A few days ago the Economist updated its Crony Capitalism Index, for the first time since the newspaper brought it out in 2016. The intention of the index was to measure the percentage of the wealth of the billionaires who are citizens of the country concerned expressed as a percentage of that country’s GDP that comes from “crony” sectors. Crony sectors are defined, in economist’s terms, as sectors where rent-seeking entrepreneurs are able to earn a supernormal return (a return above what they would be able to earn in a competitive market) because of advantages or contracts awarded them by the state or their personal connections to the leader. The Economist’s list of crony sectors is reproduced below:

The Economist’s decision to update its crony capitalism index is aimed at Russia and coincides with the announcement of widespread sanctions, in which Singapore’s Government claims to be participating, against Russian oligarchs. Russia has increased its lead at the top of the index since 2016. The proportion of billionaires’ wealth to “crony” sectors as a percentage of GDP has risen from 18% in 2016 to 28%. But more noteworthy (to Singaporeans at least) is that Singapore has moved up a ranking and is now third behind Russia and Malaysia.

Singapore is famous for its inexorable rise up the rankings of other global indices, like GDP per capita, transparency and the rule of law where PAP Government apparatchiks and well paid western consultants exploit mechanistic criteria that not only fail to act as a proxy for the underlying principles they are supposed to track but are in fact perverse.

Thus the PAP have managed to get Singapore ranked highly for transparency and lack of corruption despite the Government’s refusal to tell us how much the PM paid his wife after he appointed her as head of Temasek or how much his mother earned from being the HDB’s (and other Government statutory boards and state-linked companies?) preferred lawyer.

Singapore also has an impressively high but totally fake ranking for rule of law when what the designers of the index are really measuring is rule BY law. These rankings, like the artificially manufactured historical growth rate, driven by abundant supplies of cheap foreign labour, (much of it employed under conditions that amount to slavery and would be illegal in the West) rather than by productivity growth, serve to bamboozle gullible foreigners and legitimize PAP repression in the eyes of many Westerners, particularly politicians who should know better and white people who think that human rights are only for them. The average Brit, Australian or European thinks it is great they can freely come and work in Singapore without doing NS and pay little or no tax while expecting and receiving endless deference from brown people as well as being able to employ domestic slaves under conditions that would be illegal in their home countries.

However the PAP’s success in gaming indices does not mean that it will be as pleased that Singapore is also relentlessly climbing the ranks of the Crony Capitalism Index. Curiously the Economist omits to mention Singapore’s rise in the ranks while criticizing Russia and Malaysia. Malaysia is at least a democracy and, until the invasion of Ukraine, Russia had more of an independent media allowed to ask uncomfortable questions than Singapore, where by law all media is state-owned and a variety of repressive laws and restrictive conditions aim to keep any independent blogs starved of capital or instead owned by PAP friendly entities.

The Economist’s desire to minimize Singapore’s stellar performance on the Crony Capitalism Index might stem from a secret admiration for its fake appearance of economic efficiency and rational management and a contempt for what autocrats like LHL and his dad characterized as democracy’s “gridlock” and failure to take hard decisions. Of course hard decisions are ones that affect the poor and lower income groups disproportionately but do not affect, indeed benefit, the ruling class who pay little or no tax as a result of the less well-off being denied assistance that citizens of other rich countries take for granted. Or it may stem from a hard-nosed calculation of the revenue from Singaporean subscriptions and advertising by Government companies.

The Economist’s willful blindness as far as Singapore is concerned is also evident in its excoriation of Russia for the fact that the share of total billionaire wealth coming from crony sectors increased to 80% in 2022. However by classifying billionaires by citizenship rather than by the source of their wealth it makes it look as though a much bigger proportion of Singapore billionaire’s wealth comes from non-crony sectors. The majority of the richest billionaires in Singapore are people whom LHL has lured there by offering zero taxes on capital gains, dividends, investment and interest income as well as automatic or fast-tracked citizenship. They include several Chinese tech billionaires as well as Eduardo Savarin, the co-founder of Facebook. If we strip out billionaires who made their wealth in other countries and came to Singapore purely to avoid tax then the proportion of crony wealth to total billionaire wealth is close to 100%.

But in a sense all the foreign born billionaires who came to Singapore are PAP cronies since they were dependent on Government favour to be able to easily acquire Singapore citizenship and take advantage of the tax benefits. People like Eduardo Savarin had to renounce their US citizenship in order to escape from what they viewed as the oppressive US global tax reach. Others like Gang Ye and David Chen are particularly beholden to the Singapore Government since they were given Government scholarships to come here and then allowed to get away without doing NS as they were fast tracked to citiizenship. Their companies, like most of Singapore’s small batch of tech entrepreneurs, would have benefited from Government support and investment through Temasek or GIC.

The Economist recognises that in China all businesses operate with the consent of the state, without recognizing that this applies at least as strongly to Singapore. Singapore has about the same proportion of billionaire wealth as a proportion of GDP as Russia. Yet billionaires in Singapore, in contrast to those in the US and other democratic countries, will uniformly sing the praises of our dynastic autocrats and the PAP regime. If we reclassify many of the Singaporean billionaires who supposedly operate in non crony sectors as in fact being dependent upon Government favour then it is not clear any more that Russia should top the Crony Capitalism Index. The winner should instead be Lee Hsien Loong’s Singapore. But you will never catch the Economist saying so.

Published by kjeyaretnam

I'm a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That's why I've never been sued in any civil or criminal court no matter how hard hitting my criticism. I'm quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don't work. The Right and the Conservatives hate me because I'm a liberal. I'm not sure what the middle think of me. I don't think there are more than a handful of people in the middle, here in Singapore. I'm a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I'm not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean. View all posts by kjeyaretnam