Singapore: Place or Nation?

[Harold F. Schiffman]

Singapore: Place or Nation?
The Implications for Economy, State and Identity

Talk by Linda Lim, Professor and Director, Center for Southeast Asian
Studies, University of Michigan, for Institute for Policy Studies and
Institute of Southeast Asian Studies, Singapore, June 8, 2006. Revised and
expanded version of a talk at second annual Singapore Lecture Series,
Brown University, Providence R.I., April 14-15, 2006

Singapore's economic development has not always, and perhaps never, relied
on its being a nation state. At its modern founding by Stamford Raffles,
the island was wrested from its titular Malay rulers and transformed into
a free-trading port where immigrant merchants and labor thrived by serving
the regional business needs of the British empire in Asia.

Not until 1965 did Singapore become a sovereign nation state, and even
then its economy was dictated mainly by global and regional market and
political forces, not by national economic policy. And when national
policy was developed and implemented beginning in the late 1960s, it too
located Singapore within the regional trade and global production networks
of foreign multinational corporations.

Unlike industrializing Asia's other export-oriented "developmental states"
-Japan, South Korea and TaiwanSingapore notably did not nurture or
encourage the emergence of a local capitalist class or national
bourgeoisie. The elements of such a class who existed mainly
Chinese-educated entrepreneurs who posed a potential political threat to
the new government--were instead "crowded out" by favored foreign and
state enterprises, not just in manufacturing, but also in the established
trade and services sectors of the economy.

Singapore thus never developed the "national champion" enterprises that
the other developmental states didthe Toyotas, Sonys, Samsungs and Acers
that became icons of their national development, providing opportunity for
local elites to develop the indigenous technical, managerial and
leadership expertise, and financial, human and social capital, needed for
competitive and innovative "world-class" corporations, and arguably, also
for civic leadership. At the same time, the size and nature of Singapore's
state and its peculiar manpower needs also precluded the market-determined
emergence of the dynamic local entrepreneurial ventures for which Hong
Kong is known.

>>From its modern inception then, and in the state rhetoric of the 1970s and
1980s, Singapore has always been a "global city"a place, and not a nation.
Economically, it has been deeply integrated into the global value-chains
or supply-chains of multinational corporationsover time producing some,
but usually not all, of the value of processed commodities and services,
for sale to regional and global markets. Singapore is a place where parts
and people are imported to produce partial or whole goods and services
that are exported to foreign consumers. It does not have a national
economy, only parts of a global one which are themselves not necessarily
place-specific.

Economically, there is nothing wrong with this, of course. In fact, given
Singapore's extreme size constraints, the strategy of being a niche player
in global value-chains is quite defensible, even if other small
countrieslike Switzerland, Denmark, Finland and New Zealand--have managed
to grow locally-owned and run global companies out of their national
economies. From a competitive strategy perspective, what distinguishes
Singapore is that it is the state rather than market actors which have
decided on the particular niches in global value-chains to occupy, and
that those niches are almost exclusively filled by subsidiaries of foreign
enterprises rather than local start-ups. State policy has acted to shape
local resourcesthe education system, foreign labor, land, infrastructure,
the housing market, fiscal regimes, cultural amenities and so onto provide
a competitive or at least profitable place for particular foreign economic
entities to operate.

This is not a national development policy in that it is not predicated on
or limited by the boundaries of the nation whether in terms of resources
(labor, "talent"), markets (consumers), or enterprise ownership. If this
were what the market dictated, say, as in Hong Kong, it would not be
worthy of comment. But what makes the Singapore case interesting is that
this non-national or a-national development strategy is crafted and
implemented by a national government through multifarious state agencies,
including state-owned enterprises or government- linked companies that
arguably both substitute for and crowd out local private enterprises in
capital, labor, "talent" and final product markets. It is also accompanied
by an often intense political rhetoric of nationalism.

The standard theoretical justification for state intervention in a market
economy is "market failure"that is, market forces fail to allocate
resources efficiently. The most common reason for this is the presence of
externalities, or the divergence of private and social costs and benefits,
for example in health, education and the environment. In these sectors
society's net gain from an investment is arguably greater than the private
return to the individual, resulting in under- investment if resource
allocation is left to market forces alone. This argument is most commonly
made for developing countries, where market institutions are
under-developed and market forces distorted, hence the state has to be
relied upon to allocate resources. But as a country develops, so do
markets, and state intervention becomes not only less necessary, but also
arguably prejudicial to the development of markets and private enterprise.

