My worries about Singapore

Singapore is a well-run place by world standards, and has perhaps the world’s highest quality bureaucracy, yet right now the country faces a somewhat menacing constellation of silent risks, none of their own making:

1. It is possible that the role of the United States in the Pacific Ocean is rewritten rather suddenly.  This could come about through either a Trump presidency, or a successful Chinese attempt to grab more in the South China Sea.  Can you imagine a Singapore that had to court Japan and India rather than relying on the United States for protection?  In this same world Japan is probably more militarized than in the status quo, and possibly even a nuclear power.

2. Singapore sovereign wealth funds and related institutions have been pulling in high returns since the 1970s.  Yet the opportunities in both China and Singapore’s own real estate just aren’t there any more.  They would be very lucky to pull in four percent a year looking forward.  While fiscal risk is minimal, this will crimp expansion plans, especially if Singapore ends up needing to spend more on national defense.

3. It seems increasing pressure is being brought to bear on the Chinese currency yet again.  China would like to lower rates to stimulate its economy, and the Fed is likely to raise rates at least once more this year.  There is surely a chance that the renminbi simply snaps due to capital outflow.  During the Asian currency crisis, the Singaporean dollar fell about twenty percent as a side effect of the turmoil elsewhere.  Yet now China is much bigger than South Korea + Thailand + Indonesia were in 1997.  Furthermore Singapore is much more of a financial and clearinghouse center.  How insulated is Singapore from this China risk?  Does anybody know?  To what extent might a flow of capital into Singapore mitigate some of this risk?

4. Climate change could well lead to rising water levels for island nation Singapore.  Investing in sea walls and other forms of protection could take what percent of gdp?  The Dutch are already putting 0.5% of gdp a year into a fund for future water defense.

From this list, #2 and #4 are more likely problems, whereas #1 and #3 are more speculative, but by no means in the realm of science fiction.  There is the possibility of a perfect storm from all four.

And yet think of how things must have looked in 1965.  The Vietnam War was going badly, and most of the trends in Southeast Asia were negative.  Chinese Communism was at its nadir with the Cultural Revolution.  Indonesia had just massacred 500,000 citizens, many of them Chinese.  Singapore itself had just been kicked out of Malaysia, an outcome which its key founders mostly opposed.  There was not yet evidence that what later became “the Singapore model” was going to work, and even Japan was not yet an evident success.  It was commonly believed that Singapore, Malaysia, or both might collapse into a kind of ethnic civil war.  British military expenditures were about 20% of Singapore’s gdp, and it was widely understood that source of income would be going away.  Somehow they managed, most of all with the aid of human capital and being in the right place at the right time.

Here is the Singapore Complaints Choir, one of my favorite music videos.

In any case, I am happy to be here once again.  For dining, I recommend Sinar Pagi Nasi Padang, at Geylang Serai hawker centre, get the beef rendang.  National Kitchen, in the new National Gallery is also very good for a more traditional kind of dining.


'It is possible that the role of the United States in the Pacific Ocean is rewritten rather suddenly. This could come about through either a Trump presidency....'

Suddenly, this web site seems to have lost all faith in the ability of a CEO, familiar with the art of the deal (what, no Amazon affiliate link to such a seminal work from a CEO?), in being able to do the sort of serious work required to ensure greater freedom, something that incompetent politicians have been apparently fumbling for decades.

You may be onto something. After all, just this morning North Korea endorsed Donald Trump.

OT--seems TC is being pulled, inexorably, to the Philippines. I bet he stops there, and the change in food will be a rude awakening.

That's interesting. NK most likely has an interest in Trump winning, in the case that he might retract from Asia, and thus reducing the buildup of force which could be applied against them at any moment and which requires that they maintain a very strong defensive deterrent.

But here's the interesting part. They clearly don't understand American politics very well. Because isn't support from NK more likely to look bad for Trump?

