The Roots of Freedom and Prosperity
In just three decades, Lee Kuan Yew transformed Singapore into one of the most prosperous states in the world. On Lee Kuan Yew’s “From Third World to First.”
Liberal democracy is a luxury that only the wealthiest of nations can afford. Or so it is according to Lee Kuan Yew, the architect of modern Singapore.1 This view is not a criticism or dismissal of liberal democracy—it’s a reversal of cause and effect. It is not liberal democracy that makes for prosperous societies, but prosperous societies that can afford to sustain such a system.
In The End of History and the Last Man, Francis Fukuyama famously asserted that liberal democracy is the final stage of the political evolution of every state. Every state, the theory goes, eventually becomes a capitalist liberal democracy, for the simple reason that they outcompete the rest (economically and technologically, and thus also militarily). But even if we accept that there is a general movement towards liberal democracy, it does not necessarily follow that liberal democracy results in prosperous societies, rather than vice versa. Over two decades after publishing the book, Fukuyama addressed the issue of certain countries “backsliding” into authoritarianism by blaming those countries’ “failure to provide the substance of what people want from government: personal security, shared economic growth and the basic public services.”2 It seems, in other words, that countries that are not prosperous and safe have trouble staying democratic.
In 1959, the year Lee Kuan Yew became president, Singapore was a Third World city state (in the economic sense), an entrepôt with no manufacturing or financial sector to speak of. In just three decades, Lee’s aggressive pursuit of growth produced a miraculous transformation, turning Singapore into one of the most prosperous states in the world. Around 2010, its GDP per capita overtook that of Britain—its former colonial masters. More incredibly, it is now higher than that of the US. And he did it with what may be called an illiberal democracy, in which elections take place, but one party controls virtually all the seats. Additionally, while Singapore is free economically, it has historically used severe measures to eliminate crime and corruption and to remake itself into a clean, green metropolis (for example, a fine for littering goes into thousands of dollars). Ray Dalio, the founder of the biggest hedge fund in the world, uses the concept of “believability” to decide whether someone’s ideas deserve especial attention. He defines believable people as “those who have repeatedly and successfully accomplished the thing in question—who have a strong track record of at least three successes—and have great explanations of their approach when probed.”3 Lee Kuan Yew is a believable man. One may disagree with his views on democracy, but it would be foolish to ignore them.
So what are his views? When he visited Gorbachev in 1990—only a year before Soviet Union’s collapse—he observed that Gorbachev “had made a fatal mistake going for glasnost (openness) before perestroika (restructuring), that Deng Xiaoping had been wiser doing it the other way around.” At a forum in Tokyo the following year, in a comment on liberal democracy, Lee explained that “a people must have reached a high level of education and economic development, must have a sizable middle class, and life must no longer be a fight for basic survival, before that society could work such a democratic political system.” At a speech in the Philippines in 1992, Lee again challenged the value of democracy (emphasis mine): “I do not believe that democracy necessarily leads to development. I believe what a country needs to develop is discipline more than democracy.” Lee’s unorthodox view is that democracy, particularly liberal democracy, follows prosperity, which in turn is built on discipline.
While he is not alone in this view, Western think tanks, such as the Atlantic Council, assert that the relationship goes the other way round, with democratic freedom being essential for the creation of effective institutions, which in turn make for prosperous societies. And yet, their own “Freedom and Prosperity Index” shows that while there are countries that are not wholly free (defined as “mostly free”) and prosperous (Singapore and Israel), there is not a single country that is “mostly unprosperous” (or downright unprosperous) and free.4 One way to interpret this is to say that freedom is a guarantee of prosperity. But one could also turn it around and say that poverty is a guarantee of unfreedom—and it appears to be a more certain guarantee of unfreedom than unfreedom being a guarantee of poverty.
Freedom is a good that we pursue for its own sake, but, if Lee Kuan Yew is right, we shouldn’t fool ourselves into thinking that it will also make us prosperous. More important, if prosperity is a guarantee of freedom, then failing to deliver it may lead to a state “backsliding” into unfreedom. So what does make us prosperous? Well, at least in Singapore’s case, we don’t have to guess, because Lee Kuan Yew wrote a book about it. Published in 2000, From Third World to First is Lee Kuan Yew’s own account of the Singapore miracle.
