What do Calvin Coolidge, a wittily twisted Navy Seals motto, and the Jewish diaspora experience have in common? Notwithstanding any answer you might come up with, I have mine: They all remind me of Singapore the improbable.
Let’s take, in turn, Coolidge in this installment of our series, the Navy Seals motto in the next, and the Jewish diaspora experience in the one after that. We’ll then see what larger unified idea we come up with.1
Calvin Coolidge is popularly known these days for two things: his taciturnity (which in turn enabled one of Dorothy Parker’s greatest barbs); and Silent Cal’s famous statement, when once he did open his mouth to do something other than eat or yawn: “The business of America is business.”
What Coolidge actually said to the American Society of Newspaper Editors in Washington, D.C. on January 17, 1925, is, “. . . . the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world.” In other words, the American people are Calvinists, and Coolidge, of all people, should have known: Aside from the first name he bore, he was a Congregationalist.
Singaporeans may not be Calvinists—although there is a significant Presbyterian presence here, with seven functioning congregations—but at various levels according to their circumstances they are indeed “profoundly concerned with producing, buying, selling, investing and prospering in the world.” No ethnic Chinese, Malay, or Tamil citizen here could have said it any better.
Singaporeans are well aware of their focus on business, and some are aware of the social implications and costs of that focus. Many observers have realized what Singapore is by way of actual function as opposed to formal identity. By way of formal identity it is a country (a place) with a people (in Singapore’s case a multi-ethnic, multicultural, and multi-sectarian people, and so not a “nation” as properly defined) ruled by a state that is one of the 193 members of the United Nations. But in functional fact it more closely resembles a diversified corporation with a global reach.
The government has created two formidable sovereign wealth appendages, Temasek (named after the pre-modern name for Singapore, meaning “seaport” in Malay) and the GIC (Government of Singapore Investment Corporation). The GIC, formed in 1981, is wholly owned by the Finance Ministry, its function being to manage Singapore’s financial reserves, mainly the surpluses built up over the years. How much money does it manage? Presumably the government knows the answer, but it chooses not to publish precise figures so as to reduce incentives for currency speculation and exchange-rate spikes in turbulent times. (Independent sources guess around $400 billion.) In this role it shares responsibility with the Monetary Authority of Singapore (MAS), what passes for a central bank, in managing Singapore’s foreign currency reserves. If you have the GIC, you see, you don’t need a conventional central bank in such a small, managed city-state.
Temasek, established in 1974, is described by the government as an investment holding company, but that description doesn’t quite do justice to its actual function. Temasek owns the assets it manages, valued at about $235 billion. Some are in Singapore, others are spread throughout the world. Those outside Singapore may not be wholly owned by Temasek; those within Singapore usually are. Several dozen Singapore-based assets, commercial companies (and banks) for the most part, encompass every critical aspect of the economy: housing and infrastructure construction; ports; transportation; telecommunications; financial services; media; science and agribusiness; real estate; energy; education; and medicine. Each corporate asset must succeed on its own merit, and pay taxes to the Singapore government like any other business operating here. But Temasek has only one shareholder: the Finance Ministry. So revenue accrues to the government not only from taxes but also from dividends.
One might conclude from this bare description that Temasek is the institutional embodiment of Singapore’s industrial policy. That is not an unfair description if one starts from the premise that Singapore is a country, with a people, ruled by a state. But if one starts from the premise that Singapore is a global corporation, then one could fairly say that Singapore does not have an industrial policy but rather that it is an industrial policy.
The population, the people, can then be viewed as the corporation’s employees. They do pretty well as labor pools go, because the corporation is set on maximum feasible full employment: That way it can maximize the value of available human capital. It pays living wages, extending benefits via subsidies for housing, transportation, and even groceries, as well as through cash payments, that are generous by global standards. It also takes care of people who fall between the cracks for one reason or another, and contributes to the welfare of the young and elderly.
The corporation, in this case through its Ministry of Manpower, manages all this in coordination with the NTUC—the National Trade Union Congress, which encompasses 59 separate unions.
Americans of a certain age and education should have no trouble conceptualizing the Singaporean system. John Kenneth Galbraith famously wrote in The New Industrial State of the “iron triangle” in which government coordinated big business with big labor in the burgeoning postwar U.S. economy. It was a managed affair conducted by elites that gave all sectors their respective pounds of flesh as the cattle yard kept expanding. That captures much of the essence of the Singaporean model, but not quite all.
Americans these days typically believe that the United States does not have an industrial policy because it would contradict its devotion to reliance on “the market” and even smack of socialism. The truth beyond the myth is that in the postwar period the “iron triangle” was a de facto industrial policy, partly driven by the exigencies of defense investment during the Cold War. It was also, compared to today, a high-tax arrangement that did not inhibit consistently robust growth rates. Even today a kind of industrial policy operates by the advent of other means, although no one calls it that and it is less robust and broad-reaching than it might be. What other means?
Have you noticed how mostly state governments—not all but many—subsidize major research universities with a mind to their giving birth to new cutting-edge industry that doubles back to benefit both the state and the universities? Think Austin, the University of Texas, and Dell; the Berkeley/CIT/Silicon Valley juggernaut; the Raleigh-Durham Research Triangle that draws from UNC-Chapel Hill, Duke, and NC State; and Pittsburgh, Carnegie-Mellon, and the city’s new robotics industry, to name a prominent few.
Well, a synthesis of the old and new types of U.S. industrial policy approximates how Singapore works. Thus, for example, flowing from the old type, there are virtually no strikes here. They are not illegal, but they are constrained by law and, more important, the system strives to pre-empt or remove grievances that might give rise to motives to strike. In other words, there are no strikes for the same reason no one stuffs ballot boxes here: Outcomes are prefigured without recourse to such crudities.
