Tailoring political systems to fit

Dear Mr Shanmugam,

I refer to your Harvard Club address as reported by Straits Times on 12 Dec 2009.

You defined good governance as the delivery of benefits such as the rule of law, economic well being, security, health care and housing. But laissez faire Hong Kong has shown us that economic well being need not come from good governance but can come from the quality and hard work of the people. The solid foundations of our rule of law were laid down by the British while our health care and housing come from the civil service which was also established by the British. Even our security is provided for by our own people. Thus, as far as Singapore is concerned, all the ingredients for the delivery of those benefits were already in place before ‘good governance’ came about. So good governance is not the reason why we enjoy those benefits. As such, our goal should not be good governance per say but the avoidance of bad governance. Because good governance cannot raise the destiny of the people beyond what it is capable of while bad governance can undo the good work of the people.

If avoidance of bad governance is the goal, then a system that prevents the entrenchment of governments will be the superior system because it allows bad governance to be dislodged. Likewise, a system that entrenches the government is inferior because it allows bad governance to perpetuate itself. Singapore is already showing signs of bad governance so we need a system to help us purge bad governance.

You asked if we can assume that the US political system will automatically deliver good governance in all other societies. You should also ask if we can assume that the US political system will automatically fail to deliver good governance for Singapore. Since we have never tried the US political system, how can we be sure that it will not deliver good governance for us?

You quoted Alexander Hamilton as having said that the political system has to be tailored as closely to the country as a coat to a man. If Alexander Hamilton were still alive today, he will realise that the underwear that we wear today come in standard shapes and sizes that are mass produced from the same factories for mass consumption all over the world. Coca Cola, McDonalds, iPhone and Google are largely the same throughout the world with little tailoring or customisation.

You argue that the debate ought to be how to tailor political systems to suit a specific country and not whether the system approximates the American or British models. With that, the issue becomes one of finding the right system that will throw out the right governance. But does a right governance exist for every country that will deliver prosperity? Many third world countries have had one government change after another without any significant change to their destinies. No example exists to show that the right governance was uncovered that fundamentally transformed the fate of a nation. Hence, any attempt to search for the right system to throw out the right governance will, in all likelihood, be an exercise in futility. For no system can uncover a governance better than the people from which it is chosen from. Good governance is at best, the best of its people but it can never be significantly better than the people from which it is chosen from. To think otherwise would be to believe that only a tiny segment of the country are geniuses while the bulk of the rest of the population are down right idiots. If the bulk of the population are down right idiots, or treated like idiots, there is no way that country can rise above other countries.

You say Singapore has to be interventionist and activist compared to larger, more secure countries. Taiwan is not much larger and never more secure than us but became less interventionist and less activist over the years nonetheless. Similarly, less secure Korea and small Hong Kong also became less interventionist and less activist over the years. Examples abound to contradict your assertion.

You say size, geography and strategic situation have imposed limits on Singapore. On the contrary, our small size has been a God send for us because we do not have a large agrarian sector to pull down our overall economic achievement. Our strategic geographic location between the East and the West has been an important source of wealth for us since the time of our founding. The need for a government that can formulate policies for the long term is not critical since we have been able to stumble from one mistake to another.

You don’t believe laissez-faire will deliver the most optimal results for us. But a laissez-faire Singapore would simply be another Hong Kong that will be just as optimal if not more.

You said the laissez-faire approach could work if there is no need for survival or economic success and you asked if the theory would hold for a small city state like ours which has to react quickly to externalities and to mobilise the population for action. But the need for survival is no less critical for the state of Israel, Taiwan and Korea which are also economically successful in their own right. Yet, we find coalition governments in Israel and bipartisan politics in Taiwan. Clearly, survival is no excuse for the monopoly of government nor does it justify government activism in all realms of life.

You said Hong Kong is not a real comparison because Hong Kong can depend on China. But what exactly does Hong Kong depend on China? Hong Kong’s rule of law, like ours, originated from the British, not from China. Hong Kong’s economic well being is a result of the entrepreneurship and industry of the Hong Kong people. Hong Kong does not depend on China for health care or housing. So with the exception of security, Hong Kong does not depend on China for any of the benefits you claim that good governance delivers. Hence, if there is any excuse for activism, it would be confined solely to the realm of defence and defence related industries. In other words, there is still no reason for government activism in the commercial realms of banking, telecommunications, shipping, logistics, port activities, shopping centres, newspapers, tv broadcast or even supermarkets and cab companies. There is no reason for “stop at two”, “go electronics”, “go biomedical”, “diversify the economy”, “grow at all costs”, “raise productivity” since they have nothing whatsover to do with defence.

Foreign Talent

You said we have succeeded because we have been liberal to talent inflow. But there is no proof to suggest that we would not have succeeded just the same had we been less liberal to talent inflow.

You cited the example of a blue chip foreign bank employing 1,000 foreigners and in turn employing 5,000 Singaporeans to illustrate the importance of the need to be liberal with foreign talent. But what about our own government linked companies? We just signed a new foreigner CEO to head the Singapore Exchange with a lucrative salary. We have a foreigner CEO heading DBS. Are Singaporeans so lousy that we cannot even head our own companies?

You cite the example of the US where 60% of engineering PhD students and 40% of master’s students are foreign nationals. But the founders of Microsoft and Apple are Americans, not foreigners in America. Even the Google founder Surgey Brin came to the US as a child not as a PhD or masters student. Furthermore, many European countries do not have such high percentages of foreign talent but continue to enjoy good prosperity and technological advancement. Therefore, we cannot simply look at the high percentages of foreign students doing research in the US and conclude that that is the reason behind their phenomenal success.

You said we do not have resources so we must depend on investments instead. But Finland, Sweden and Switzerland do not have much resources either. Yet they do not depend on investments as much as we do. We cannot be forever asking for investments like we are forever asking for fish. We should instead learn to fish for ourselves by growing our own brands and our own mutinationals.