On the 9th of August, 1965, Singapore, a tiny Southeast Asian city-state that sits on an island smaller in area than New York City, with a then population of under 2 million, was kicked out of Malaysia. The reason it was in Malaysia in the first place goes back to only four years prior, when the president of Malaya, Tunku Abdul Rahman, known as “the Tunku,” proposed putting together the scattered pieces of former British territories in the region—Malaya, Singapore, Brunei, North Borneo, and Sarawak—into a larger federation called Malaysia. At the time, Singapore’s economy was so paltry that a fifth of its GDP was supported by British military bases alone. But the British were packing their bags and planning to leave by the end of the decade. Singapore’s leaders doubted that Singapore could survive alone, so they embraced the Tunku’s idea and joined the newly formed Malaysia in 1963 (Brunei gave it a pass). But it didn’t work out. Singapore began to have fundamental disagreements with policies dictated by Kuala Lumpur. Disagreements deteriorated into strife, which exploded in 1964, when Singapore’s ethnic Chinese majority (about 3/4 of the population) openly clashed with the Malay minority (around 1/7), resulting in hundreds of casualties, of which 36 were fatal. The Tunku, seeing no way to repair the rift, advised the Malaysian Parliament to expel Singapore from Malaysia, which it promptly did.
Singapore’s location at the tip of the Malay peninsula makes Malaysia its natural hinterland. When relations broke down, the dream of a common market with its larger neighbor also fell through. Worse still, Malaysia wanted to bypass Singapore entirely by using its own ports to deal directly with its trading partners. However, Singapore did have one invaluable asset. It was situated on one of the busiest sea lanes in the world. This meant that although geographically it was part of the Malay peninsula, logistically it could attach itself to other, potentially much larger economies. Socrates famously said that he was not an Athenian, or even a Greek, but a citizen of the world.5 Spurned by Malaysia, Singapore had to look for a new hinterland on the other side of the globe in America and Europe. In a sense, it would become a city state of the world.
In 1961, in his role as economic advisor, Albert Winsemius told Lee Kuan Yew that it would be a good idea to keep the statue of Sir Stamford Raffles, the British colonial officer who founded modern Singapore. Winsemius explained that investors wanted to see what the new government was going to do with the symbols of its British heritage: would it break its ties, or embrace them? “I had not looked at it that way,” writes Lee Kuan Yew, “but was quite happy to leave this monument because he was the founder of modern Singapore. If Raffles had not come here in 1819 to establish a trading post, my great grandfather would not have migrated to Singapore.” Rather than viewing the statue as an insult, a constant reminder of the country’s time under foreign rule, Lee only saw the positives, made the statue his own, and focused on the future. This mindset would prove invaluable in the building of his state and establishing rapport with foreign leaders.6
The core of Lee’s strategy for growing Singapore focused on attracting foreign capital in the form of factories, which would provide jobs for Singaporeans and revenue for the state. To begin, he had to start local and small. “We encouraged our own businesspeople who set up small factories to manufacture vegetable oils, cosmetics, mosquito coils, hair cream, joss paper, and even mothballs! And we were able to attract Hong Kong and Taiwanese investors to build factories for toys, textiles and garments.” But mothballs weren’t going to take Singapore very far. What Lee really wanted were large multinational corporations (MNCs).
Like the statue of Raffles, Lee saw MNCs constructively. Viewed negatively, MNCs exploit labor in poorly developed countries by making their employees work long, arduous hours for paltry pay. Lee instead saw them as lucrative sources of jobs, technology and revenue. He understood that high wages could not be achieved overnight, that Singaporeans would have to work hard for many years to establish themselves in the world. The truth was that there was nothing particularly special about Singapore in the 1960s besides its port, certainly nothing to make MNCs move there. Lee had to offer them something very substantial if he was going to get them to set up shop on a tiny Southeast Asian island.