Or, maybe they DO understand it. And see that nuclear proliferation might not be good for their safety.

"Suddenly, this web site seems to have lost all faith in the ability of a CEO (...) in being able to do the sort of serious work required to ensure greater freedom."
Maybe not meddling there is in America's self-interest even if not in Singapore's.

Suddenly? Can you cite a time when Tyler or Alex ever held the view you claim they did?

They don't and didn't. But then why do the commenters lean so conservative? TC (but not Alex) must be sending coded messages to readers giving off Pro-Trump vibes despite his caginess, mainly in the form of an ideologically contextless just-the-facts ma'am style of linking and head-tilting.

Maybe coded messages like "I worry about vindictive non-billionaires".

Your remark #1 is misguided; China has never threatened Singapore in the way it has threatened Taiwan, and there is no good reason for that to change within our lifetimes. Just because Singapore gets along well with the US doesn't mean it's an enemy of China; mainland China-Singapore relations have been good since at least Deng Xiaoping's 1978 visit.

Singapore hosted Ma and Xi for a non-official meeting recently. If that doesn't imply good relations I don't know what would.

Singapore's diplomatic corps spent two odd decades trying to herd its neighbours into a geopolitical discourse nominally built around the rule of law, with its finest achievement in this area being persuading its ornery neighbour to agree to bring the pedra branca territorial dispute to the ICJ

Singapore also tried this with the South China Sea dispute, with the foreign ministry working hard on the supposed Code of Conduct. As before - partition the dispute into a smaller dispute about the rules to be played by in settling the larger dispute, so the short-term tussle becomes about the principles to be codified

and then suddenly all this has fallen by the wayside as China and America and the Philippines and Vietnam and Malaysia all suddenly pile armed ships in. and China contemptuously rejects the principle of arbitration or even recognizing the existence of a dispute. Singapore's not used to this, it's used to Soviet and Western powers who are consistently holier-than-thou about their ideological systems. You're not supposed to be... crude, it's just not done. as bilahari kausikan acidly observed, you're not supposed to throw tantrums about trivialities like hotel choices or meeting dates. okay, sure, sometimes those are used as diplomatic slights but you're supposed to suck it up and find some other way to signal your irritation, not march out and then clutch your pearls when people don't drop everything to invite you back.

the Soviets tried to act like this at the beginning of the Cold War, they only stopped when boycotting the UNSC for their pet alternative cost them South Korea. at some point China is going to blunder into a similar situation. In the meanwhile, try not to be Korea when that happens...

The problems Singapore face are dire. Steep demographic decline, Chinese Singaporeans the most economically productive group,only have 1.1 kids per women. Also a increasing fragmented society due to a lot of foreigners who engage in clannish behavior. Local engage in the same sort of behavior as a response, retreating into their own in groups. It is a downward spiral that will not end.

I hope that the economy collapses, and all the foreigners leave. Its getting too crowded.

Singapore TFR sucks, but its unclear what they can do about it. Asian TFR and urban TFR is low in general. Maybe the whole area is just too damn crowded to get people to breed in modern society. It's unclear there is some answer out there that Singapore could try (lord knows LKY tried).

They are doing what they've always done, make sound practical decisions given the severe limitations they have. They've done a lot with limited resources, probably the most that anyone could do. You can't blame them for being an over-crowded island.

"Singapore TFR sucks, but its unclear what they can do about it. Asian TFR and urban TFR is low in general."

Not a problem if they can choose the best of the billion and a half Chinese milling about in their vicinity.

Culturally incompatible, due to they having a cultural revolution, the presence of British rule and peranakan culture. Racially different as well Singaporeans mostly from the south. I can tell from facial features.

Why do you think that being from the south would imply cultural incompatibility?

Also, as Dan pointed out, there's a billion and a half of them. Surely the ones who decide to pursue opportunities in/through Singapore tend not to have cultural incompatibility issues (imaging there is something to that idea, which I somewhat doubt is very relevant).

