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Post Museum Election Perspectives: A Critique of the Yawning Bread Article*


A few nights ago I ran into Alex Au at the US Independence Day reception and at last had a chance, somewhat belatedly, to discuss his article which appeared on the 16th May 2011. In particular I took exception to the diagram on the left and the description of the Reform Party as “libertarian.” His response was that he had done this to court controversy and because the RP had advocated free-market economic solutions for many of Singapore’s problems while the other Opposition parties took a much more unashamedly populist stance. This may be true in that we are the only party that is led by an economist. The RP is certainly “liberal” in the sense that we believe in democratic values and incline towards individualism rather than communitarianism. That does not make us libertarian.

Since the word is often bandied about in Singapore, usually pejoratively, I propose to start with a definition of libertarianism and some acerbic comments from Francis Fukuyama in his latest book** about the ideal libertarian state. Then I contrast this with the actual philosophy of the RP. Finally I will compare the RP with the other main parties in Singapore on the basis of their published manifestos.

The problem with any definition is that there are as many different types of libertarianism as there are shades of political thought. Wikipedia*** defines it as:

Libertarianism is a political philosophy that upholds individual liberty, especially freedom of expression and action.[1] Libertarianism includes diverse beliefs and organizations, all advocating minimization of the state and sharing the goal of maximizing individual liberty and freedom.

While commonly associated with the right, there are also “left libertarians” who believe in individual freedom but support some form of income redistribution or social justice. Noam Chomsky would describe himself as a “libertarian socialist”. It would probably be fair to describe the founder of the Reform Party, JBJ, as being in many ways close to the left libertarian position, particularly in his support for the views of John Ruskin.

Francis Fukuyama rather amusingly exposes the inconsistencies of the right-wing libertarian position thus:

“Indeed, the kinds of minimal or no-government societies envisioned by dreamers of the Left and Right are not fantasies: they actually exist in the contemporary developing world. Many parts of sub-Saharan Africa are a libertarian’s paradise. The region as a whole is a low-tax utopia, with governments often unable to collect more than about 10% of GDP in taxes, compared to more than 30% in the US and 50% in parts of Europe. Rather than unleashing private entrepreneurship, this low rate of taxation means that basic public services like health, education…are starved of funding. The physical infrastructure on which a modern economy rests, like roads, court systems, and police, are missing. In Somalia, where a strong central government has not existed since the late 1980s, individuals may own not just assault rifles but also rocket-propelled grenades, antiaircraft missiles, and tanks. People are free to protect their families, and indeed are forced to do so.”

 

While the example is a bit of a straw man, in that even the most right-wing libertarian state would require an executive strong enough to enforce contracts and property rights, it shows that the Reform Party is definitely not libertarian in this sense of the term.

We have always described ourselves as liberal free-market Keynesian. While believing that a free market economy is normally the best form of economic organisation in terms of efficiency and providing incentives for growth and investment, there are notable cases of market failure. An example of this is the current situation the global economy finds itself in.  An overhang of debt from the housing bubble and the (in my view, misplaced) fear of increasing the debt burden has led many Western governments to focus on reducing debt rather than growing the economy. In this situation, my Keynesian economics training inclines me to the view that the government has a major role to play in getting the economy out of an unsatisfactory equilibrium of slow growth and high unemployment through deficit spending or quantitative easing designed to reduce the real burden of debt.

Also we believe that the state has a role to play in mitigating the effects of unequal endowments and levelling the playing field to provide genuine equality of opportunity. In our election manifesto we said we wanted to introduce free education for everyone including the disabled children who are now effectively excluded. We also wanted a minimum wage (or else much tighter curbs on foreign labour), universal health insurance, a basic old-age pension and income support for lower-income families with children, as opposed to the current Workfare system. However where we can, we wish to promote individual freedom, economic freedom being an integral part of that. Thus, our proposals to privatize large chunks of Singapore’s state-corporatist economy, introduce more competition or more effective regulation into the provision of essential services such as public transport, to allow HDB leaseholders to buy out their freeholds, to end the compulsory forced-savings scheme that is CPF, to give citizens a stake in our SWFs and to keep the burden of taxation low (which incidentally was a pledge in the 1994 WP Manifesto produced under JBJ’s leadership with my assistance) are all aimed at promoting economic freedom. At the same time our proposals to remove restrictions on freedom of expression and association, reduce the length of National Service and abolish many of the laws which have been used wrongly to curtail our fundamental liberties, such as the ISA and the Criminal Law (Temporary Provisions) Act, are aimed at enhancing individual freedom.