This something came in two forms. First, he created “a one-stop agency” called the Economic Development Board (EDB), whose purpose was to save investors from having to deal with multiple ministries. “This agency would sort out all an investor’s requirements whether relating to land, power, water, or environmental and work safety,” writes Lee. Instead of putting up barriers with red tape, the government was going to actively simplify the process of doing business. Second, the government invested heavily into infrastructure for future factories by building industrial estates. “Our largest infrastructure development was the Jurong industrial estate, which eventually covered 9,000 acres, with roads, sewers, drainage, power, gas, and water all laid out.”
Results were far from immediate. For its first few years, Jurong remained largely empty. In fact, the future of the project seemed so bleak that people called it “Goh’s Folly,” after Goh Keng Swee, who was finance minister at the time. “In 1961, we had issued only 12 pioneer certificates (During 1963–1965, our years in Malaysia, none were issued by the central government in Kuala Lumpur) … By the end of 1970, however, we had issued 390 pioneer certificates giving investors tax-free status for up to five years, extended to 10 years for those issued after 1975. Jurong was humming with activity.” In 1968, Texas Instruments flew to Singapore to consider it for their semiconductor factory. They began production within just 50 days of deciding to go with Singapore. More big names would follow, including National Semiconductor and Hewlett-Packard.
The Singaporean government went out of their way to attract and accommodate MNCs. For example, while Hewlett-Packard were picking a site for its factory, they leased two upper floors of a six-story building. Mr. Hewlett himself had flown in a visit. There wasn’t enough electricity in the building yet for the lift, but the EDB team came up with a solution. “Rather than have [Mr. Hewlett] walk up six flights of stairs,” recalls Lee Kuan Yew, “the EDB got a gigantic cable extended from a neighboring building, and on the day of the visit the elevator worked. Hewlett-Packard invested.” Presentation was everything. Part of the reason why Singapore now has remarkably clean and green streets is that Lee wanted to impress visiting CEOs. He made sure that the road from the airport to the hotels, and from the hotels to his office was clean and lined with neat shrubs and trees. “Without a word being said, they would know that Singaporeans were competent, disciplined, and reliable.”7
In effect, the government of Singapore acted like a business, one whose customers were not consumers, but multinational corporations. In fact, officers at the EDB acted as a sales team for Singapore, contacting and visiting corporate offices on a mission to get them to invest. Like all sales, this was a numbers game. “EDB officers would sometimes call on 40 to 50 companies before getting one to visit Singapore.” It was difficult to convince the CEOs to even consider Singapore as many of the them “did not even know where Singapore was.”
Meanwhile, Lee also focused on developing the infrastructure that connected Singapore to the world: its ports and airports. The now famous Changi airport, which ranks among the best airports in the world, began its life as one of four British Royal Air Force bases. When the British left in 1971, there remained the question of what to do with their vacant bases. It was suggested that they should be reclaimed for agricultural use, as this was what was usually done in such cases. Lee Kuan Yew had other ideas. He wanted to turn Singapore into an international hub, an “oasis” in Southeast Asia, and for this he needed to transform Changi into a major commercial airport. “For an airport of that size, the building period was usually 10 years. We completed Changi Airport in six. We demolished hundreds of buildings, exhumed thousands of graves, cleared swamps, and reclaimed land from the sea. When it opened in July 1981, it was Asia’s largest airport … The airport and the pleasant 20-minute drive into the city made an excellent introduction to Singapore, the best S$1.5 billion investment we ever made.”
All the investments poured into infrastructure, and all the promotional work done by the EDB paid off. When the British left in 1971, there was no rise in unemployment. “The American electronics companies had generated so many jobs that unemployment was no longer an issue.” In 1997, just over three decades after independence, Singapore “had nearly 200 American manufacturing companies with over S$19 billion worth of investments at book value.” These were complemented by investors from Japan and Europe. Singapore had found its new hinterland in the world’s richest countries. Unemployment fell from 14% in 1965, to 1.8% in 1997. Meanwhile, GDP per capita soared from around $500 in 1965 to over $26,000 in 1997. In 2022, it was over $82,800.8
“If I have to choose one word to explain why Singapore succeeded, it is confidence,” writes Lee Kuan Yew. “This was what made foreign investors site their factories and refineries here.” When Jiang Zemin, the future leader of the Chinese Communist Party, visited Singapore in 1980, he questioned Ng Pock Too, an EDB director, about Singapore’s formula for success. “You have not told me everything,” he pressed. “What is the secret formula?” Ng pointed to Singapore in his copy of the Business Environment Risk Index, highlighting its 1A rating. “China was not even included in the rating. Singapore was safe and favored for investments because of safe political, economic, and other factors. There was no danger of confiscation. Our workers were industrious and productive, and there were minimal strikes. Our currency was convertible.” After thinking this over, Jiang told Ng that he has figured out his magic formula—it’s a “unique knowhow to sell confidence.” Under Zemin’s leadership, China’s GDP would grow 10% per year.