In the case of Singapore, the state has retained its developmental role
and control of the economy, way past the stage at which a market-believer
would expect it to "wither away". It plays a major role not only in
shifting comparative advantage by shaping the country's relative resource
endowment through the import and export of labor, skills and capital, but
also by intervening to mould competitive advantage in the sense of Alfred
Marshall, the early 20th century Cambridge University economist whose
"economics of agglomeration" Michael Porter repackaged as "clusters".

Developmental state policy in Singapore since the achievement of developed
economy status around 1990 has not merely focused on enhancing
productivity through investments in health, education, infrastructure and
the like, leaving market forces to determine the exact sectoral allocation
of resources. Rather, state policy has targeted the development of
specific economic "clusters" in which Singapore does not have the
resources, markets or companies able to provide leadership in their
development, most notably the extremely capital- and talent-intensive,
scale-sensitive and risky field of the life sciences. Importing foreign
talent, sometimes by paying above-world-market compensation rates, and
providing capital subsidies to foreign corporations in the hopes of
producing medical breakthroughs for global consumers, are the essence of
the life sciences policy.

While the government's policy might make Singapore a competitive and
profitable place for parts of the life sciences global value-chain to
locate, which it would not if responding to market forces alone, it is not
clear where Singapore the nation benefits, since the resultant jobs,
profits and products are produced overwhelmingly by and for foreigners.
Indeed in this case the Singapore state itself may be seen as acting as a
steward of the interests of non-Singaporeans. Certainly foreign and local
interests may be complementary, including in the labor market. But in this
case if the state did not attract, steer and push resources in the
direction of the life sciences, local resources would have been allocated
in other sectors by local entrepreneurs. In a market economy, such as
Singapore claims to be, every investment choice, private or public, has an
opportunity cost, and it is against this that its economic benefit to the
place and the nation must be evaluated.

The "picking of winners" (or to the skeptics, "losers") by the Singapore
state reflects both its continued adherence to the last generation's
industrial policy formula for economic growth and development, and its
continued distrust of markets and of local private entrepreneurs as
drivers of the economy. It is true that the government has been
encouraging private entrepreneurship, including among its own bureaucrats
and scholarship-recipients. But this policy is itself based on a
contradiction, since individual initiative and risk-taking in response to
market forces are the essence of private entrepreneurship, not a response
to government exhortations, training and incentives to become
"technopreneurs" (remember that?). Both entrepreneurship and creativity
spring from social conditions, and an economic policy environment, that is
very different from the top-down control model found in Singapore still
today.

In 2002, Richard Florida, a Carnegie-Mellon professor (now at George
Mason) specializing on regional economic development, published The Rise
of the Creative Class, which he has since built into a lucrative
consulting franchise including a third book on The Flight of the Creative
Class: The Global Competition for Talent. Florida identified "technology,
talent and tolerance" as the characteristics of "cool cities" which
attract creative young people whose work then contributes to economic
growth.

One of Florida's indicators of "tolerance" was a tolerance for
homosexuals, who some argue are disproportionately represented among the
creative class. It is this supposed correlation of gay-ness with economic
growth and dynamic cities that led to the Singapore government revealing
that there are gays in the senior levels of government, and to its
promotion of so-called "Pink Dollar" tourism (remember that?), which I
read about on the front page of the Wall Street Journal. "Tolerance" in
this case was apparently motivated by the prospect of economic gain for
the place, rather than as a value in its own right for the nation.

The economic primacy of place over nation in today's Singapore is
reflected in the government's recent controversial decision to allow
international gaming companies to establish casinos in Singapore. In
response to local objections based on moral, social, cultural and
religious as well as some economic concerns, the government argued that
casinos would not undermine Singaporean society because Singaporeans
would, in essence, not be involved in the gambling business as owners or
consumers, but only as workers. The casinos would be owned by foreign
multinationals which would pay heavy tax revenues (which chronically
budget-surplus Singapore arguably does not need) in exchange for taking
their profits out. There would be restrictions (if only by high-end price
rationing) on Singaporeans patronizing the casinos as customers. And while
employment created for Singaporeans was touted as the primary motivation
for allowing the casino complexes, we would expect their employees to be
disproportionately foreign, as is the case in the rest of Singapore's
hotel and recreation sector. Singapore, in short, is to be a place where
foreign profits are earned from foreign customers served
disproportionately by foreign workers, and it is only the disentanglement
of place from nation that makes the casino enterprise justifiable in the
face of national objections to it.