While there are elements that we have in common with some strands of libertarianism it is probably more correct to describe the Reform Party as being firmly in the mainstream of the Liberal tradition. We place a high priority on human rights and individual liberty. The SDP is similar in this regard but they have more of a redistributionist agenda and are less radical than the RP in wanting to free Singaporeans from the economic constraints and controls coupled with indirect state ownership of much of the economy.

The Workers’ Party manifesto has some good points to make in the area of constitutional reform and strengthening the rights of the individual against the executive but a lot of this pre-dates the present leadership and can be traced back to the 1994 manifesto which was considerably more daring. They call for a Freedom of Information Act in their 2011 manifesto but this is predated by a similar call in the RP manifesto we issued in 2009. In economic policy they have, if anything gone backward with calls for nationalization of the public transport network without understanding that the public transport system is still effectively nationalized despite the corporatization that has been the government’s fashion. If it is merely a call for lower transport fares to be subsidized by the taxpayer then that is likely to lead to both under-investment and inefficiency. I would prefer to see more competition where possible or else independent and intelligent regulation that controls the level of profit that can be earned by what is effectively a monopoly while at the same time rewarding efficiency gains and other performance targets.

The PAP is sometimes labelled as “libertarian” but I feel this is a misnomer. They do believe in a social Darwinism, particularly for those at the bottom of the income distribution, which is why they have introduced an open-door immigration policy without a social safety net. Taxes are low (though the lower income earners have to save a high proportion of their income or spend it on government-supplied housing through the CPF scheme) but the state controls much of the economy and owns most of the land. Civil liberties have a low priority and many of our constitutional rights have been abrogated. Fukuyama describes how the necessary conditions for economic growth were fulfilled by the imperial Chinese state in the form of “good enough” property rights (though still subject to arbitrary confiscation by the emperor) and a level of taxation that was well below the theoretical maximum. This was despite there being no rule of law or political accountability. However economic growth was held back by a fundamental complacency on the part of its inhabitants. In Singapore we have achieved something very similar to “good enough” property rights (though the bulk of the population live in flats with 99 year leaseholds whose renewal is dependent upon government goodwill and the government has acquired the bulk of Singapore’s land without paying anywhere close to market value). China and Singapore today exemplify this model of economic development which can be called “East Asian Authoritarian”. Historically the challenge for absolutist states was to avoid the re-emergence of patrimonialism and the replacement of meritocracy by a rent-seeking elite. In the absence of accountability and the rule of law past absolutist states were not able to prevent this and it is not at all clear how the new authoritarian models can avoid this in future.

In Singapore the interests of the government are only weakly aligned with those of the citizens. Interest in building a strong state as measured by GDP, the size of the reserves (including the SWFs), and increasing our population through the import of foreigners take precedence over the raising of living standards for the bulk of existing inhabitants. While the recent election may have made the government pay more lip service to the demands of native-born Singaporeans, it is not clear that much has changed. At the US reception I chatted briefly to an American energy policy analyst who said he had observed that Singapore’s aggressive recruitment of foreign talent in his area was far beyond the needs or capacity of the domestic economy at present. What amazes me is that foreigners continue to be surprised when they discover evidence that the government is not acting in the economic interests of its own citizens.

To conclude, the Reform Party is a Liberal rather than a Libertarian party. While the authoritarian model may continue to enjoy a few more years of success in the longer term it is hard to see how states lacking accountability and the rule of law can compete with those which have it. The Reform Party’s message of economic and political freedom is one that will be increasingly attractive to Singaporeans and will also prove to be the most successful at raising living standards.

 

*http://yawningbread.wordpress.com/2011/05/16/talk-at-the-post-museum-election-perspectives/

**The Origins of Political Power, Francis Fukuyama, Profile Books 2011.

***http://en.wikipedia.org/wiki/Libertarianism#cite_note-0

13 Comments »

  1. On the topic of public transport, competition is hard to get right. How many MRT lines do you need from AMK to Orchard? I am reminded of a trip to Oxford, England where at the time they seemed to have at least 3 bus companies competing. We had bought some sort of one day free and easy travel ticket but it was only valid on the buses of one company, so while the red and yellow buses went past, we had to wait for the blue bus, very annoying. I would imagine proper regulation and regulating the rate of return would be more workable. Currently those monopoly industry profits presumably feed into the returns of Temasek Holdings and thus into any performance related remuneration that the CEO enjoys, a situation which I find to be wholly unsatisfactory, not least because the CEO is the PM’s wife, and thus the possibility for conflicts of interest to arise is significant.

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  2. “What amazes me is that foreigners continue to be surprised when they discover evidence that the government is not acting in the economic interests of its own citizens.”

