Global-is-Asian #16

Chinese Diaspora and its Benefits | Sustaining Good Governance | The Cost Disease

Issue 16 路 Jan - Mar 2013

The Singapore Water Story: Sustainable Development in an Urban City-State

By Cecilia Tortajada (Institute of Water Policy, LKY School), Yugal Kishore Joshi, Asit K. Biswas (Visiting Professor, LKY School) Publisher: Routledge Publications Also see our story on the book launch, pp 56.

Ranking the Liveability of the World’s Major Cities: The Global Liveable Cities Index (Glci)

by Khee Giap Tan (Associate Professor & Co-Director, Asia Competitiveness Institute), Wing Thye Woo, Kong Yam Tan (Director, Asia Competitiveness Institute & Adjunct Professor, LKY School)

Publisher: World Scientific

Asia’s Role in Governing Global Health Edited by Kelley Lee, Tikki Pang (Visiting Professor, LKY School), Yeling Tan

Publisher: Routledge Publications

Economic Reform in India: Challenges, Prospects, and Lessons Edited by Nicholas Hope, Anjini Kochar, Roger Noll, T. N. Srinivasan (former Yong Pung How Chair Professor, LKY School)

Publisher: Cambridge University Press

DEAN’S PROVOCATION

EXECUTIVE EDUCATION

1

47 What Can Mongolia and Myanmar

Learn From Each Other?

Are Good Policies Going Viral?

SPECTRUM Managing Editor Claire Leow, claireleow@nus.edu.sg Editor and Writer Melanie Chua, melaniechua@nus.edu.sg Designer James Lee,

jllf.design@gmail.com

49 The Temasek Foundation Water

Leadership Programme

3

Singapore in 2012: Balancing Growth with Domestic Imperatives

5

Analysing Key Household Income Trends 2012

7

Managers Making Bad Decisions

RESEARCH SOJOURN

8

Securing a Future For Dignity

51 Sloan Foundation Conference on

South Asian Science Engagement

50 Executive Education Launches Online

Alumni Portal

Cover Illustrator Paul Lachine

11 The Policy-Maker’s Dilemma

Illustrators Paul Lachine and Cheng Puay Koon

FOCUS

55 America’s Role in the Asian Century

Editorial Assistant Kwan Chang Yee, sppkcy@nus.edu.sg

14 Singapore: A Contested Space 18 Sustaining Good Governance in an

Era of Rapid and Disruptive Change

56 The Singapore Water Story:

Sustainable Development in an Urban

City State

Editorial Office Research Support Unit (RSU) Lee Kuan Yew School of Public Policy 469C Oei Tiong Ham Building, Singapore 259772 To offer feedback on, or contribute an article to Global-is-Asian, please email GIAlkyschool@nus.edu.sg Global-is-Asian is available free online at http://www.spp.nus.edu.sg/global-is-asian.aspx No part of this publication may be reproduced in whole or in part without written permission from the Managing Editor. © 2013, Lee Kuan Yew School of Public Policy, NUS. Global-is-Asian is published quarterly.

The views and opinions expressed in this publication reflect the authors’ point of view only and not necessarily those of the Lee Kuan Yew School of Public Policy, NUS.

22 Singapore’s Political Transition 25 Slower Growth, Stronger Nation?

IN-DEPTH

53 Spatial Justice in Singapore

57 GPPN 2012 Turning the Tide: Policies

for a Changing World 59 Master of Public Management (MPM)

2012 Study Trip to Cambodia

29 The Potential of the Chinese Diaspora

and the Benefits for Southeast Asia

SHRINK WRAP

34 The Cost Disease and its Implications

for an Ageing Society

63 Scholars Without Borders

PHOTO ESSAY

61 On The Move 65 Accolades

38 The Kachin State

66 A Wise Man Knows the Limits of

His Knowledge

18

Sustaining Good Governance in An Era of Rapid and Disruptive Change

25

Slower Growth, Stronger Nation?

38

The Kachin State

53

Spatial Justice in Singapore

ISSN 1793-8902

8

34

Securing a Future for Dignity

The Cost Disease and its Implications for an Ageing Society

Dean’s Provocation

Are Good Public Policies Going viral?

by Kishore Mahbubani

W

hy is violence declining? Why are wars diminishing? Why is poverty disappearing? Why are global middle classes exploding? Why is global trade growing?

Given the zeitgeist of pessimism in the West, it is hard to believe that year by year the world is becoming a better place.

Many in the West look ahead at this decade with great foreboding. Yet in this decade, in 2015, one of the few UN Millennium Development Goals (MDGs) that will be met will be the halving of global poverty.

In this decade, the size of the Asian middle classes will explode from 500 million in 2012 to 1.75 billion in 2020, more than tripling in eight years. The global middle class will also grow from 1.8 billion today to 3.2 billion by 2020. Even the US National Intelligence Council (NIC) has predicted that global poverty will virtually disappear by 2030.

So, what is going right with the world?

In an effort to find the deeper causes of this great global resurgence, I decided to write The Great Convergence: Asia, the West, and the Logic of One World, which went on sale in February. In doing the research for this book, I came across a shocking amount of good news. All this led me to the conclusion that despite many obvious (and not so obvious) global pitfalls ahead of us, humanity is well on its way towards creating a peaceful new global civilization.

Clearly humanity is doing something

right. One key reason why the world is becoming a better place is that nations are beginning to learn better from each other.

Many governments in the world are busy studying “best practices” of other countries and emulating them.

This is especially true in Asia. As a result, many Asian countries traditionally associated with “bad news” are becoming “good news” countries. When Bangladesh was created in 1971, Dr. Henry Kissinger famously remarked that Bangladesh would remain a “basket case.” This “basket case” has been growing at around six percent a year for the past. Sri Lanka seemed to have little hope of turning the corner. It has clearly done so. Most amazingly, barely five years ago, no one (and I must emphasise here, no one) predicted that Myanmar could make a peaceful and happy transition out of military rule. Yet since President Thein Sein assumed the presidency in March 2011, we have witnessed, literally and not metaphorically, the “miracle of Myanmar.”

As I document in The Great Convergence, a lot of new global learning is taking place because we are increasingly living in a single information universe.

Access to data has become easier and easier. With a small solar-powered battery and a simple computer device (tablet or cheap smartphone), remote villages in Africa and India can download useful data. And they do! For instance, the Web Alliance for Regreening in Africa

Dean’s Provocation

(W4RA), a joint project by the World Wide Web Foundation, Vrije University in Amsterdam and the Africa Re-greening Initiative, helps small-scale farmers in the Sahel combat desertification by sharing farming innovations amongst each other through mobile Internet access.

This universal spread of information is basically good news. But, like many types of good news, it is also a double-edged sword. This rapid spread of information is ironically bad news for traditional information providers.

Newspapers are dying. Newsweek ceased its printed publication after 69 years in December 2012. Television stations are struggling.

Now many leading universities are beginning to realise that they too could

become, like printed newspapers and journals, 21st century dinosaurs. “I can see a day soon where you’ll create your own college degree by taking the best online courses from the best professors from around the world — some computing from Stanford, some entrepreneurship from Wharton, some ethics from Brandeis, some literature from Edinburgh — paying only the nominal fee for the certificates of completion,” Tom Friedman wrote in his January 27 column for the New York Times. Hence, most leading universities have decided to work with, not against, this tsunami of information that has been unleashed in our world.

The LKY School will have to do no less. We cannot afford to continue

with traditional models of delivery of education. We have to innovate and stay one step ahead of competition and new waves of competition. Fortunately, we anticipated many of these challenges.

This is why we are rolling out new curricula for both our MPP and MPA programmes in July 2013. Please watch this column for more good news in the rest of the year. Contrary to popular belief, the number 13—and the year of the snake—may be an auspicious year for the school and possibly for the world too.

Kishore Mahbubani is the Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. His email address is kishore.mahbubani@nus.edu.sg

Apple opened its first store in Hong Kong on September 24, 2011, part of its plan to tap into the booming China market. The Asian middle classes will explode from 500 million in 2012 to 1.75 billion in 2020, more than tripling in eight years. Credit: AFP/Getty Images

· J an - M ar 2 0 1 3 · p 2

Spectrum

Singapore in 2012: Balancing Growth with Domestic Imperatives

by Mukul G. Asher and Chang Yee Kwan

S

ingapore has continued to skilfully pursue a business location strategy in 2012, the key requirements of which include keeping the share of wages in the national income below the share accruing to capital, and tapping into new commercial opportunities and economic partners. Predictably, the external sector’s contribution to growth has been, and will continue to be, dominant.

Singapore has officially projected real gross domestic product growth of between 1.5 and 2.5 percent for 2012, lower than 4.9 percent reported for 2011. Indications, however, are that growth in 2012 will be at the lower end of the projected range (GDP growth was officially reported to be 1.3 per cent for 2012). In comparison, the IMF’s World Economic Outlook published in October 2012 projected a global growth rate of 3.3 percent as a whole for 2012 and 1.3 percent for high-income countries.

Despite the moderation in growth rates, official estimates are that the Singaporean economy had generated about 100,000 new jobs in 2012. This represents a credible achievement in relation to Singapore’s total labour force of 3.4 million. The total employment-to-population ratio at 62.4 percent in 2012 compares very favourably with South Korea (48.7 percent) and Australia (50.5 percent). If the experiences of other aged countries hold, however, Singapore may not be able to rely on a high employment ratio in the future.

Total factor productivity (TFP) continues to be a major concern in Singapore. Over the last decade, Singapore achieved TFP growth, including that of labour, of around 1 per cent. The aim of Singapore’s policy makers is to raise TFP growth by between two and three per cent over the next decade. This will require a sustained shift toward a higher value-added and innovation-driven economy.

Inflationary pressures in 2012 are projected to remain elevated at around 4.5 percent, similar to 2011. High inflation is expected to intensify domestic public discourse about large inequalities in income.

The Gini coefficient for wage income of Central Provident Fund members (which excludes foreign workers and expatriates) was officially reported as 0.47 in 2011. The Gini coefficient for total income, which includes very lightly taxed and unevenly distributed capital income, is expected to be even higher.

In addition to concerns about inequalities, there have been growing demands by Singaporean residents to mitigate congestion externalities due to heavy demand for transport networks and recreational amenities; manage competition for positional goods which, by definition, are scarce but highly desired; enhance the adequacy and fairness of old-age financing arrangements; and demands for a more equitable, transparent and accountable polity and society.

Underlying these concerns is the real possibility that the current growth strategy and domestic political arrangements may not provide sufficient upward economic and social mobility opportunities, while exacerbating current insecurities.

Balancing the requirements of Singapore’s growth strategy with domestic concerns will become even more challenging in the future, as individuals expect to exercise greater control, influence and leverage over decisions affecting their lives. Concerns have been expressed that proxies, such as the annual value of housing, which is used to determine eligibility for government benefits, do not take into account the needs of the older generation, which has experienced low wages and relatively high income taxes.

Continuing to pursue high growth under the current growth strategy is likely to intensify domestic concerns. However, if growth moderates to around three per cent, in line with experiences of other highincome countries, and becomes the new norm, re-examining current assumptions and practices concerning economic, social and political management will become even more necessary.

Current arrangements for financing old age illustrate this point. Two key assumptions underlying the current arrangements are that it is wholly possible to finance retirement expenditure by state-intermediated and micromanaged

Spectrum

Orchard Road in Singapore. Inflationary pressures in 2012 are projected to remain elevated at around 4.5 percent, similar to 2011. High inflation is expected to intensify domestic public discourse about large inequalities in income. Credit: yoursingapore.com

mandatory savings, and that the purpose of the pension system is to mitigate absolute poverty. But these measures are inadequate to address old-age risks, particularly longevity risk (risk that a person may exhaust savings before death), and inflation risk (keeping real values of retirement income constant). These assumptions also raise concerns about fairness, particularly by requiring those with greater need but limited annuity resources, such as women, to pay higher healthcare and annuity premiums while not extending even limited health insurance beyond the age of 90.

In contrast, the Singapore International Chamber of Commerce, which represents about 700 multinational corporations, publicly stated that the lack of clarity on foreign manpower policies is hampering business planning. Small and medium enterprises have also indicated a strong preference for the greater inflow of foreign workers. However, an increased inflow of workers has the potential to exacerbate domestic imperatives of mitigating congestion externalities and competition for positional goods.

Since the 2011 general elections, the government has attempted to address a number of domestic concerns. These include making entry requirements for foreign workers more stringent, increasing investment in public transport, revising subsidies to the elderly for healthcare and expanding tertiary education opportunities.

But the challenge of balancing requirements of the current growth strategy with domestic imperatives will continue to occupy policy makers for the next several years. Public policy choices about the nature and quality of balancing between the high growth strategy and domestic concerns will have far-reaching implications for Singapore’s future economic, social and political dynamics.

This is part of a special feature for East Asia Forum, “2012 in review and the year ahead.”

Mukul G. Asher is a Professorial Fellow at the Lee Kuan Yew School of Public Policy.

His email is sppasher@nus.edu.sg. Kwan Chang Yee is a Research Fellow at the Lee Kuan Yew School of Public Policy. His email is sppkcy@nus.edu.sg

The Gini coefficient or index was first proposed by Italian statistician Corrado Gini in 1912. It measures the extent of inequality among frequency distribution of income (or other indicators) among the population (or other indicators). Normally, a zero value of Gini coefficient implies distribution (i.e. no dispersion) in the indicator chosen, such as income in relation to population, the value of one would imply complete inequality.

Thus, normally, the Gini coefficient will have a value between zero and one, with increasing inequality of income or other variables as values become closer to one. · J an - M ar 2 0 1 3 · p 4

Spectrum

Analysing Key Household Income Trends 2012

by Tan Khay Boon

S

ingapore has been embroiled in debates over income inequality issues in the past few years, not unlike other countries in the aftermath of the Great Financial Crisis. In the decade to 2012, the income gap – as measured by the Gini coefficient – has widened from 0.454, unadjusted for government taxes and redistributive transfer, to 0.478, with a higher figure demonstrating worsening income gaps.

Even redistributive taxes and transfers failed to close the gap, with a coefficient of 0.433 in 2002 widening to 0.459 in 2012.

Furthermore, the gap between the bottom and top 10 percentiles has exhibited greater divergence and demonstrates the need for policies to address deepening inequality.

The Department of Statistics released the Key Household Income Trends 2012 report in February, indicating that the reported Gini coefficient, a measurement of income distribution in which a

smaller number means more equal distribution, was 0.478 before government taxes and redistributive transfers and 0.459 after. In 2011, both values were lower at 0.473 and 0.448 respectively.

Median monthly household income from wages increased in both nominal and real terms for 2012, and presents a significant increase in incomes across all deciles relative to the previous years. Between 2007 and 2012, the annualised real income change of the bottom 11th to 40th percentile has been increasing, with a decreasing trend of the 41st to 90th percentile. If this continues, the income gap between the two quartiles may eventually converge. In other words, income inequality may narrow.

Yet, it seems unclear what factors and how each contributed to this marginal improvement. If policymakers and analysts were to better understand the underlying causes for the rise in income inequalities, a greater breakdown of the reported statistics would

Vegetables in a market in Singapore’s Little India district. While Singapore’s use of regressive transfers and progressive tax structures has helped mitigate the income gap somewhat, it did not manage to prevent the Gini coefficient from increasing. Credit: Flickr/Aaron P

Spectrum

The unexplained omission of both non-labour income and households with no labour force participation and non-labour income presents a less than representative picture. Intuition suggests that the Gini coefficient may, in fact, be larger than what was reported.

be very beneficial in the recommendation of corrective measures, especially for the lower income groups. Two pieces of statistics can further illustrate this.

In 2012, the bottom and top 10 percent of households saw a nominal income increase of 4.3 percent and 9.6 percent respectively but Singapore’s reported annual inflation stood at 4.6 percent, erasing the gains for the worse-off in society. While all income deciles would be affected, the impact of inflation is more marked on the lowest decile than the highest, as they spend a disproportionately bigger share of income on goods and services which make up the consumer price index. Adjusting for inflation and the proportion (weights) of expenditure, real income actually fell by 1.2 percent for the bottom 10 percent income stratum, but still increased by 5.1 percent for the top 10 percent income stratum.

Another statistic to consider is imputed rent, an item in the CPI basket. Imputed rent is the rental income forgone by the owner in occupying his/her own accommodation. This effect is very evident to those who do not own, and rent public housing, namely those in the lowest income bracket. If imputed rent is removed from the CPI, a similar calculation will indicate that real income of the lowest 10 percent income stratum actually increases by 0.8 percent while real income of the top 10 percent increases by 5.6 percent.

Seen another way, any increase in the CPI, or any one component in it, affects the lowest income decile more adversely than others.

The Household Income Trends report acknowledges that households could potentially have non-work sourced income such as capital income that was not included, for instance, rental income, while the reported Gini was computed using only labour income (which is only 42 percent of total GDP in 2011). Capital income comes from investment dividends and rental income earned by households with more than one unit of housing or have spare capacity in their current ones. Incomes from either source can be substantial and are likely to only be accrued to those who have a greater ability to save.

The reported Gini is also derived using data from households with at least one working individual. In Singapore, 9.2 percent households are not in the labour market and are excluded from the calculation. They cover the spectrum from households dependent on working adult children, transfers from the government or their pension payouts to those who enjoy accrued savings from capital, rental or other non-labour incomes.

The unexplained omission of both non-labour income and households with no labour force participation and non-labour income presents a less than representative picture. Intuition

suggests that the Gini coefficient may, in fact, be larger than what was reported.

Policy Tweaks Needed An increasing income gap as reported in the Household Income Trends 2012 report can become a source of anxiety if steps are not taken to reduce it. While Singapore’s use of regressive transfers and progressive tax structures has helped mitigate it somewhat, it did not manage to prevent the Gini coefficient from increasing.

For the lowest decile especially, existing policies such as income assistance in high inflation periods and the expanded use of goods and services tax vouchers are helpful in raising real incomes.

Lower public housing rental, greater rebates and subsidies on utilities, healthcare and ways to further this group’s ability towards homeownership also go some way towards mitigating current income inequality levels. While the use of government taxes and transfers reduce the income gap to some degree, this merely addresses immediate needs, and does not help raise the long-term earnings potential of the various groups.

There is a general positive correlation between higher incomes with technical change and productivity improvements. This is reflected in the managerial and technical skill sets of individuals, notably those who manage domestic enterprises. However, lower income groups are often unable to capitalise on such improvements.

Attaining new skills often favours higher income workers as this is the group who can better afford to take time out for retraining.

In contrast, older workers and those whose skills have become obsolete will be the most adversely affected.

Singapore’s policy-makers may do well to formulate policies to focus on making training and education opportunities available and accessible, restructuring local small-and-medium enterprises, widening the safety-net for enhanced risk-pooling through insurance and budgetary financing against external shocks. These policies in tandem may help social mobility. A compelling case can also be made for retirement financing as acknowledged in the 2013 Singapore Budget. These are all steps that would go far towards reducing income inequality in Singapore.

Tan Khay Boon is a Senior Lecturer with SIM Global Education. He previously taught at Nanyang Technological University and SIM University, and is a regular commentator in the media on a variety of economic issues.

