Page Count: 194

Chapters : 8

Time Taken: 8 Hours

Keith’s Take

Chua Beng Huat's Liberalism Disavowed articulates Singapore's disavowal of liberalism as stemming from a combination of historical, ideological, and pragmatic reasons.

Singapore did not import Westminster-style democracy wholesale. Instead, it made its own version. This book outlines where they diverged.

In its management of land, markets, race and politics - the dominant PAP government rejected every liberal solution.

The PAP did not like liberalism for its overt individualism. They thought it would undermine social cohesion by prioritising individual rights over collective stability.

Singapore's leaders framed the city-state’s geopolitical, economic, and social vulnerability as the pretext for its need for national stability. Thus, a strong, centralised authority was needed to ensure survival.

This fear of fragmentation and external threats has been used to justify tight political control and a single-party dominant system, contrasting sharply with liberal democratic ideals.

It views this as incompatible with Singapore’s need for unity and disciplined economic and social development

And the crazy part?

It paid off.

But, in a world without paradise, every miracle has its underbelly.

To this day, the PAP-led government must make unpleasant trade-offs. This book does an exceptional job of outlining those trade-offs.

Keith’s Notes

The Birth of The Welfare State

The demand for social justice manifested itself in the development of the "welfare state," as a compromise between capitalists and the working classes in democratic nations (Esping-Andersen 1990). David Harvey (2005) and, before him, Daniel Bell (1960) suggest that after the Second World War, the US polity had the following features: a "focus on full employment, economic growth, and the welfare of its citizens, and that state power should be freely deployed, alongside of or, if necessary, intervening in or even substituting for market processes to achieve these ends;

the state also "actively intervened in industrial policy and moved to set standards for the social wage by constructing a variety of welfare systems (health care, education, and the like);"

finally, in societal management, the interventionist state fostered a "social and moral economy," in which class compromise between capital and labor was seen as "the key guarantor of domestic peace and tranquillity.”

In short, the social compact in the post-WWII American economy was as such - the government would invest in infrastructure, and human capital (i.e. public education) so that capitalists could yield a higher return on their investments and would not withhold capital.

As they realise their investments, the government could tax them on their returns. At the same time, citizens had to enjoy certain ‘rights of citizenship’ (i.e. welfare benefits) as they might either be unwitting victims of the creative destruction or negative externalities imposed by capitalism.

The role of the government then should be considered managing these tensions.

Swing too far left- you will end up in consistent budget deficits.

Swing too far right- your citizens may end up voting you out.

Liberalism and Its Discontents

Every ideology engenders its own critics and opposition, and liberalism is no exception. Criticism is frequently focused on its individualism. British conservative philosopher, John Gray, argues that the asocial individual of liberalism is a conceptual fiction, as such a person would be one "without history or ethnicity, denuded of the special attachments that in the real human world give us the particular identities we have" (1995: 5). The critique of asocial individualism is often accompanied by a counter-conceptualization of a socially embedded individual who realizes and reproduces his/her everyday life in and as a community

It is no surprise that in most liberal democracies, there is often a stronger focus on one’s rights as opposed to one's responsibilities.

When you make the individual the ideal, the externalities of their actions are often not priced in policy decisions.

Southeast Asia's Allergic Reaction to Liberalism

Several historical reasons stand in the way of democracy, particularly in post-colonial Southeast Asian nations.

First, where there was a protracted violent anti-colonial struggle, military and political leaders who led the armed revolution often assumed that they, having shed blood for the birth of the new nation, were entitled to lead the new nation, as in the case of Aung San in Burma. Or, when a fledgling elected government ran into the normal prolonged negotiations among competing interests, causing delays in policy decisions that intensify economics and social issues, the supposed "instability" would serve as an excuse/opportunity for military leaders to intervene directly or stand ready to be "invited" by civilian political leaders to impose emergency rule, such as the regular coups in Thailand.

Second, with or without an armed struggle for decolonization, indigenous political leaders could legitimately "reclaim" their homeland and re-impose, in whole or in part, the resurrected pre-colonial governing structure as the structure of government in the new nation.

Third, newly minted East Asian nations are still very much insecure objects in-the-making. They continue to tightly embrace their citizens, incorporating them within a bounded “national” space, inscribing upon them a “national” identity and incorporating them into the ongoing nation-building project.

I also think Southeast Asians are much more concerned with bread-and-butter issues than with the Western definitions of ‘rights’ and ‘ideals’. By that, I mean the country is in a greater rush to get rich and developed than to uphold democratic values.

It's also interesting to see that Western champions of liberal democracies have:

a) often failed to improve the well-being of its citizens and

b) are themselves rejecting liberalism (I don’t think the incoming President Donald Trump sees himself as the defender of liberalism)

I don’t expect Southeast Asia to be fertile soil for political liberalism in the coming decades.