    Speaking as a foreigner in Singapore, this was one of the biggest surprises for me, and why would such a state of affairs not be shocking!

    Unfortunately a combination of local media subservience and international media disinterest (because to be frank, on an international scale, Singapore is tiny) leaves most of the world completely unaware of how the place is really run. Sadly this leaves Singaporeans economically pressed by the PAP from a multitude of angles. GDP bonus driven cheap labour imports, inflation lagging CPF yields, highly regressive tax burden transfers from income tax to GST to name a few. I feel it’s pretty obvious once you really dig into the details that Singapore is not run for the benefit of the citizens.

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  3. Whereas it has long been known and declared that the poor have no right to the property of the rich, I wish it also to be known and declared that the rich have no right to the property of the poor.

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  4. “In economic policy they have, if anything gone backward with calls for nationalization of the public transport network without understanding that the public transport system is still effectively nationalized despite the corporatization that has been the government’s fashion. If it is merely a call for lower transport fares to be subsidized by the taxpayer then that is likely to lead to both under-investment and inefficiency. I would prefer to see more competition where possible or else independent and intelligent regulation that controls the level of profit that can be earned by what is effectively a monopoly while at the same time rewarding efficiency gains and other performance targets.” – not sure how we can increase competitiveness in the case of SMRT. Clearly we can’t build another MRT line. Without nationalization, how are we to ensure “independent and intelligent regulation” of profits? Through a board of directors appointed by the government? Are we not back to square one?

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    • Hi Netina,
      You have a unique perspective having emigrated from Singapore and being able to experience how public transport and other utilities are managed in other countries. The UK is a case in point where a degree of competition has been introduced into the rail network with a corresponding improvement in service so your dismissal out of hand of the possibility of competition in Singapore’s public transport is too sweeping. Even if its not feasible or economic to have two companies competing on the same MRT line we can have more of the bus network opened up to competition with the other bus lines and the rail network. Also regular reviews of the existing operators and allowing other companies to bid for the franchises might spur them to improve service standards. However we also need a beefed-up PTC that is more independent of the cosy cartel of government and GLCs that is allowed to monopolise our transport network. This would be tougher at forcing down or capping fares and regulating the rate of return that can be earned on a monopoly asset.

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  5. Hi Kenneth.
    I’m not sure why you think the word “libertarian” is a pejorative. The self-styled libertarians at New Asia Republic would beg to differ.
    As for Francis Fukuyama, his argument is a straw man as you have rightly pointed out; he is really describing anarchy, not libertarianism.
    I also don’t know why you think the WP’s call to nationalise transport is a step backward. It does not make sense to have competition for all things, especially when economies of scale exist. The WP’s call is meant to lessen duplication of functions which may be combined and centralised if there is only one transport operator. And non-profit doesn’t necessarily mean subsidised by the taxpayer if the transport operator charges fares on a variable cost-plus (to cover fixed costs) basis.

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    • HI Reservist_CPL. Thank you for responding. You have actually covered three or four points that would really benefit from further discussion. Well done!

      Firstly you say the self-styled libertarians at New Asia Republic do not see “libertarian” as a pejorative term. Very amusing! No offence to Donaldson was intended and he is capable of defending his own philosophy anyway but he is not a politician at the helm of a Party standing for public office. “Sex Maniac” for example is a term that might even enhance a bloggers profile but does little for a politician.

      The key here is “self-styled” . (And does this mean you are a spokesperson for New Asia Republic? ) Take the word N***s. If I’m a rap musician I may well want to self-style myself as a N***** With Attitude or without. But if someone else calls me a N**** on their blog I may take offence. As another example, The British National Party may be happy to style themselves as a far right Party and to be called that. Whereas I would be unhappy to be called the leader of a far right Party and would even consider it defamatory. I can call myself a son of a dud with pride but if you call my father a dud you had better be able to prove it.

      To call us Libertarian is sloppy at best even if there is no intent to categorise us as a Party that doesn’t care or even as anarchists. RP does not self-style itself Libertarian and I would not categorise myself as Libertarian. I mention that merely in order to try and highlight some of the ways in which “Liberal” and “Libertarian” are distinct and separate terms and not interchangeable. In the context of describing the policies and philosophies of The Reform Party “Libertarian” is simply inaccurate. Wanting accountability and transparency in government is not the same as not wanting government at all. RP is Liberal. Self-styled if you will, but Liberal. There are several widely accepted litmus test indicators for those parties globally which stand under the liberal umbrella.