He can be reached at tankhayboon@sim.edu.sg

· J an - M ar 2 0 1 3 · p 6

Spectrum

Managers Making Bad Decisions

by Roger Marshall

In a time of rapid change, habitual thinking has its dangers. Roger Marshall gives some pointers.

T

he human brain is an amazing organism, but it has a processing capacity weakness – we can only think about a relatively few items at once. One way nature compensates for this weakness is to lead us to rely on habitual thinking.

Habitual decisions are known to academics as cognitive heuristics; mental shortcuts based upon either formal learning or experience. For instance, when an adult crosses the road no conscious thought to look right, look left, and then right again before crossing is required. This particular heuristic is very useful; it saves processing capacity and time.

The problem is that cognitive heuristics only guide you to a good decision if the context of the environment hasn’t changed. Your “crossing the road” heuristic could save your life in Singapore where cars keep to the left of the road but if you are crossing a road in the US it could result in your death!

Our business environment is changing with frightening speed. With this rapid change comes even greater pressure on business people (and other individuals in positions of authority) to make yet more decisions, sift through yet more data and do it all in a shorter and yet shorter time-span.

What does the human brain do in response to this pressure? We rely more and more on our cognitive heuristics of course! But herein lies a trap. These heuristics become less accurate decision guides with the speedier environment changes.

What can we do? I offer four guides.

The first is to keep learning. The body of technical knowledge is roughly doubling every two years, so our knowledge structures become outdated very swiftly.

The first way to learn is from experience.

In the same way that a company builds a customer database over the years of dealing with them, every executive should build their personal knowledge database by thinking through the day’s events and decisions and mentally cataloguing the experiences therein. Because it is very hard for modern professionals to take time out and think about what they do and how they could do it better, the second way of learning – through structured courses – is also often a good idea. Lifelong learning is not an abstract idea or even an optional extra, but a very necessary, fundamental practice. Universities have a vital role to play in this respect and must build capacity and skills to meet the burgeoning, and continuous, needs of decisionmakers of all ages.

The second guide is to remember that the basics of the professions do not change, even though the operational and delivery systems do. Thus we are still in the business of finding ways to engage our customers and to satisfy their needs in an efficient (and profitable) way. We know that a segmented, personalised, targeted market offering is more likely to satisfy our customer. We know that we must identify and develop a unique competitive advantage for our organisation, and that developing a positive culture within our organisation is critical to its health. The technologies we have to attain these ends are changing dramatically; the ends themselves are not. Keep focussed on the ends and don’t be blinded by the means.

The third is to dig out and polish off the old adage that you must “keep it simple.” A quick Internet search reveals the alarming facts that in 2006 there were 2.7 million Google searches, but currently

they number 31 billion every month.

Facebook has 800 million active users, adding more than 200 million in a single year. We are becoming swamped with information and the ability to pluck out the few salient facts that really count is critical to making sensible decisions. I am not suggesting that all managers need a degree in higher informatics or mathematics, but I am suggesting that managers who do not even develop simple analytical skills will inevitably make poor decisions. This point, of course, links back to the requirement of lifelong learning and the role our tertiary institutions play that was mentioned above.

It also has critical implications for the way in which universities teach decision makers, to ensure that students are tightly focussed on the decision itself, and are taught to reach for appropriate tools to help rather than focussing upon the tools themselves.

Finally, and almost counter-intuitively given that we are making more and not fewer decisions, we must learn to avoid knee-jerk responses in decision situations.

Take the time to check that the decision environment is essentially the same as the last time a similar decision was made. In academic jargon we speak of “dropping your (inappropriate for the environment) tools.” Cognitive heuristics are a naturally efficient way to handle processing overload, but in a rapidly changing decision environment they can also mislead you to into trying to fit yesterday’s solutions onto today’s problems.

Roger Marshall is currently senior Professor of Marketing at the Auckland University of Technology. Prior to his current appointment, he had a successful business career for two decades, followed by a 13-year long academic position at the Nanyang Technological University, Singapore. He remains deeply involved in cognitive psychology, focusing on individual decision-making processes and behaviour. His email is roger.marshall@aut.ac.nz

Spectrum

Securing a Future for Dignity

by Yap Kwong Weng

Human dignity needs to be embraced amid increasing humanitarian and social challenges. Yap Kwong Weng, a Young Global Leader of the World Economic Forum, tells us why.

C

an dignity be a global movement? It is already one.

Global Dignity is the brainchild of three concerned global citizens who met as Young Global Leaders at the World Economic Forum in 2006, HRH Crown Prince Haakon Magnus of Norway, Professor Pekka Himanen Professor at the University of Art and Design, Helsinki

and John Hope Bryant, CEO of Operation Hope. Young Global Leaders represent the future of leadership, coming from all regions of the world and representing business, government, civil society, arts and culture, academia and media, as well as social entrepreneurs. Since 2006, they have worked with many Young Global Leaders and partners from more than 50 countries,

hosting what are known as Dignity Days.

This involves visiting local schools and communities around the world and teaching a “course in dignity” to youth.

This is a positive step forward, but the buck cannot stop here. More needs to be done by civil society to collectively strengthen human dignity in our crisesridden world.

Photo by Hu Qiren · J an - M ar 2 0 1 3 · p 8

Photo by Hu Qiren

Spectrum

Dignity and Development Ignoring human dignity as a precondition to the broader developmental agenda is dangerous. Professor of Politics George Kateb from Princeton University proposes that dignity is an “existential” value that makes up the identity of a human being. Injuring this identity would bring about negative societal consequences.

In Southeast Asia, Cambodia, Laos, Myanmar and Vietnam will clearly be testing grounds. The economies of the region have all registered positive results at a growth rate of five percent. Since 2010, tourism in these four countries, also known as the “ASEAN 4”, has also increased significantly despite the uncertain global economic situation. These developing countries are resource rich but are trying to make some very difficult transitions. Poverty, unemployment, human trafficking and marginalised communities continue to remain as some issues that require urgent attention.

The good news, however, is that these developing countries are gaining traction in regional economic integration and the liberalisation of global trade. With Vietnam currently leading the pack – these economic developments could level the playing field in poverty, unemployment, security, politics and healthcare.

Having said that, economic independence is no guarantee of peace.

Over in the Middle East, revolutions are taking place partly due to the lack of recognition on human dignity. Take the Arab Spring for example. This social movement highlighted a deeper human problem – humiliation and disrespect – which is an anti-thesis to dignity. This was exemplified when Mohamed Bouzizi, a jobless Tunisian graduate, set himself on fire after police confiscated his unlicensed fruit cart in 2010. His suicide sparked off massive protests that led to the fall of several political leaders in the Middle East and North African region, including former Tunisian President Zine al-Abidine Ben Ali and Egyptian President Hosni Mubarak.

Regardless of how the Arab Spring has reshaped the world, the clear lack of human dignity continues to affect many societies. In a world with rising urbanisation, middle-class booms and challenges of aging societies, reforms in social and economic domains can no longer just be the “new normal” but the priority for governments and organisations. Separately, economic uncertainty alone should not provide a pretext to guide such reforms especially when the global humanitarian challenge is expected to become larger in the future.

Preventing, Not Managing, Crises Prevention is better than cure. It is not just governments that are responsible in recognition of human dignity. Civil society plays a critical role in broader ownership. The media can choose whom to feature, consumers can choose goods and services from socially responsible organisations, and young people can work with stakeholders to plan and lead change.

Former United Nations Secretary-General Kofi Annan reminds us that “human beings are at the centre of everything we do – from conflict prevention to development to human rights”. So, whether it is tackling issues in human rights, natural disasters to establishing government legitimacy and economic stability, human dignity plays a key role in development.

The ongoing fight for human dignity has become tougher in our inter-connected world. For one, the world may not necessarily become better off as it experiences technological advancement and economic growth. While globalisation has created new risks, it has also opened doors of opportunity in economic cooperation, social reform and human rights.

In 1995, Hillary Clinton, Former U.S. First Lady, gave a remarkable speech on women’s rights in Beijing, saying, “We have not solved older, deeply rooted problems that continue to diminish the potential of half the world’s population”. Until today, many of same challenges remain to engulf our society.

Issues such as discrimination against marginalised communities, human trafficking and ethnic violence are still not solved.

Dignity for Stability Global consequences could be dire should countries choose to ignore human dignity as a precondition to social stability. If everyone agrees on dignity, then what is the problem? First, the principle of dignity is difficult to quantify. Second, the priority of maintaining dignity is perceived to be less urgent than other global concerns such as terrorism, demographic imbalances and climate change. Third, the consequences of dignity are not necessarily seen as a critical factor for informed decision-making in social reforms.

Regardless of culture, race and religion, dignity is a necessary condition for social solidarity. Maybe one day, macroeconomic challenges can be tackled through “the use of policy measure” and “dignity tested” implementation, says Young Global Leader Lutfrey Siddiqi and Managing Director at UBS. Maybe one day, a dignity scale can be used as a yardstick in assessing social policy development and conflict resolution. The possibilities are infinite but the key question is: “Will society give dignity a chance to flourish?” Clearly, the future of dignity lies in the hands of civil society.

True development can be achieved if lives are improved with dignity enhanced. Promoting dignity as a legitimate cause, not as an elusive ideal, could be a possible departure point to close development gaps. In the end, every human being has the right to lead a dignified life, and to have access to resources to fulfill one’s potential. Therefore, human dignity must be recognised and protected. It cannot be excluded from the social equation.

As founders of Global Dignity put it, “In a world where it seems no-one agrees on anything, a world where politics divides, religion divides, and race and even cultural borders seem to divide, dignity is something that everyone can agree on”. This couldn’t be truer today.

Yap Kwong Weng was honoured as a Young Global Leader of the World Economic Forum in 2012. He is a Rotary Peace Fellow and the Country Chair of Global Dignity – Cambodia. He holds a Master of Public Administration from the Lee Kuan Yew School of Public Policy, and can be reached at yapkwongweng@gmail.com

· J an - M ar 2 0 1 3 · p 1 0

Spectrum

The Policy-Maker’s Dilemma

by David Skilling

I

n Singapore, as across much of the developed world, governments are facing pressure to change economic and social models in order to address a range of emerging challenges such as inequality, slowing growth, fiscal imbalances, and environmental pressures. Changes need to be made to the prevailing policy approaches to ensure that policy settings are appropriate to a new context, and so that governments can continue to deliver the desired outcomes. And over the next few decades, governments will need to respond to the substantial, disruptive changes that are likely across the world, from the increasing role of emerging markets to an aging population.

A modified version of the policy status quo is unlikely to be sufficient to address many of these challenges.

The better analogy would be periods of more significant policy change, such as in the 1930s/40s and the 1970s/80s, in response to major new economic and social challenges.

And yet there has been relatively little policy change to date. This is broadly true in Singapore, where there has been a consistency of policy direction, as it is elsewhere across developed countries.

Although there is awareness in many governments that the world is changing, it is difficult to identify major structural policy change. Rather, there seems to be a common view that an improved version of the current policy approach is all that all is required to respond satisfactorily.

So what explains this apparent policy inertia? One part of the answer is policymaker risk aversion. Almost by definition, policy change is costly and uncertain.

Alternative approaches are uncertain and unproven, and the politics of major change can be challenging. In such an environment, there is a clear incentive for decision-makers to delay making a change: waiting may either resolve some of the challenges or make the need to respond more pressing and obvious.

This is particularly the case for governments of successful countries.

These governments may have become accustomed to a particular policy approach working very well, and have an expectation that this will continue. So when economic and social outcomes worsen relative to historical standards of performance, the government’s tendency may be to stick with the status quo while the policy approach is still working tolerably well.

A new approach will often not seem warranted – at least not yet.

The choice between ‘kicking the can down the road’ (or making tactical adjustments to the current approach) and making a structural change to the strategic direction is a difficult one. I call the challenge of determining how seriously – and when – to respond to a challenge ‘the policy-maker’s dilemma’, because of the similarities with the famous innovator’s dilemma in the private sector.

Spectrum

Image by Cheng Puay Koon 路 J an - M ar 2 0 1 3 路 p 1 2

Spectrum

Responding to disruptive innovations Harvard academic Clayton Christensen developed this concept of ‘the policy-maker’s dilemma’ after observing the tendency for established incumbent firms to ignore disruptive innovations because they were not seen as important enough to require change to the established business model. Firms were more responsive to existing ways of doing things and not sensitive enough to disruptive innovations. They were often aware of the change, but it was not seen as worthwhile to respond. The dilemma is the extent to which the firm incurs costs, and moves away from a successful model, to respond to this disruption.

The difficulty in responding is why market leaders are commonly overtaken by new dynamics. By the time that the competitive threat becomes large enough to get the full attention of the firm, it may be too late. Challenger firms (think Amazon, Google) can become dominant before the incumbents think it sufficiently important to respond.

Ironically, perhaps, it is the more successful firms that are more likely to act in this way. Well-performing firms can be held captive by the success of their existing approaches and there is understandable reluctance to move away from a model that is still working tolerably well. Indeed, Christensen argues that it is exactly the successful, well-managed firms that may be at most risk of failure to respond to disruption. Management practices and capacity that enable them to succeed in mainstream markets are also those that make it more likely that they don’t respond well to disruptive innovation. The things that have made them successful may make failure more likely.

Of course, countries do not go out of business in the way that firms do. But a failure of national governments to respond to structural changes in their operating environment can lead to compromised outcomes. Economic history over the past century is full of examples of countries whose performance deteriorates substantially (Argentina was once one of the richest countries in the world, for example).

This can be because governments continue

with a policy approach that is no longer appropriate for a changed environment.

And there is significant variation in economic performance across the decades, with high-performing countries often not able to sustain this performance. Countries, and particularly small countries, need to be sensitive to the changing strategic environment and to be able to judge when a change in strategic policy direction is required. A failure to do so can lead to lagging economic and social performance – and the longer that change is delayed, the more such problems can accumulate (as has been seen recently in several European countries).

Preparing for change Governments seem to find it difficult to make the strategic policy choices to respond to the emerging disruptions, in a similar way as the firms that Christensen documents. This is sometimes because the alternatives are not yet clear, or because elected officials are using a short-term decision-making horizon. And sometimes it may be because there is not sufficient social consensus (or low trust in politicians) to allow policy-makers to make the change.

But the observed inertia in responding to disruptive change is also due to the nature of the decision-making process within government. So what are the things that can be done to strengthen the capacity of governments to address the policy-maker’s dilemma? I would suggest three things: First, investments should be made to respond to the changing world and the strategic challenges and opportunities that would be presented. This understanding allows governments to better judge when structural change is required as opposed to a tactical response, and avoid having tensions accumulate into a crisis.

For example, dealing with declining competitiveness directly through measures to improve productivity is preferable to short-term measures such as loose fiscal policy that can create more problems than they resolve.

Second, conversations about change should be informed by rich data so that there is a shared understanding

of the outcomes that are being generated – and how they compare with historical outcomes, and with other countries. And the policy conversations should also be informed by how other, similar countries are responding to these dynamics. Given the extent of uncertainty, it is important to understand how other countries are interpreting the change and responding. Context matters, and there is no template for success, but countries can learn from their peers. These country observations will make the debate about the need for change more concrete and real.

And third, there need to be institutions and cultures that are comfortable with challenging the status quo. ‘Faith-based policy’ – a dogmatic attachment to the existing policy approach – needs to be confronted. A review of the IMF’s performance before the crisis identified an “institutional culture that discouraged contrarian views” as a major factor in explaining why some warning signs were missed. And these behaviours are seen in many governments. To address this, it is important to encourage strong debate, a constant testing of existing approaches, and investing in a pipeline of new ideas. This is often done through dedicated units or teams who have a mandate to constructively challenge the orthodoxy and develop policy alternatives – and who are less attached to the current approach than the mainstream government agencies.

In a period of disruptive change across the advanced economies, governments need to be strengthening their strategic capacity to enable them to respond to the policy-maker’s dilemma. And particularly for small country governments, developing the capacity to detect weak signals of emerging change is important so that they can better judge when and how to respond. The existence of the policymaker’s dilemma needs to be recognised and deliberately addressed.

Dr David Skilling is Director at Landfall Strategy Group, a Singapore-based government advisory firm. His email is david.skilling@ landfallstrategy.com

Focus

SINGAPORE:

A Contested Space

by Geh Min

In land-scarce Singapore, the contestation for space has ignited a robust debate on what it means to belong. Geh Min, a former president of the Nature Society (Singapore), adds her voice to the cacophonous conversation.

T

he dialectic over Singapore’s much-debated White Paper for 2030 has been split over the size and composition of the projected population then, and what would be needed in infrastructure and land use to meet that need. I would like to look at the interface between the two, and look to that complex, dynamic and unpredictable interface where the two essentially interact. A society is more than just the quantum of populace and services to meet their needs. It is about a sense of home and identity.

Without a shared sense of home, we cannot achieve social cohesion. A population of five, six or seven million on this island would be stressful and ultimately intolerable. Yet high density and proximity has its advantages, including creating ease of access, greater choices and dynamism when calibrated to the benefit of the majority. Such a sense of belonging and shared space requires preconditions.

Founding Vision Fresh from the heady days of independence, with the people defined by what they did not want (colonial rule) rather that what they wanted, our founding fathers had a vision to link people & place –namely, an ambitious aim of having everyone own his/her home. This bold idea turned into a reality of a world-class model of public housing that anchored one’s sense of belonging, a sense of home.

It was not without its downside. In the abrupt shift from rural to suburban, from river, coastal and village communities to a highrise city-state existence, the mass upheaval of moving people into flats also created a sense of ownership hard to translate beyond the doorstep of an urban apartment. This demonstrated itself in public apathy and anti-social behavior such as littering. There is enough anecdotal evidence that the expanded sense of ownership is selfishly rather than socially motivated.

Fortunately we have also seen an increase in the number of social and communal initiatives for the larger good. Some of the have aligned well with government policy (Community in Bloom, Waterways Watch), others have been more contentious such as the movement to protect Bukit Brown Cemetery from development. A few more, such as the move to protect the Chek Jawa mangroves and the railway land handed to Singapore after decades of Malaysian ownership, called the Green Corridor, started off controversially but have had, for now, a happy outcome. All should be viewed as expressions of a desire to protect and enhance our shared ownership rather than judged by whether they fit into current government policy. Indeed, government policy makers including land use planners should consult far more widely before coming up with their blueprints and white papers.

What was in the past an effective top-down approach may not be as appropriate as seen by an increasing number of policy U-turns

· J an - M ar 2 0 1 3 · p 1 4

Focus

Certainly, a reflection of courageous admissions of past mistakes may address the trust deficit needed to ensure genuine consultation and discussion to help formulate future policies. Policies are more effective when the constituents feel engaged and respected. recently. Certainly, a reflection of courageous admissions of past mistakes may address the trust deficit needed to ensure genuine consultation and discussion to help formulate future policies.

Policies are more effective when the constituents feel engaged and respected.

A rapidly growing number of educated and articulate Singaporeans with a strong sense of national identity are clearly frustrated by the insufficient avenues for them not just to speak up but to actually make a difference,

Art by Lachine

an encouraging sign of growing nationhood, rather than of impending chaos.