The Government in Singapore takes an almost corporate attitude in the way it approaches social spending:

Social expenditure is to be rendered as "human capital" development: education enhances the employability of workers and improves their productivity which, in turn, enhances capital accumulation; better employment rates, housing and public health improve the material condition of life for Singaporeans; finally, the ways through which human capital investments are funded underwrite the PAP government's legitimacy to rule and recuperate the PAP's claim to be a "social democratic" party.

Most countries (especially those run by liberals) see social spending as the whole point of governance.

The more they spend, the better.

Not the PAP under LKY.

They treat social spending like how investors treat the stock market.

Money must be deployed efficiently, and any money spent on citizens ought to yield a return on investment. The difference is that the gain on investment the government was looking for is the GDP per capita, not the price of a stock.

PAP’s Restructuring of Labor Relations

The PAP did not stop at incorporating organized labor into the party and government. A string of legislation was enacted to progressively constrain the rights of unions from taking conventional industrial actions, such as work-to-rule, walkouts and strikes, which effectively further reduced the political power of the already compliant unions. This string of legislation was aimed at redirecting the unions away from confrontational relations with employers, towards a tripartite relation of "trust and cooperation" among unions, employers and the government, in which obviously the government supersedes capital, which in turn supersedes labor.

In his memoirs, Lee Kuan Yew said that the Japanese occupation was the most formative part of his ‘education’, and it was then that he learnt the true nature of power.

Reading his memoirs and this book made it increasingly clear to me that he was not messing around.

Under LKY’s leadership, the PAP monopolised political power in Singapore without excessive force.

Dictators fail because they are often unsophisticated. They treat violence as a solution to all their problems.

This example that Prof Chua cites is another example of how LKY softly consolidated power to his party.

PAP’s Longevity and Economic Growth in Singapore

This gets at the core of the PAP’s political dominance.

However, even the most severe critic of its authoritarianism would acknowledge that the longevity of the PAP in parliamentary power and government has been underpinned by more than five decades of phenomenal economic growth which has brought massive improvements in the lives of Singaporeans across the board. The palpable political quietude may be said to reflect a general agreement between the governed and the PAP government, a working "citizen-government compact."

They had to deliver results. They could stack the cards in their favour and consolidate power onto themselves.

But, all these tactics could only work if they delivered tangible improvements for Singaporeans.

The PAP even has its formula for good government:

"Good economic performance + anti-corruption = good government."

The problem now is that as Singapore matures and its economic growth slows down, formulating a ‘good government’ will become increasingly difficult.

Ideological Hegemony and the PAP’s Rule

(The PAP’s rule) is a condition akin to the Gramsican concept of ideological hegemony where the PAP sees itself as providing moral/ideological leadership for Singaporeans and only exercising coercion for the Singaporeans' collective interests.

Undoubtedly, the absence of an opposition in parliament and tight media control of public opinion have shielded the government and civil service from public scrutiny. However, it has enabled the melding of the PAP government leaders and long-serving civil servants into a "unity of purpose," greatly facilitating the setting and implementing of long-term policies and plans, without the disruptions caused by changes in government.

As ‘good government’ becomes increasingly difficult to achieve, the political landscape will open up.

There will be more members of the opposition parties in parliament and more public scrutiny. The tight media control the government once had has been completely disintermediated by technology. There is no way for the government to exercise the same level of control over public opinion as it did in LKY’s heyday.

By extension, the government will face increased political pressure in the coming years. It will get harder to implement unpopular but necessary policies. This is where leadership makes all the difference.

The big follow-up question will be: Even if the government does not change for the next 10-15 years, can it continue to implement long-term policies?

The Question of Land

I spent some time diving deeper into Prof Chua’s discussion of the Government’s land policy because :

Of all the factor inputs, land is the scarcest for Singapore. We can always import more talent (be it labour or entrepreneurs) and attract more capital, but there is little we can do about the land we have. This lack of space is an eternal constraint that we can never escape, no matter how hard we try.
Singapore’s land (and housing policy) is most antithetical to liberalism. Liberalism champions private property rights. Liberals believe that property ownership allows individuals to exercise control over their resources, make independent decisions, and pursue their goals without undue interference. The Singapore government disavows that proposition.
The Singapore public housing system is a paradoxical miracle. Many states (with more land and capital) embarked on large-scale public housing projects, which failed terribly, but with way less land and initial capital, Singapore succeeded. Yet, this success brings with it difficult trade-offs we can never escape.

The rest of the book notes will focus on this facet of PAP's public policy.

Land cost is the most prohibitive factor to any government's ability to provide social housing. Without low cost land, no national public housing program is possible.

