Tuesday, February 27, 2024

Is Letting People Think for Themselves a Bad Thing?

 

The late Lee Kuan Yew was without doubt an extraordinary person. Say what you like about the late Mr. Lee but on the whole, he did good for Singapore. Sure, I have my grouses about Singapore and how life has become expensive. However, as one Dutchman said to me “Where else is there.” If you think about it objectively, Lee Kuan Yew got most things right and I will never tire of saying this but Singapore is pretty much what any city or country should be – clean, green and rich.

However, while Mr. Lee was undoubtedly an extraordinary leader, he developed what one could call a glaring flaw. In his later years as a consultant to nations, he developed a philosophical aversion to natural law – namely an aversion to the laws of natural selection. He seemed to genuinely believe that the system he created, which was all about the perpetual rule of an “intelligentsia” concentrated around his family (both his actual family and political party) was the best possible system for Singapore and would last in perpetuity.

The man who forged a nation where citizens pledged to “build a democratic society, based on justice and equality” ended up arguing that Singapore would be undone by a “two-party” system and while Mr. Lee had the wisdom to know when to curb himself (let’s remember he voluntarily stepped aside and made his successors remember to let him come to them), this wasn’t necessarily the case with the people after him. Whilst Singapore’s political system seems to continue to deliver the proverbial goodies, one cannot help but feel that there is a genuine belief in the elites that they have received the “mandate of heaven” to be where they are. I mean, which other “free-market” capitalist society actually has business leaders saying “the market is too small for competition.”

 


 Singapore’s success made Mr. Lee the choice consultant of developing nations. He was particularly liked by the People’s Republic of China. Thanks to Mr. Lee, autocrats of the world found an example that proved that you could keep an iron grip on power and still grow the economy. It’s particularly noticeable when you talk about the Asian giants. While you get a number of Indians complaining about China being nasty, you will undoubtedly get another group (mostly business people) talking about how India should learn from China’s ability to get things in order. India’s Prime Minister, Narendra Modi is known to be an admirer of Mr. Lee Kuan Yew and attended his funeral.

So, was Mr. Lee, right? Is an iron grip on power better for the economy than letting people do what they want? Sitting in Singapore, which seems relatively stable (no Trump and no Brexit) compared to pretty much most of the world, the answer might be yes.

However, around November of last year, I attended a talk by His Excellency, Mr. Ignacio Concha, the Chilean Ambassador. This was a talk about investment opportunities in Chile, which is the most advanced economy in South America.

 



Chile's “success story” once made it comparable to an Asian Tiger economy rather than a Latin one. More importantly, Chile was once run by a strong man, called Augusto Pinochet, who along with murdering millions, actually stabilized the economy and set Chile onto the path of growth and development.

One might argue that Chile under Pinochet was a classic example of the benefits of strong man rule. However, the Ambassador made the point that the real explosion the Chile's growth came in the decade after the return to democracy (1990). If you were to look at World Bank statistics, you would realise that the Ambassador is right:

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=CL

 

 

 

If you look at the statistics closely, Chile’s real explosion didn’t happen in 1990 with when Pinochet stepped aside but in 2000 when he was arrested in the UK on the orders of the Spanish Magistrate Baltasar Garcon. This marked the beginning of the end of his influence on the country.

So, while there is a case to say that Pinochet, for all his faults, did stabilize the Chilean Economy, there is a case to say that his influence held the country back and the country only started exploding into wealth and advancement when his influence over the country ended.

There’s a similar example closer to home. In South East Asia, there is Indonesia, which is by far and away the economy that counts on the global stage. For 30-years, Indonesia was run by a strong man. Like Pinochet in Chile, Suharto had millions killed. However, he was a stable force in Indonesia and the ASAEAN region. Coming from Singapore, where there are memories of “Konfrontasi” under his predecessor, Sukarno, Suharto was a vast improvement. He kept Indonesia stable and focused on itself rather than on us, which allowed us to grow.

When Suharto fell, it seemed that things were a little bit messier. However, if you look at growth figures, Indonesia has done exceedingly well and being the world’s third largest democracy has been good for Indonesia’s entrepreneurs. The years under Jokowi, Indonesia’s first entrepreneur president, have been particularly good for growth:

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ID

 


 

On the African continent, there’s Nigeria. Like Indonesia in South East Asia, Nigeria is the giant in its neighborhood. For the better part of its Independence, Nigeria was run by its generals. There were periods of vast growth, which were then followed by economic collapse. Nigeria was effectively driven by oil exports. Then, in 1999, the last and worst of its military dictators died. Nigeria returned to civilian rule and growth has been steady. While Nigeria has by no means escaped poverty, its been remarkably steady since 2000.

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=N

So, if you look at the examples of Chile, Indonesia and Nigeria, there is a case to be made for democracy being good for growth. Yes, rule by strong men can be necessary to bring a sense of stability. However, that’s only good up to a certain point. A lot of the benevolent effects of strong man rule depends on the strong man himself. In Singapore, we’re lucky that the “strong man” was Mr. Lee who got things right and saw to it that his immediate successors remained honest. However, there’s no guarantee that the next few leaders will remain honest or get too used to the perks of power.

Nigeria’s plethora of military strong men turned what should be an exceedingly wealthy place into a basket case. Suharto was a force for stability but when things collapsed in 1997, he was exposed as being more interested in hanging onto power to protect family wealth than running the country.

Democracy and competition for power are actually good. When you let people get on with it within a certain framework, you actually create prosperity. It may look messy and ride may be rough, but in the end, letting people get on with it and making them have a stake in the country is actually good for everyone

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Maira Gall