Also, I think you overestimate your ability to determine origin on the basis of just looking at someone.

Low Singaporean Chinese population growth is not an issue as long as Malaysia continues to do its best to push talented Malaysian Chinese out of the country.

Malaysian Chinese i can accept as my kin. But if they come their birth rate would drop as well. I rather they stay in Malaysia and have above replacement birth rates. At least straits Chinese culture can be preserved.

Uhh for your information, Straits Chinese refers to Chinese settlers who arrived before the 16th century and they are an extreme minority in both Singapore and Malaysia. The overwhelming majority of ethnic Chinese in Singapore and Malaysia are 2nd to 3rd generation only, they are the descendants of later arrivals called 'sin kek' meaning new guest in Hokkien language. That's the reason LKY had to rely on co-founder Lim Chin Siong to prop up PAP, and why he had to quickly learn Hokkien in a very short time if he wanted to even get anywhere in politics. I never met anybody who is so deluded and quick to spread blatant lies about the demography of Singapore, it is recorded in history, and Singapore's history is already very short compared to other countries so don't make a fool of yourself, what a disgrace you are. I don't even believe you are Chinese. Probably a malay.

If Straits Chinese settlers are not an extreme minority, then there is no way how Straits Chinese culture is on the brink of extinction and this is affirmed by national heritage board.

Ethnic Chinese in Singapore and Malaysia are overwhelmingly made up of sin kek descendants who practice mainstream Chinese culture, NOT Straits Chinese.

No worries about #4 it's about 1 foot in a 100 years Here is is the NOAA data for the Sultan Shoal lighthouse in Singapore

very close the the global mean rise of 3.4 mm +/- 0.4 mm /year

Strangely enough, the Dutch don't agree in terms of their own planning. But then, what do the Dutch know about managing below sea level land?

The Netherlands is a good example of why Singapore should not worry. If the sea rises several feet, the sea level of reclaimed land in Singapore will be similar to what the Netherlands is now, and the Netherlands seems to be doing fine.

The idea that a rich, small country like Singapore can't deal with water rising very slowly over many decades is just silly. Singapore has built 130 square kilometers of new land in the last 50 years, but they can't make it slightly higher or protect it with earthworks over a similar period of time?

Singapore also gets three times the rain and is at rare but non-zero risk of tropical cyclones. To say nothing of the extensive literature on perverse incentives of flood control infrastructure and on the risks of filling flood-prone land.

It just occurred to me - considering the value of Trump's brand, and Trump's fierce insistence that the Trump brand will never be diluted or diminished, shouldn't it be the 'Trump® presidency'? Or possibly the 'Trump™ presidency' depending on how diligently the paperwork has been filled out, Trump being more in the visionary CEO style than detail oriented.

Gentle pressure on Singapore gets a currency union with the RMB, the first step toward making the RMB a reference currency. After that, Taiwan joins the union so they can engage with the economic powerhouse of east Asia before their won becomes irrelevant. Another 10 or 15 years before the Korean won and Japanese yen fall into their hands like overripe plums. The RMB becomes the Euro of Asia.

Or, the RMB collapses before then, financial panic, and a currency of avoidance emerges. How many rubles is that worth?

What interest could any of those countries have in handing their monetary policy over to Beijing? In the case of the Euro, each country got access to very real influence on the monetary policy by means of selecting the people who run that stuff.

China's ambitions poises a bigger risk, I think Trump can be contained because US will still be a democracy.
On the currency side it's a risk they probably don't have strong enough tools to mitigate, they're a sitting duck.

Off-Topic Tyler: Warriors or Cavs?

Seems a bit "outside looking in". I'd suggest having a chat to the locals, or your contacts there, and find out what their concerns are.