The government initiated an outreach called the Singapore Conversation to “listen to one another’s views on the issues and challenges we face today” in the hope of forging “a better Singapore”. The call emphasises choices. It clearly tries to address concerns beyond the economic model and physical infrastructure that make up the city. For this exercise to succeed, it must be inclusive, continuous and productive.

In short, a home goes beyond a place where you have invested your money to one where you have the freedom to make choices and the desire to exercise this responsibly.

Social and Spatial Justice In a country as land scarce as Singapore, spatial justice is as important as social justice, creating a level playing field in jobs and educational opportunities.

The government was far-sighted in perceiving this at the

Focus

onset of independence and implementing it by its public housing policy.

Beyond housing, there must be an equitable use of land for transport and other essential amenities, for industry and investment, and for nature and recreation. Through the Land Acquisition Act, the state is by far the biggest land-owner by which the Urban Renewal Authority is both the arbiter and implementer of land use. By far, this law has been critical in transforming Singapore in the early days of independence, clustering former villagers into suburban housing for cost-effective shared amenities while releasing land for industry and investment to build a new economy. It’s worthwhile looking at this more closely.

Land Use Authority The concept of application of the Public Trust Doctrine is critical here. “When applied to the State, it draws a distinction between ordinary land generally owned by the State as a corporate entity as though it were a private landowner, and public trust land held by the State as the sovereign as though it were a trustee for

specific purposes in the common interest of the public,” Joseph Chin wrote in his 2005 journal article, Reclaiming the Public Trust in Singapore.

This distinction is crucial in any analysis of whether the Singapore government has been a wise steward of this scarce resource. It is not an easy balance. Broadly speaking, the government has done an effective job, bar perhaps a disproportionate number of private golf courses for a minority. But the question arises as to who makes or should make the critical decisions as to how land in Singapore is used? What has been lacking is a stringent need for environmental impact assessments (EIAs) that would not only provide valuable information on impacts and carrying capacities but also help determine what the majority of Singaporeans want.

Particularly worrying is the premise of the White Paper to build in anticipation of demand, namely to build infrastructure and amenities well in advance of a forecast 6.9 million population in 2030. One should pause and ask if we really need to use valuable land and taxpayers money to provide for this hypothetical increase in population.

· J an - M ar 2 0 1 3 · p 1 6

Focus

A rapidly growing number of educated and articulate Singaporeans with a strong sense of national identity are clearly frustrated by the insufficient avenues for them not just to speak up but to actually make a difference, an encouraging sign of growing nationhood, rather than of impending chaos.

When land becomes scarcer and population density increases even more, how is the state going to maintain the precarious balance between land use for the public good and private developments and amenities affordable only by the affluent?

Even expanding our roads and highways may be scrutinised in the context of spatial justice with cars one of the least efficient and most inequitable forms of transport in a land-challenged country.

One of the most embarrassing oversights perpetrated by our planners is the lack of proper housing amenities for foreign labourers – the construction workers, cleaners and domestic workers who contribute enormously to making Singapore the envy of many cities. Yet they lack access to decent housing or recreational amenities. While public housing provides ample parking, the same foresight has not been given to privacy for domestic helpers.

Construction and other workers are housed in third world tenements that even they find intolerable. In addition to one of the highest Gini coefficients, a sign of widening income inequality, this deficiency is another polarising factor in our society today.

A Sense of Continuity While change has its challenges, a sense of continuity is essential to our general wellbeing.

Indeed very few Singaporeans have the luxury of growing old in or even revisiting their childhood home or neighborhood. Such has been the pace of change. It was acceptable in exchange for

a dynamic economy and upward mobility.

As the latter is sacrificed, the old social compact cannot hold. As upward mobility declines, and economic growth slows, it is even more essential that we conserve as much of our natural and man-made heritage, shared memories and familiar landmarks as possible.

The strong public reaction, across the age spectrum, to the potential loss of historical landmarks such as the Railway Line and Bukit Brown are indicators of this growing need for visible and palpable proofs of our shared past. A rapidly changing landscape may be a developer’s dream and entertain tourists but stressful nightmare for those who choose to make Singapore home.

Chan Chun Sing, the Acting Minister for Social and Family Development, said recently that “while it is important to preserve Singapore’s heritage, this has to be balanced against the need for redevelopment” as this “adds new buildings and new areas which in turn allows future generations to create new memories”. Sadly, many of these historic buildings or places have been or will be replaced by roads, highways and other amenities (National Library, Bukit Brown, Khatib Bongsu).

He also argued that because “the previous generation has… given up some of their memories for us to be where we are today, then I think it is also incumbent upon us to pay it forward.” This linear train of thought is deficient. Memories are not a commodity to be bartered or traded.

As with the relationship between wealth and happiness, there is a diminishing rate of return in constant change to the physical environment in the pursuit of “development”. The value of heritage is for subsequent generations to add fresh layers to existing treasured memories to enrich the narrative, not trade old memories for new ones.

Heritage and national values cannot be transmitted by textbooks and political rhetoric alone. A society is defined as much by what we choose to preserve or destroy as by what we create. The Singapore Conversation after all focuses us on the choices we have to make.

A society that places no visible value on continuity would create future generations who are adrift on market forces rather that secured by a shared loyalty to the country and fellow countrymen. How would such a place produce people who are prepared to invest emotionally, to stay longterm, to start a family and to make sacrifices to defend their country? It would be much easier to trade one country for another.

Singapore has evolved from a nation by chance to nationhood by choice.

Let us not deteriorate to a city-state of convenience: A hotel rather than a home.

Dr. Geh Min is the former President of Nature Society in Singapore. She was formerly a Nominated Member of Parliament from January 2005 to April 2006.In 2006, Geh was one of the three recipients of the inaugural President’s Award for the Environment, along with Singapore diplomat Tommy Koh and the Waterways Watch Society (WWS).

Focus

Sustaining Good Governance in An Era of Rapid and Disruptive Change

by Donald Low

H

connectedness with the global economy, to hyper-globalisation and unfettered capital flows, and to rapid technological change that is shortening business cycles.

Politically, the government’s space for manoeuvre has also narrowed. Its traditionally admired solutions in a number of areas – housing, healthcare, education, transport and infrastructure – have come

under greater scrutiny and debate. This partly reflects a more contested political scene, but it also suggests that policymaking has become more complex, and the tradeoffs shaper and starker.

These economic and political trends will interact with social forces – the ageing of our population, rising inequality, wage stagnation, lower social mobility, and a

Credit: Nizam Ismail

ow we can sustain good governance in an era of rapid and disruptive change? I believe that more so than before, Singapore will face greater volatility, uncertainty and complexity.

We have seen this economically: we experienced more shocks to our economy in the last 15 years than in the 30 years before that. Much of this is due to our growing

· J an - M ar 2 0 1 3 · p 1 8

Focus

Resilience is the capacity of a system to bounce back – not necessarily to its original form – but to a state that allows the system to maintain its core purpose and integrity, and to continue performing its main functions larger foreign population – to create new stresses on social cohesion.

Citizens’ trust in government’s ability to deliver can also no longer be assumed. The pristine “policy lab” that our policymakers used to operate in is being replaced by a more critical public, and by a more diverse polity with competing interests. Increasingly, our policymakers have to make hard choices (where there are winners and losers), not just remind themselves of hard truths.

Sustaining good governance in this new context is not impossible, but it would require significant institutional and policy reforms on the part of the government.

The Resilience Imperative In an era of rapid and disruptive change, the most valuable asset a government can have is resilience. Resilience is the capacity of a system to bounce back – not necessarily to its original form – but to a state that allows the system to maintain its core purpose and integrity, and to continue performing its main functions.

Resilience – whether of an ecological system, an organisation, or a species – is usually a function of two things. First, a resilient system is one which has been exposed to a variety of shocks. Each of these shocks is not large enough to destroy the system but over time, they force the system to adapt, and to develop capabilities to respond to a wider range of shocks and stimuli. (This is Ashby’s Law of Requisite Variety.) Conversely, systems which are fragile are those which have been insulated from external shocks or protected from competition. This is why the Galapagos Islands are ecologically so fragile, even if they are stable and sustainable.

We also saw in the financial crisis how a lack of variety created a highly fragile financial system. The health of banks became tied to the availability of cheap credit, rising house prices, and the

willingness of home owners to continually refinance their mortgages. Financial institutions mostly pursued a strategy of originating and then securitising subprime mortgages. The result was too much mimicry and insufficient variety in the financial system. Such monoculture systems can exhibit long periods of stability, but are also extremely vulnerable to the slightest shock. The collapse of Lehman Brothers Holdings Inc. in 2008 had such far-reaching and catastrophic consequences, not because it was a large investment bank, but because it was highly connected in the US financial system.

And because many other institutions were doing the same thing, there was a great deal of “interlocking fragility” such that when Lehman collapsed, the entire banking system became vulnerable too.

The second essential ingredient of a resilient system is selection. Resilient systems all have some mechanism for “choosing” between competing strategies and designs. We normally think of the selection process as being undertaken by individuals or leaders. But we can also think of selection as being undertaken by impersonal forces such as the market.

Markets are resilient because they encourage variety and diversity, and because they are a highly effective way of selecting “fit” strategies or designs – and then replicating and scaling them up. As the economist William Baumol points out, markets are “innovation machines”.

This resilience perspective – which I have used to describe ecological and economic systems – can also be applied to the study of governance systems. If we agree that what governance needs most in the context of rapid and disruptive change is resilience, then we would also agree it needs to foster diversity and variety, as well as competitive selection processes that are not reliant on a few individuals making the “right” calls.

While it is extremely tempting for the human mind to respond to more shocks with a desire for control, harmony and stability, the reality is that the avoidance of shocks and failures is a utopian dream.

More problematically, insulation from competition and shocks breeds brittleness and fragility.

A political system can also suffer from too much mimicry, and have too little variety to allow for the experimentation and adaptation that is needed for longterm survival. Without sufficient variety, a political system can become trapped by “groupthink” and ideological rigidity. The psychologist Irving Janis coined the term “groupthink” to explain poor decisionmaking by groups. Its key signs are a strong illusion of invulnerability by decision makers, a belief in the inherent morality of the group, the stereotyping of those who do not agree with the group’s perspective, and simplistic moral formulations that discourage deeper, rational analysis. Selfappointed guardians of the dominant ideology prevent alternative views from being aired and place significant pressure on dissenters, creating an illusion of unanimity, even if dissent is rampant below the surface.

I believe that this resilience perspective ought to replace the vulnerability narrative that the government

Monoculture systems can exhibit long periods of stability, but are also extremely vulnerable to the slightest shock. frequently relies on. Rather than emphasise our vulnerability and how this imposes all sorts of constraints on what Singapore can do or can be, resilience thinking frames the discussion on governance expansively. It invites us to think about what

Focus

While it is extremely tempting for the human mind to respond to more shocks with a desire for control, harmony and stability, the reality is that the avoidance of shocks and failures is a utopian dream. More problematically, insulation from competition and shocks breeds brittleness and fragility. institutional shock absorbers we need in a more volatile world, how we can achieve a better allocation of risks between the state and citizens, and how we should secure Singaporeans’ confidence for the future.

Better Institutions Having identified resilience as the central imperative for our political system today, let me suggest two areas of reforms entailed by taking a resilience perspective to governance. The first is that we need better institutions, rules and norms to

safeguard good governance in Singapore; the second is reforming meritocracy.

First, better institutions, rules and norms. For those of you who are familiar with the principles of governance taught in schools, you’d know there are four of them. The first of these is “leadership is key”. The elaboration of this principle is that given our inherent vulnerabilities, Singapore needs leaders of great ability and high integrity, individuals who will do “what is right, not what is popular.” I think most Singaporeans will agree that effective

and far-sighted leadership is essential for Singapore.

But if we apply a resilience lens, as opposed to just a vulnerability perspective, then we’re likely to say that leadership matters, but good institutions matter too and possibly matter more in the long run.

This is partly because leadership is highly context-dependent. Good leaders in one context may make for terrible ones in another. Winston Churchill was a great wartime prime minister for Britain; but less effective in peacetime.

A volunteer (R) filling up a food tray at the Singapore Buddhist Lodge where free vegetarian meals are served daily in Singapore. With inflation spiralling to a 26-year high, places like the Singapore Buddhist Lodge where free meals are served have become an unlikely refuge for low-income Singaporeans.

Credit: AFP/Getty Images

· J an - M ar 2 0 1 3 · p 2 0

Focus

Rather than emphasise our vulnerability and how this imposes all sorts of constraints on what Singapore can do or can be, resilience thinking frames the discussion on governance expansively. It invites us to think about what institutional shock absorbers we need.

But more importantly, the “leadership is key” principle goes against the grain of my argument that what determines resilience is not some wise man or a group of elites determining what “right” answers look like. Rather, it is by ensuring sufficient variety and diversity in the system that we increase resilience. In the long run, we are better off relying on system of distributed intelligence, on Singapore having a diversity of ideas and competing options than on a system that is critically dependent on a small group of bright people.

So beyond the “leadership is key” principle, I would like to see a principle around the importance of having institutions that support dissent, variety, experimentation and selection. Translating this into practice would see the government giving citizens and researchers more access to information, and supporting social science research as much as it does with the hard sciences. Greater transparency bolsters trust in our system of governance, and enhances government’s credibility.

Encouraging greater variety might also mean instituting the practice of red teams vs. blue teams across government to encourage a healthy contest of ideas. Because the executive has been a highly successful one that has been relatively insulated from competition, the risks of insufficient variety, and of inadequate pressures for it to adapt, are quite real. It therefore has to make a special effort to create mechanisms that would foster greater variety and selection in the system.

Leaders of the ruling party in Singapore have, in the recent past, expressed their concern about how increasing polarisation might paralyse government. I’m more worried about how the human desire for control, harmony and stability, might weaken the already weak incentives for policymakers to allow competing ideas to surface, and to subject

these to serious debate and analysis. In short, I’m less worried about the risks of polarisation than I am about the numbing effects of incumbency, the inertia of the status quo, and the tyranny of old ideas.

Reforming Meritocracy A second principle of governance that we hold dear is meritocracy, the idea that rewards should be allocated on the basis of a person’s talents and abilities. But an equally critical question that we should ask is what rules should constrain the behaviour of those who have done well in the meritocratic system. There is no prima facie reason to believe that those who have succeeded in a meritocracy will channel their energies to improving society’s well-being.

Indeed, as the crisis has shown, it is possible that those who have succeeded in a meritocracy engage in morally hazardous activities, and demand government bailouts when the risks they have taken go bad.

The kind of meritocracy that was practised on Wall Street also breeds a self-justifying, entitlement narrative. Wall Street bankers justified the decision to pay themselves millions in bonuses from bailout monies on the grounds that not doing so would cause talent to leave the financial industry. This kind of meritocracy breeds a belief among its beneficiaries that they are entitled to their rewards, that the market system is inherently just, and that inequality is natural. They view those who have not succeeded in the system as slothful or lacking in merit – and thus undeserving of state support. Such a system increases resistance by the rich to the redistributive policies needed to address inequality.

Over time, it entrenches inequality and immobility, and society becomes more stratified and divided by class.

Singaporeans are often reminded of the risks and moral hazard problems of providing more help for the poor. This

is the main justification for why we must not have a welfare state. The crisis is a timely reminder that the risks of moral hazard are far greater when the rich are not properly regulated and reined in.

Corporate malfeasance imposes much larger costs on society than the often cited entitlement mentality of the poor addicted to government welfare.

In the long run, we are better off relying on system of distributed intelligence, on Singapore having a diversity of ideas and competing options than on a system that is critically dependent on a small group of bright people.

So to conclude, I would very much like to see the principle of meritocracy augmented by a principle that emphasises fairness and social justice. Translating this into practice means avoiding conflicts of interest, ensuring the independence of public institutions, having strong safeguards against regulatory capture, and increasing transparency and public accountability. It also means strengthening our social safety nets and other redistributive institutions, and ensuring a fairer allocation of risks between state and citizens, between rich and poor.

Donald Low is Senior Fellow and Assistant Dean (Research Centres) at the Lee Kuan Yew School of Public Policy. He has administrative oversight of the School’s research centres and leads the School’s case writing efforts.

Focus

SINGAPORE’S Political Transition

by Gillian Koh

There is a heightened sense that Singapore is in political flux. Gillian Koh reports on the current climate.

T

he party that has governed Singapore since 1959, the People’s Action Party (PAP), has had to face bruising political contests in the General Election of May 2011, where it suffered a 6.5 percent decline in its vote share vis-à-vis its political opposition.

In two subsequent by-elections in May 2012 and January 2013, it lost to the candidates of the main opposition party, the Workers’ Party.

These developments reflect a mood on the ground that people want change – change in the way the government relates to them and by which it designs its public policies; change in the way that citizens want life and society ordered. Also, what emerged are the diverse views about what those changes should be.

There is a ‘secular trend’ towards a greater level of political pluralism among Singaporeans, who are now more educated and

Fireworks from the Singapore Flyer during festivities for the Singapore’s national day celebrations. The IPS Prism 2012 survey found most wanted the city state to be governed by ‘moral values’ rather than ‘economic goals’ and ‘common sense’. The performance legitimacy that used to be based primarily on economic achievement seems to have run its course with respondents. Credit: AFP/Getty Images

· J an - M ar 2 0 1 3 · p 2 2

Focus

affluent. It is also reinforced by the transition of the younger generations of Singaporeans into the voting public, those who did not participate or witness the early battles of statehood. Products of a more secure society, they also appear to expect political parties to establish a connection with them, directly, and in a way that respects their freedom of choice. They do not want their support to be taken for granted. With Singapore being an open, highly globalised citystate, the benefits of development have had a different impact on different people. While the state has made on-going efforts to redistribute the benefits of economic growth with more subsidies and social support especially to the needy and low-income, these have been deemed inadequate, raising a sense of social injustice even as the differences in incomes and lifestyles between those at the working class and the professional and entrepreneurial classes have widened. These are the social bases for the diversity in political interests and attitudes that have arisen.

Trend-Spotting Two surveys of attitudes about the general elections conducted by the Institute of Policy Studies provide some support for this analysis. The Post-Election Surveys of 2006 and 2011 indicated that the desire for political pluralism rises among the higher occupational classes, the more affluent and those who are better educated. The desire for political pluralism is also higher among the younger voters and possibly more so with each set of younger voters. The conclusions will be more robust with more surveys on this matter over time but for now, the electoral results, the political discourse and these sets of data tell us about the changing relationship between citizens and the PAP, and their role in the governance system. A poll conducted by Blackbox Research on Punggol East swing voters, and reported by Yahoo News on 8 February 2013, was conducted right after the election and suggested that while the pocketbook cost of living issues were important to 39 percent of them, 17 percent said the government was not listening to them, of which one-fifth were below 40 years of age. Another 7 percent said they were guided by the need for stronger opposition to the PAP in Parliament in their voting preference, and emphasised the role of a political opposition as integral to governance.

