Singapore: Free economy, flawed politics, and some interesting numbers

Singapore is exactly what you’d expect, but less so. Expensive? Yes, but you can be cheap. Clean? Yes, but not significantly more so than Japanese cities. Strict–draconian even? The signs telling you about fines are plentiful, but so are the people jaywalking and smoking in theoretical non-smoking areas. Efficient? Absolutely, but the bus stop didn’t have an electronic display and the subway made an unscheduled mid-ride stop; Korea had displays everywhere and 100% of my subway rides for the last three years have been uninterrupted. Polished and classy? Yes, but the good parts of the city are the more run-down, semi-gritty ones–and those do exist.

All that said, I enjoyed Singapore much more than I anticipated. I wouldn’t want to live there–I prefer a bit more personal freedom–but as a place to visit it offered a lot of budget-friendly, interesting options and a fairly painless experience getting around

Tangent: Singapore public wi-fi is a real pain

I’m going to get a bit more academic in a moment, but on a personal note I have to complain about the wi-fi situation in Singapore. I didn’t buy a SIM card for my two-day stay, thinking wi-fi would be ubiquitous. It is, somewhat, but only the city-run wi-fi hotspots are really ever open, and every time you want to connect you have to go through the multi-minute process of opening the login page on your browser, entering your foreign phone number (luckily I still had my Indonesian SIM card, or I would have been out of luck), getting a code via SMS, going back to the browser, entering the code, and then finally getting access to a fairly decent connection. You have to repeat this process every single time you want to connect, even if you’ve just moved to one down the street, unless you download the app–which I did, but couldn’t sign up for since I don’t have a Singaporean phone number. For a city called “the most tech-ready in the world” it has pretty horrible connectivity. I’ve had much better luck in most other Asian cities.

That said, here are some stats:

Population 5,600,000
GDP (nominal, 2017) $304 billion USD (37th largest; 39th in PPP terms)
GNI per capita nominal/PPP 2017 $52,000 USD/85,080 (3rd-highest)
Major sectors Manufacturing, business services, trade, finance
Unemployment (2016) 2.1% (not a typo, not an outlier)

Data from the World Bank and SingStat.gov–which is an amazing statistical resource that I wish more countries had something like.

I’ll break down those numbers really quick, because they do get interesting. Nominal GDP just means straight-up how much money the goods and services produced in Singapore are worth. Given that Singapore is only 2/3 the size of New York City, it is fairly impressive that it ranks 37th overall–though it is worth nothing that NYC’s GMP (Gross Metropolitan Product) is 1.55 trillion USD–about that of South Korea. Though if you read carefully into that report you’ll notice that this number includes some areas of New Jersey in the NYC metro area–fair enough, but a bit tricky.

The good stuff comes when you see the GNI (Gross National Income) per capita (per person). In nominal terms (how much money a Singaporean citizen earns in U.S dollars), the average Singaporean income is nice and middle-class. In terms of PPP (Purchasing Power Parity, or how much stuff they can buy compared to the rest of us), they’re sitting at a very respectable 85,000 USD, which means your average Singaporean citizen is U.S upper-middle class, right?

Well, we’ll get into inequality later; for now, suffice it to say that GNI per capita is calculated by taking the average of all citizens’ incomes, and Singapore has some rich, rich people. Median income, a more accurate picture of typical incomes calculated by looking at the middle of the distribution, is about 36,000 USD–though this is still hardly anything to sneeze at, and adjusted up for PPP is still excellent. Though you also have to shave off about 20% for CPF, Singapore’s social security program.

In plain words, the average person in Singapore is doing really well, and they can get more with their money than Americans can. Why do bars exist in Singapore when drink prices average 8-20 USD? Because, while it’s still expensive for them, Singaporeans can in general afford those prices.

Finally, unemployment is 2.1%, and that’s been pretty steady for at least a decade–that is insanely low (lowest in the world), and I’ll get to that around the end of the post. For now, here are a few ramblings to break up the numbers stuff.

Strangely Free

As I mentioned in the introduction, Singapore has a reputation for being a bit strict. You’re technically not allowed to bring chewing gum into the country because they don’t want it on the sidewalks. The subway specifically disallows durians (a particularly pungent fruit popular in Singapore). You can’t even buy a beer in a convenience store after 10:30pm,and the laws governing the sale of alcohol on and around public holidays are undoubtedly as irritating to locals as they seem confusing to visitors.

Of course, Singapore’s massive alcohol taxes (a trait it shares with neighboring Malaysia and its neighbor, Indonesia) make buying alcohol a bit unpleasant anyway.

But despite having sin taxes through the roof, Singapore is actually one of the most economically free countries in the world, as ranked by The Economist, Freedom House, and others. Income and corporate tax rates are quite low (someone earning $30,000 USD pays about 2%), and Singapore, being essentially a nation in a single city, doesn’t impose many import duties. Actually, about 99% of all imports enter tariff-free, with the exception of tobacco and alcohol (the fun stuff, of course).

My personal stereotype before learning about it was that Singapore must tax pretty heavily in order to maintain the infrastructure it’s famous for, but oddly enough, it turns out that government spending is about on par with taxes collected. That is to say, Singapore’s government is fairly frugal. So where does all the good stuff come from?