From my talks:
-food decline: Of particular interest to you- Singaporean-run restaurants are in decline. Singaporean Chinese like their cuisine cooked in the Singaporean Chinese style. But few restaurant owners have found their children willing to continue the business. So, Mainland Chinese often run the restaurants now.
In terms of taste, the mainland Chinese renditions of Singaporean favourites are considered inferior - often considered very salty and/or too oily by the locals.
-immigration. New arrivals to Singapore do not have the influence of the authoritarian LKY's legacy to draw upon. Moreover it is a harsh place to "set up" - strict rules on imports effectively blot out the staple of the underclass elsewhere in SEA- importing cheap stuff from China that breaks or are fakes. The immigrant riot in Little India was SG's first riot in something like 30 years, and many Singaporeans are feeling increasingly uneasy about the immigration situation.
-long work hours - workers driven to "keep up appearances" and bosses are felt/seen as being less ethical and more harsh of recent, on their workers. It's not uncommon to get home at 10pm.
-general moral/care decline. I suppose this is similar to many countries. But Singapore is seeing the return of trash to its streets - at least in the neighbourhoods.
-Malaysia - there's always something a Singaporean will have to say about their neighbours - and vice versa too. There's a few common sentiments, one being "I wish SG/MY would just get along with us". Another is "damn Singaporeans shopping in Johor" -and its counterpart, "Thank goodness for Singaporeans spending their money in Johor".
And that's just a start. If you don't scratch behind the tourist veneer, you will never see or comprehend a lot of Singapore.

"Singaporean Chinese like their cuisine cooked in the Singaporean Chinese style. But few restaurant owners have found their children willing to continue the business."
I'm seeing the same thing here in the U.S. The kind of Chinese restaurant I grew up with, the kind with red curtains and those horrible rolls, is disappearing.

On the Dutch savings plan for flood defense - why do they need a state savings plan for this? Why separate this particular expenditure from all the others that the Dutch state does? The Netherlands are currently running a deficit of around 2%, Isn't this like a person with a credit card debt putting money into a savings account?

I suspect this is just tokenism - people doing and saying stuff so they look good. Its the modern day equivalent of penance.

Also on the sovereign wealth funds - the singapore one is about 10% of their national asset based, and a very much smaller percentage of the future income of the people of singapore on an NPV basis. So the most important thing for them is not the performance of the SWF, it is what/how their economy can perform in the future. And of course they are smart sensible people so they will do very well.

Keep in mind that the Netherlands has been investing in flood defense of various types for centuries, and especially since the flood of 1953. Some of the 0.5% GDP is related to climate change, some is routine maintenance and improvement of critical infrastructure.

Perhaps the justification of a "savings plan" system is to restrict the options of future governments that might try to cut state expenditures by reducing flood protection to the point that necessary maintenance is deferred. And yes, such moves are also symbolic and keep voters happy. That's how democracy works.

Adding: My research shows that Delta Fund gets 1.2 billion euro annually, and the NL GDP is 850 billion. This is thus 0.14 % of GDP.

Debt-to-GDP ratio is the relevant macro figure, not deficits. Although clearly deficits influence that variable.

> From this list, #2 and #4 are more likely problems,

Mentioning #4 is just empty virtue signaling ...

I disagree with #4 but that doesn't mean everyone who makes that claim is being disingenuous. People actually are worried about rising sea levels.

TC can only be thinking about the problems SG will have to face within the next 0-10 years. Even the most ardent AGW activist will not be willing to commit to the proposal that rising sea levels due to AGW will be a serious issue within that timeframe.

Agreed. #4 is, not an issue what so ever, even with a climate sensitivity of greater than 3.

#1 is also partially virtue signaling.

Pretty horrible post overall by Tyler.

The sea level rise panic is just more junk science. Which I suppose makes sense on an economics blog.

Just bought oceanfront r/e in Miami, correct?

Or pre-committing to a price for that property to be purchased for the grandchildren in 75 years?

Isn't the real systemic worry with Singapore that its highly competent government management is not repeatable going forward? Singapore is extremely interventionist in housing and health care, for example; who's to say the quality of those interventions will continue to deliver value?