In 2011 and 2012, the Institute mounted a year-long project called IPS Prism to better understand the trends in political attitudes among Singaporeans. It was designed as a scenario planning process centred on the question: How will Singapore govern itself in 2022, which, assuming two regular five-year parliamentary terms, represents two election cycles out from the present. In the first of two distinct stages of the study, 140 representatives of seven key sectors of society were asked to develop scenarios showing the possible trajectories that governance in Singapore might take from now till 2022. In the second stage, one set of scenarios from the previous stage was shared with members of the public who were then invited to share their own thoughts about how Singapore would be or should be governed. In this way, we were able to get a further sense from the ground of what meanings people give to governance; what concerns them and what are their hopes for

it. This was collected in the IPS Prism Survey and constituted the third phase of the project. Its findings are discussed later in this article.

In the first stage, participants identified several trends with the potential to shape governance significantly over the next decade. I will list three that had the most mentions here. One was the sense of national identity and its impact on improving or deteriorating social cohesion. A second trend concerns income distribution, determining if people will have a greater sense of social inclusion or exclusion in Singapore. The third is whether society will focus on material well-being or social objectives and community service.

After further deliberation, participants in stage one identified key trends with the most potential of influencing governance in Singapore. First is the sense of trust and credibility that the government of the day enjoys to secure room to rule effectively.

Second is how society defines success – by material standards or by non-material values. Third is how the social compact between government and people is designed – would it be one tailored to provide greater support to those with the most potential and rewards for the high achievers because of the benefits they bring to the rest of society, or a system that provides a more egalitarian system of distributing support and rewards.

Therefore concerns about the value system of Singaporean society, the national identity and threats to social cohesion such as income distribution and trust in the government are key concerns in the minds of the select group in the IPS Prism workshop process.

These trends and scenarios written based on them, called the IPS Prism Scenarios , were brought to life in an immersive arts experience. Members of the public were invited to participate in creating exhibits and forum theatre designed around the trends and scenarios. Having been through the IPS stories of governance in 2022 they were then invited to share their own stories of ‘life in 2022’. Using a method called Narrative Capture, people who attended the immersive arts experience held at the National Library Building between 8 and 15 November 2012 or watched the material that was recorded and placed at an IPS Prism website were invited to volunteer their stories.

Researchers collected data on the respondent’s story and their opinions on other issues related to their values and governance.

A New Electorate Of the 600 IPS Prism participants, about 71 percent was between the ages of 21 and 39, namely the younger working ages.

In all, 81 percent lived in four-room, five-room flats, executive flats, and private property so the affluent were over-represented in this sample. About four in five were Chinese. Half the respondents had no dependents. Almost 89 percent of the respondents were citizens. While the respondents were not representative of the whole population, they fit the profile of the younger, more affluent voters supportive of political pluralism that was suggested in the earlier IPS surveys.

At the risk of simplifying the findings, the results showed that in the balance of government that ‘improves the well-being

Focus

of people’ or that ‘delivers economic growth’ or provides desired freedoms, “good governance” was conceived as attending to wellbeing rather than just achieving economic growth.

Respondents want Singapore to be governed by ‘moral values’ rather than ‘economic goals’ and ‘common sense’. The performance legitimacy that used to be based primarily on economic achievement seems to have run its course with respondents.

Hence trust in government for this group would depend on its moral direction and ability to address the higher order goal of ‘well-being’.

On the matter of providing basic goods such as housing, healthcare, education and transportation, the bias was towards provision by the government with some role for the community. A quarter of the respondents however did indicate that these basic goods should be provided by the government, community and business sector together. When asked which group should be given priority in receiving help from the government, respondents tended to say that in their stories, it was the needy rather than ‘everyone equally’ and certainly not ‘the people who can contribute the most to society’.

When they were asked which demographic group – the youth, the elderly and the working age adults – should receive help first by 2022, the elderly topped the list with only 32 percent saying help should go equally to all three groups.

Finally, respondents were likely to say that the government should help people in a way that encourages independence and allows them to ‘help themselves’, through part subsidies of the costs of people’s basic needs. So, for the IPS Prism participants, big government would still be in fashion in 2022 and its support would be targeted especially to the needy, the elderly and the guiding principle to that help would be to subsidise basic costs of living and to empower. It is not however an ideal-typical form of egalitarianism where support is given to all as equally as possible.

While it might seem like political change is in the air, it may be that Singaporeans are resisting the current governance system that is more market-oriented than the socialist model they grew up with, and one they want to revert to. They want to hold the present-day government accountable to that sort of social compact that seems now, long gone.

The situation in Singapore is not all too different from the political developments in other East Asian countries such South Korea and Taiwan. Long after their democratic transition from authoritarian regimes and economic transformation from state-directed capitalism, the social transition to more diverse and unequal societies has led the respective publics to wish for more state-funded social support. This has been exacerbated by the uncertainty that has arisen from being tied more closely now to the vicissitudes of the global economy since the turn of the millennium. Politicians and policymakers in developed East Asia, including Singapore, now search for progressive social policies to prove that their democratic regimes are responsive and deserve the trust of their people.

These scenarios were called: SingaStore for a pro-business, proSingapore scenario where the public trusts the government because it prioritises economic growth to ensure better-paying jobs for Singaporeans in its planning; SingaGives for a pro-Singaporean scenario where the public trusts the government for its new paradigm of quality growth with a strong egalitarian policy framework to provide significant social support to them; and WikiCity for a scenario where the people sector is very proactive in providing economic and social solutions to citizens’ needs and the government sector is greatly reduced to managing foreign and trade relations as well as defence and maintaining law and order.

Gillian Koh is a senior research fellow at the Institute of Policy Studies at the LKY School. She can be reached at gillian.koh@nus.edu.sg

· J an - M ar 2 0 1 3 · p 2 4

Focus

Slower Growth,

Stronger Nation?

by Linda Lim

Reducing Singapore’s dependence on foreigners won’t affect living standards if productivity and wages rise. It may even help the country’s fertility rate. Linda Lim writes.

C

an slower growth lead to a stronger, more cohesive society?

In debating Singapore’s population policy, some have assumed that fewer foreign workers and lower immigration levels would hurt economic growth and businesses and by extension, Singaporeans’ way of life as well. However, other affluent economies with low fertility, ageing demographics and small populations have managed to achieve sustained if modest improvements in living standards without importing large numbers of foreign labour and talent. Singapore too can adapt with tried and tested technological and business process innovations.

Higher productivity can substitute for more workers in achieving a particular gross domestic product growth rate. Lower aggregate growth is not just inevitable for a mature economy, given diminishing marginal returns to added inputs of labour and capital, but may even be desirable, when real income and total well-being are taken into account (reduced congestion, environmental degradation, income inequality, social unease). It may even have the added benefit of encouraging couples to have children, mitigating concerns about the falling fertility rate in Singapore.

Benefits of Lower Growth Just as higher growth has repercussions, so does a lower growth trajectory.

Economically sustainable activities that may generate lower growth but employ

a higher ratio of Singaporeans would also contribute to higher wage and domestic shares of GDP. Put another way, a higher proportion of a given dollar of GDP would accrue to Singaporeans, so local living standards can be maintained or increased with slower growth. Policy instruments to achieve this could include: investment incentives to hire and train Singaporeans, greater stringency in handing out work permits and employment passes by ensuring there are no qualified Singaporeans for the jobs as is standard practice in some other countries.

Higher wages would encourage employers to improve productivity and attract more Singaporeans into particular jobs, giving both an incentive to invest in upgraded skills (since there will be a higher income payoff).

One way to reduce the chronic excess demand for labour that Singapore has long suffered (despite or because of a liberal immigration policy) occurs when some businesses exit the country. This is a normal process of adjustment to shifting comparative and competitive advantage.

It’s crucial to smooth such adjustments and minimise the costs to both employers and workers by committing to a clear, long-term labour market policy not subject to short-term business or electoral cycles.

Such a policy should not be bluntly applied but nuanced and gradual, according to the circumstances of individual sectors and businesses.

Economic planning agencies need to

be involved in calibrating the demand side of the labour market. For example, they shouldn’t provide incentives to businesses whose highly specific manpower needs require a heavy reliance on imported labour and talent, with few jobs for native Singaporeans, or favour highly landintensive businesses.

Choices and trade-offs must be made—not between growth and foreign labour dependence, but between different sectors contributing to growth.

Benefits of “Failure” One could anticipate that businesses that cannot or would not pay higher wages would fail, easing the manpower shortages that fuel inflation and increasing supply of skilled workers for those businesses that remain. A reduction in demand would alleviate any labour shortage.

Choices and tradeoffs must be made — not between growth and foreign labour dependence, but between different sectors contributing to growth.

One often missed opportunity in the debate is the concept of higher operating costs from rentals –fewer foreign workers reduces pressures on the housing market and on commercial rents to the benefit of

Focus

It is a mistake to imagine that higher wages with higher productivity and moderating rents necessarily mean higher costs. But if they do, these are costs Singapore’s consumers will have to pay. As consumers are also workers, their real incomes may increase with higher salaries, lower rents and mortgage payments.

businesses, which may raise wages as well.

By the same token, reduced foreign capital inflows to purchase property, and other investments, would mitigate asset inflation and currency appreciation, thus helping to maintain cost competitiveness.

It is a mistake to imagine that higher wages with higher productivity and moderating rents necessarily mean higher costs. But if they do, these are costs Singapore’s consumers will have to pay. As consumers are also workers, their real incomes may increase with higher salaries, lower rents and mortgage payments. If those enjoying higher wages are Singaporeans (rather than foreigners with higher savings rates and remittance outflows), the multiplier impact of their local spending will be greater - their higher costs are other Singaporeans’ higher income, most of which is spent in Singapore.

Mindset Shift Many high-income economies have chosen this model of raising productivity.

However, emulating their market-derived solutions requires mindset and values shifts among Singaporeans. Consider three sectors in Singapore that are labourintensive, and usually considered lowwage, low-skilled and low-productivity jobs shunned by citizens.

First, the construction industry: in no other high-income country is this associated almost exclusively with foreign labour from neighbouring countries. In the US, this is a high-wage, high-skill, capitalintensive industry employing mostly unionised native workers, with high safety standards, sophisticated equipment and processes. Construction workers earn at least twice the median national wage in the US state I live in; their hourly wage is probably three times higher. Some

Singaporeans would be willing to work in this sector if adequately compensated, while construction firms would employ them at high wages if productivity were sufficiently high.

Second is the food and beverage industry. In even high-immigrant big cities and on the coasts of the US, most restaurant workers are Americans. They include students or mature individuals (mothers, retirees) working part-time as well as seasoned professionals for whom this is a full-time, long-term career. People skills such as customer service and professional skills involving knowledge of the menu and wine list are required and rewarded by tips. There is a strong monetary incentive to develop skills and even a personal brand.

In the kitchen, much food preparation has been automated and outsourced to specialist food services.

In Singapore, the use of temporary foreign workers and the standardised service charge has repressed wages and upward mobility, thus discouraging the participation of Singaporeans in this sector.

Third is the domestic service industry of household help, care for children, the elderly and disabled. This is a heterogeneous sector, but nowhere in the rich world is the dominant mode of operation that of the individual maid bound to a single individual or household.

Rather, professional services of house maintenance, cleaning, food preparation and delivery, child and elder care and transport are the norm, compensated at hourly rates many times the minimum wage. Many self-employed workers in this sector simultaneously serve multiple clients, some for many years at a stretch or to work part-time, while private enterprises employing such workers provide a range of

customised services. Many offering child and elder-care services are personally dedicated to helping others, or are training for careers in teaching or nursing.

Foreign workers in both this sector and F&B are usually new long-term immigrants, not temporary guest workers, so integration into the majority society is only a matter of time.

In all three examples, much higher wages would both attract more workers and encourage investments in higher productivity methods. It would require a mindset shift regarding the social status and value collectively ascribed to such occupations.

In the US, social barriers are highly permeable with respect for hard work, enterprise and professionalism even in “blue collar” or manual service occupations, some of which pay better than many “white collar” jobs. A social egalitarian ethic in Europe, and national group solidarity in Japan, both regions with limited income inequality, fulfill the same role. In contrast, the Singapore model favours academic credentials and professional achievement.

A sustainable low-growth model is not unattainable but is hampered by the availability of cheap and low-skilled labour as an alternative fall back that discourages businesses from innovation. Innovations could be accelerated by temporary public subsidies that would not cost more than the investments in the housing and transport infrastructure required to accommodate a larger population.

The situation at the higher end of the labour market is more complex, given the global or regional roles many companies fulfill from their Singapore base and the geographically mobile talent that they may require. · J an - M ar 2 0 1 3 · p 2 6

Focus

In a closed labour market, the rising cost of living eventually translates into higher nominal wages.

But in an open labour market like Singapore’s, wage increases held down by the increased supply of foreign labour discourages the substitution of capital, higher technology and sophisticated management processes, for labour.

Towards Greater Cohesion Nonetheless, the bottom line is that Singapore can survive economically, even prosper, without further large increases in foreign labour and immigration. A reduction in both will also deliver compensating benefits, such as lower housing costs, higher domestic consumption, lower income inequality and a less congested, more environmentally friendly city whose residents may even be willing to have more children. Given this outcome, policymakers can craft a message that persuades businesses and the governed alike to adjust expectations and adapt to, and gain from, slower labour growth.

The concurrent debate about Singapore’s population policy also provides a timely opportunity to reconsider how different pieces of our economic growth model fit—or do not fit—together.

Asset Appreciation Risk GDP (output) growth in any country comes from either or both increases in inputs (primarily land, labour and capital) or the productivity of those inputs. As noted first in Lee Tsao Yuan’s 1982 Harvard PhD economics dissertation, and continuing to the present day, Singapore’s GDP growth has depended more on input than on productivity increases, as reflected in the high dependence on foreign labour.

This has had the unintended (but predictable) consequence of discouraging increased labour productivity.

Employers could increase output more readily and cheaply by recruiting foreign workers, particularly from lowerincome countries, than by investing in capital-labour substitution and upgrading

the skills of the domestic labour force. This was and is an entirely rational decision for profit-maximising private enterprises.

But increasing output by increasing inputs eventually runs into the problem of diminishing marginal returns.

In Singapore’s case, this is because the addition of more and more people to an essentially fixed and extremely scarce complementary resource, namely land, inevitably raises other costs. These include rising housing and commercial rental costs, and congestion costs especially in transportation. Moreover, both higher housing costs and lengthening commute times effectively lower the real wage of workers (because it now takes them 10 or 11 hours to earn an 8-hour daily wage).

This is why the policy of tightening foreign labour supply and increasing labour productivity is necessary.

In a closed labour market, the rising cost of living eventually translates into higher nominal wages.

But in an open labour market like Singapore’s, wage increases held down by the increased supply of foreign labour discourages the substitution of capital, higher technology and sophisticated management processes, for labour.

This is why the policy of tightening foreign labour supply and increasing labour productivity is necessary.

Policy Consequences Given Singapore’s extreme land scarcity, reliance on foreign labour and immigration has another unintended consequence. It contributes marginally to the low fertility rate and emigration of native Singaporeans, and to labour force participation rates that are lower than they might be for certain demographics.

These are, for example, mothers of young children, and professionals and skilled workers more than 50 years of age who in other developed countries would be at the pinnacle of their careers, but in Singapore are too often sidelined in favour of cheaper (or more globally accomplished) imported talent.

High housing costs reduce fertility by delaying the age of marriage since young couples work longer to afford their own home. Also, long commutes on congested public transportation reduce time for social interaction and family formation, affecting the transport of children for childcare and schooling.

The costs of child-raising are high, including the cost of hired help which also increases population density, including in the ever-shrinking space of home.

Competition with foreigners in school and the job market also increases the stress and expense of child-raising.

Brain Drain?

One unintended consequence of the current economic model would be to prompt young professional couples or eligible single to consider emigration to less congested or competitive countries as they cannot envisage replicating their parents’ standard of living.

Credit: AFP/Getty Images

The challenges of our time should not be seen as obstacles but an opportunity for policy-makers to shine as they reshape the economic, social and human landscape of Singapore.

The feeling of being treated as a second-class citizen and being crowded out by foreigners, adds to the loss of physical markers of “home”—buildings, land, green and wild areas which in every country constitute part of the native’s national patrimony and identity—in discouraging the sojourner’s return to be a “stranger in a strange land”.

The over-representation of foreigners or immigrants in the leadership and even middle ranks of many organisations also suggests that a “glass ceiling” exists for the locally-born, such that upward career mobility may be more limited than in a larger country.

From a purely GDP growth input perspective, it may not matter if emigrating or low-reproducing native Singaporeans are readily replaced in the labour market by immigrants and new citizens. But particularly at the high end of the skill ladder, among the globally-mobile talent Singapore wishes to attract, many of the same “push factors” operate to discourage a permanent stay in Singapore—from the

cost of living to quality of life—reinforced by lack of the bond of a shared collective national identity.

They face the same pressures that imply that their birth rates will also fall over time for the same reasons this has happened with native Singaporeans.

Land and people together constitute a nation. Residents – citizens, immigrants and temporary workers - would be better off if our population policy takes a more comprehensive view of both economic growth and social integration in this small but precious piece of land. The challenges of our time should not be seen as obstacles but an opportunity for policy-makers to shine as they reshape the economic, social and human landscape of Singapore.

Linda Lim is professor of strategy at the Stephen M. Ross School of Business at the University of Michigan in the United States. These articles are edited with her permission; her views have been expressed in other forms in the Straits Times and Yahoo news.

· J an - M ar 2 0 1 3 · p 2 8

In-Depth

The Potential of the Chinese Diaspora & the Benefits for Southeast Asia

by Wang Gungwu

Immigration is a hot-button issue. Prof Wang Gungwu, an expert of Chinese history, speaks to Claire Leow as he takes a long view and casts an eye back on the history of the Chinese in Southeast Asia, for some instructive lessons.

P

rofessor Wang Gungwu narrowly defines diaspora to refer to those of Chinese descent who have made their homes and settled as nationals in a variety of countries, specifically in Southeast Asia, in contrast to those who reside outside China but retain Chinese nationality.

The latter are not central to the question of the Chinese diaspora’s role in modern history, he said.

Of the estimated 40 million Chinese who have settled outside China, more than 75 percent have settled in Southeast Asia, he said. The earliest of these had come to this region hundreds of years ago.

They began actively and regularly trading there since the 12th century and many settled to become part of Southeast Asian society. There is historical evidence that some of them laid the foundations for a long-lasting relationship with their countries of adoption.

Initially the numbers were very small, and characterised by commercial activities between the ports of China and the ports of Southeast Asia. The numbers grew steadily

over the centuries and they became a vital part of the region’s economy, even after the arrival of the Europeans and their trading companies. Over time, these ethnic Chinese also adapted themselves to European power and political control.

It was only after the 19th century that the numbers of Chinese began to rise substantially, following the forced opening of the China ports after the 1840s.

As a result, the earlier relations underwent radical change. China declined rapidly. After the early 20th century, its imperial system was overthrown, and the republican government that followed was weak and divided.

For the next three decades, the country was subject to external interventions and invasions. In reaction, the people became nationalistic. These patriotic sentiments spread widely and influenced the Chinese who had gone abroad to work and live. This was particularly striking among the Chinese diaspora in Southeast Asia where large numbers of them had penetrated beyond the trading ports

and had gone inland to engage in a wide range of agricultural, mining and other economic activities.