>>From the viewpoint of economic development, the disentanglement of place
from nation may be considered inevitable given contemporary globalization
trends, the diminution of nationalisms globally, and Singapore's own small
size and lack of economic scale. A state-directed place-based economic
development strategy could also yield higher income and non-monetary
returns to nationals than market-determined entrepreneur- led nation based
activities (whatever they may be).

>>From my perspective as an economist and business strategy professor, I
would caution that there are also economic risks and potential losses
associated with defining Singapore merely as a place in competition with
other places around the world. It exposes us to Tom Friedman's "flat
world", rather than building the unique competencies and niche strategies
based on difference rather than sameness that we strategy professors urge
on businesses and on our own students, which involve taking advantage of
the world's roundness rather than surrendering to its flatness. In
Singapore's case, for example, this would mean "market positioning" as a
regional rather than a global city, exploiting location-specific
advantages and the limited regional competition, versus replicating the
amenities of multiplying other "global cities" like London or New York or
Shanghai. But, the economic and business case aside, my primary concern
here is to consider the implications that place-enhancing, nation-denying
economic development has for Singapore as a nation, for Singapore
nationals, and for the meaning of nationhood more generally.

We all know that 25% or more of Singapore's workforce today consists of
foreign workers, the majority of whom do not have the opportunity of
becoming Singaporeans due to their lower skill levels. Rather, they
constitute a floating guest-worker population who will never have the
rights and responsibilities of citizenship, including political
participation. For them, Singapore is merely a place, not a nation. The
situation at the upper, more educated, skilled and higher-income levels of
the labor-force is of more interest to the nation, since it tends to be
elites, including cultural elites, who lead nations and define nationhood,
just as it is "talent" which, at least according to Richard Florida,
determines the economic success of a place.

The Singapore government's policy on "foreign talent" will be well-known
to this audience. It resembles the U.S. policy of giving H1B visas and
permanent residence more readily to immigrants with unique skills that can
enhance the nation's economic growth and technological development. This
policy also resonates with our own history as a nation of immigrants now
populated predominantly by people of a different ethnic group than the
"original" inhabitants who sold their land to Stamford Raffles. The influx
of foreign talent, in Singapore as in the U.S., shifts the nation's
comparative advantage towards more highly-skilled activities, and is thus
complementary, as well as competitive, with local talent.

There are, of course, many differences between Singapore and the U.S. with
respect to the role of foreign talent in society and the economy.
Immigrants form a much larger proportion of the labor force in Singapore
than in the U.S., and are particularly highly represented at upper
echelons, for example, among university faculty who groom our next
generation's elite. Foreign talent in Singapore is also more likely to be
here temporarily, moving on back to their home or larger third countries
after a period of study and employment in Singapore. They are probably
less likely than talent attracted to the U.S. to be from the top of their
home societies and thus "world-class", and for various reasons are less
inclined to participate in politics than the locally-born. Further,
rightly or wrongly, there is a perception among some native-born
Singaporeans that foreign talent receives favorable treatment from the
government and private sector employers, relegating the native-born to
"second-class citizen" status in their own country.

Over the past ten years, I have come to know many Chinese and Indian
nationals who studied at Singapore schools and universities, often with
scholarships provided by the Singapore government, worked here for a few
years, then applied to U.S. MBA programs such as the one at Michigan. To
my knowledge none has ever returned to Singapore after graduating with the
MBA, their goal all along having been to use the place as a stepping stone
into the U.S. job market. It is easier, they say, to get into a top U.S.
MBA program from Singapore than from China and India, which are awash with
top candidates, and also easier to get a U.S. visa both for school and for
work, if they apply from Singapore. So far, none of these students who
claim to be from Singapore, and in some cases hold Singapore permanent
residence, has even chosen to take my class on Business in Asia, which is
full of Americans, and other Asian nationals, or to socialize with the
Singaporean and other Southeast Asian students. They tend to identify most
with student groups from their countries of origin. This is only to be
expected, since Singapore to them is just a place to study and worklike
Ann Arbor, Chicago, New York, San Francisco or Londonwhereas their nation
remains China or India or, for some, eventually the U.S.

I have also known many Southeast Asian nationals, mainly ethnic Chinese
from Malaysia, Thailand and Indonesia, who attended school in Singapore
from a young age, even as young as under ten years' old. Many if not most
also hold Singapore permanent residence status. Yet at the University of
Michigan, with only a few exceptions, they belong to and are active not in
the Singapore Students' Association but in the Malaysian, Thai or
Indonesian Students' Associations. The big advantage of studying in
Singapore was that it provided them with a world-class secondary
education, including a facility in English and Mandarin that makes them
more competitive on their national and the global job markets. Most return
to their Southeast Asian homelands to work after their U.S. college
education, with a handful to date staying on in the U.S. or going to
China.