I can't imagine exporting the Singapore system successfully to another country. Maybe future Singapore is another country.

Malaysia seems to be moving towards extremism so I would not put any money on Singapore remaining a secular society:

Living with a bunch of Malaysians in my dorm in college was an eye opener. Once the country is majority NAM get ready for this stuff.

Ummm...Malaysians are NAMs?

So ... is this whole "NAM" thing about building Nazi bridges so that there are more people to shit on the rest of us?

This is one of those strange posts, in which Tyler, who insists that he doesn't know enough to comment on political disputes at Yale, which is a few hundred miles away and where he knows the language and the people, comments on a place thousands of miles away where he knows no one and doesn't speak the language. I know a coward when I see one.

How adept at managing money is a country whose sovereign funds were investing in China real estate (including a large bet on industrial real estate) even after it was clear to everyone else that China's economy was slowing and slowing considerably. Now the tide has turned and in the first quarter of 2016 Singapore had a capital and financial account surplus of 25880.40 SGD Million after averaging -4898.85 SGD Million from 1986 until 2016. My friend and client, who has visited every major city in the world, visited Singapore several years ago, and his observation was that it was conspicuous consumption on steroids, retail shops selling outrageously expensive items like they were cheap Walmart housewares. Singapore's fate is tied to China: as goes China, so goes Singapore. And it's what is expected to occur in the second half of this century that is really worrisome, namely a 400 million population decline in China according to the mid-range projection by demographers. That's the entire population of the U.S.!

What about True Blue for a Nonya cuisine?

Its expensive but food is very good. Its next to Peranakan museum

China is rising. No one is going to stop them. Their tactic will be unbeatable; they will build their islands to expand their sphere of influence and arm them and make the price to force them off too high for any sane country to undertake. China is expanding their sphere in South, North and central America, in Africa, in Australia, in Asia and Europe. They intend to position themselves to win and they are playing the long game by their rules. I wouldn't invest a cent in Singapore or Taiwan. In fact if I lived in Taiwan I would be selling my assets and moving to Canada. If I was Australian I would be looking to acquire a second passport.

These issues with China could be solved in about an hour if America would stop issuing visas to China's kleptocratic leaders until they behaved. This solution would be free and instantly successful.

However, it violates the most central objective of the American system, which is for the western world to be overrun as quickly as possible.

"China is rising. No one is going to stop them."

Imperial Germany is rising. No one is going to stop them.

The Third Reich is rising. No one is going to stop them.

Imperial Japan is rising. No one is going to stop them.

The Soviet Union is rising. No one is going to stop them.

What about the largest and most expansive empire in the history of the planet?

Considering that the Pentagon recommends that many overseas bases should be closed, it seems that there are at least some quarters from which people are talking sense these days.

China's claims haven't budged an inch since they were first penned down in 1949.

What do you think "win" means in Chinese? Don't you think they might be more interested in "win win" than just "win"?

I don't think megalomania is a common feature of Chinese leaders.

Lee Kuan Yew spent his life fending off the grave threat of Democracy.

Now the biggest risk is that some dummy will come along and try to bring Democracy to Singapore.

As Singapore's Father noted on Democracy (Der Spiegel interview, 2005),
"In multiracial societies, you don't vote in accordance with your economic interests and social interests, you vote in accordance with race and religion. Supposing I'd run their system here, Malays would vote for Muslims, Indians would vote for Indians, Chinese would vote for Chinese."

Singapore would soon collapse into Democracy-driven ethnic strife, like in Iraq, Ukraine, Libya, Palestine, America and other places we touch with our grubby hands.

Which is why Singaporeans should pray that the crazy neocon Hillary never gets her hands on the levers of power.

Some people only write about Singapore, even though non-democracy in China had an impact on hundreds of times more people. Too much focus on Singapore obscures the overall low mean and high variance of non-democracy. You might be Singapore, but you'll probably be Vietnam.