Colonial Rule & Aftermath During the 20th century, the majority of the Chinese, except those in Thailand, were operating in areas under the administration of colonial powers. Thus the traditional relations between Chinese and the indigenous ruling classes changed fundamentally. In the larger context of centuries of relations with local peoples, this was an aberration that lasted for only a little more than a century. During that period, most Chinese had to learn to deal with new administrations and technologies, as well as new ideas and laws that were introduced by the colonial powers.

In many parts of Southeast Asia after the middle of the 19th century, there were large numbers of new arrivals, the sinkeh or “new guests”. They were mostly very poor coolie labour who had no history of interacting with local ruling classes but had to deal largely with European officials and employers who were Europeans or

In-Depth

During the 20th century, the majority of the Chinese, except those in Thailand, were operating in areas under the administration of colonial powers. Thus the traditional relations between Chinese and the indigenous ruling classes changed fundamentally.

merchant Chinese. Most of them were illiterate or knew only the respective Chinese dialects and had to be assisted by the local-born and settled Peranakan or Straits Chinese who had totally adapted to Southeast Asian ways. But the newcomers were numerous and, in the early 20th century, were more inclined to identify with and respond to political developments in China. Most of them were industrious and thrifty and the more entrepreneurial among them soon became wealthy and influential.

Both Peranakan and sinkeh experienced very difficult times under Japanese occupation in the years 1942-45. When the colonial period ended after the Second World War, many of the sinkeh chose to return to China and some of the Peranakan re-migrated to Europe and elsewhere. But those who remained adjusted quickly to the new phase of history when the modern nation-state was introduced to the region.

The new generation of local nationalists was determined to abandon the older feudal structures and pre-colonial systems to build new nations within the borders that the colonial powers had drawn.

Thus all those of Chinese descent had to recalibrate their positions in Southeast Asia. Those who were local-born could, on the while, adjust to the changes more readily since they had adopted many indigenous customs and were familiar with local norms. The rest had a more testing time adapting. Everyone faced with the nation-building process had to deal with nationalism, concepts of sovereignty, citizenship, political loyalty and new parameters of national economic development.

The local-born learnt quickly to be citizens in the nation-states and found roles they could play by accepting their

new responsibilities. These were a small minority in most territories until the 1960s. After that, local-born new citizens became the majority among the Chinese diaspora. Today, the majority of these ethnic Chinese in Southeast Asia identify with their countries of adoption and not with the countries of origin. Their loyalties and identification are with the countries to which they belong. This has made them clearly different from the newcomers who have come to the region since the 1980s.

The latter have come to do business, do not have loyalties to their countries of temporary residence and are not considered diaspora, Prof Wang argues in making distinctions for research purposes.

Changing Composition A hundred years ago, ethnic Chinese in Southeast Asia were mainly merchants who had decided to settle in the region.

They had come in small numbers. But with industrialisation, with new agricultural and mining produce in great demand, they came in larger numbers. The composition of the newcomers was also different in that some of them were educated, contrary to past migratory practice when educated Chinese did not leave China. But those who came in the early 20th century included many who came to enlighten the merchants and workers and educate their children. Some of them worked to increase consciousness among the Chinese about the modern Chinese nation. They used Chinese textbooks and systems adopted from China to arouse patriotism among the people they called sojourners or hua chiao.

Their work often left a deep impression not only among those of Chinese descent but also showed the local peoples how nationalistic many Chinese had become.

Since the 1980s, many more of those

leaving China are better educated, quite unlike the emigrants of the past. This is particularly noticeable among those who left China to go to North America, Western Europe and some other parts of Asia, and also those who are going to Africa and Latin America. However, new Chinese migrations to Southeast Asia have been relatively few, especially when compared to the numbers who came in the past.

Throughout history, it has been young Chinese of South China in search of business opportunities who led the way to work in Southeast Asia. Merchants had a lowly legal and social status, and were very dependant on the goodwill of officials and local notables in China who usually came from the literati ruling class. The few merchants who were successful and able to acquire landed wealth were better able to relate to mandarin officials, but most of them were highly constrained in their activities. Outside of China, however, where traders were considered assets to the rulers and chiefs, their status was enhanced.

This is one of the reasons why many of the early venturesome Chinese who became wealthy in Southeast Asia chose to settle in their adopted homes abroad.

The importance of trade was proven by the success of the European powers, especially by the Dutch and English East

During that period, most Chinese had to learn to deal with new administrations and technologies, as well as new ideas and laws that were introduced by the colonial powers. 路 J an - M ar 2 0 1 3 路 p 3 0

Today, the majority of these ethnic Chinese in Southeast Asia identify with their countries of adoption and not with the countries of origin.

Art by Lachine

In-Depth

When the colonial period ended after the Second World War, many of the sinkeh chose to return to China and some of the Peranakan remigrated to Europe and elsewhere. But those who remained adjusted quickly to the new phase of history when the modern nation-state was introduced to the region. The new generation of local nationalists was determined to abandon the older feudal structures and precolonial systems to build new nations within the borders that the colonial powers had drawn. Thus all those of Chinese descent had to recalibrate their positions in Southeast Asia.

India Companies during the 17th and 18th centuries. They respected enterprise, their legal processes and contractual agreements offered protection of property, and they recognised the importance of technical and professional skills; all these impressed the Chinese diaspora. Furthermore, the nature of education also changed. Traditional Chinese education was focused on passing examinations in the Confucian classics so that the graduate could become an official in the Imperial Chinese government.

It was a very exclusive education that emphasised classical learning. By the end of 19th century and the beginning of 20th, however, the Chinese outside encountered new kinds of education – in science and technology, in training for industrial and managerial competence, and other practical skills. This was not merely Western education but really education for a modern world, a world of nationstates, of transnational trade and one that dealt with a global market economy. The Chinese diaspora realised that this kind of education is not only good for China but also for their children if they were to cope and prosper in that world. It was a major factor in the change in composition of the Chinese who left China in recent times.

Today we see the rise of the middle class of the Chinese diaspora. Not just the merchant class of the last century but professional classes adjusting to new nation states that appreciate that such skills are necessary if they are to become modern, prosperous and strong. This is part of a larger global shift but, in Southeast Asia, the ethnic Chinese were quick to respond to this shift and this greatly

encouraged their focus on an education for the modern world.

Now that the status of merchants was higher, ethnic Chinese developed a greater interest in education as a means of adapting to modern, industrial capital systems.

The process of adjusting from traditional business values to highly competitive business skills has changed the lives of the younger generation. Most of them are able to operate as useful modernisers in their respective countries.

The Adaptability of the Chinese Through their history of trading and settling in the region, the Chinese have shown that they are extremely adaptable.

They have not been so much concerned with identifying with their regimes in China as with the practical advantages of loyalty to family and family-based businesses. These values are not peculiar to the Chinese, and it would be wrong to think that it is unique among them. The norm for most of history everywhere had been for business to depend on the cohesion within a larger kinship group, enabling each group to adapt to business methods and institutions. From studies of the Chinese family businesses in Southeast Asia, it is clear that their family-centered focus has enabled them to stand up to great challenges. The studies also show how they have transformed the large family system suitable for an agrarian society to the smaller families that characterise modern urban societies. However, the idea that the individual by himself is weak and that family support is what makes each individual life meaningful remains

strong. It is in that context that individual Chinese work hard, and seek to gain the trust of others. If successful, individuals embody the qualities that the family, the community and society in general would find valuable and useful. Such Chinese are likely to promote the values that they believe had enabled them to succeed.

Underlying all this is skepticism towards the opposite ideal of encouraging individuals to place themselves above family and society. This skepticism is strong enough to resist those trends that glorify the individual as sacred and it has led ethnic Chinese to contest any idea that such kinds of individuals are necessary for people to become modern.

The Chinese heritage regards loyalty to the family as a basic building block for harmonious relationships and social cohesion. Although the Chinese outside China today are very different from their ancestors, and they have moved beyond being just merchants and traders and can be found in every field of endeavour, they are able to enjoy the greater freedom they now have to develop as individuals and feel that their achievements are primarily rooted in the family as a social unit. On the whole, they still believe that this is why the Chinese heritage remains of great value to everyone in the societies they live in.

Chinese Diaspora and Governments Chinese people everywhere have been re-adjusting relationships with their respective national governments.

Traditionally, the Chinese in China steered clear of officialdom, and ¡ J an - M ar 2 0 1 3 ¡ p 3 2

In-Depth

Today we see the rise of the middle class of the Chinese diaspora. Not just the merchant class of the last century but professional classes adjusting to new nation states that appreciate that such skills are necessary if they are to become modern, prosperous and strong. This is part of a larger global shift but, in Southeast Asia, the ethnic Chinese were quick to respond to this shift and this greatly encouraged their focus on an education for the modern world.

their imperial dynastic rulers may be described in today’s terms as running “small governments”. Mao Zedong (b.1893-d.1976) changed that by establishing a revolutionary state that tried to force his people to serve his vision of a proletarian paradise. However, the revulsion against its worst excesses has produced something different again. During the past 20 years, the government in China has been undergoing reforms, and there is more freedom for local initiatives in most fields of work and play.

For ethnic Chinese outside, it is instructive to see that one of the most stable features of Chinese socio-political life is being revived in China, despite the country’s rapid rate of industrialisation and urbanisation. Those of Chinese descent in Southeast Asia are concerned to see how the family as a unit is respected again, especially in rural life, and the family is still playing an important role in supporting local government and commerce. They are encouraged to see the way communities are once again managing their own affairs, in areas such as health and welfare, basic education and local economic activities.

Some may even see conditions that are

The process of adjusting from traditional business values to highly competitive business skills has changed the lives of the younger generation. Most of them are able to operate as useful modernisers in their respective countries.

now once again close to the autonomy the Chinese enjoyed in the past.

That governments should do more for their people is a modern concept. The nation-state in the West is very different from older feudal states. Ever since the French Revolution, the relationship between individuals and the state has become increasingly important. People demand more from their governments, and governments provide more, so much so that some have also become more authoritarian and autocratic. But many also realise that states are not good at controlling too much or providing too much; when they do, that makes societies dependant and weak.

Today people in every society are trying to achieve a balance, one that allows for more participation by people who can say to their leaders that there should just be that much state power and no more.

The Chinese diaspora have learnt from their experiences that such a development is good and are trying to achieve that balance. They have observed what happened to China under Mao Zedong; they have seen how the Chinese have learnt a hard lesson. Living outside China and experiencing the various paths to modernity, they are aware that the balance is necessary if a society is to be healthy, stable and prosperous.

They have also seen that, in the West, some nations have gone too far the other way, where too much power rests with the people and how that has weakened governance structures and the states that depend on them. Ethnic Chinese have had to learn to live in different kinds of states and have devoted much of their time to master the skills needed in these modernising societies and to learn about

modern institutions, especially about modern education. As they adjust to life in these societies, and try and contribute to their adopted countries, they have learnt to play important roles in each of them.

Adapting to Modern Ways This process of adapting to modernisation deserves close attention. It is important to understand the ways they are trying to fulfill their responsibility to their adopted countries. Today’s global economies and relationships are not only between states and peoples, but also between large transnational enterprises.

The capacity to deal with a rapidly changing world has to be cultivated in new ways. The Chinese diaspora have done this much more successfully than their ancestors could have dreamt of. They are now achieving that as loyal groups in the new nations they have chosen to belong to, offering their new skills that can link up with the world beyond at various levels and in different ways. They are part of a global middle class that link up readily and easily across national and continental boundaries and bring benefits in ways that were not possible in the past.

The potential of the Chinese diaspora to benefit Southeast Asia is fulfilled by education, an ability to adjust and adapt, and the skillfulness in harnessing modern life. That can become a great asset to their adopted countries.

Prof. Wang Gungwu is a historian of China and Southeast Asia, chairman of the East Asian Institute at the National University of Singapore, and Emeritus Professor of the Australian National University.

In-Depth

The Cost Disease and its Implications for an Ageing Society

by Donald Low and Yeoh Lam Keong

Policymakers should be more circumspect about some of their long-held assumption in healthcare such as their belief that healthcare is always a form of consumption spending to be minimised; that competition and market-mimicking reforms in healthcare improve efficiency among providers; and that emphasising individual responsibility keeps the health financing system sustainable. Donald Low and Yeoh Lam Keong argue for these assumptions to be re-assessed.

A

geing societies, especially in the developed world, are confronted with the prospect of ballooning healthcare costs amplifying pressures on their stretched fiscal resources. Combined with an anaemic recovery from the crisis and high levels of public debt in many of these countries, it seems that governments would be well-advised to consider how they can trim their statefinanced safety nets in healthcare, pursue efficiency gains and cost savings, introduce tight caps on public spending, and even find ways to privatise parts of healthcare so as to shift more of the costs to citizens and improve cost discipline. Only with such drastic measures, it is often argued, can these countries avert a looming fiscal crisis, a crisis that would otherwise be unavoidable because of ageing populations and the shrinking base of workers to support them.

An excellent new book by William Baumol of New York University’s Stern School of Business challenges much of this orthodoxy and suggests that many of the policymaker’s instinctive reactions to rising healthcare costs may in fact be quite misguided.

His book, The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t, is also quite timely for Singapore’s policymakers as they grapple with a complex array of issues: an ageing population, rising healthcare expenditures, the allocation of risks between state and citizens, and how the country’s foreign labour policies should be adjusted in the context of ageing and the need to sustain economic growth. The responses to the cost disease which Baumol suggests are somewhat counter-intuitive and surprising, but are extremely important for Singaporeans

to consider as the city-state navigates a vastly different socioeconomic context created by an ageing population.

Rising relative costs Baumol’s analysis begins with the seemingly trivial observation that for any given average rate of productivity growth, some industries will outpace others in productivity growth. Not surprisingly, those industries which are less likely to benefit from labour-saving technologies – education, healthcare, social services, the performing arts and many other service industries where human contact determines the quality of the service – have seen their labour productivity grow at a slower clip than average productivity. Conversely, in manufacturing and some service industries (most notably the ICT industry), standardisation, automation and mechanisation have enabled large productivity gains, allowing for the same level of output to be produced with much less labour input.

But while productivity growth in the relatively stagnant sectors may be slower, wages in these sectors tend to rise as fast as they do in the rest of the economy, as workers would defect if wages elsewhere were rising faster. As wages rise, producers in the stagnant sectors have to raise prices. These increases are faster than those in the more productive sectors where productivity gains are large enough to offset their rising costs. Consequently, prices in the stagnant sectors must rise in real terms. That is, the prices of services produced in the industries which are afflicted with the cost disease would rise faster than the average inflation rate. So · J an - M ar 2 0 1 3 · p 3 4

Art by Lachine

In-Depth

The cost disease underlines the importance of sustaining economic growth that is driven primarily by productivity improvements. Productivitydriven growth, as opposed to labourdriven growth, is the only sustainable way of raising incomes per capita. Only with rising incomes per capita can we afford the inexorably rising costs of healthcare and other essential social services without reducing our consumption of other goods and services. while higher productivity growth would enable goods such as mobile phones, DVD players and cars to be produced and sold more cheaply than before, lower productivity growth in health care and education means that their prices will rise in real terms.

Over time, these services will command an ever larger share of our incomes – at both the household and national levels.

Historical data confirms that the cost disease is real. Between 1978 and 2008, the cost of hospital services in the United States rose by nearly 8 percent a year while the overall consumer price index (CPI) rose by just under 4 percent a year. This meant that in real terms (that is, the increase in prices over and above the general inflation rate) the cost of physician services increased by 150 percent over that 30-year period. Since the early 1980s, the price of college tuition in the United States has increased by 440 percent, more than five times, and the cost of medical care by 250 percent, both much faster than the rate of inflation (110 percent) and the median family income increase (150 percent) over that period.

Baumol also provides data showing that this pattern of increasing real costs in healthcare and education is not peculiar to the US, but is also strongly observed in countries where governments are more committed to healthcare and social spending, financed by higher tax rates and supported by stricter controls on the fees charged by providers. He notes that although virtually every industrialised nation has tried to prevent healthcare costs from rising faster than average inflation, none has succeeded.

This, in itself, is revealing. Health economists have, for the most part, tried to explain why different financing regimes produce widely differing levels of national healthcare spending. It is often pointed out by health economists that the US has a much higher level of healthcare spending because its system of relying mainly on private insurance creates (perverse) incentives that encourage excessive consumption of healthcare resources among physicians, patients and employers. Baumol’s analysis takes a different tack.

It suggests that whatever the financing regime, and regardless of who bears the burden of financing healthcare, costs in this and many other service industries will increase faster than the average inflation rate. So although the US’ healthcare spending is high in

absolute terms, its rate of increase resembles that of other affluent industrialised countries.

Should Singapore be concerned with the cost disease?

In Singapore, the availability of cheap foreign labour has delayed the need for us to confront this question. In most developed economies, as wages rose, middle class households could afford less of those services requiring a high degree of human contact and personalisation, even if employees in those industries were not becoming more productive to “justify” their higher wages.

Many of the things that middle class Singaporean households take for granted – eating out regularly, maids, cheap cleaning and maintenance services – are not usually found in other developed economies. Singapore’s relatively more liberal foreign worker policies have softened the impact of the cost disease, allowing an affluent society access to personalised services that would cost much more in rich countries with tighter immigration policies.

But there is a price for affordable access to these middle class comforts: middle and lower-end wages in Singapore are lower than in countries with a comparable GDP per capita. Indeed, it is precisely because wages in many of our service industries are low that Singaporeans enjoy relatively low prices for them.

As foreign worker policies are tightened, Singaporeans will increasingly be confronted with the choice of cutting back on those services which are less amenable to automation and standardisation. But no matter how much we cut back, there will always be a large part of education, healthcare and other social services that are resistant to productivity gains. If so, the cost disease predicts that the costs of these services will take up an ever larger share of our incomes – individually and nationally.

Should this be a source of concern?

Baumol argues that it need not be. He notes that if productivity growth is maintained at its long term rate of around 2 percent, US incomes would rise fast enough to allow Americans to afford more of everything. So although he estimates that US healthcare spending as a share of GDP would rise to an eye-popping 60 percent by 2105, this would be a share of a much larger pie. And the larger pie is, of course, made possible by productivity gains in the productive sectors.

Policy Implications If the cost disease is incurable but quite manageable and ultimately survivable, should policymakers still care about it?

There are three important reasons why they should, and these apply with particular salience in Singapore’s context.

First, the cost disease underlines the importance of sustaining economic growth that is driven primarily by productivity improvements. Productivity-driven growth, as opposed to labourdriven growth, is the only sustainable way of raising incomes per capita. Only with rising incomes per capita can we afford the inexorably rising costs of healthcare and other essential social services without reducing our consumption of other goods and services.

In much of the economic policy discourse in Singapore, there seems to be a focus on maintaining GDP growth, regardless of the · J an - M ar 2 0 1 3 · p 3 6

In-Depth

Singapore’s old mantras of individual responsibility and the reliance on savings and family support to meet health care expense will have to be seriously rethought in light of the cost disease. sources of that growth. That is bad economics. What matters is per capita GDP growth (actually what really matters is consumption per capita since it is consumption, not income, that predicts well-being). The emphasis on GDP is misguided and misleading because how this growth comes about matters more than just more growth. If GDP is increased by 3 percent as a result of a 3 percent increase in our labour force, in per capita terms residents are not better off. Meanwhile, there is increasing congestion and greater competition for public goods. Individual well-being is actually reduced by GDP growth generated only by labour force growth.