But if “confidence” is the reason for Singapore’s success, what was it built upon? Lee Kuan Yew said that what a country needs to develop is not democracy, but discipline—and that is precisely what he strove to instill and maintain. Large multinational corporations could feel confident knowing that their workers wouldn’t go on strike because Lee Kuan Yew defanged the labor unions and shifted the focus from wages to productivity. Moreover, Lee rejected the idea of a welfare state in favor of personal and familial responsibility, so there was little danger of creeping taxation. Lee’s benevolent authoritarianism, which emphasized order, industriousness and cohesion, would even spill into social life, materializing in, for example, his campaign against boys having long hair (because it promoted the hippy look—the antithesis of discipline). When one official remarked that the three things that Singapore does not tolerate are “hippies, long-haired boys, and critics of multinational corporations,” he wasn’t joking.9
From the end of the Second World War right up to the 1960s, Singapore suffered persistent union strikes, with 1962 seeing well over a hundred strikes. The unions were so active in those years in part because the British colonial government tried to undermine communist influence by showing workers how they could negotiate with their employers within a capitalist system. They taught people how to organize labor unions and go on strikes—something Lee Kuan Yew himself took part in and which he came to regret. The results, Lee explains, were terrible. “For example, triple pay on public holidays had led to cleansing workers deliberately allowing garbage to accumulate before public holidays to ensure that they would have to work on these holidays.”10 Another problem was worsening unemployment. Union pressure was forcing companies to become capital-intensive. Instead of simply giving in to union demands, companies looked for ways to replace capricious humans with compliant machines.
Higher pay was a worthy goal, but rather than trying to squeeze higher wages out of employers by force, Lee thought that it was better to raise employee efficiency and productivity in order to attract more companies to Singapore. If more businesses came to Singapore, wages would rise as a result of these companies’ competing with one another for the best employees. Lee took decisive measures to test his thesis. He rolled back policies such as triple pay on holidays and put restrictions on strikes. “We made it illegal for a trade union to take strike or industrial action without a secret ballot,” writes Lee. “This stopped the practice of voting by an open show of hands where dissenters were intimidated into acquiescence.” When an especially defiant unionist by the name of K. Suppiah organized a cleansing workers’ strike, the “police arrested and charged Suppiah and 14 other leaders” with organizing an illegal strike. “At the same time, the ministry of health declared that the strikers had sacked themselves; those who wished to be reemployed could apply the next day. This coordinated firmness panicked the strikers. Ninety percent of them applied for reemployment.” Following this incident, strikes in essential services were banned altogether.
“Between July 1961 and September 1962, we had 153 strikes, a record for Singapore,” writes Lee. “In 1969, for the first time since before the war, we had no strikes or work stoppages.” The reason he could implement such tough policies was in part due to the looming fear of British withdrawal. Not only did the British presence provide political stability at a volatile time, its military bases contributed to about a fifth of Singapore’s GDP in the 1960s. The existential threat of British withdrawal made Singaporeans more open to radical changes. Lee won the trust of many trade union leaders by meeting with them personally to explain why it would be unwise to “kill the goose whose golden eggs” they needed. “These changes in employment and industrial relations laws and practices brought tangible benefits. … [I]n 1969, 52 new factories were built, creating 17,000 new jobs. In 1970, new investments added 20,000 jobs. Incomes increased.” Indeed, incomes would continue to increase. Today, Singapore’s GDP per capita is higher than that of the US.
