2003 Speeches
"Building on Success: Adjusting the Singapore Model": Remarks to Young Entrepreneurs Organization
Franklin L. Lavin - U.S. Ambassador to Singapore
May 28, 2003
Good afternoon. I want to thank the Young Entrepreneurs Organization for inviting me today to talk about the road ahead for Singapore's economy. It seems our lives today are very much caught up in the immediate challenges such as SARS, Iraq, and terrorism, but let me invite you to join me in a discussion of the long term. Where is Singapore going? How successful is the model? What kind of success is attainable over the next few decades, and what type of changes might Singapore have to make to realize that success?
Let me say at the outset that I offer my remarks with humility, knowing full well that America's economic and social systems have their own weaknesses. In fact, I'm sure there are many areas in which America could learn from Singapore. But since you paid for this lunch and I didn't, I suppose I owe it to you to give you my thoughts. When we move to questions, I would be happy to get into any topic you choose.
Where we are
Let’s first recognize the success of Singapore in getting to where it is today. In a few short decades, the country has made the great jump, as the Senior Minister put it, "from Third World to First." From the 1960s through the 1990s, the Singapore model was one of extraordinary success. Singapore enjoyed a clean, well-run, rationalist government characterized by forward-thinking leaders and a professional civil service. It established a legal system that was stable and welcomed foreign investment. It avoided the traps that befell many newly independent countries: corruption and socialism. Avoiding these missteps allowed the industriousness of its work force and the leadership of its business community to create broad based prosperity.
But anyone in business is aware that success is not likely to be a permanent condition. Thucydides taught us that nations rise and fall, and the same is true for businesses. The conditions of success change as the world changes. Not surprisingly, the historical Singapore model is subject to greater challenges as the world, the region, and Singapore itself evolve. Amidst the tough competition of today's globalized economy, Singapore faces several challenges: It has the disadvantage of a small domestic market. In some key sectors, its neighbors are starting to offer competition. As a regional platform Singapore is subject to the shifting winds of the Southeast Asia economies. And the Chinese, like the Singaporeans, are smart and hard-working. They're also very hungry.
So, the question becomes "what now?" How could the model be modified to perpetuate and build on Singapore’s success?
Creating the Open Society
I don't have one "right" answer to give you on how to move Singapore forward. In fact, I would argue that there really isn't one "right" answer to be sought, and that in accepting this, we actually move closer to getting on a successful track. Because we do not know what sort of challenges lie ahead, nor do we know what type of innovations might be devised, the best prospect for Singapore’s success comes with a move to a system that allows for different opinions, different experiments and an independent media. In short, what political scientist Karl Popper termed the “open society,” one that realizes that policy choices, like business challenges, involve complicated decisions, imperfect information, and occasional subjectivity. So the more voices in the discussion, the better the likelihood of arriving at a good answer.
Prime Minister Goh said that what Singapore needs is "an environment that encourages people, to discover, create, experiment." I’d suggest that this kind of environment stems not from correct government planning, but from the absence of government planning. Rather than focusing on getting the right answer, the starting point here is recognizing that the best policy choice is somewhat elusive, somewhat changing, and perhaps somewhat unknowable, so it is more likely to be arrived at through experimentation, competition, and open debate. This is true in both the government sector and the business sector.
Nobel laureate Milton Friedman points out in his seminal work
“Capitalism and Freedom” the intimate relationship between economic
freedom and political freedom. As Singapore developments, it will increasingly find value in these truths. An open society with a free flow of information can be a powerful catalyst in energizing business and also promote a healthier, more secure country.
As a benchmark, my friend Minister George Yeo had the idea of Singapore
as the London of East Asia. Of course, as the American Ambassador, I
might recommend Singapore look more toward the San Francisco Bay area as the benchmark. But the idea is the same: a dynamic city, a great place to live, an international culture, a hub of vibrant knowledge-based industry, and still a healthy dose of sophisticated manufacturing. Those places are full of entrepreneurial buzz. They got there by embracing the idea that a certain sense of unpredictability is not only acceptable, it is desirable.
How does this specifically apply to Singapore? I have a few modest
observations.
Look at Singapore's education system and reward structure: students get
"streamed" from an early age and students who score well are the "winners." What about those with different kinds of strengths, different goals and motivations, or those with creative and unusual ideas? What about the late bloomers - they might underperform early in school but might outperform later on? What about those who have only a narrow skill set, but are world-class within that set? What about those who can move across disciplines better than anyone, but are not necessarily distinguished in any one particular discipline? Nonetheless, they can make connections that a nominally smarter student fails to make.
