Singapore’s Lessons for an Unequal America


Joseph Stiglitz in the NYT's Opinionator:

Inequality has been rising in most countries around the world, but it has played out in different ways across countries and regions. The United States, it is increasingly recognized, has the sad distinction of being the most unequal advanced country, though the income gap has also widened to a lesser extent, in Britain, Japan, Canada and Germany. Of course, the situation is even worse in Russia, and some developing countries in Latin America and Africa. But this is a club of which we should not be proud to be a member.

Some big countries — Brazil, Indonesia and Argentina — have become more equal in recent years, and other countries, like Spain, were on that trajectory until the economic crisis of 2007-8.

Singapore has had the distinction of having prioritized social and economic equity while achieving very high rates of growth over the past 30 years — an example par excellence that inequality is not just a matter of social justice but of economic performance. Societies with fewer economic disparities perform better — not just for those at the bottom or the middle, but over all.

It’s hard to believe how far this city-state has come in the half-century since it attained independence from Britain, in 1963. (A short-lived merger with Malaysia ended in 1965.) Around the time of independence, a quarter of Singapore’s work force was unemployed or underemployed. Its per-capita income (adjusted for inflation) was less than a tenth of what it is today.

There were many things that Singapore did to become one of Asia’s economic “tigers,” and curbing inequalities was one of them. The government made sure that wages at the bottom were not beaten down to the exploitative levels they could have been.

The government mandated that individuals save into a “provident fund” — 36 percent of the wages of young workers — to be used to pay for adequate health care, housing and retirement benefits. It provided universal education, sent some of its best students abroad, and did what it could to make sure they returned. (Some of my brightest students came from Singapore.)

There are at least four distinctive aspects of the Singaporean model, and they are more applicable to the United States than a skeptical American observer might imagine.