Lee took a similarly restrained stance on welfare. “Watching the ever-increasing costs of the welfare state in Britain and Sweden, we decided to avoid this debilitating system. We noted by the 1970s that when governments undertook primary responsibility for the basic duties of the head of a family, the drive in people weakened. Welfare undermined self-reliance.” Instead, Singapore would follow what he calls the “Confucian tradition,” whereby “a man is responsible for his family—his parents, wife, and children.”
In practice, welfare took the form of a personal savings fund (called the Central Provident Fund, or CPF), to which employers and employees contribute a percentage of an employee’s salary. The CPF is more than a pension fund, it is a kind of general reservoir that can be used to cover healthcare, education and housing costs. In contrast to the shared welfare pot approach in Western countries, the CPF emphasizes personal responsibility by shifting most of welfare costs to individual savings. So rather than your taxes going into paying for everyone else’s expenses, they are used to pay for your own. Perhaps the term “personal responsibility” isn’t the quite right. What actually matters is the family, as relatives can tap into their funds to help cover each other’s costs. So somewhat paradoxically, we have a Confucian collectivist society shifting the welfare burden onto individuals and families, while individualist Western societies are shifting it onto the collective.
Today, Singapore is one of the safest countries in the world. This was achieved by means of a severe deterrent. Caning is used as punishment for both serious crimes, such as kidnapping and robbery, and ones that are not so serious—at least to Western eyes—such as vandalism and drug abuse. Offenders are stripped naked and secured to a wooden trestle, with protective padding placed over their lower back organs to limit the damage. A rattan cane about 1.2 meters in length and no more than 12.7 mm in thickness is then used to administer the earned number of “strokes.” Asiatic barbarity? Not so. The practice was established by colonialists from the civilized world. “The British used to have whipping with a cat-o’-nine-tails or rattan in Singapore. After the war, they abolished whipping but retained caning (with rattan). We found caning more effective than long prison terms and imposed it for crimes related to drugs, arms trafficking, rape, illegal entry into Singapore, and vandalizing of public property.” In addition to caning, Singapore still practices the death penalty—by hanging—for serious crimes. In reply to those who might suggest other factors for low crime rates, Lee points to the time of Japanese occupation, explaining that “punishment then was so severe that even in 1944–1945, when people did not have enough to eat, there were no burglaries and people could leave their front doors unlocked, day or night. The deterrent was effective.”
Singapore’s streets today are remarkably clean and green, but it was a very different place in the early 1960s. Taxi drivers would spit out the windows of their cars, street hawkers would clog up the roads by setting up illegal food stalls, the Singapore River was so polluted that a blind man could tell that the bus he was on was approaching it from the stench alone. “One morning in November 1964 I looked across the Padang from my office window at City Hall to see several cows grazing on the Esplanade!” Lee introduced anti-spitting campaigns, moved street hawkers to specially constructed centers “with piped water, sewers, and garbage disposal,” and cowherds were given a deadline to move their cattle off the streets, “after which all stray animals would be taken to the slaughterhouses and the meat given to welfare homes. … Very quickly, all cattle and goats were back in the sheds.”
Cleaning up the Singapore River, however, was a monumental task. Many people questioned the very idea of doing it, saying that the Singapore River has “always been filthy; part of Singapore heritage!” A CEO of a ministry board joked that “It will be a lot cheaper for you to buy fish and put them in the river every week.” A new underground sewage system was constructed, 3,000 people from backyard and cottage industries were resettled, 5,000 street vendors moved into newly designed centers, pig rearing was phased out on 8,000 farms, and many fish ponds were closed. “Clean rivers made possible a different quality of life … We bought sand from Indonesia to lay a beach along the banks of the Kallang Basin where people sunbathe and water ski today. Waterside high-rise condominiums have taken over from unsightly small shipyards. For those who remember the Singapore River when it was a sewer, it is a dream to walk along the banks.”