I wonder where some of America’s leaders would end up if they had been born in Singapore? What would have happened to college drop-outs like Bill Gates and Dick Cheney? What about seemingly ordinary students such as Colin Powell? What about repeatedly bankrupt individuals such as Henry Ford?
You can't test for entrepreneurial ability and then make the highest scorers the entrepreneurs. There’s no test for leadership, or management strength, or creativity, or personal integrity or persistence. These are areas that defy planning and require a more free-flowing environment. The U.S. tends to view raw intelligence as a less significant indicator of success, and among the easiest skill to find or replace. Singapore tends to view intelligence as the determining characteristic of success. It is worth noting as we look at some of the terribly smart people running the Singapore government, that
America’s greatest economic growth often occurred during periods when our leadership was astonishingly mediocre, suggesting that the quality of
government might have less to do with economic success than is generally believed.
To continue with the Bill Gates example, many of America's most successful entrepreneurs were restless, even unproductive, in school. Ted Turner and Fedex founder Fred Smith come to mind here. People have to be able to accept that something isn’t working and be willing to start over again and again until it does.
The Internet revolution demonstrates the need to deal with the unpredictable. It was the intelligent, the creative, and the daring who pushed the Internet to transform the way the world does business. Sometimes this was through our leading institutions, but sometimes there were small groups of rebels and misfits whose minds were afire with a burning idea. The point is not that the Internet revolution resulted in failures as well as successes. The point is that you are only going to get the successes if you allow for the failures.
That leads me to a second observation. Introducing change requires the ability to challenge prevailing ideas and practices. People have to be willing and free to criticize when a strategy does not work, a product is not useful, or a manager is not effective. Sometimes the critics will be right, sometimes not. But in Singapore an aggressive use of defamation suits seems to stifle even mild criticism in the business environment. I read of one Singapore company which discovered that some individuals gave its service low marks in comments posted on an Internet website. The company responded by acquiring the email addresses of the individuals and sending notices requesting apologies and stating it was considering damages. Press reports over the last year offer other examples of defamation suits or threats thereof for statements or activities that would be considered normal business "chatter" in other financial centers. Some of these are directed against Singaporeans and some against American firms operating in Singapore, but it makes no difference.
There is certainly a use for defamation law to protect companies from malicious or unfounded attacks, but excessive sensitivity and willingness to use defamation suits as a weapon risks creating an environment where the business press hesitates to criticize.
One example hit home just a few months ago when peaceful protesters were taken away from the U.S. Embassy when they wanted to demonstrate against U.S. policy in Iraq. I don't see why a group of people who want to stand in front of my Embassy and tell me they don't agree with a policy of my country should not be able to do so. The right of peaceful expression of opinion is an important element of a successful society. Not only does it ensure the society has a moral basis in which different opinions are respected, but it also encourages a climate of respect and of open debate that is vital to business success.
Another example: The magazine 'Business Week' a few months ago ran an annual article on the fifty best and worst managers in America - with a small article on each of them. Could such an article be published here?
Conclusion
Creativity can be messy. Dynamic capitalism is imbued with what
The economist Joseph Schumpeter called “creative destruction.” You have to be willing to have a bit of unpredictability if you want a vibrant economy and a vibrant society. The key is to see this as a strength of society and not a weakness. The good news is that Singapore is a successful country with a successful business community. But benchmarked against London/San Francisco Bay there is less dynamism. Companies from "noisy markets" have honed their competitive edge. Maybe Singapore could use some of that beautiful noise.
Singapore has much to be proud of. But the reason we are having this discussion is that Singaporeans are not content to rest on their laurels. You want to adapt and move forward. In the future, you in this room and people like you will be the ones who will make the new Singapore. I firmly believe that, despite recent bad weather, Singapore’s best days lie in front of us. But the astonishing success of the last few decades should not give way to complacency or trap us in a conventional mindset. Some view the Singapore economy as a symphony, with all parts working harmoniously together under the auspices of a conductor. In some respects, this analogy is both accurate and positive. But beautiful music can also be made by small groups and by individuals who experiment and improvise. Maybe Singapore needs to augment its symphony with some jazz performances.
Thank you.