The Act was amended in 1973 to allow the state to compensate owners of acquired land at the 1973 market value or the land's value at the date of notification, depending on which was lower.

In determining "market" value, either the existing use or the zoned use would be used to determine the lower cost to the government. No consideration was to be given to the potential value of the land for any intensification of use. As every landholding, whether vacant or developed, was permanently threatened by state acquisition, this draconian land policy effectively cut down speculation, as intended by the government.

Those who owned land had to forgo the huge upside of their real estate value as Singapore began to prosper. But, if the government did not acquire land cheaply in the first place, the country could never take off.

Prof Chua elaborates,

it (the Government) did not deny the coerciveness of the state in land acquisition. Land had been effectively nationalized. This gave the government great advantages in long-term planning and development of physical infrastructure for transport, public housing, water catchment areas and military installations.

Public Housing as a Wealth Accumulation Tool

However, with the exception of one brief short dip of prices during the 2008 global recession (Phang 2013: 82), the annual rate of price increase of public housing has consistently outstripped the annual interest accrued to CPF savings. The wealth of the homeowners has thus increased and, presumably, the proceeds of the sale of their flats eventually should be even better able to cover their retirement needs than keeping the CPF savings.

Properties have two economic functions- its utility function (i.e use for living) and investment function.

The purpose of HDB was to fulfil a utility function- ensure that every Singaporean had a roof over their head.

But, with such a small market - it was inevitable that demand for housing would often exceed supply. The prices go up and now people see their public housing as one that serves an investment function.

When its investment function outstrips its utility function, citizens naturally expect the government to ensure their property appreciates. Thus, they will care more about the price change than the qualitative standard of their living environment.

(At the same time, it was a policy tool embedded with many incentives to make Singaporeans more nationalistic. For example, LKY and Dr Goh believed that universal access to housing was essential if they wanted full-time conscription to work out. By guaranteeing a literal home to fight for, Singaporean soldiers now have skin in the game and would stay to defend Singapore.)

Public Housing as a Citizenship Right in Singapore

The government’s policies have practically guaranteed public housing homeownership as a fail-safe investment for all citizens, except those too poor to buy even the smallest public housing flat. Thus, despite its insistence that subsidized public housing is a privilege of citizenship, for the citizens it has become an unspoken right of citizenship that the government/HDB is obliged to provide for all but rich Singaporeans.

The thought process of one fictitious HDB owner, Jerry could be as such:

“If everyone’s subsidised HDB is appreciating, surely mine must too! When I buy my flat, it should be cheap and affordable. But once I get my flat, its value better be appreciating! If the price doesn’t meet my expectations - when election season comes around- I will vote for opposition!”

Ensuring almost universal home ownership for Singaporeans may seem like a sweet deal, but its the sweet things that cause diabetes.

The Government’s Monopolization of Housing

The unstated gratitude of the citizens for improved living conditions and homeownership is undoubtedly reflected in the consistent popular electoral support for the PAP.

The government's successful monopolisation of housing has effectively eliminated all alternative modes of housing, leaving all but rich Singaporeans with no choice but to avail themselves of public housing.

This total dependency on the state for a very important necessity of life has turned the citizens into clients of the state, thereby reducing very substantially the political space and force for citizens to negotiate with the government.

It is worth noting when things go well for the PAP, they go swimmingly well.

Tell any political party in a liberal democracy that they could secure 60% of a popular vote and call it a ‘bad year’- they would be over the moon. The PAP has achieved that.

This is in large part due to their ability to make homeownership extremely affordable despite our land scarcity.

Conclusion

Singapore’s housing story is a miracle on a knife’s edge. The miracle brings about huge costs and demands that become increasingly difficult to fulfil.

Furthermore, the government is in an unenviable position to ensure that the property market remains in the Goldilocks zone.

Prices must go up (just enough) to yield a healthy ROI without making it too expensive for new entrants.

In the words of Prof Chua,

Having encouraged Singaporeans to invest in their public housing flats, the PAP government is obliged to bear the responsibility of ensuring the security of the investment. It is thus engaged permanently in balancing a set of contradictory demands:

Supplying sufficient new flats and keeping them affordable for first-time homeowners and low-income families without turning public housing into a welfare entitlement;
Preventing an oversupply of new flats that might hurt market values of existing and resale flats; and
Increasing property values of existing flats and resale prices to ensure that retirees have sufficient funds for retirement while closely watching the buildup of inflationary bubbles that might jeopardize the affordability of resale prices to potential buyers.

To use a favorite metaphor of the government, the management of these tightly balanced demands is like a marathon race without an end. Failure to maintain a balance of the competing demands through periodic intervention in the market will incur a political cost.