It rains in Singapore almost every day. One might think that it would result in lush, green grass, but the opposite is actually the case. The rains wash away the topsoil, leaving few nutrients for the grass. Singapore’s grass is again the result of diligent effort. “To have grass green and lush, we had to apply fertilizers regularly, preferably compost, which would not be so easily washed away, and lime, because our soil was too acidic.” Very soon, the “grass became greener.” At first, sport fields were treated, and then gradually “the whole city greened up.” Even the industrial estates were greened, as factories “had to landscape their grounds and plant trees before they could commence operations.” The greening of Singapore was so successful that Singapore’s neighbors, Malaysia and Indonesia, were inspired to do the same. “Our neighbors have tried to out-green and out-bloom each other,” writes Lee. “Greening is the most cost-effective project I have launched.”
The simple explanation for Singapore’s growth thus has two parts. The first part involved pouring money into infrastructure to create industrial estates, eliminating bureaucracy and creating an economic board that not only helped companies rapidly set up shop, but would aggressively market Singapore to Western MNCs—particularly ones from America. The second part was to enforce discipline across all spheres of Singapore’s life, from eliminating union strikes to cleaning up its streets. These two things combined made Singapore attractive as a manufacturing base. It’s worth remembering that Singapore was a poor Third World country when Lee took over. Granted, its location on one of the busiest sea lanes in the world is a major asset, but Singaporeans still had to work hard to make the most of it. After all, its closest neighbors, who sit upon the same lane, did not experience the same rate of growth.
None of the steps Lee Kuan Yew took focused on building a democracy. If anything, he steered Singapore in the opposite direction, creating a kind of pseudo-democracy, which held elections but had only one viable party—the People’s Action Party (PAP). The one major threat, the communist Barisan Sosialis party, was effectively crushed as many of its leaders were arrested under the charge of foreign subversion. While he does not outright say it, you get a feeling that Lee is far from convinced in the value of opposition parties. In the 1970s, “people had full confidence in the PAP leadership and were not interested in having an opposition,” he writes. Keeping the communists out doesn’t appear to be the only reason for Lee’s distrust of opposition. He says that a decade later, in the mid-1980s, younger voters “wanted an opposition to check the PAP, to pressure the government for more concessions and to soften hard policies. It was bound to lead to less than adequate people getting elected, as indeed happened.”
Besides arresting the communists, the PAP set up a network of organizations to sway the public in their favor. Lee suggests that the simple method of walking around different areas to gauge support and decide where to focus your efforts is not effective. “I learned that while overall sentiment and mood do matter, the crucial factors are institutional and organizational networks to muster support.” The party set up the People’s Association, which provided various self-improvement classes in over a hundred centers, from literacy classes to courses on how to repair automobiles and television sets. The PAP also set up what Lee calls “semi-government institutions” called management committees and citizens’ consultative committees. These were funded by PAP to organize various recreational and educational activities, and manage local improvement projects. As these organizations “mobilized” community elders, they in turn would exert influence on the local voters to get them to vote for the PAP. But there were also more dubious tactics. For example, in 1991 the PAP decreed that “priority for upgrading of public housing in a constituency would be accord with the strength of voter support for the PAP in that constituency.”
The result was that the PAP won every single election since 1959. Some elections were won totally, as in the PAP won all the seats. In 1972, for example, all 57 out of 57 contested seats were taken by PAP with over 70% of the vote going the party’s way. The same was repeated in 1976 and 1980. In 1984 they finally lost 2 seats. Though the PAP continued to lose some seats over the years, it has retained its vast majority. In the 2020 election, it won 83 out of the 93 contested seats.
This reinterpretation of democracy, which dismisses the function of parliamentary opposition, combined with “nanny state” policies and their severe enforcement (for example, in 1992 Singapore banned all chewing gum after vandals stuck some on train sensor doors), has continued to provoke constant criticism and ridicule from the West. Singapore’s material success makes it impossible to criticize its leaders from a position of incompetence, so the attacks focus on the strictness of its rules. “To show their disapproval,” writes Lee, “the American press describes Singapore as ‘antiseptically clean.’ A Singapore that is efficient is called ‘soullessly efficient.’” A New York Times headline contrasted a “clean and mean” Singapore with a “filthy and free” Taiwan. Singapore’s greatest sin, however, is that it shows that material prosperity likely has less to do with liberal democracy, and a bit more to do with market economies and competent leadership.