This is only to be expected of a place which is not a nation, at least not
for those passing through. Economically, this is not necessarily a
problemthe circular flow of talent may actually benefit the economy by
enhancing its flexibility--but politically and socially it may be a
problem, particularly for a state which desires to maintain much tighter
political and economic control of its place and its nationals, than is
typical of other "places" around the world. The nation, after all, is a
political entity, and its ability to survive as such is already undermined
in an era when globalization allows economic survival and prosperity to
occur with the bypassing of national authorities in an increasingly
"borderless" economic world and global value-chain. Today, in Singapore,
place and nation increasingly do not coincide. Many of those in the place
are not of the nation, and many that are of the nation, including I would
argue, myself, a Singapore passport-holding expatriate rather than an
immigrant to the U.S., are not to be found in the place.

I am an observer rather than an expert on the subject of identity,
including both individual and national identity. In the case of Singapore,
much of our pre-nation-state identity was deliberately erasedmost notably
through language policyin order to forge a "new" national identity that
would not conflict with survival and prosperity in a globalized world
economy, or encourage challenge to established domestic political
authority. Identity has been reshaped to serve economic and political
goals, with the state itself becoming the determinant and arbiter of
acceptable ethnic identities and their expressions, such as the enforced
diminution of the Malay heritage of Peranakan Chinese, and of the dialect
heritage of the majority non-Mandarin-speaking Chinese. If what makes a
nation is its collective memory and shared values, it is difficult to find
the nation in a place where memory, including its physical embodiments,
has been erased or reconstructed, and values pared to emphasize only
social stability and material prosperity.

Fearful of the emergence of alternate centers of power, the Singapore
state has also preempted local private initiative in civil society as well
as the economy, precluding the kind of independent political involvement
which engages and defines the citizens of nations, but is typically denied
foreigners, making them easier to control, and thus perhaps the preferred
inhabitants of a place. Note that a high-performing benign and
paternalistic state which engenders a passive dependence and apathy on the
part of contented citizens (including by distributing "goodies" such as
"Singapore shares" and other handouts just before general elections) is
perhaps a greater threat to nationhood and national identity than an
under-performing state which allows and provokes discontent and thus
active civic and political participation. A nation, after all, is a
political entity and arguably cannot exist in a domestic political vacuum.
And, in a nations as in any organization like a university or a
corporationthe empowerment of stakeholders is necessary to engender the
"sense of ownership" that can attract and retain "talent" and elicit its
best performance. As parents and teachers, we know that the best way to
develop our children and students is to let them "own projects" and make
their own mistakes while "learning-by-doing", even though we are more
efficient and better at doing everything than they are.

The recently resurrected rhetoric of a "global city" implies "global
citizens" like our immigrant ancestors in Singapore, distinguished by
their willingness and ability to move and change nationality in response
to the ever-shifting competitive attractions (or detractions) of other
places. A "global city" also requires that these citizens be led by a
cosmopolitan elite able to navigate the complexities of a global economy,
thus further legitimating continued political control by the members of
such an elite. To the extent that such a cosmopolitan elite includes
"foreign talent", we may even end up with a situation where Singaporean
"heartlanders", relatively immobile in the global job market in part
because they lack the linguistic and cultural tools to participate in it,
are ruled by "foreign talent" which developed those tools in other places
and nations, while members of the Singapore-born cosmopolitan elite,
raised to be "global", depart for foreign shores.

Whether one views Singapore as a "place" or "city" versus "nation" has
practical implications for almost any public policy. For example, my
friend Dr Geh Min, former Nominated MP and President of The Nature
Society, has noted that viewing Singapore as a city results in its
physical environment being managed by urban planners, with our land
resources treated as real estate, defined by their commercial market value
as in any city with a limited terrain but facing global market demand.
Open spaces are seen as having value only as manicured parks, improving
the urban quality of life of the place.

Considering Singapore as a nation, however, would result in its physical
territory, including the biodiversity represented in "wild" areas, being
valued as a national treasure and birthright, as well as (in this case)
contributing to the global commons. "Wild" lands might then be preserved
in their natural state for the emotive and affective appeal that they
would have for nationals, in other words, for their contribution to a
natural-place-specific sense of national identity.

