Authoritarian rule and the impending crisis in Singapore

By Dr Chee Soon Juan
“We have learned that any solution to our problems require much more that the piecemeal measures attempted in the past. It demands nothing less than a fundamental change in our approach to the idea of development, a paradigm shift toward the parallel pursuit of democracy and a market economy.”
So said the late Kim Dae Jung, South Korea’s former president. When the country was undergoing its economic throes in the wake of the 1997 Asian financial crisis, Kim knew that South Korea needed radical changes in order to resuscitate the economy. South Korea was emerging from a long period of dictatorships and a command economy dominated by the the political elite and chaebols (conglomerates owned by wealthy families).
When Kim was elected president in 1998, he ditched authoritarian rule and took the country on a sharp turn towards democracy. The result? South Korea’s economy bounced back with a vengeance. Today, corporations like Samsung, LG, Hyundai, SsangYong, Kumho, etc. compete on the international stage with the world’s leading brands.
And it’s not just gadgets and cars that South Korea is exporting, the country’s pop culture have found its way into the hearts of people far and wide. Korean television dramas are popular not just in Asia but places as far away as Brazil, Argentina, and Chile. The musical genre of K-pop has become a mainstay in the teen subculture all over the world with the Korean boy band, BigBang, even becoming the “gods of pop” in Indonesia. In 2012, Korean musician Psy took the globe by storm with this Oppa Gangnam Style dance video.
Somewhere in here is a lesson for us in Singapore. When I met Kim before he became president, he had repeated to me that it was unfortunate that much of Asia was still under undemocratic rule which stymied the development of our societies.
It is a view I share deeply. Innovation does not take place in the halls of government buildings and it cannot be kindled from ministerial pronouncements. Innovation thrives in a culture that not just tolerates but celebrates openness, diversity and, yes, dissent; it flourishes in an environment where people have free and full access to information.
Financial analyst Michael Schuman expressed this point perfectly, writing in Timemagazine in 2010: “Fear caused by political control doesn’t foster an atmosphere conducive to free thinking. Censorship and limitations on information curtail the knowledge and debate necessary for the generation of new ideas. I’m not the only one who believes this is true. Some Koreans…argue that the country couldn’t have become more innovative without democracy.” It is no accident that freedom of expression and innovation are so commonly juxtaposed in the entrepreneurial world.
But even before the 1997 meltdown, economist and Nobel Laureate Paul Krugmanhad pointed out that Singapore’s top-down, input-driven growth model was unsustainable: “One can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to the past.” This is because, Krugman explained, “Singapore’s growth can be explained by increases in measure inputs. There is no sign at all of increased efficiency.”
But instead of liberalising our society and encouraging the hard work of innovation like the Koreans did following the financial crisis in 1997, the PAP took the easy way out by transforming our city into a tax haven and attracting the super rich of the world. Instead of making policy adjustments to retain our local talent and investing in our people, our rulers found it expedient to bring in foreigners by the millions.
Of course, these measures generated GDP growth but it was growth that masked deeper structural problems of our economy. For one thing, labour productivity levels remained dismal even as GDP expanded. The problem persists to this day with Prime Minister Lee Hsien Loong lamenting that we have “maxed out” on easy ways of achieving economic growth – a tacit admission that Paul Krugman was right.
“Productivity is very tough to do,” Lee acknowledges. Indeed it is. Analysts observethat it is harder now to retool Singapore’s economy. The PAP has done everything – or almost everything – to kickstart the productivity engine. In 1991, it came up with the National Technology Plan to propel Singapore into the “major league of a world-class innovation-driven economy by 1995.” Five years later, it launched the SME21 plan to “promote SMEs is to help them tap into global networks.” This was followed by a 2001 report from Economic Review Committee (ERC) which promised to “make Singapore a knowledge economy powered by innovation, creativity and entrepreneurship.” Nine years later, another committee, the Economic Strategies Committee (ESC), was formed to “make skills, innovation and productivity the basis for economic growth.” Now in 2016, the government has reincarnated the ERC and ESC in the form of theCommittee on the Future Economy, or CFE, to (predictably) “recommend strategies to enable companies and industry clusters to develop innovative capacities.”
In between, there were a myriad of schemes – costing taxpayers more that $20 billion – to boost productivity. They included promoting R&D, enhancing of public-private sector collaboration, upgrading workers’ skills and capabilities, increasing foreign-worker levies, subsidising businesses in purchasing IT equipment, and so on. Bodies like the National Productivity Board, SPRING Singapore and, more recently, the National Productivity and Continuing Education Council were established to lead the productivity chase.
And yet, for nearly two decades, productivity gains continue to elude us, and we have produced few innovative enterprises that are able to compete internationally. Such a scenario does not paint a bright future of our economy. In fact, Nomura’s Global Markets Research predicts that the failed productivity drive will be a drag on economic growth until the end of this decade.
We have tried everything except the one that is key: Freeing our society from authoritarian rule. It is clear that the anachronistic paradigm of undemocratic, one-party dominance – where debate, a free media, and a fair election system are non-existent – is the proverbial albatross around Singapore’s neck.
And because we have taken the easy way out all these years, we are ill-prepared to weather the global economic storm that is about to descend upon us. There is gloom in our housing market, our dollar continues to weaken even as we spent $40 billion of our reserves trying to prop it up, our oil-rig builders Kepple and Sembcorp Marine are under severe strain from cancelled projects; our flagship shipping company Neptune Orient Lines collapsed under unsustainable losses and was sold off; household debt of Singaporeans soared to become one of the highest in the world and, perhaps most frighteningly, China’s economy seems on track to becoming the epicenter of the next global economic meltdown – an economy of which we are the biggest foreign investor.
Assuredly, we will not be able to avoid the upheaval. The question is, when we emerge from it, will we divest ourselves of the many excuses we have put up to defer from opening up our political system, or will we continue down the dead-end alley of authoritarian rule?
Dr Chee Soon Juan is the Secretary-General of Singapore Democratic Party (SDP). This post was first published at Huffingpost, Dr Chee had submitted this post for Straits Times for publishing consideration but was rejected.