Unfortunately, this also makes it difficult to imitate, because its success is not so much based on a set of policies, but on a leadership capable of identifying what problems to focus on and how to go about solving them in the context of their country’s capabilities. Copying Singapore’s policies on a superficial level won’t work. Sri Lanka, another former British colony, did just that and failed. “They announced that they would adopt the Singapore-style Area Licensing Scheme to reduce traffic entering the city, but it did not work,” writes Lee. “They started a housing program in 1982 based on ours, but there was no adequate financing. They set up a free trade zone only slightly smaller than the area of Singapore that might have taken off but for the Tamil Tigers whose terrorist tactics scared off investors.” Against Lee’s advice, they even launched an airline, taking away valuable resources from the things Sri Lanka really needed to improve: agriculture, housing, industrial promotion and development. “Faced with a five-fold expansion of capacity, negative cash flow, lack of trained staff, unreliable services, and insufficient passengers, it was bound to fail. And it did.”
That said, some attempts to copy Singapore were more successful. For example, Indonesia has an island called Batam 20 kilometers south of Singapore, about two-thirds its size. In 1976, Suharto asked Lee to help turn Batam into a second Singapore. Lee explained that in order to attract investors to Batam, Indonesia had to build out proper infrastructure on the island, to cut red tape, and “to allow 100 percent foreign equity ownership of investments in Batam.” Suharto hesitated and ended up only allowing full foreign equity ownership for purely export businesses for the first five years, after which Indonesia would take its share. This compromise made Batam less attractive. Suharto also did not understand that Lee could not simply order Singaporean companies to invest in Batam, that he had to create the right conditions for the companies to come on their own. Fortunately for Indonesia, manufacturing in Singapore was growing ever more expensive, motivating manufacturers to seek alternatives. Breakthrough came when the Singapore Technologies Industrial Corporation “formed a joint venture with an Indonesian group to develop a 500-hectare industrial park in Batam and actively promoted it among MNCs as well as [Singapore’s] own industrialists. It turned out a success. By November 1999, the park had generated US$1.5 billion investments, employing over 74,000 Indonesians.”
“The rare strange thing is to hit the mark; the gross, obvious thing is to miss it,” says the poet Syme in G. K. Chesterton’s The Man Who Was Thursday, arguing against an anarchist’s assertion that a well-functioning railway system is predictable and boring. “We feel it is epical when man with one wild arrow strikes a distant bird. Is it not epical when man with one wild engine strikes a distant station? Chaos is dull; because in chaos the train might indeed go anywhere, to Baker Street, or to Bagdad. But man is a magician, and his whole magic is in this, that he does say Victoria, and lo! it is Victoria.”
When Singapore was kicked out of Malaysia in 1965, followed by the departure of the British a few years later, it would have been the gross, obvious thing for Singapore to stagnate or deteriorate. The remarkable, miraculous thing was for it to become a prosperous, First World state in just three decades. “We cannot afford to forget,” warns Lee Kuan Yew, “that public order, personal security, economic and social progress, and prosperity are not the natural order of things, that they depend on ceaseless effort and attention from an honest and effective government.” Lee’s critics attack his authoritarian excesses, but it is not at all a certainty that Singapore would have been freer had he focused less on growth and more on freedom. A poorer Singapore would have left the door open for communist takeover, which would have been the end of both the economy and individual freedoms.
Liberal democracy as we know it today is a relatively recent phenomenon, and the West did not grow rich under the freedoms it now enjoys. Even as late as the second half of the 19th century, democracy was not viewed as a panacea. For example, when Disraeli was pushing for fairer representation of the working classes in Britain in the 1860s, he mollified his critics by saying that of course “votes should be weighed not counted,” and moreover, that he was by no means trying to turn Britain into a democracy, which, he sincerely hoped “will never be the fate of this country to live under.”11 In most Western democracies, women couldn’t even vote until the 20th century, and before that, legibility to vote among the male population was often limited by property requirements. Liberal democracy is not the trunk of the tree of Western civilization, it is the fruit of a most prosperous time in its history.
