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What Foreign Pundits Really Mean When They Say Singapore Is “Small Government”


On Saturday Adrian Wooldridge, Political Editor of the Economist and author of the Bagehot column, made the following extraordinary comment about Singapore in a tweet:

Singapore’s effectiveness in treating Covid-19, at least for now and as far as we know, given the limited information flows allowing one to judge, has more to do with its small geographical size and its previous experience in dealing with SARS and H1N1. Democracies like South Korea, Taiwan and Germany have shown themselves to be equally or more efficient.

However even if we take at face value the claim that Singapore has dealt with the crisis well it is clearly absurd for the Economist editor to attribute this to Singapore’s government being smaller than Britain’s.. I am not an advocate for a new age of big government by any means and Wooldridge is right to raise concerns but he once again has completely misunderstood or willfully misrepresented Singapore.

In fact when commentators like Adrian Wooldridge praise Singapore for “small government” what they really mean is that they like the low taxes here, especially the zero tax on unearned income and capital gains and the opportunity it gives people like them to accumulate wealth before going back to higher-tax areas of their birth where they retire to benefit from universal health care in old age. The icing on the cake is that of course they do not have to do do national service which at two years length amounts to a tax of 5-10% extra on lifetime income.

Apart from loving paying little or no tax why would Western writers think that Singapore has “small government” in terms of owning less of the economy ? Firstly the Government uses a deliberately misleading format for its Budget which excludes the earnings of Temasek, GIC, MAS and other state-owned but corporatised entities like Changi Airport Group and SingHealth as well as revenues from land sales. Since the Government owns over 80% of the land the latter alone amounts to tens of billions of dollars.

When we look at Government operating revenues rather than General Government, which should include all state-owned entities, we get a figure of about 15% as a percentage of GDP while operating and development expenditures combined are about 16.5% of GDP. This looks low. Far lower than the US figure of some 24% while the OECD average is around 34% and the UK is around the same or slightly lower. It is this artificially low figure which many right-wing commentators use to claim that Singapore is a paragon of “small government” when it is nothing of the sort.

What should we really be looking at? As a measure of the Government’s ownership of the economy, Temasek’s net asset figure in 2018 was about one-third of Singapore’s stock market capitalization. This percentage would undoubtedly be higher if the stock market capitalization excluded cross-shareholdings and double-counting of holding companies. In measuring the degree of Government control of the economy this percentage is only of listed companies and does not take account of GIC, MAS and other significant entities like Changi Airport Group.

The ruling party also separately owns the major supermarket chain through its state trade union arm, NTUC, and the major pre-school education provider, as well as having influence over many of the major corporates not Government owned by the presence of PAP MPs and ex-Ministers on the board or in the executive suite.

The Government is not small by any other definition either. In fact the Economist itself famously called the Singapore Government the “stingy nanny”.. Ownership of most of the land means that 90% of Singaporeans live in public housing (HDB) on a 99-year leasehold. There are many restrictive conditions tied to HDB including compulsory repurchase if you breach any rules or the Government sees a profitable redevelopment opportunity. At the end of your 99-year leasehold your property will revert to the Government which gives it an extraordinary degree of control over the population in a situation where central government is also your landlord. You cannot necessarily choose where you want to live because of the Ethnic Integration Act which aims to ensure that each estate and constituency mirrors the national racial mix of 76% Chinese, 14% Malay and 8% Indian.

The Government also controls people’s savings through the compulsory savings scheme (CPF) which can be used to purchase housing (again mostly public) or deferred till retirement, when a panoply of restrictive conditions make it difficult to withdraw your money as well as the requirement that a significant percentage be retained to pay for medical care, of which the usage is highly restricted.

Other than statistics which paint the Government in a positive light, it is almost impossible to obtain any information because Singapore has no Freedom of Information Act. No one in Singapore from the President down can even find out the size of the reserves. and until I started raising questions Singaporeans were too scared to even ask what the PM Lee’s wife, Ho Ching, pays herself with her husband’s approval. Her remuneration is presumably so enormous that the Government refuses to tell us.

Singapore is certainly not “small government” when it comes to restricting individual rights and freedoms. The Government has a huge armoury of restrictive laws ranging from sedition, detention without trial, defamation, to the new Protection from Online Falsehood and Manipulation Act (POFMA). These restrictions ensure that even critics make sure that they self-censor or risk being driven into exile by direct action or just through being deprived of the ability to earn a livelihood, just as critics of Eastern European Communist regimes were and of China still are. In fact Singapore resembles more the Communist state caricature in Hayek’s Road to Serfdom than any libertarian free-market paradise.

Woolridge writes for the Economist so I am not sure what his excuse for being ignorant of our economy is but this misrepresentation is somewhat of a meme now and has been seized on by Far-Right Brexiters like Daniel Hannam and Jacob Rees Mogg (whose business is based there presumably because it gets a 0% tax rate) as a model for Britain to follow.

4 Comments »

  1. Kenneth

    Aaaa yes the Economist. A magazine that can’t get enough of authoritarian regimes as long as they embrace open economy policies.
    I don’t take the magazine seriously. Lactbofvself awareness grates

    Like

  2. Hi Kenneth, You can call me Zheng.
    I debated with my family members about your policies and about Singapore Democratic Party (SDP). I wish to meet you one day, and we can talk about politics. I improved my English vocabulary due to your blog especially the word sycophant. I am the only one among all of my family members, who is very supportive of SDP and Reform Party., and perhaps join RP
    I refer to your blog post: https://kenjeyaretnam.com/2015/04/02/perspiration-without-inspiration-singapores-role-in-the-asian-economic-boom/

    What is your response to the argument that if we chose the wrong government, despite the excellent geography location we are in, we might not be rich, if we were one of those failed nations?
    What is your response we are richer than our two neighbours, Malaysia and Indonesia, due to the current leadership?
    What is your response, we made the right balance about austerity?

    I will send you more questions when I can think of them.
    I am considering creating a Twitter account to be in the loop of Singapore politics.

    Thank you so much and I look forward to your responses.

    Like

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