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What About Singapore?

By Matthew Yglesias on March 9, 2011 at 8:06 am

"What About Singapore?"

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Tyler Cowen, discussing the sins of left-wing economists, says “Classical liberals are increasingly facing up to the enduring successes of the Nordic nations. There is not always a similar reckoning with the successes of Chile and Hong Kong and Singapore; often this is a sin of omission.”

I can’t say much about Chile and Hong Kong, but to me the striking thing about Singapore is how fundamentally similar it is to the Nordic countries in a lot of ways. People often see it as being all the way on the other end of the spectrum since the formal tax burden is so low. But this seems to me to largely be an artifact of the fact that the 35.5 percent Central Provident Fund contribution rate isn’t counted as a tax. So, okay, that’s not a tax it’s an individual mandate to save. But as we’ve learned lately with the health care debate, the distinction between taxes and mandates is a bit fuzzy. I also frequently hear the CPF invoked in the context of conservative schemes to privatize Social Security, but as you might have guessed from the name there’s nothing “private” about the Central Provident Fund. This is a government agency. The basic structure is similar to an idea Tyler Cowen put in his “would likely lead to massive socialism” file.

Which is all to say that Singapore seems to have achieved some enviable results in public policy, may well be on the cutting edge of sound welfare state design in many respects, but is very much a country with a large welfare state. And of course if you look at it from the other side Norway, like Singapore, runs a large sovereign wealth fund. Denmark and Finland, like Singapore, make it very easy to start a new business. Sweden and Denmark, like Singapore, have privatized the provision of a lot of public services. I don’t think it’s a coincidence that Stockholm and Singapore are leading the way on congestion pricing. These are all small countries that put a premium on well-managed public sector. We should probably all learn more about what they’re doing, but it’s important to really learn about what’s happening. In my experience, references to Sweden’s school vouchers or Singapore’s private accounts tend to obscure large differences between the programs in question and the US policy proposals.

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