It’s also worth noting that democracy is by no means synonymous with freedom. Democracy implies representation, but a tyranny of the majority can be just as tyrannical as a tyranny of one, and perhaps even more so because, as Tocqueville points out, whereas a despot may have physical control over you, “the majority possesses a power which is physical and moral at the same time; it acts upon the will as well as upon the actions of men, and it represses not only all contest, but all controversy.”12 In other words, a tyrant doesn’t care about your opinions unless they undermine his authority, but the mob will get their pitchforks out to challenge every controversial opinion. Moreover, a tyrant can seize power through a democratic system just as well by an accident of birth. Democracy may act as a limiting mechanism to stop power being gathered in one place, but it is not enough to divide power to ensure freedom. Freedom requires that the government not only restrains itself from interfering in people’s lives, but that it also has enough power to protect its citizens against each other, against nature, and against other states. The freedoms afforded by a state that does not interfere in people’s lives are worthless if the state cannot also protect those freedoms from forces other than itself.
The idea that liberal democracy is supported and sustained by prosperity has implications for the West, because it suggests that a breakdown in the functioning of the state will threaten not only the wellbeing of its citizens, but their political freedom as well. A serious enough economic disaster can create the conditions for a radical transformation, plunging a country straight from a Weimar Republic into a Nazi Germany.
That democracy degenerates into tyranny is not a new idea. Writing around 375 BC about the origins of tyranny in the Republic, Plato observed that “an excessive desire for liberty at the expense of everything else is what undermines democracy and leads to the demand for tyranny.” He explains that the mind of the democratic character becomes so sensitive to any form of restraint that all authority becomes intolerable, so that eventually the “father and son … change places,” with the son “neither respecting nor fearing his parents, in order to assert what he calls his independence,” the “teacher fears and panders to his pupils, who in turn despise their teachers,” and the elders “try to avoid the reputation of being disagreeable or strict by aping the young.” Plato then suggests how the interaction between three groups (politicians, businessmen and the masses) can destabilize democracy. First, the politicians compete for favor with the masses by seeking to distribute the businessmen’s wealth (after taking their share). The businessmen in turn try to defend themselves, only to be accused of being “reactionaries and oligarchs.” “There follow impeachments and trials in which the two parties bring each other to court.” To resolve the struggle, a popular leader is put forward. Once in power, however, he uses violence against his opponents in fear of being dethroned. And, once blood has been spilled, the violence only intensifies, for, as the story goes, “the man who tastes a single piece of human flesh, mixed in with the rest of the sacrifice, is fated to become a wolf.”13
If Lee Kuan Yew is right and if our liberal democracy is indeed a luxury, then we should remember that it is a luxury that demands constant tribute in the form of discipline, that is, of making a constant effort to organize and manage the workings of the state according to what actually works—and not according to how we wish things worked—because when the payment stops, we may find ourselves possessed neither of prosperity, nor freedom.
For example, in a comment on the speed at which US administrations change, Lee Kuan Yew wrote that he believes that “only a wealthy and solidly established nation like America can roll with such a system.” (From Third World to First, p. 499)
Ray Dalio, Principles.
Plutarch, De exilio.
This is what Carol Dweck calls a growth mindset. A person with such a mindset focuses only on the actions necessary to move forward. This is contrasted with a fixed mindset, in which a person’s ego is the focus.
This is an example of the Matthew effect, which explains how being in possession of some resource (money, influence, etc.) makes it easier to gain more of the same, and vice versa—i.e. the rich get richer, the poor get poorer. Lee takes advantage of the effect by creating the appearance of success (I wrote about this tactic in more detail here).
Pye, Lucian W. 1985. Asian Power and Politics: The Cultural Dimensions of Authority. Harvard University Press, as cited in Francis Fukuyama’s The End of History and the Last Man.
This is a perfect example of what is called the cobra effect, a phenomenon in which an incentive aimed at motivating people to get rid of something actually leads to more of it as people exploit it to cash in on the incentive.
Richard Aldous, The Lion and the Unicorn.
Alexis de Toqueville, Democracy in America.
Plato, The Republic. Part IX, Book 8.