and a meritocracy. And his influence is evident in Singapore every direction you turn.

Here are a handful of examples I’ve come across this week:

  • Your entry card into Singapore warns you that selling drugs is punishable by death.
  • Local newspapers are chock full of stories of people who either are caned or deported for bad behavior.
  • Yesterday, I saw a grandmother ticketed for jaywalking.
  • While the United States is mired in political gridlock, 81 of the Singapore parliament’s 88 members belong to the same party.
  • The casinos at the new Marina Bay Sands complex are almost invisible. And if you are Singapore citizen, you must pay an $80 entry fee to gamble.
  • Import tariffs on cars are more than 100%, so even a compact will cost you $70,000. In addition, you must pay a fee of around $60,000 for 10 years for a “Certificate of Entitlement” to drive in Singapore.

Singapore as the “Tiger Mother” State

Having spent a few short days here, I now think of Singapore as a living, breathing “Tiger Mother” state constantly hovering over its citizens to make sure they are well-behaved.

Yet, as an American, there is something unsettling about a government treating its citizens like wayward children.

After all, it goes against the very fabric what the U.S. founding fathers stood for and learned from the philosopher John Locke.

My first instinct was also to think that you’ll never see Singapore produce an iconic, quirky and visionary person who could change the world like Steve Jobs did.

But I quickly realized I was wrong.

After all, Singapore did produce Lee Kuan Yew himself — who, like Jobs, is iconic, quirky and visionary — and who successfully transformed this minor colonial outpost into the world’s wealthiest nation.

The bottom line?

Lee Kuan Yew’s approach may not be your cup of tea.

But he did help transform Singapore’s skyline from this in the 1950s…

http://www.fabian.com/images/singaporeskyline05212013/

…to this view from the Marina Bay Sands hotel and casino last night.

And it is darn hard to argue with that level of success.

To read my e-letter from last week’s Eagle Daily Investor, please click here. I also invite you to comment about my column in the space provided below my Eagle Daily Investor commentary.

Sincerely,

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Nicholas Vardy, CFA
Editor, The Global Guru
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