Second, the cost disease provides a powerful reason why aggressive fiscal redistribution by the state is needed more than ever. Even if one accepts the prediction that productivity will grow fast enough to enable us to afford more of everything, it is quite likely that the gains of that productivity growth will be concentrated in the hands of the highly skilled. This concentration of the benefits from productivity growth suggests that economic growth may not necessarily increase general purchasing power. The combination of rapid technical advances, skills-biased technical change and competition from the cheap labour forces of emerging economies is likely to result in median and lower-end real wages in developed economies to lag the overall productivity growth for a long time. Indeed, the rising income inequality we have observed in the past two decades – in almost every rich country – is largely a consequence of the highly uneven distribution of the fruits of technical progress and productivity growth.

Economic growth may not necessarily increase general purchasing power.

The real danger of the cost disease, Baumol argues, is not that we cannot afford the rising costs of healthcare in the aggregate. Rather, in the context of wage stagnation for lowerwage workers and rising income inequality, it is whether lower-income citizens can afford the inexorably rising costs of healthcare (and other essential services afflicted by the cost disease). If they cannot, it is incumbent on the state to redistribute the gains of productivity growth aggressively. This includes ensuring that real wages rise more in line with overall productivity increases via effective collective wage bargaining arrangements, redistribution via transfers to less advantaged groups, and providing equitable access to good healthcare for the lower and middle-income groups that may not otherwise find it affordable. Singapore’s old mantras of individual responsibility and the reliance on savings and family support to meet health

care expense will have to be seriously rethought in light of the cost disease.

Thirdly, the cost disease suggests that policymakers would have to think quite differently about how all segments of society can continue to afford good healthcare given the inherent tendency for costs to rise faster than inflation. Most of our policy measures in healthcare have been focussed on “getting incentives right”, on preventing moral hazard and over-consumption by patients, and on preventing over-servicing by providers. All this is necessary, it is argued, to keep healthcare spending “sustainable”. But the cost disease phenomenon suggests that these measures, while useful, do not prevent healthcare costs from rising faster than general inflation.

The rising income inequality we have observed in the past two decades – in almost every rich country – is largely a consequence of the highly uneven distribution of the fruits of technical progress and productivity growth.

Baumol thinks that the real problem is not the cost disease but possible knee-jerk reactions to it by policymakers. As healthcare costs rise, governments may well respond by shifting more of the costs to patients, providers or private insurance in the (vain) hope that this would instil greater cost discipline in the system. It will not: such a shifting of costs is misguided as it will not cure the underlying disease. Even if public spending in healthcare is “not sustainable”, it is not clear how passing the costs and risks to citizens or providers makes it so. It is more likely that citizens, facing higher out-of-pocket expenditures, will cut back on necessary healthcare.

The higher costs in healthcare could also lead to excessive rationing by the state, resulting in poorer health outcomes or unequal access to good health care.

While the cost disease is not lethal, misguided thinking and policy responses by policymakers could be damaging.

Policymakers should also be more circumspect about some of their long-held assumption in healthcare. This includes their belief that healthcare is always a form of consumption spending that should be minimised; that competition and market-mimicking reforms in healthcare will make providers more efficient and keep costs down; and that emphasising individual responsibility keeps the health financing system sustainable. All these assumptions ought to be re-assessed and rethought in light of a rigorous analysis of the cost disease and its implications.

Donald Low is Senior Fellow and Assistant Dean (Research Centres) at the Lee Kuan Yew School of Public Policy. He has administrative oversight of the School’s research centres and leads the School’s case writing efforts.

Yeoh Lam Keong is an Adjunct Senior Research Fellow at the Institute of Policy Studies. His email is yeohlamkeong33@gmail.com

The Kachin State

Photos by Michael Culme-Seymour Text by Melanie Chua

T

he breakaway border state of Kachin has been embroiled in a bitter struggle between the Burmese military and the Kachin Independence Army, after a 17year ceasefire broke down. The KIA is the military arm of the Kachin Independence Organisation. Formed in February 1961 in response to a military coup led by Burmese general Ne Win, the KIA are fighting for greater autonomy within a federal union of Burma. Kachin leaders had tried for over a decade to get the rights promised to the Kachin people in the Panglong Agreement when Kachin joined with Burma to make a Union of Myanmar.

Fights broke out anew in June, 2011.

One factor cited was the creation of the Myitsone Dam, which would displace dozens of villages in the Kachin state. The conflict recently escalated in early 2013.

Tens of thousands of people have since been displaced in Kachin state, and in August 2012, thousands of Kachin refugees were forced back by Chinese authorities into Burma despite calls to cease such action

by NGOs and the continued fighting. Most will find it too dangerous to return to their home villages, leaving them displaced amid an armed conflict in Burma.

The northernmost state of Burma, Kachin borders China to the north and east, and India to the west. Chinese statistics put the crossings at the main border checkpoint of Ruili at over ten million people in 2012.

International reaction to the Kachin crisis has been relatively quiet. 路 J an - M ar 2 0 1 3 路 p 3 8

路 J an - M ar 2 0 1 3 路 p 4 0

路 J an - M ar 2 0 1 3 路 p 4 2

路 J an - M ar 2 0 1 3 路 p 4 4

路 J an - M ar 2 0 1 3 路 p 4 6

Executive Education

What can Mongolia and Myanmar learn from each other?

by Aigerim (Aika) Bolat

M

yanmar is currently in the eye of foreign investors wanting to be the first to seize golden opportunities in a resource-rich country that soon will be open for business. Many international organizations, donors and consultants are also lining up to offer assistance in socioeconomic development, infrastructure and urban development to a government that is preparing to guide the country on its transformational journey.

Two decades ago, in the early 1990’s, Mongolia was in a similar position when it peacefully changed from a Soviet socialist system to a western style democracy.

Over the following few years investors and international organisations arrived in Mongolia offering investment and development assistance. As with Myanmar today, the Government of Mongolia was not accustomed to this interest and was unaware of the challenges and risks of opening up to the outside world.

There are many similarities between these two Asian countries in transition.

The majority of the people in both countries are Buddhist although from two different branches: Theravāda Buddhism in Myanmar and Tibetan Buddhism in Mongolia. Both countries were single party states – one communist, the other military – with histories of totalitarian socialism and centrally planned economies.

Geographically, both Myanmar and Mongolia are sandwiched between superpowers: India and China in the case of Myanmar, and Russia and China in the case of Mongolia. As a result, both countries have strong economic ties with China with 50 percent of their trade with China. Finally both countries are rich in natural resources with mining being an important part of their economies.

At the Ministry of Foreign Affairs branch in Yangon with Deputy Minister of Foreign Affairs H.E. U Thant Kyaw (centre) to his left: Director General and Deputy Director General Myint Lwin, Assistant Director Ye Minn Thein (MPM 2009 Alumni)

LKY School’s Presence in Myanmar In January, I visited Myanmar with two colleagues from the LKY School to learn about the needs and demands for public policy education. LKY School’s Executive Education has plans to provide executive programmes to the Union Government of Myanmar officials on developing and implementing new strategies and best practices for public sector management and good-governance.

We were welcomed warmly by the Alumni of the LKY School. There are 54 Alumni who graduated from the Master programmes at LKY School, the first being in 1998. Some Alumni are serving in the government while others consult to local NGO’s and various agencies of the United Nations. Some run their own NGO’s and foundations in addition to their full time jobs. For example, Ms. Phyu Yamin Myat (MPP 2010) is the Managing Director of the Myanmar Development Fund while in her spare time she teaches at the Egress Institute, an NGO that provides public policy and vocational trainings all over Myanmar with

assistance from the government. Her goal is to influence change by encouraging public participation in government policy-making which she hopes to achieve by teaching the public to understand and analyze policy.

While in Myanmar I noticed the country had several advantages that might help with its transformation. Firstly, the cities we visited (Yangon, North Dagon and Naipiydaw) are generally clean and in order: my first impression of the international airport in Yangon, the new terminal that opened in May 2007 was its similarity in terms of its efficiency to Changi Airport’s Terminal 2. The impression was reinforced by wide and clean streets strangely jammed with new and expensive cars. To avoid poor city planning that many SEA cities had in the wake of its economic growth, Japan is investing in urban development through JICA and Union Government of Myanmar invited Singapore companies to provide expertise on urban planning.

Secondly, I was impressed by the attitude and capability of its young people, (some quotes show almost a third of the

Executive Education

population to be youth aged between 15 and 24). Like the young Mongolians in the mid-nineties, they are ambitious and seem certain about the kind of future they want for their country. I met young entrepreneurs and intellectuals who were confident in transforming society with or without the help of external assistance. Most young people I met in Yangon (it does not represent the whole country or especially people from the rural areas) envisioned a slow-paced Burmese style transformation; a welfareoriented growth path rather than one just focused on economic growth. Traditional values and beliefs remain as an important part of the development model they favour.

Thirdly, the Union Government of Myanmar is taking steps to resolve the problem of not having enough public policy specialists with foreign language and IT skills. The Ministry of Foreign Affairs acknowledges the urgent need to improve skills of public servants in advance of Myanmar heading the ASEAN in 2014.

The Union Government is trying to attract overseas Myanma scholars and scientists to return and experts from non-governmental organizations to take important posts within the government.

Apparently due to absence of a policy in place to attract talents currently only those individuals passionate about contributing to their home country’s development are returning to Myanmar.

One major difference between the two countries is that Mongolia is still a new country with only 807 years of history since its establishment as a united State, and a population of three million. Myanmar has more than 2,000 years old history and with around 49 million population and 132 different ethnic groups. It is interesting to note that Mongolian empire between 1277

Two LKY School Alumni at the UN agency in Yangon, from left Myint Kyaw (MPP 2008 Alumni), Louise Beehag and Aika Bolat from the LKY School; Ma Khin Myo Aye (MPA 2010 Alumni), Joyce Cuff, LKY School .

and 1301 repeatedly invaded Myanmar which toppled the four-century-old kingdom in 1287. Both countries have small Muslim minorities (Kazakh Muslims and Rohingya Muslims make up about four to five percent of the population of Mongolia and Myanmar respectively) but unlike the Rohingya in Myanmar, Muslims in Mongolia have lived peacefully and are recognised for their contributions to the country.

Absence of Policy toAttract Talents One challenge both countries face is political integration: in the case of Mongolia numerous political parties have led to unstable coalition governments more concerned about politics and personal interests than good public policy. In the case of Myanmar, it is the large number of local and international NGO’s that work in different directions and without cooperation.

Some government agencies also seem disconnected. For instance it is about twenty minute drive between the different ministries in Naipyidaw while some ministries have their representatives in rural areas.

Interestingly many of the workers have never left their villages or townships.

Looking at the experience of Mongolia, one might say that the large amount of foreign aid and foreign direct investment (which amounted as USD 1,408,058,870.87 in 2010) mostly in mining sector has discouraged Mongolians from being creative and self-sustainable and that too much freedom in the name of democracy and disintegration due to personal interests of our politicians have harmed the integrity and unity of the country.

After 20 years of economic liberalization, Mongolia has experienced both success and failure. Myanmar as a country just starting along this path can learn a lot from the experiences of Mongolia especially as these countries have so much in common. I believe Myanmar will succeed in implementing the political and socio-economic reforms with or without the help of foreigners. I am certain the generous and kind-hearted people of Myanmar will remain optimistic, courageous and true to their beliefs.

Aigerim (Aika) Bolat is an Assistant Manager at Executive Education. She is reachable at sppaika@nus.edu.sg

A gathering of alumni organised in Yangon

· J an - M ar 2 0 1 3 · p 4 8

Executive Education

The Temasek Foundation

Water Leadership Programme

by Luana Chow

A

s Asia enters a new era of unprecedented growth and prosperity, innovative thinking will be required to address the critical health and sustainability issues that hamper its progress: the growing water and sanitation needs of 3.7 billion people.

The Temasek Foundation Water Leadership Programme (TFWLP) is a unique programme which aims to tackle these challenging issues through adopting innovative approaches and best practices from the Asian context. Developed in collaboration between Temasek Foundation, the Lee Kuan Yew School of Public Policy at the National University of Singapore and PUB, Singapore’s national

water agency; the programme is designed for water utilities managers operating in Asian emerging markets that are adapting to the increasing water and sanitation demands placed on them. The programme will expose participants to the best practices in water utilities governance, practical guidance on managing water utilities effectively, and strategies to deal with existing and future challenges.

Designed for middle and senior level management in local, regional or national water utility authorities, participants will represent their countries in teams of 5-7 members which could comprise of a combination of policy makers, public

utilities officials, consultants, researchers and representatives of civil society who would then work together upon returning to their home countries to achieve the programme outcomes.

The fourth run of the TFWLP will take place from 6 to 17 May 2013 at the Lee Kuan Yew School of Public Policy, NUS Bukit Timah Campus, in Singapore.

Luana Chow is Assistant Manager at Executive Education. If you have any queries about the programme, please contact her at luanac@nus.edu.sg or call (+65) 6516 7167.

Executive Education

Executive Education

launches online Alumni portal

by Aigerim (Aika) Bolat

E

xecutive Education at the LKY School has over 9,000 alumni from seventy countries. These alumni have completed public policy and management programmes, including short-term programmes, since 2004. The vast are from the public sector, while others are from the private sector and non-profit organizations. The list includes a glittering alumni of former Prime Ministers, Cabinet Members, Vice Ministers and Mayors.

Recently, Executive Education launched its first online Alumni portal to help alumni from around the world stay connected, network and to continue their learning journeys even after the completion of the programme. The portal also provides an opportunity for alumni to share their future experiences and to stay involved in activities and events organised by the LKY School. The Alumni can also provide job opportunities, internships and mentorship to LKY School’s current students and Master degree programme graduates.

Executive Education hopes that the Alumni will contribute greatly in implementing LKY School’s mission to improve lives, inspire leaders and transform Asia by actively staying in touch with their colleagues via Executive Education online Alumni portal. The portal is available at http://internet-alumni. com/int/lkyexed/ We encourage you to make full use of the interconnectedness offered at the portal.

Please register and update your contact and personal details regularly to keep in touch with School and Alumni news, updates and other events.

For enquiries on the online portal, please contact Ms. Aika Bolat, Assistant Manager at Executive Education sppaika@nus.edu.sg · J an - M ar 2 0 1 3 · p 5 0

Research Sojourn

Sloan Foundation Conference on

South Asian Science Engagement

by Karthik Nachiappan

The Sloan Project on South Asian Science Engagement “Scientists Across Borders”

T

he Green Revolution, initiated during the 1960s, helped the underdeveloped and developing countries of the world overcome widespread hunger and poverty.

Fifty years ago, around a billion people, or roughly half of the population, in the developing world starved or didn’t have enough food to eat. While the number of people who remain hungry hasn’t changed much, the Green Revolution has helped reduce the proportion of hungry people across the global south. Many social, political, and institutional factors con¬tributed to this change; however, the principal contribution has been the use of science and technology to achieve higher crop yields of common staples such as wheat, rice, and maize.

To further explore how scientists across South Asia are addressing issues surrounding rice production across the region, the LKY School organized the inaugural conference on South Asian Science Engagement on 18th and 19th October 2012. The purpose of the conference was to create a platform for exchange of scientific knowledge and facilitate scientists from South Asian countries to contribute to discourses related to science, growth, development, and sustainability. The conference was funded by the Alfred P. Sloan Foundation, New York.

The inaugural conference focused on how scientists across South Asia are addressing current and future problems pivoted around enhancing regional rice yields. Presentations at the conference

Dr. Zhikang Li, Chinese Academy of Agricultural Sciences, China.

included Contributions from scientists working at this particular intersection on areas such as varietal development, nitrogen management and efficiency, effects of photosynthesis on rice, water and irrigation technologies, and crop management innovations were presented at the conference. The dialogue provided space for candid discussions and knowledge sharing between regional scientists on issues related to the core problem of enhancing rice yields and addressing future challenges for Asia’s most common staple crop. Fifteen scientists from six South Asian countries (Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka) and China attended the conference.

Several insights emerged on the state

of rice production across South Asia and how scientists are attempting to increase yields whilst simultaneously facing multiple constraints. Resource deficits are pervasive across South Asia. Major inputs for rice cultivation—land, water, fertilizer, capital, labour, and climate patterns—are under duress. Acreage is diminishing across the region with land and water resources facing competing demands due to urbanisation and industrialisation. Labour shortages are intensifying due to rising urban migration.

Climate change has disrupted the context of cultivation, dramatically affecting seasonal weather patterns and altering ecological conditions. The demand for rice is expected to grow faster than production in most countries. Whether the current level of

Research Sojourn

annual production of 524 million tonnes could be increased to 700 million tonnes by the year 2025 using less land, less water, less manpower, and fewer agrochemicals is the big question. (More information can be found in Papademetriou, M.K. Rice Production in the Asia Pacific: Issues and Perspectives. Food an Agriculture Organization (FAO) Accessible at: http://www.fao.org/docrep/003/x6905e/ x6905e04.htm). Thus, current agricultural production will not only have to be sustained, it will have to commensurately rise alongside diminishing land, water, fertilizer, and labour whilst facing climate uncertainties.

To meet this challenge, scientists are leveraging technology. To develop new rice varieties, scientists are deploying molecular breeding, genome sequencing, data and bio-technological tools. Several innovative crop management technologies and practices are being used, such as

geographic information system (GIS) and remote-sensing technologies to map, monitor, and assess potential and total crop yields. Precision agriculture is being introduced to remedy low crop productivity due to inept water and soil management practices. Scientists are also harnessing geo-informatic technologies to efficiently manage water resources. Spatial analysis is being vigorously used to enhance crop productivity. To better confront climate change, scientists are engaged in transforming the genetic pathways in rice by making them more carbon friendly and efficient. Rice intensification systems are being developed to absorb and thwart anticipated water loss. Cutting-edge seed producing technologies that measure seed’s genetic purity are also being utilised to mitigate seed loss.

Following panel sessions that explored rice production from a multi-disciplinary perch, scientists convened to articulate their

Mr. Doron Weber, Vice President (Programs), Sloan Foundation.

Dr. Naweed Naqvi, Temasek Life Sciences Laboratory, NUS/NTU.

thoughts on regional science engagement and how to sustain it, possibly through a joint project that unites mutual interests and objectives. Several scientists called for the establishment of a regional knowledge portal on rice that will act as a knowledge hub for their scientific peers and farmers.

There were also calls for more emphasis on precision agriculture given the onset of the digital revolution and the accessibility of such applications for agricultural purposes.

An in-depth understanding of climate change and its effects on food is sorely needed; and so is robust policy analysis that underscores problems farmers face across the region vis-à-vis rice cultivation.

More broadly, scientists urged for the strengthening science-innovation policy linkages given the complex nature of challenges in food production that calls for sustained collaboration between scientists, policymakers, and farmers.

Karthik Nachiappan is a research associate at the Centre on Asia and Globalisation (CAG) at the LKY School, where he researches Asia’s evolving role with global governance. His email is karthiknach@nus.edu.sg

Participants of the Sloan Conference.