In education, Singapore-the-place would overweight the technical training
of commercial value in subordinate parts of global value-chains, and
underweight the study of Singapore and Southeast Asian history, languages
and literature. Thus, the Singaporean students at Brown and other East
Coast universities whom I met in April told me that one reason they
organized the conference that motivated this talk was because they were
embarrassed that they themselves did not know enough about Singapore to
answer questions posed to them by interested Americans! Remarkably, I
understand from some colleagues who teach about Singapore in our local
universities, their classes are populated mainly by curious foreign
students, but shunned by native Singaporeans who evidently see "no use" in
learning or thinking about their/our own past or present. Also remarkably,
foreign faculty in our universities seem to shy away from doing research
on Singapore that might be construed in any way as "controversial" or
critical of the imagined local conventional wisdom--characteristics that
would tend to be rewarded rather than penalized in U.S. academia, for
example, for being "path-breaking". Not surprisingly, a place which is
"unknown" to its own most privileged and educated youth, and which fades
away in both teaching and research, risks disappearing as a nation.

I will leave to your imagination the ways in which the domestic politics
and foreign policy of a globalized, even virtualized, place would differ
from that of a nation. In the cultural sphere, all you have to do is visit
Singapore's Chinatown today to see how it has been re-formed, and to many
locals and long-term visitors over 40 years of age, deformed and
diminished, into an a-national, universalist or even Americanized
theme-park devoid of its and our true and unique multicultural history.
Even Singapore documentaries and other cultural and educational products
are being outsourced to foreign experts and consultants, who may produce
technically superior products to "global standards", but cannot be
expected to capture the intangible "local soul".

>>From my own experience and observation, I believe that national identity,
perhaps all identity, must have an irrational and not just an economically
rational component, that is to say, it comes from emotional affiliation
rather than pragmatic self- interest. If I choose to become a member of a
nation because it gives me a good job and good lifestyle, good education
for my children etc., I am really interested in that nation only as a
place, and it makes sense if I leave it for another place which can offer
me superior conditions and opportunitiesthe situation of the MBA students
and graduates I mentioned.

It is when I stick around when a place is in trouble, and cannot guarantee
me a good life, or I am concerned with the welfare of others in that
place, and try to improve things even at a risk to my own good life (say,
I decide to join the political opposition), that I can say I am indeed of
the nation, and not just the place. In the same manner, it is when I enter
public service even though it pays me but a fraction of what I could earn
in the private sector that I can claim to be primarily interested in the
public good and national welfare. In academia we are used to very bright
people voluntarily choosing a profession which pays much less than the
private sectorthat's how we know they have the passion for scholarship.
That is also the test of whether one has the passion for public service.

The audience at the Brown University conference where I gave a first
version of this talk consisted of about 70 Singaporean and Malaysian
students from elite East Coast liberal arts colleges and universities,
like Wesleyan, Wellesley, Harvard, etc. Many of the Singaporeans had
Malaysian roots, and they were about evenly split between government
"scholars" and "private" students. During the post-lecture forum, I asked
them if they were "afraid of failure", and nearly all raised their hands.
Why this was considered remarkable in a population frequently
self-lampooned and self-chastised for being kiasu, I don't know, but the
students themselves were struck by their own response. One of them even
feared freedom of the press because it might lead to racial conflictthey
apparently did not trust themselves to eschew such conflict if given such
freedom. I commented that fear of failure undermines both place and
nation, since tolerance of risk and acceptance of failure are required for
political democracy, business entrepreneurship and scientific discoveryall
of which Singapore officially aspires to. To the extent that this "fear of
failure" comes from a culture created by a strong state (since it is not
present in ethnic Chinese communities in other countries), this strong
state may result in a weak nation, and possibly even in a weak economy.

Let me end with quotes from two emails I received two months ago, just
before my talk at Brown, both from Michigan MBAs, which highlight the
distinction between Singapore the place and Singapore the nation. One, an
American and my former student with a large multinational company, said
this: "My wife and I have decided to come to Singapore instead of London.
(The company offered him promotions and postings in both places.) Quality
of life is so much higher here and it will be great for the kids."

The other, a Singaporean and a successful banker, was running for election
as an opposition party candidate (of course he lost). His message: "My
wife and children walked the ground (visiting voters) with me together
with my other party colleagues.After three weeks of walking the ground, my
daughter (aged 15) said that some people can say we are crazy but she has
never met five persons (my party colleagues and I) who loved their country
so much."

http://searchingforenlightenment.blogspot.com/2006/12/post-no-95a-singapore-place-or-nation.html
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