Meanwhile, flowing from the new type, investment in industry is planned through the relevant ministries and Temasek, with the research and development function deeply engaging the companies with the major government-funded universities here: the National University of Singapore (NUS) and the newer, more science-and-technology oriented Nanyang Technological University (NTU). Wander around NTU and you will see several dozen corporate-focussed centers, not all of them associated with Temasek-managed operations but most. There is the Centre for Augmented and Virtual Reality, the Rolls-Royce@NTU Corporate Lab, the Singtel Cognitive and Artificial Intelligence Lab, the Delta-NTU Lab for Cyber-Physical Systems, and many others. A few centers, associated with the government’s intelligence gathering and analysis function, do not have names on or near their office doors.
Singapore’s is a global industrial policy, too, so encompassing of opportunity that the fact of the Red Dot itself is almost incidental. Gary Trudeau, the cartoonist who draws “Doonesbury,” adjured members of the University of Pennsylvania’s Graduate School of Arts and Sciences commencement audience in 1979 to “try to perfect a lifestyle that does not require your presence.” It was an amusing remark at the time, because the tools to do such a thing mostly did not yet exist. Many now do, so that even countries can follow the advice. East Germany did it under duress one way in 1991, Singapore is today doing so by choice another way. If any country is the opposite of autarkic by design—the major exception being Singapore’s determination to be self-sufficient in fresh water—this is it. Singapore is so radically non-autarkic that a great deal of what it does happens somewhere else.
Consider, for example, that the PSA—the Port of Singapore Authority—aside from being the largest transhipment port in the world—won the tender to manage the port of Antwerp. Yes, that’s right, the Antwerp that is in Belgium.
Consider, too, that when it dawned on the international shipping industry that an ice-free Arctic route, a beneficial side-effect of the global warming trend, would cut the travel time of large container ships from North America to East Asia by eleven days—and make it unnecessary to go anywhere near the Strait of Malacca—the folks here did not cry in their laksa. They reasoned that Singapore could emerge a big winner from this development thanks to its high levels of trained human capital, high level of incorruptible corporate social capital, and excellent marketing skills. And that is what Singapore’s highest echelon of corporate managers—a.k.a. the government—intends to do.
Consider also the spatial spillover of Singapore, Inc.. Across the causeways from here into southern Malaysia, in Johor Bahru, the economy is significantly integrated into Singapore’s. From the Woodlands and Tuas Link in Singapore one can look across the water and see copses of skyscrapers one rarely sees in such profusion elsewhere in Malaysia save for Kuala Lumpur, Penang, and a few other places plugged into the global economy.
The economic integration involves labor as well as capital: Somewhere between 300,000 and 500,000 Malaysian citizens commute daily into Singapore to work, and others work for Singaporean capital on platforms on Malaysian soil. The same is true, if to a lesser extent, for Batam Island and other parts of Indonesia. From a functional perspective, all this territory composes a perforated if not a single economic zone magnetically pulled together by Singapore’s corporate gravity. All three countries benefit from it, if not necessarily equally.
The functional economic net spreads even wider than that. As is well known, two major kinds of non-Singaporean labor are present on the island at any given time. High-flying expats bring corporate best-practice to Singapore, and there are low-skilled laborers—from the Philippines, Bangladesh, India, China, Indonesia, Malaysia, and elsewhere—who do jobs that Singaporeans either don’t want to do or are in too short supply to do. Non-citizens are divided into two groups: permanent residents (about 530,000) and non-residents (about 1.68 million). Non-residents are in turn divided into employment-pass holders and their dependents, foreign domestic workers, “s-pass” holders for mid-level skills, and students. The total non-citizen population weighs in at about 38 percent of the total, all of them save dependents having some economic function that contributes to the whole.
Some of the expat input is institutional, not individual or private-corporate. There is a branch of Duke University Medical School here, for example, and the staff engages in clinical research as well as medical education. There is a branch of Yale University here, too. One could go on.
The point, without getting into the details here and now—some of them controversial as regards the circumstances of Singapore’s low-skilled imported labor—is that the physical size of the country is vastly too small for the functionality of its economy.
All of this affects statistics. From the foregoing description you will not be surprised to hear that external trade, whether transshipping or standard importing, as a percentage of Singapore GNP is very high. You will also not be surprised, exactly, to learn that Singapore is the largest contributor of FDI to China because you will reason fairly quickly that most of that flow is not Singaporean money, but money flowing through Singapore from other places. Want a breakdown of where the money comes from on its way to China? Statistics won’t help you here, because such data isn’t published.
But you can guess at how it flows, if not how much. If you walk down by the iconic Marina Bay Sands and look across the water back toward the city, you will see many tall buildings each with the name of a large bank emblazoned in neon near the top: Citibank, HSBC, Bank of China, DSB, Maybank, and so on. Multinational corporations like to site their Asian operations in Singapore, and use these mostly multinational banks, because the place is both literally and politically safe, the workforce is well-educated, disciplined, and hard-working, and there is virtually no “friction,” a euphemism for corruption. The point? Not only does Singapore, via Temasek and other means, go forth into the world, but the world, the more affluent parts of it anyway, comes hence to Singapore.
It’s no simple task to manage all of this going out and coming in and mixing around. So note, just to put a last dab of color on the picture, that Singapore’s managerial/governmental elite are compensated at levels that track roughly with those of multinational corporate executives, not government leaders. And why shouldn’t they be, since their day jobs actually consist of running a major successful global business?
Somehow I think that, were he still with us today, Calvin Coolidge would understand all this fairly well. Of course he’d have little to say about it.