      But make no mistake. I actually said that “Libertarian” is a term often bandied about as a pejorative because libertarian IS a term that could be used against a Party if it were allowed to stick, Libertarian can or may be allied in the common perception to uncaring and undesirability or even anarchy. The point of the blog is that I can clarify the terms “libertarian” and “liberal” so we can all benefit from the ensuing discussions. My aim is as always to normalise democracy. By this I mean that we need to move towards a culture where we get used to discussing politics and where we stand on a spectrum and what we believe in. That aim may help to explain why I feel the inaccuracies of these otherwise rather silly little diagrams and charts are actually quite important. We all need to move away from the current culture of politics of personalities or tribal politics and towards a politics of policies. In order for that to happen we need to know what the various policy positions are. A politics of policy where parties are clearly defined by ideology would go along way towards stabilising the Opposition and would make ‘Party hopping’ less desirable.

      Mind you any term can be used against us. I wouldn’t self-style myself as RIFF-RAFF as Gillian Koh did on National Television recently, when misappropriating a quote from LKY . I also bumped into her at The same US Embassy reception where I bumped into Alex Au. There’s not much I can do about Gillian Koh (IPS) bandying about LKY’s terms and LKY’s views on which Opposition he finds acceptable and which Opposition he wants to keep out. Particularly whilst the Media, the IPS and our other National educational Institutions maintain their embargo on allowing me to speak. Anyway if I am Riff -Raff then the US Embassy invited me -as they do every year -so what does that make my fellow invitees?

      You go on to say that it doesn’t make sense to have competition for all things so clearly you are no libertarian yourself.

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  6. Interesting read, Kenneth.
    Suggest you consider writing in a more ‘vernacular’ style to reach more of your target audience. It will be a challenge, I am sure, but well worth it.

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    • HI George. I’m glad you enjoyed it. This blog is deliberately not in ‘vernacular’ other than the vernacular of economics. I say ‘deliberately’ as here in ‘son of a dud’ I explain that I am writing as an economist not as a politician. This blog is not connected to RP. This blog attempts to be an examination of the idea that Singaporeans need to have their hides toughened and to be grateful for a porcelain rice bowl life as though it were a gift and not something they earned. I do this mainly through targeted economic analysis as most writing on economics and analysis of ensuing policies in, from and about Singapore is muddled, inaccurate and misleading. Whereas we have in Singapore and elsewhere many, many commentators writing in a vernacular style and forums dedicated to that. I don’t feel I have much to add in that arena. For a more colloquial style refer to my witterings and twitterings on Faceboook-‘Kenneth Jeyaretnam TeamRP’, twitter personally and on and the Reform Party media, my rally speeches especially the final one and other media available on the RP website.

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  7. Dear Mr Jeyeratnam,

    I refer to your stand that as a Keynesian-trained economist, the government’s resources are better employed engaging in deficit-spending as a means of ensuring the health of the private market and equity in resource distribution. You have mentioned in brief measures such as Free Education, Universal Health Insurance and Old Age Pension.

    I would like to inquire as to your views on the impact of the state using such measures for the above-mentioned purposes in light of the fact that deficit-spending is inherently risky, since the state takes on a much heavier burden. Government deficits have a tendency to balloon out of control, as has been in the case of most Western economies, where an overly welfarist bent resulted in high public debt.

    In other words, I’m curious as to what are your views on the trade-offs Singaporeans will face from the risk incurred by such an approach, since I’m concerned that while the economy may reap benefits but in the long run, there’s a fine line between judicious use of fiscal measures and fiscal imprudence.

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    • I am not advocating deficit spending as a matter of course, only in the most special circumstances where a shortfall in aggregate demand means a slump in output and employment. Even if we were in power, our first priority would be transparency in the government’s accounts so we could see the exact size of the surplus we were running. In all likelihood we would opt to run a smaller surplus and return more of this to the people in the form of lower taxes and higher spending.

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  8. The current system is that the people are expected to be “satisfied” with the present situation; and to concede that “noone” or “party” can perform better than the PAP in running Singapore. A majority of Singaporeans still think that the PAP has the best brains and talents. However, is the wealth of the country being shared with the “Poor” in Singapore? Public Assistance for the majority of beneficiaries are still S$200 to S$250 per month and they are not allowed to work. Only for people with extreme disabilities are they given about $300 to S$350 per month. Very few are given the maximum of S$400 allowed. I have questioned many people mainly from the Chin Swee, York Hill and Jln Kukoh area who live in 1 room rental flats; many of whom are Public Assistance beneficiaries; they feel that the Public Assistance is insufficient for them to survive. So, where did all the reserves go to? Has the PAP any sense of “Priority” in using money?

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