As the economy continues on its southbound track – GDP grew by 0.6% in Q3 this year, a contraction of 4.1% compared to the same period last year – the PAP has been eager to indict global forces for the turn of events.
Prime Minister Lee Hsien Loong blames “cyclical headwinds” arising from uncertainties in the United States, Europe and China. Trade and Industry Minister Lim Hng Kiang tells us that our economic prospects are “swayed by external developments”. Finance Minister Heng Swee Keat points to forces in Asia that are “largely beyond our control”.
The tactic is simple. Pinning the current economic woes to external causes allows the PAP to deflect blame.
But it is also disingenuous. While it cannot be denied that uncertain global developments impact upon the domestic situation, the PAP cannot hide away its policies that undergird the deep structural problems of our economy, namely policies that produced:
1. A crony-capitalist economy. Out of the 23 countries that were surveyed by The Economist's Crony-Capitalism Index, Singapore came in at 5th position. The index assesses the extent to which a country's policies favour the wealthy business class. Columbia University's Jan Svejnar found that crony-capitalism has a strong negative effect on economic growth. “Billionaire cronies constrain economic growth,” he states plainly.
2. High income inequality. Cronyism, of course, also exacerbates inequality and inequality, in turn, retards growth. Such an outcome is amply demonstrated by celebrated French economist Thomas Picketty. Joseph Stiglitz, former World Bank chief economist, adds that “far from being either necessary or good for economic growth, excessive inequality tends to lead to weaker economic performance.”
But Singapore didn't get the memo. With already one of the highest income inequality levels among OECD economies, PM Lee said that he would persuade more billionaires to come to Singapore even if that worsened the country's wealth divide.
3. Sickly productivity. The government has been singularly unsuccessful in motivating the nation's workers to raise their productivity levels. In fact, our productivity woes have lingered for decades because of the PAP's insistence of massively infusing this island with cheap foreign workers. The game now seems to be up: Mr Lee Hsien Loong himself admitted that we have “maxxed out” on easy ways of growing the economy.
4. A depoliticised and fearful populace. An undemocratic political system demanding a pliant and unquestioning workforce had helped to drive GDP growth in the early years of our Republic's development. But changing circumstances now require an innovative and creative mindset to spur economic regeneration, a trait that is distinctively lacking among Singaporeans. Fearful conformity and innovative dissent are like day and night – you can't have both at the same time.
5. Poor leadership. The elitist model that masquerades as meritocracy has produced poor leaders in the Singapore's political-corporate nexus. In fact, research questions the efficacy of the Singapore Inc model. A survey showed that our corporate leaders destroy rather than add value to the entities they run. This has an adverse effect on workers who are consistently ranked the unhappiest lot in the region. Unhappy workers, as if it needs to be said, make unproductive workers.
The PAP is never diffident in taking credit for the boom years. Now that things are unraveling, it blames the rest of the world. The disingenuity must be called out because as long as the party ducks and deflects, the process of reform cannot begin.