· J an - M ar 2 0 1 3 · p 5 2

Research Sojourn

Spatial Justice

in Singapore

by Rita Padawangi

Justice in the city is spatial, asserts Edward Soja, distinguished geographer and urban planner. In January this year, he spoke at a public lecture and workshop organised by the Lee Kuan Yew School of Public Policy in collaboration with Asian Urban Lab, a non-profit research organisation in Singapore.

J

ustice is commonly used to reflect a desired sense of rightness with moral and ethical elements. When reflected in the urban landscape, the concept of justice relates with social issues and inequalities among the diverse groups that reside and interact in the city.

Edward Soja, geographer and urban planner at the University of California at Los Angeles, emphasised that justice in the city is spatial. Speaking at a public lecture and a workshop at Lee Kuan Yew School of Public Policy on 23 and 24 January 2013, he reminded the audience that spatial justice is closely related to social justice that concerns with how public resources are managed and

distributed. The commentators were Dr William Lim, Chairman of Asian Urban Lab, Dr Sharon Siddique, Adjunct Professor at the LKY School, as well as Visiting Professorial Fellow at the Lee Kuan Yew Centre for Innovative Cities, Singapore University of Technology and Design (SUTD) and Dr Lilian Chee, Assistant Professor at the National University of Singapore (NUS). All concurred that spatial justice is an important concept to be reflected in Asian cities, including Singapore.

The following day after the public lecture, five papers were presented in a one-day workshop on spatial justice in Singapore. Dr Lilian Chee presented the first paper, which discussed the notion

Organised by the Lee Kuan Yew School of Public Policy in collaboration with Asian Urban Lab, a non-profit research organisation in Singapore, the public lecture and workshop are part of the ‘Spatial Justice in Asian Cities’ research project by Kenneth Paul Tan, Assoc. Professor and Vice Dean (Academic Affairs) and Rita Padawangi, Research Fellow, at the LKY School.

Research Sojourn

of the home in Singapore. The majority of Singapore population reside in public housing flats that are subjected to rules that prioritise the mainstream nuclear family structure of married couples who preferably have children.

The consequence is felt most on singles who also aspire to craft their own living spaces in affordable homes. Lilian argued that the minority struggle to have their voices heard, and that spatial justice activism would benefit from visual, critical and open-ended representation through film.

Jack Lee, Assistant Professor at the School of Law at Singapore Management University, followed up on the subject of public participation. He scrutinised the existing legal framework on the creation and preservation of built environment and the transient use of public space. All the limitations were pointed out, but he suggested that spatial justice could potentially be a rallying point for grassroots and community groups to call for modifications to policies and laws. The fact that urban space is tangible and physically experienced in daily life makes it a logical evidence that reflect spatial (in)justice.

The lively discussion continued on the subject of urban renewal and heritage in relation to race and ethnicity. Through examining urban policies and outcomes since the 19th century Singapore until the present time, Imran bin Tajudeen, Assistant Professor at the

School of Design and Environment at NUS, argued that spatial inequalities and exclusions were created through heritage projects.

On heritage, Daniel Goh, Associate Professor at the Department of Sociology at NUS, pointed out that older public housing towns such as Tiong Bahru and Queenstown also have exemplary architectural and intangible heritage sites and practices.

However, heritage in these estates has to be upheld by residents and the capacity to do housing heritage activism also depends on the residents’ financial, political and social capital. In other words, residents with working class background are unlikely to be able to protect and preserve their neighborhood in the wave of gentrification in a global city like Singapore.

Beyond residents and their concerns, spatial justice in Singapore also touches on transient population. Joel Chow from the Chua Thian Poh Community Leadership Progamme highlighted how transient workers are almost completely marginalised despite their vital role in everyday activities. Their presence in Little India reflects spontaneous ‘resistance’ of these workers by appropriating their gathering space, but unequal spatial contestations continue between heritage conservation and the accessibility of urban spaces for these migrant workers.

Edward Soja proposed that all projects that utilise public funds should be subjected to a “spatial justice test”; benefits and disadvantages for various groups of people should be analysed before the project proceeds. Housing, heritage preservation, and public spaces that were presented in the workshop are well within the notion of public goods that utilise public funds.

Nevertheless, the discussion inevitably highlighted social stratification that affects the capacity of the people to act and limitations in the legal framework. Although there are established mechanisms in the state bureaucracy to manage distribution of public goods, spatial justice also postulates the necessity of social awareness and possibilities of community engagement in achieving a more just city.

Rita Padawangi is a Research Fellow at the LKY School. Her email is ritapd@nus.edu.sg

· J an - M ar 2 0 1 3 · p 5 4

Research Sojourn

America’s Role in

the Asian Century

by Sharinee Jagtiana

H

ow does Asian maintain peace and stability given the strategic rebalancing of power by America and China in its own backyard? Dr. Hugh White, Professor of Strategic Studies at the Australian National University, gave a public lecture at the LKY School on 20 November 2012, on America’s strategic pivot to Asia since the coming of the Obama Administration, and the implications of this phenomena in the region.

Within less than a month of his re-election as the US President on 6 November, Barack Obama had made a three-country visit to Southeast Asia, capturing international headlines. Professor Huang Jing, Professor and Director, Centre on Asia and Globalisation, raised the key question, setting the tone for the session.

Dr. White set the subject within the dialectic nexus between wealth, power, relationships and order within states. He argued that the rise in China’s wealth has made it more powerful, altering its relations with states in the region and subsequently the relative order. Given this scenario, it is essential that this shift be accounted for and adequately accommodated in the region, to sustain its social and economic growth.

While several middle powers like India and Indonesia are emerging in the region, China’s rise remains – and will continue to be for the next few decades - the major shift influencing the region.

Despite the economic downturn, America is not in decline and still has the capacity to play a major role in Asia if it chooses to, White stated. What has changed

however is its relative power. Much to its denial, China challenges America in terms of GDP more than any other nation has.

As China continues to grow economically, it will seek to challenge the current status quo of American dominance in the region.

Given this situation, the question then becomes what next? How will the United States respond and what would its role be in this changing order?

White differs with John Mearsheimer’s controversial contention that established and rising powers are predestined to conflict on confrontation; he stated that America has three options: The first is that the United States may concede everything to China. This option, White asserted, was not quite in the rest of Asia’s interests. Till date, America’s primacy in the region has worked in favour of many other Asian countries. The second was sharing power in Asia. Despite rhetoric of a possible occurrence of this, the option is dismissed out of hand by America. Lastly, the third choice before America was to preserve the current status quo of its primacy in the region and conceding nothing to China.

Given these, America appears to be taking the third option. White stated that America’s pivot to Asia is a nothing but a form of ‘containment’, a contentious and heavily laden term. He believes this remains the strategy underlying the rhetoric of ‘rebalancing’ or ‘hedging’. That said, China in its current form, is extremely powerful both militarily and strategically.

Militarily, China holds an asymmetrical advantage in Asia. Despite America’s vast

network of allies in the region, not many, except Japan, would come to American assistance if war were to break out against China, over Taiwan for instance.

Hence, the policy of containment can prove to be extremely costly. White believes that the possibility of this is highly likely and cited the ongoing Senkaku dispute as an example, where leaders both in Washington and Beijing find nothing better to do but continue escalation.

This dynamic places a new dilemma before other Asian countries: they neither wish to survive in China’s shadow nor be in the midst of Sino-American rivalry. The worst situation would be when the region’s countries have to choose between the two powers. While they benefit by an American presence in the region, it can no longer exist in the same form it’s been for the past few decades.

White concluded by stating the American presence needs to exist in a form that is acceptable to China. Only this would put the region onto a path of peace and stability.

This lecture was hosted by the school’s Centre on Asia and Globalisation (CAG) under its Hong Siew Ching Speaker & Seminar Series and chaired by the centre’s Director, Professor Huang Jing.

Sharinee Jagtiani is Research Assistant at the Centre on Asia and Globalisation (CAG). Her email is sppslj@nus.edu.sg

Research Sojourn

The Singapore Water Story: Sustainable Development in an Urban City State

by Cecilia Tortajada

A

fter two years of intensive research, the Singapore Water Story is the most authoritative text that critically and objectively analyzes how the city-state transformed its urban water and wastewater management from an average Third World country in 1965 to one of the best in the world two decades later. It discusses the enabling environment that made this possible including plans, policies, institutions; laws and regulations; water demand and water supply strategies; water quality and water conservation considerations; and partnerships and importance of the media.

It assesses overall how all these issues have evolved in response to the dynamic needs of the city-state.

Starting a mere five decades ago, the city-state’s apparent vulnerability due to its small size, almost total lack of natural endowments and high water dependence on external sources has been turned into a myriad of opportunities propelling it and its population to continuously higher levels of development. The characteristic efficient and pragmatic decision-making within which policies have been formulated and implemented, have made national strategic planning a distinctive and flexible process. Forward-looking and holistic thinking has been consistently channelled towards initiating required changes and anticipating and responding to new problems and challenges in what seems to be a permanent quest for feasible and cost-effective alternatives.

Water resources policies and management practices have evolved aiming to bring water issues closer to the public in

an attempt to conserve the scarce resource, promote social cohesiveness and sense of belonging, and to create an environmentally attractive city with clean water and green areas as dominant features. This has improved the quality of life of millions of people, making the city-state more liveable for locals and more attractive for investors as well as visitors.

There are many achievements that are unquestionably commendable and exemplary. Nevertheless, with the resource constraints the city-state faces, it will have to run faster to keep up with the rapidly evolving global developments, maintain good rates of economic growth and, above all, respond to increasing societal expectations. While the city-state justifiably prides itself of the enormous progress it has made over the last decades, it also faces a myriad of challenges, both old but recurrent issues that need to be improved upon, and new and emerging problems that have to be addressed in a timely manner.

The book assesses the motivations for the continuous search for excellence, consistent with domestic social, economic and political expectations as well as international dynamics. At home, the government needs to respond to the

population’s increasing hopes and aspirations to lead a better quality of life.

As part of a broader community of nations and rapidly changing and increasing competition, Singapore will have to successfully navigate in the uncertain future and constantly changing local and global social, economic, technological and environmental conditions that will be beyond its control. Only time will tell to what extent the Singapore Water Story will be appraised and capitalised on, and what path the city-state and its people will decide to take to continue striving for increasingly better human and natural environments.

The book is the product of collaboration between the Lee Kuan Yew School of Public Policy, Singapore, and the Third World Centre for Water Management, Mexico. It is now being translated into Chinese.

Dr. Cecilia Tortajada is President of the International Water Resources Association; Scientific Director of the International Centre on Water and Environment, Zaragoza, Spain; former Visiting Professor of the Lee Kuan Yew School for Public Policy, Singapore; and Vice President of the Third World Centre for Water Management. · J an - M ar 2 0 1 3 · p 5 6

Research Sojourn

GPPN 2012 Turning the tide: Policies for a Changing World

by Nirmali Sivapragasam

The Lee Kuan Yew School of Public Policy had the honour of hosting and organising the 2012 Global Public Policy Network (GPPN) student conference held on 9-11 December 2012 at the School. Nirmali Sivapragasam reports.

A

n annual student conference run

by GPPN schools and associated institutions, the conference has become a highly anticipated event since its inception in 2006, bringing together policy students from around the world to discuss and exchange ideas on policy, governance and economic development.

Participants of the 2012 GPPN The conference brought together over 80 students from seven distinguished public policy schools around the world to discuss and exchange ideas ranging from economic development to social policy and environmental sustainability. The schools represented were The Institute of Public Affairs, London School of Economics (UK); The School of International and Public Affairs, Colombia University (USA); Sciences Po (France); The Graduate School of Public Policy, University of Tokyo (Japan); The Hertie School of Governance (Germany), and the LKY School.

Titled “Turning the tide: Polices for a changing world” the conference sought to encourage a rethink of traditionallydominant modes of economic growth, and the extent to which Asia, a growing continental power, could play in the move towards more inclusive and sustainable growth. Three sub-thematic questions the

conference specifically sought to address were: Can the current dominant economic system still “raise all boats”? Given growing income inequalities, what kind of policies can best promote social equity and more inclusive measures of growth? What roles can Asian nations play in a changing global order?

The conference was organised by a core committee of eight Master in Public Policy (MPP) students from the LKY School with help and support from other students, its Academic Affairs team, and colleagues at participating institutions.

The conference was co-chaired by Midhfa Naeem and Sue Helen Hernandez, Master

in Public Policy (MPP) senior students at the School.

The two-day conference consisted of four plenary talks and 40 student presentations.

Professor Kishore Mahbubani, Dean of the LKY School, gave the opening address. Dean Mahbubani asserted that a key challenge policymakers and policy students face in an increasinglyinterconnected world is responding to global problems with a global mindset. Dean Mahbubani argued for stronger (and, more effective) multilateral decision-making, including a wider presence of emerging economies in global policymaking talks and meetings. The opening address was

Research Sojourn

followed by a Roundtable Discussion with Deans from five GPPN partner schools, on how characteristics of global leadership can and should be redefined, in light of changing geopolitical and disciplinary landscapes.

The third plenary of the conference was the keynote speech by Mr. Chandran Nair, author of the provocatively-titled book, “Consumptionomics: Asia’s Role in Reshaping Capitalism and Saving the Planet” and Founder of the independent pan-Asia think-and-do tank, The Global Institute for Tomorrow. In line with the first subtheme of the conference, the lecture elaborated on the economic, social and environmental consequences of consumption-led growth, and explored alternative strategies and its implications for nation states, particularly, those in Asia. Given rapidly depleting natural resources and growing environmental concerns, Nair opined that Asia should (and, daresay, cannot) aim to follow the West in promoting consumption-driven growth; rather, countries should aim at achieving and maintaining a standard of living that is environmentally sustainable in the long run. Nair argued that natural resource management needs to be placed at the center of policymaking. Moreover, Nair asserted that if countries are to aim at equitable levels of inter-generational resource sharing, the promotion of collective welfare over individual rights should be encouraged.

In line with this theme, a student policy challenge on the topic of “Strategies for De-growth”was organised with the aim of promoting debate among students on ways in which economic “de-growth” could be encouraged and incentivised.

Policy suggestions ranged from public finance, labour and education to media/ communications and urban planning. Some of the suggestions included progressive taxation on household and commercial energy use, promotion of self-sustaining neighbourhoods and communities (thereby, reducing transport costs), and taxes on advertisements. Two faculty members from the School, Professors Charles Adams and Professor Dodo J. Thampapillai kindly accepted an invitation to serve as judges for the competition. The session proved both enlightening and entertaining for all.

Finally, participants were treated to a Roundtable discussion on social inequality, led by Donald Low, Senior Fellow and Assistant Dean (Research Centres) at the LKY School and former Director of the Ministry of Singapore, and Veronica Gamez, Executive Director of Aidha, a micro business school which serves to nurture the entrepreneurial talent of domestic workers in Singapore. Mr. Low asserted he considered inequality to be one of the three great problems – others being, climate change and economic instability – facing the world, post the 2007-08 Global Financial Crisis. He argued that from an

academic angle, one needs to reassess the ways in which economics is taught and positioned in the face of growing inequalities and related problems. Reforms in institutions and redistributive tools are also needed. Ms. Gamez argued that one needs to understand such issues from the perspective of those who seek change, and provide them with the opportunity of making their own decisions.

Aside from the plenaries, 40 student papers were presented, based on the aforementioned subthemes. Topics ranged from proposals aimed at building an “ideal” global economic architecture that incorporate the best elements of capitalist, statist and socialist systems to those examining the role Asian nations could play in a changing global order.

Nirmali Sivapragasam is a Master in Public Policy (MPP) Candidate at the LKY School. Her email is nirmali.r.s@gmail.com

Participants of the GPPN Student Conference 2012. This included students from Fundacion Getulio Vargas - Brasil, The Hertie School of Governance, The London School of Economics, Sciences Po – Paris, SIPA – Columbia University, University of Tokyo – GraSSP, as well as from the Lee Kuan Yew School of Public Policy.

· J an - M ar 2 0 1 3 · p 5 8

Research Sojourn

Master of Public Management (MPM) 2012

Study Trip to Cambodia

by Elaine Chong

The MPM 2012 class embarked on a five-day study trip to Cambodia on 8-12 July 2012. Elaine Chong reflects on what was essentially a crash course on more than a thousand years of Cambodian history.

T

wenty one of us from the MPM 2012 class—some with spouse and family—descended upon Siem Reap, Cambodia, on a particularly sunny morning. This five-day study trip had us in eager anticipation since the start of the year. With our Social Secretary Extraordinaire, Rithy Kim, planning our itinerary, we knew we were in for a good time. More than that, the study trip was to be an exceptional learning experience, and we are fortunate that M. Ramesh, Visiting Professor at the LKY School, was able to accompany us on the trip. Essentially, we had a crash course on more than a thousand years of Cambodian history, which left us partly in awe, of the Angkor empire, and in horror, of the Pol Potera genocide. Mostly, we were left in a silent anticipation and hope for Cambodia’s future development.

The theme of our study trip was ‘The Quest for Peace, Security, and Economic Development: The Cambodian Experience’.

Our focus was on Cambodia’s experiences in ongoing efforts in national reconstruction and reconciliation. Our first meeting was with H.E. Sak Setha, Secretary of State, Ministry of the Interior.

He gave a succinct but comprehensive background of Cambodia’s recent political history as well as the challenges the government now faces as it enters a new phase in its development.

My previous visit to Siem Reap was about ten years ago; and I could see the physical improvements of the city. In various conversations with locals, the consistent message I got was that maintaining peace is their overriding priority. I also met many young educated Cambodians eager to contribute to their nation’s future. It was interesting that while Cambodia’s war torn past left deep wounds among its people that need to be healed, it also serves

Research Sojourn

as a reminder of the luxury of peace. In my view, the latter is the stronger force motivating Cambodians to move beyond differences to for a better future.

One highlight of our trip is surely the meeting with H.E. Ek Sonn Chan, General Director of the Phnom Penh Water Authority (PPWA), whose success in turning around the city’s water system in under ten years—a relatively short time —is much admired.

For those of us who had this case study in class, having the person himself give us a presentation and share his experiences and philosophies with us was a real treat. We came away from that meeting not so much as water utility experts, but certainly with a dose of classic leadership pointers!

No trip to Cambodia would be complete without a visit to the world famous historic UNESCO site Angkor Wat. It provided the perfect subject to study different aspects and elements of tourism development and sustainable tourism. Angkor Wat is a world renowned tourist destination and helped spawn a thriving tourism industry in Seam Reap. However, as it is an ancient monument, it also needs investment into conservation work to ensure Angkor Wat can continue to be a prime tourist attraction. It is also important to ensure that the benefits of the increased tourist dollar can be enjoyed by ordinary Cambodians.

Apart from the formal meetings, other sights and unscheduled encounters also contributed to the richness of our study experience.

For instance, we saw, on our six-hour bus ride from Siem Reap to Phnom Penh, how Cambodia’s rural villagers lived and even the exotic foods they ate. Those braver among us had a taste of local delicacies, such as fried crickets and tarantula-like spiders.

Then, after seeing nothing but padi fields and wooden huts for a good part of our bus ride, I admit we were not prepared for the glittering lights that greeted us in Phnom Penh. We were hosted by Nagaworld for two nights and was even personally welcomed by Tan Sri Dato’ Dr Chen Lip Keong, CEO, founder and controlling shareholder of NagaCorp Ltd, which is the owner operator of Nagaworld, the only integrated hotel casino complex in Phnom Penh.

