Reporting of the historic Singapore Summit between President Donald J. Trump and Supreme Leader Kim Jong-un has been fascinating. The lead story in Pyongyang has been on the Supreme Leader’s Singapore walk around, and his desire to learn about economic development from the Singapore Strategy. In the western press, however, Pyongyang’s lead story is nowhere to be found.
Kim Jong-un is clearly onto something. As anyone watching telecasts from Singapore during the past few days could observe, Singapore appears to be very prosperous. And it is. Measured by per capita income, Singaporeans are some of the richest people in the world. The economy is capitalist, and capitalist on steroids. That’s why Singapore has shot up from the depths of the Third World, at its founding, to the upper reaches of the First World, today.
Singapore gained its independence in 1965, when it was, in effect, thrown out of Malaysia. At that time, Singapore was backward and poor — a barren speck on the map in a dangerous part of the world. If that wasn’t enough, it was experiencing race riots, which came close to igniting a civil war. Singapore’s per-capita income in 1965, adjusted for inflation, was roughly equivalent to that of poor countries like Albania, Angola, Armenia, Guyana, Kosovo, and Mongolia, today.
But, at its founding, Singapore had a leader, Lee Kuan Yew. He had clear ideas about how to modernize the country — a strategy which I have dubbed the “Singapore Strategy.” This strategy contained the following elements:
The first element was stable money. Singapore started with a currency board system — a simple, transparent, rule-driven monetary regime. Currency boards operate on autopilot, with automatic adjustments keeping the system in balance. Accordingly, currency boards deliver discipline to the spheres of money, banking, and fiscal affairs. For Singapore, the currency board provided stable prices and free convertibility of the Singaporean dollar, which was fully backed by foreign reserves and gold, at a fixed exchange rate. This established confidence and attracted foreign investment.
The second element was that Lee Kuan Yew ruled out passing the begging bowl. Singapore refused to accept foreign aid of any kind. This is a far cry from many developing countries, where, when you pick up the paper, all you see are politicians and bureaucrats trying to secure foreign aid from someone, be it an NGO, a foreign government, or an international financial institution, like the World Bank. By contrast, signs reading “no foreign aid” were hung figuratively outside every government office in Singapore.
The third element was that Singapore strived to have first-world, competitive private enterprises. This was accomplished via light taxation and light regulation, coupled with completely open and free trade — in short, policies that enabled Singapore to become one of the Asian Tigers.
The fourth element in the Singapore Strategy was an emphasis on personal security, public order, and the protection of private property.
The fifth, and final, element in the Singapore Strategy was a “small,” transparent government — a minimalist government that avoided complexity and “red tape”.
To execute the strategy with precision, Singapore appoints only first-class civil servants and pays them first-class wages. Today, for example, the Singaporean Finance Minister’s annual salary is 1.3 million dollars (USD). In exchange for these high salaries, the Singapore Strategy demands that the government runs a tight ship, with no waste or corruption. By embracing Lee Kuan Yew’s Singapore Strategy of stable money, no foreign aid, first-world competition, law and order, and a government that is free of waste and corruption, Singapore has transformed itself from a poor, barren speck to a global financial center.
It should come as no surprise that Singapore today is one of the freest, most flexible, and prosperous economies in the world. Kim Jong-un clearly has his eye on a winning strategy. Maybe the Supreme Leader is a bit more clever than most western observers give him credit for.