Singapore fact of the day

by on February 2, 2016 at 1:25 am in Data Source, Economics, Political Science | Permalink

A majority of the top dividend-paying stocks on the Straits Times Index are government-linked…

This Andy Mukherjee piece makes numerous good points about the current problems faced by Singapore, more than just the usual and focusing on the internal, and the difficulties of maintaining an adequate level of competition in the economy.

As I’ve said before, when you examine flows — such as government spending as a percentage of gdp — Singapore looks and indeed is quite free market.  When you consider stocks and wealth…well, that is a very different story.  Singapore has a strong market-oriented component, but it is not a free market miracle.

1 Ray Lopez February 2, 2016 at 2:44 am

Well said. Also consider Sweden, a socialist paradise historically, has a very high level of employee-owned companies and stock ownership in general, while the Bank of Japan has bought something like 40% of the Japan Fund indexes in the last few years. We live in strange times.

2 Hoosier February 2, 2016 at 6:45 am

I was under the impression that the only thing “socialist” about Sweden was the high tax rate. Other than that they don’t directly involve themselves in the country’s businesses to any great extent. Not a lot of top down planning.

3 JWatts February 2, 2016 at 11:55 am

They used to, but they moved towards privatization during the 1990’s. However, a lot of people seem to have their opinions based on the 1970’s. Maybe when they were in college and they’ve never updated their priors?

4 Miguel Madeira February 2, 2016 at 7:49 pm

I think Sweden never had many state-owned companies (and, curiously, many – most?- nationalizations were made during a brief right-wing government in the end of 1970s); although it had a plan (never implemented, I think) to turn many companies in property of the unions.

5 Right February 2, 2016 at 12:19 pm

Sweden top tax rate = 59.7%. Socialist!

US top tax rate = 55.9%. Evil capitalists!

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

6 Jay February 2, 2016 at 1:03 pm

Not really helpful to just quote income, I’m sure Sweden also has a VAT and any other number of different taxes (as does the U.S.).

7 Cooper February 2, 2016 at 1:14 pm

The Swedish corporate tax rate tops out at 22% versus 35% in America.

8 JWatts February 2, 2016 at 2:02 pm

US governmental % of GDP = 35%
Sweden governmental % of GDP = 53%

http://www.tradingeconomics.com/sweden/government-spending-to-gdp

9 Chip February 2, 2016 at 3:11 am

Sweden’s Wallenberg family own about 30% of the shares traded on the Swedish exchange. It used to be more.

Socialist paradise indeed.

10 Ray Lopez February 2, 2016 at 10:36 am

What about Marc Wallenberg, no relation?

I think Socialist Paradise and Sweden go together…let me Google this on Bing: “21,100 results” and the titles of the first page of hits indicates: (1) popular perception is that Sweden is a socialist paradise, but, (2) “it’s not true”. Without clicking on any links, just reading the headers.

11 rayward February 2, 2016 at 6:41 am

Of course, the Singapore sovereign funds are deeply invested in China, including China’s stocks and bonds and China’s real estate. As goes China, so goes Singapore. Temasek, the sovereign fund deeply invested in China’s stocks and bonds, is private, so its losses aren’t known. And the losses of the fund deeply invested in China’s real estate won’t be known until the real estate is sold; unfortunately, the fund made its largest investment at the peak of the market. Temasek has the burden of its own track record, a 16% annual return going back decades, inducing it to take on greater risk to maintain its past record. Thus, to consider Singapore is to consider China. I am of two minds when it comes to China. On the optimistic side, I diverge from those who view China’s investment in infrastructure as a waste of resources; but on the pessimistic side, I agree with those who view China’s intervention in China’s stock and bond market as inept (and counterproductive) market manipulation. More significantly, I view China’s very high level of inequality and the bubble economy necessary to sustain it as inevitably bound for collapse. As an interesting theoretical and historical matter, I have raised the question whether the enormous shift of productive capital from an economy or country that has an advantageous record of technological progress and economic growth to an economy or country that has a disadvantageous record of technological progress and economic growth creates a black hole for technological progress and economic growth, resulting in a downward path for the entire global economy.

12 Doug February 2, 2016 at 9:02 am

This dovetails nicely with my view that Singapore isn’t a country, nor a city-state. It is a corporation.

13 The Anti-Gnostic February 2, 2016 at 10:56 am

All that’s lacking is primogeniture. Or maybe they already have it.

14 carlolspln February 2, 2016 at 3:28 pm
15 anon February 2, 2016 at 10:14 am

As I have said, I think the sweet spot for makers and democracy is wider than most people recognize. Canada is not a hell hole. Australians don’t live in gunless repression. Etc.

16 JWatts February 2, 2016 at 11:58 am

I think you mistake rhetoric for what people actually believe.

17 anon February 2, 2016 at 12:12 pm

The problem with such rhetoric is that it can cycle and reinforce, to become belief. See the letter Cliven Bundy just sent to Sheriff David Ward and President Obama.

18 JWatts February 2, 2016 at 2:05 pm

Yes, much like the type of rhetoric Bernie Sanders uses against corporate America or Wall Street. And it’s not as if plenty of Europeans don’t refer to America as a repressed, hell hole. I agree rhetoric should be toned downed, but I don’t expect actual humans to do so.

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