On our last night, the surprise VIP guest to grace the dinner was General Kun Kim, Deputy Commander-in-Chief and Chief of Joint Staff, Royal Cambodian Armed Forces. General Kun Kim is also Chief Advisor to the Prime Minister of Cambodia. He is also Rithy’s father.

We would like to thank the LKY School for enabling this trip, and this is certainly one that the class will be talking about for years to come.

Elaine Chong a0092516@nus.edu.sg is a student at the LKY School, and President of the MPM 2012 Class Committee.

· J an - M ar 2 0 1 3 · p 6 0

Shrink Wrap

ON THE MOVE The Lee Kuan Yew School of Public Policy continues to attract leading scholars from around the world.

MICHAEL HOWLETT (Yong Pung How Chair Professor, Jan 2013) returns to the School as Yong Pung How (YPH) Chair Professor for a period of three years. He was a Visiting Professor at the School from 2009 to 2010. Professor Howlett is currently the Burnaby Mountain Chair Professor at Simon Fraser University’s Department of Political Science. He has also taught at the University of Victoria and Queen’s University. He specialises in public policy analysis, political economy, and resource and environmental policy. He is author or editor of over 27 volumes, numerous articles in leading international journals, and various commissioned reports. He is the recipient of a variety of competitive research grants. In addition to these achievements, he is also the author of a leading international text book on public policy and serves as editor on Canadian and international policy journals. He will provide research mentorship and help to anchor the School’s PhD programme.

RETO STEINER (Visiting Research Fellow, Jan 2013) is Professor for Public Management, especially Organisational Management, at the Center of Competence for Public Management of the University of Bern, Switzerland. He is a member of the management team at his University. His research focus lies in the governance of agencies and state-owned enterprises and the organisational design of such institutions. He is also interested in decentralisation and local governance. He aims to finish a paper from a COST action project on agencies during this stay at our School.

He teaches the following subjects at University of Bern: Public Corporate Governance, Local Governance, organisational design of public administration, including Process Management, and Performance measurement.

NORMAN FAINSTEIN (Visiting Professor, Jan 2013) is an internationally recognised scholar in urban studies and a Visiting Professor in the Lee Kuan Yew School of Public Policy at the National University of Singapore. He has published several books and many chapters and scholarly articles in the areas of urban sociology and politics, planning and development, public policy, race and social movements. He was a founding editor of Ethnic and Racial Studies, served on the boards of several other journals, and is a frequent referee of scholarly work. His research interests include metropolitan and regional policy, suburbia in Europe and North America, and the political evaluation of urban development.

LESLIE A. PAL (Visiting Professor, Jan 2013) is Chancellor’s Professor of Public Policy and Administration at the School of Policy and Administration at Carleton University, and Director of the Centre on Governance and Public Management. His most recent book is Frontiers of Governance: The OECD and Global Public Management Reform (Palgrave Macmillan, 2012). He served as the first Chair of the Accreditation Board of the Canadian Association of Programs of Public Administration (2006-2009), and was, for six years, an elected member of the Executive Committee of the International Political Science Association, as well as chair of its Committee on Research and Training. In February 2012 he was appointed to the Federal Electoral Boundaries Commission as one of three commissioners for the province of Ontario.

In addition to his academic work, he has served as a consultant for various Canadian government ministries, the Open Society Institute, and the World Bank.

Shrink Wrap

The Master in Public Administration and Management 高级公共行政与管理硕士 (MPAM) and Chinese Executive Education (EE) Programmes have a new expanded team.

Professor CHEN KANG is overall in charge of the new team as the Director of MPAM and Chinese EE Programmes. Associate Professor GU QINGYANG remains as the Deputy Director, MPAM, and will have the additional title of Director, Chinese Executive Education. Gu Qingyang’s responsibilities under this new arrangement will include marketing both the MPAM and Chinese EE programmes, as well as designing the Chinese EE courses. WU ZHEN will remain as Associate Director, but she will have the expanded job scope of managing the Chinese EE administrative and support work. He Peiwen and Xie Yan will continue to work for the MPAM programme.

SUSAN S. FAINSTEIN (Visiting Professor, Jan 2013) is a Senior Research Fellow in the Harvard Graduate School of Design, where she had been a professor of urban planning until 2012. She received the Davidoff Book Award for her book, The Just City, and the Distinguished Educator Award, which recognises lifetime career achievement, from the Association of American Collegiate Schools of Planning (ACSP).

Among her other books are The City Builders; Restructuring the City; and Urban Political Movements and edited volumes on urban tourism, planning theory, urban theory, and gender. She has authored over 100 book chapters and articles in scholarly journals.

She has been a professor of at Columbia and Rutgers Universities, held visiting appointments at universities in North America, Europe, and Asia, served on numerous editorial boards, was an editor of the International Journal of Urban and Regional Research and of Ethnic and Racial Studies, and has consulted to various public organisations.

PEGGY KEK (Director, External Affairs & Partnerships, Feb 2013) helms the External Affairs (EA) department. Peggy joins us with a wealth of experience from the time she spent, in local and overseas postings, with the Asia Foundation, Asia-Europe Foundation, United Nations Children’s Fund and the World Bank. She was also the first Head of Public Affairs at the Institute of Policy Studies and more recently, Acting Executive Director at the Singapore International Foundation.

CHAN MUN KITT (Director, Corporate Services , Jan 2013) is appointed the new Chairman of the Chinese Studies Programme from 1 April 2013. This is in addition to his current role as Director, Corporate Services. Going forward, the Chinese Studies Programme will also focus their energies primarily on the Master in Public Administration and Management (MPAM) and Chinese short-term training programme, with the other areas, including student recruitment, alumni and media relations, going back to the EA department.

Mun Kitt holds extensive experience in business development, including in China.

RHODA SEVERINO (Research Assistant, Aug 2012) is a graduate of the London School of Economics and recently completed a Master of Science in Comparative Politics with a democracy concentration focused on foreign policy analysis and Asian politics.

Prior to LSE, Rhoda completed a Bachelor of Arts (History and Political Science) as a Saint Peter’s College Presidential Scholar at Saint Peter’s College, USA. Rhoda also completed semesters at The Washington Center, Washington DC; and University of University of Hong Kong Summer Institute in Hong Kong SAR. She is Research Assistant to the Dean at the LKY School.

Prior to joining the LKY School, Rhoda was an intern at the Centre for Humanitarian Dialogue, Singapore; Permanent Mission of the Republic of the Philippines to the United Nations in New York; Legal Network for Truthful Elections (LENTE), Makati City, Philippines; and Asia America Initiative, Washington DC. She has also been a volunteer at Kalayaan, London, and worked as a Research Assistant at Saint Peter’s College.

· J an - M ar 2 0 1 3 · p 6 2

SCHOLARS WITHOUT BORDERS In the pursuit of disseminating expertise and accumulating knowledge, there are no borders for the faculty and researchers of the LKY School

12 5 4

10

11 8

7 1

3 9

6 2

1

2

INDIA

KANTI BAJPAI

EDUARDO ARARAL JR

PROFESSOR & VICE-DEAN (RESEARCH) Speaker at the Delhi Dialogue V: IndiaASEAN: Vision for Partnership and Prosperity on “India-ASEAN Security Cooperation: Towards Peace and Stability”.

(NEW DELHI, 19-20 FEB, 2013)

INDONESIA

ASSISTANT PROFESSOR Invited speaker at the conference on the Future of Indian Universities: Comparative Perspectives on Higher Education Reforms on “Interdisciplinarity in Higher Education: Management, Public Policy, and International Relations”.

(NEW DELHI, 21-23 MAR 2013)

Speaker at the MENSA International Annual Meeting, “Brain Drain, Brain Gain and Implications for Public Policy”.

(BALI, SEP 2012)

3

PHILIPPINES

EDUARDO ARARAL JR ASSISTANT PROFESSOR

Speaker at the 50th Anniversary of the Philippine Association for Graduate Education on “Is Graduate Education in the Philippines still Relevant?”

(MANILA, SEP 2012)

PHUA KAI HONG ASSOCIATE PROFESSOR

Participated in the ASEAN High Level Meeting on Regional Pandemic Preparedness Framework.

(MANILA, 10-11 JAN 2013) 4

SWITZERLAND

RAZEEN SALLY

VISITING ASSOCIATE PROFESSOR Delegate to the World Economic Forum Annual Meeting, Davos. Chaired panels on competitiveness and international trade.

(22-26 JAN 2013) 5

UK

HENG YEE KUANG

ASSOCIATE PROFESSOR & ASSISTANT DEAN (RESEARCH) ‘The discourse of risk and the politics of catastrophe’, Conference on ‘Political Economy, State Transformation and the new Security agenda’.

(QUEEN MARY, UNIVERSITY OF LONDON, 7-9 MAR 2013)

PHUA KAI HONG ASSOCIATE PROFESSOR

Invited speaker on “ASEF Comparative Study on the Health of Migrants” at the EU COST-ADAPT Workshop on the Economic Case, London School of Economics, London. UK. (22 FEB 2013) 6

SINGAPORE

RAZEEN SALLY

VISITING ASSOCIATE PROFESSOR Presented a speech on the Eurozone crisis at the ISEAS Annual Regional Outlook Forum, Shangri-La Hotel.

(10 JAN 2013)

7

USA

HENG YEE KUANG

ASSOCIATE PROFESSOR & ASSISTANT DEAN (RESEARCH) ‘ASEAN’s Position on the South China Sea and Implications for Regional Peace and Security’ Conference on ‘The South China Sea: Central to Asia-Pacific Peace and Security’ Asia Society/Centre on Asia and Globalisation, New York, USA. (13 MAR 2013) 8

JAPAN

HENG YEE KUANG

ASSOCIATE PROFESSOR & ASSISTANT DEAN (RESEARCH) Invited lecture at Japan National Defence Academy, Yokosuka, Japan Title: ‘The evolution of British strategic culture’.

(14 DEC 2012) Presentation at the Japan Association for International Security Annual Meeting, Tokyo, Japan Title: ‘Contributions of Asia-Pacific countries to international peacekeeping: a micro-view’ (8-9 DEC 2012) Invited lecture at Waseda University, Tokyo, Japan on ‘IR theory in the UK and Singapore’.

(20 DEC 2012) 9

BRUNEI

CAROLINE BRASSARD

ASSISTANT DEAN (ACADEMIC AFFAIRS) & SENIOR LECTURER

10

AUSTRIA

PHUA KAI HONG ASSOCIATE PROFESSOR

Invited speaker on “Promoting the Health of Migrant Workers from an Asian Perspective”, EU COST-ADAPT Expert Meeting on Strategies for Organisational Change, Centre for Health and Migration, Vienna, Austria.

(15-16 MAR 2013) 11

KAZAKHSTAN

DODO JESUTHASON THAMPAPILLAI VISITING PROFESSOR

Executive Programme on Public Policy and Management at Nazarbayev University. Lectured 30 Senior Government Officials on Micro and Macro Economics in Astana, Kazakhstan.

(20-23 NOV 2012)

EDUARDO ARARAL ASSISTANT PROFESSOR

Executive Programme on Public Policy and Management at Nazarbayev University.

Lectured 30 Senior Government Officials on Good Governance in Astana, Kazakhstan.

(20-23 NOV 2012) 12

SWEDEN

TIKKI PANG (PANGESTU) VISITING PROFESSOR

Presenter and Panelist, Nobel Week Dialogue, ‘Genomics for Health Improvement in the Developing World—How do we actually get there?’

(STOCKHOLM, 8-10 DEC 2012)

Presented a conference paper on “Natural Disasters and Volunteerism for Social Development: Prospects and Challenges in ASEAN” at the 10th ASEAN Inter-University Conference on Social Development on Climate Change and Human Insecurities. A panelist on “Southeast Asia and Human Insecurities: Causes, Costs and Challenges” at University Brunei Darussalam.

(10-12 DEC 2012.)

· J an - M ar 2 0 1 3 · p 6 4

Faculty achievements Kanti Prasad Bajpai Professor & Vice-Dean (Research)

Razeen Sally Visiting Associate Professor

The sixth K. Subrahmanyam Award for Excellence in Research on Strategic and Security Issues was conferred on Prof. Kanti Bajpai by the President of the Institute of Defence Studies and Analysis (IDSA), New Delhi, by the Rt. Hon. A.K. Anthony, the Minister of Defence, Government of India, at Foundation Day of Institute of Defence Studies and Analysis (IDSA) IDSA on 10 November 2012. The K. Subrahmanyam Award is conferred on an Indian scholar, journalist or analyst who has made an outstanding contribution in the area of strategic and security studies.

Appointed to International Advisory Committee, Journal of Southeast Asian Economies (published by Institute of Southeast Asian Studies (ISEAS)).

Heng Yee Kuang Associate Professor & Assistant Dean (Research) His article ‘The Bundeswehr and the Kunduz Air Strike — 4 September 2009: Germany’s Post-Heroic moment?’ (with Constantin Schuessler) has been accepted for publication in European Security. Forthcoming 2013.

Tikki Pang (Pangestu) Visiting Professor His book “Asia’s Role in Governing Global Health” has been published by Routledge. The volume investigates the neglected question of the impact of a rising Asia on the management of transboundary health problems. More information can be viewed at http://www.routledge.com/books/ details/9780415503433/ Appointed as Member, Editorial Board, at OMICS: A Journal of Integrative Biology. The monthly journal integrates global high-throughput and systems approaches to 21st Century science from “cell to society” – seen from a post-genomics perspective.

Phua Kai Hong Associate Professor Was conferred the Long Service Award 2012 by the Ministry of Social and Family Development (MSF), in recognition of 20 years of invaluable voluntary service to the community.

Previously known as the MCYS Long Service Award, it recognises individuals or organisations who have volunteered directly under MSF programmes and schemes.

Thirukodikaval Nilakanta “T. N.” Srinivasan Yong Pung How Chair Professor His article “Trends and Impacts of Real and Financial Globalization in the People’s Republic of China and India since the 1980s” is published in the Asian Development Review.

Reference is: Srinivasan, TN (2013), “Trends and Impacts of Real and Financial Globalization in the People’s Republic of China and India since the 1980s” Asian Development Review, 30(1): 1-30.

Kwan Chang Yee Research Fellow His article ‘Subsidies as Optimal Fiscal Stimuli’ (with Hassan Molana and Catia Montagna) has been published in the Bulletin of Economic Research. Reference is: Molana, H., Montagna, C. & Kwan, C.Y. (2012). Subsidies as Optimal Fiscal Stimuli.

Bulletin of Economic Research. 64(s1): s149–s167.

Shrink Wrap

A Wise Man Knows One Thing – The Limits Of His Knowledge

by John Kay

We do great damage by claiming to know things that are not known, by asserting certainty in the face of uncertainty and ambiguity, and by attaching a veneer of rationality to decisions.

John Kay is our guest columnist.

J

ohn Maynard Keynes, who never tried to conceal that he knew more than most people, also knew the limits to his knowledge. He wrote, “About these matters – the prospect of a European war, the price of copper 20 years hence – there is no scientific basis on which to form any calculable probability whatever. We simply do not know.”

And Keynes was right. He published these observations in 1921, and 20 years later, Britain was engaged in a desperate, and unpredictable, struggle with Germany.

But lesser men find prognostication easier. I have been looking at some of the models people use, in both the public and private sectors to predict events.

The models share a common approach. They pose the question: “How would we make our decision if we had complete knowledge of the world?” With such information you might make a detailed assessment drawing together many different pieces of relevant information on matters such as costs, benefits, and consequences.

But little of this knowledge exists. So you make the missing data up. You assume the future will be like the past, or you extrapolate a trend. Whatever you do, no cell on the spreadsheet may be left unfilled.

If necessary, you put a finger in the air.

This may lead to extravagant flights of fantasy. To use Britain’s Department of Transport scheme for assessing projects, you have to impute values of time in 13 different activities, not just today, but in 2053. Fortunately, you can download answers to these questions from the official website. And answers to many others you

probably did not know you wanted to ask.

What will be average car occupancy rates, differentiated by time of day, in 2035?

The impression of rationality these procedures convey is spurious. Because so many inputs to the analysis are invented, they can be chosen with a view to the desired result. With monotonous regularity, the Private Finance Initiative route is found to offer slightly better value for money than the public sector comparator. Financial analysts have been told to rework their figures to come up with the right answer sufficiently often that it is now rarely necessary to give them this advice.

The future is assumed to be essentially like the present, with differences mainly derived from mechanical projection of current developments.

Uncertainty is ignored, or dealt with in unsatisfactory ways.

Sometimes the analysis will offer probability judgments – typically derived by tweaking some of the arbitrary assumptions and seeing how many of the scenarios generated fall within specified limits. As will the stress tests carried out on Europe’s banks recently. The only information exercises such as these convey is the limits of the imagination of the people who have undertaken them.

Yet the mistaken belief persists that these procedures provide an objective basis for decision-making. A consultancy industry has developed that has expertise in particular models. It is almost essential for project sponsors to appoint those companies. To their great profit, the consultancies have developed modelling

into a scalable business in which junior analysts can be used to input data.

Models are often useful in illuminating complex problems and quantification is an essential part of decision-making. But good models are simplifications, not black boxes whose workings are incomprehensible even to their operators. The relevant model is always specific to the task at hand and there is no objective method of determining the right tool to employ in any particular case.

If you do not know the answer to a question, the right response is not to make a number up, but to rethink and frame an alternative question that is capable of being answered.

We do great damage by claiming to know things that are not known, by asserting certainty in the face of uncertainty and ambiguity, and by attaching a veneer of rationality to decisions that have in fact been made on other, rarely articulated, grounds.

The paradoxical result is all too obvious.

The public sector and large bureaucratic organisations appear as paragons of good decision-making process and exemplars of bad decisions.

John Kay chaired the Review of UK Equity Markets and Long-Term Decision-Making which reported to the Secretary of State for Business, Innovation and Skills in July 2012. He is a visiting Professor of Economics at the London School of Economics, a Fellow of St John’s College, Oxford. He is a Fellow of the British Academy, a Fellow of the Royal Society of Edinburgh.

He is the author of many books, including The Truth about Markets (2003) and The Long and the Short of It - Finance and Investment for Normally Intelligent People Who Are Not in (2009) and his latest book, Obliquity was published by Profile Books in March 2010. Kay contributes a weekly column to the Financial Times, where this article first appeared. It is reproduced here with his permission. · J an - M ar 2 0 1 3 · p 6 6

Global-is-Asian,theflagshipmagazine of the Lee Kuan Yew School of Public Policy, focuses on public policy research conducted at the school and policy issues raised in public debates.

We endeavour to feature pithy opeds and insightful research by the faculty, PhD students, and research centres, and solicit commentary on areas of public interest, with lessons for Asia. You will be kept abreast of programmes and courses run

by Executive Education, alumni updates, awards and publications.

All archived issues will be available online soon at the revamped LKY School website. Follow us for other updates on Facebook at the Lee Kuan Yew School of Public Policy Official FB page and on Twitter @LKYSch.

returns next issue with a focus on public policy research by the LKY School.