One answer is that a tiny but wealthy nation is a lot easier to manage well than a big wealthy one. They have to manage exactly one subway system, one set of building codes, one police force, et cetera. This enables them to really cut down on budget leakage and misuse and limits administrative gridlock. Centralization does its best work in homogeneous environments.

Singapore is also still fairly young demographically, so it has a low dependency ratio (ratio of people draining the social safety net versus contributing), and high immigration is sustaining that demographic advantage.

State-owned enterprises (the government profits off of shares and ownership in several industries) also bring in a decent profit that add to tax revenue.

And then there’s also the fact that low tax rates still bring in a lot of money when you have a very wealthy population. So overall, it looks like Singapore’s government is having its cake and eating it too, because they only had to make a small, excellent cake, and they had some excellent ingredients to work with.

So why do I say it feels “strangely free?” Well, the overbearing rules that haunt your daily life in Singapore are a symptom of a political system that Freedom House and most other indexes rate “partly free” or “flawed democracy.” You are generally free to do whatever you want in a financial sense, but not necessarily to participate in the political process. Singapore is currently on its third prime minister. Number three. That wouldn’t be so bad if Singapore had begun a decade or two ago, but the history buff will have already remembered that the city-state gained independence from Malaysia in 1965.

One man, Lee Kuan Yew, held the post of prime minister for over thirty years. The new one, Goh Chok Tong, was chosen to succeed Yew and became prime minister in 1990 without a vote, though the one-party system slipped a bit in the parliamentary election in 1991. The third PM, Lee Hsien Loong, is currently in office after being made deputy prime minister simultaneously with Tong ascending to PM. Loong also happens to be Lee Kuan Yew’s son.

Citizens have more say at the parliamentary level but even so, the centralization that makes Singapore such an economically free place still serves to limit how much can be accomplished politically, and how many things can really be changed. Electoral manipulation and political suppression are both still present, and free speech is not guaranteed.

Ethnicities and enclaves/Workers and wages

My absolute favorite parts about Singapore were not the most-photographed ones. Yes, the fancy buildings and harbor views were spectacular, but much more interesting at a human level were the districts of Little India and Chinatown–which are genuinely populated by people from these countries and with these backgrounds, and which exude their own unique vibes at stark odds with the neatly administrated neighborhoods surrounding them.

Singapore has a very large migrant population–Indians, Malays, Chinese, and many more. Some migrated several generations ago and are now full Singaporeans; some are here on migrant worker visas. Currently about 15% of Singapore’s residents are migrants.

70% of Singapore is ethnically Chinese, but unlike China, there really is no obstacle to becoming a citizen provided you meet the other requirements. This is perhaps one of the only Asian countries I know of that is so: it would be laughably difficult for a non-Korean to gain Korean citizenship; likewise in Japan, China, etc. And even if they did–and some have–there is a very strong sense that you are never Korean/Japanese/Chinese if you lack the ethnic aspect.

The official language being English also gives it quite an international feel and makes it far easier for migrants to settle here, as English is widely spoken and practiced by those anticipating a career abroad.

For all their charm and melting-pot sensibilities, however, the ethnic enclaves can put on display some of Singapore’s high economic inequality. They score 49.3 on the GINI coefficient (a 1-100 measure of economic equality, with 0 being exactly even distribution and 100 being “one person has it all”).Of course, the GINI coefficient is flawed as it is highly susceptible to outliers–the more rich people move to Singapore, the higher the coefficient gets because more income is technically now going to the top, and Singapore has an especially high level of super-wealthy people in its population.

This last explanation does tend to be the state’s defense of their GINI score, but it hardly explains away everything. Especially among the migrant worker populations there are high rates of poverty which tend to be ignored. Given that Singapore’s economy benefits quite a bit from these non-citizen workers, perhaps they should be acknowledged a bit more.

That said, inequality is by no means automatically a bad thing, and the fact that people migrate to Singapore for work means that they tend to view it as a step up. The fact is, Singapore’s median income is excellent, and the standard of living there tends to be very high; both ends of the spectrum exist, but on the whole the average Singaporean is doing well enough.

Unemployment? What’s that?

Perhaps one of the most interesting aspects of Singapore is its freakishly low unemployment rates–they’ve hovered around two percent for quite a long time, which is far below the roughly five percent that most health economies tend to be at. Frankly, if you get too far below five percent for too long you end up, among other things, not having enough qualified workers available to fill open positions, leading to economic slowdowns as firms struggle to grow or even maintain their labor force.

So how’s Singapore, this crazy economic outlier, actually doing it?

One reason is already listed above–immigraton. Singapore has a fairly flexible workforce, and in fact the unemployment rate for residents only tends to be higher than that of the entire population, since temporary/non-resident workers tend to leave altogether if they lose their job.

They have also experienced pretty much non-stop economic growth, and with economic growth comes jobs.

So no extremely well-organized central planning committee or cultural work ethic necessarily–just immigrants and growth.

Conclusion

My advice for those visiting Singapore: eat at the hawker centers (it’s so much cheaper), take a break from the alcohol, visit the photo spots, and make sure you check out the parts of Singapore that don’t match up with the myth. And while you’re there, go ahead and contemplate the successes and paradoxes that underlie Singapore’s safe, smooth exterior.