There are sound theoretical reasons to think there's a relation between democracy and growth.

But also consider that it basically reads like a "friends of EU and America" club. It doesn't really take a whole lot to be defined as a "democracy". A vote every 4 years and you're pretty much in the "club". But what about free press, non-intimidation of political opposition, freedom to participate in contexts which are relevant to your situation, and all the rest? For example, it's not exactly clear that where Egypt was going, that it is necessarily less democratic under existing major political repression than it soon would have been under a 50+% rule by whoever leading clerics support for elections.

How many Chinese Indonesians were massacred in 1965-66? The Wikipedia article on the massacres is an internally inconsistent patchwork, including this notably tendentious paragraph: "Commentators have mistakenly claimed that hundreds of thousands of Chinese Indonesians were killed, but this number is certainly incorrect. The killings targeted members of the Communist Party of Indonesia, and few Chinese Indonesians were members. The best estimate is that around 2,000 Chinese Indonesians were killed (out of a total death toll of 500,000), with documented massacres taking place in Makassar and Medan and on the island of Lombok.[78] Robert Cribb and Charles A. Coppel noted that "relatively few" Chinese were actually killed during the purge while the majority of the dead were Indonesian Communists.[79] The death toll of Chinese was in the thousands while the death toll of non-Chinese Indonesians was in the hundreds of thousands. Balinese and Javanese made up the majority of people who were massacred.[75]" But immediately following this paragraph we read: "Indigenous, non-Muslim, pagan Dayaks expelled 45,000 ethnic Chinese from rural areas, killing 2,000-5,000.[35] The Chinese refused to fight back, since they considered themselves "a guest on other people's land" with the intention of trading only.[59][80]" And earlier it had been noted that Charles Coppel's denial of a genocide against Chinese Indonesians was "controversial."

Singapore strictly controls labor unions which were a hot bed of radicalism in the 1960s. Singapore is mostly Chinese Buddhists while Malaysia and Indonesia are largely Islamic. They also have or at least had the most powerful military in the region. A majority of the population is Chinese. Although they invest in China, they have many non-Chinese clients. It is a small country that is easier to manage than say a United States. An Island can erode and it can look like it is sinking. But it is part of a volcanic region which can rumble up or down periodically.

4. Climate change could well lead to rising water levels for island nation Singapore. Investing in sea walls and other forms of protection could take what percent of gdp? The Dutch are already putting 0.5% of gdp a year into a fund for future water defense.

First of all sea levels have been rising at about two centimeters a decade since Singapore really got going as an imperial center in the 1850s. They've coped with 35 or so cm of average sea level change in that timeframe - a pace of change that is utterly unchanged over that period - without even thinking about it. I think that academics place far too much emphasis on the things that academics 'know' which we all know changes radically from decade to decade. And you boffins place far too little emphasis on knowledge that everyone else knows - including Hayekian knowledge that leads to subtle changes in coastlines and designs of buildings to reflect almost imperceptible changes in the environment. Academics know so very little and talk so very much.

The Dutch are already below sea level and living on borrowed time. Why do we bail out people below sea level like New Orleans?

1. "America might mind its own business! Oh noes!"

If so, then good riddance. It is and will always be a huge benefit to the world and posterity when authoritarian models that affront human dignity and liberty are seen to fail and fail spectacularly.

I have lived in Singapore for ten years. I have known many people who have left after a long time and what they felt was: nothing. I am afraid that this post is not terribly elegant, but to me, the biggest worry I have about Singapore is how unemotional people are about this place. Of course you miss good friends, but never anything more. This is a radically different response to other countries: love or hate (often the latter) dominate the response, but there is response. Singapore just doesn't seem to impact one's soul. I am sorry to be so etherial in an economics post, but I would leave Singapore with nary a look back, and some internet surveys suggest a majority of Singaporeans would to.

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