by Eric Feigenbaum
How do you square the following the statements?
I will be very unhappy if I went around Singapore and in spite of our prosperity, I saw a few hundred people living on the streets, begging, playing a violin, or pretending to play a violin to collect money. That means something has gone wrong with the society. They have not been given the proper chance.
And
Welfares and subsidies destroy the motivation to perform and succeed. Where we must help, give cash or assets and leave it to the individual to decide how he will spend it. When people become dependent on subsidies, and the government can no longer afford and has to cut subsidies, people riot.
In the United States and Europe, these two quotes may well be made by politicians from rival political parties. We generally think of them as a liberal versus conservative view and for some, perhaps a compassionate versus callous perspective.
Both were said by Singapore’s founding and long-time Prime Minister, Lee Kuan Yew. They do not represent a change in perspective over his tenure – they are two sentiments he held simultaneously throughout his long career.
He put his convictions to the test. No country has been so successful as Singapore in eliminating homelessness and abject poverty while avoiding public welfare programs.
The western model for dealing with social ills is for government to step in and create systems reliant on some variety of wealth redistribution – with countries like Sweden and Norway achieving some of the best results and Britain and America experiencing lesser ones.
In fact, Americans have been notoriously wary of anything that smacks of socialism – which is why there was so much initial resistance to many New Deal programs including Social Security. Lyndon Johnson’s Great Society introduced food stamps and Medicare to create additional social safety nets. Today, these programs are entitlements Republican and Democrat retirees alike support. Social Security has become the “third rail” of American politics.
Singapore, on the other hand, is extremely wary of anything that presents as wealth redistribution. Lee Kuan Yew proudly proclaimed it the “No Beggar Bowl Society.” Yet, Singapore has socialistic goals on par with Europe.
Only, instead of giving money, Singapore aims to make life more affordable for its poorer citizens.
For example, government subsidizes and regulates the cost of public and taxi transportation to ensure people can get around for often less than a Sing Dollar. It requires hospitals to have 80 bedded, open, fan-cooled wards so hospitalization can be affordable by scaling back the creature comforts to reduce the bill. For those who can’t afford their care, families are allowed and encouraged to transfer their health insurance funds to their sick loved ones. Singapore brings down the cost and then taps into the strength of their family units.
Most importantly, government has kept housing within people’s budgets. Government-built affordable housing with government-backed loans taking downpayments from mandated savings through payroll and self-employment taxes have created a 90 percent homeownership rate – cascading down to some of the lowest income levels.
The closest Singapore comes to traditional Western-style welfare is its Workfare Income Supplement program in which it incentivizes people to take or remain in jobs by “topping up” their income to a higher living standard. Employees 30 to 60 years old who make between S$500 and S$3,000 per month can receive up to S$4,200 per year and up to S$3,267 for self-employed persons, while seniors 60 and above can receive up to S$4,900 in benefits which are a mix of income and money deposited to their Central Provident Fund accounts which are used for healthcare, retirement and downpayments on first and second homes.
There are also numerous grants and tax credits for businesses who create jobs for seniors and the disabled.
The core tenet of the Singaporean system is that while no one should be unable to make ends meet, everyone should have skin in the game. Moreover, protecting one’s most vulnerable means empowering them.
As Lee Kuan Yew once explained:
Even in the capitalist West where they have tried throwing money at problems, what is the end result? You go down New York, Broadway. You will see the beggars, people on the streets. Worse than in the 1950s and in the early ’60s before the Great Society programs. Why? Why did it get worse after compassion moved a President, motivated with a great vision of a society which was wealthy and cared for, could look after everybody – the blacks, the minorities, the dispossessed, the disadvantaged. There is more unhappiness and more hardship today and more beggars, more muggers. Why is that? Have we not learnt? Where are the beggars in Singapore? Show me. I take pride in that. Has anybody died of starvation? Anybody without a home left to die in the streets and have to be collected as dead corpses? Because we came to the realistic conclusion that the human being is motivated by instincts that go deep down into the basic genes of life. And the first basic instinct is to protect yourself, and stronger than that, to protect your offspring so that there is the next generation. You kill that link, you have killed off mankind.
While American Presidents of both parties – from Kennedy and Clinton to Reagan and Trump – have given speeches about moving people off welfare and how important self-reliance is, no one has managed to reform American social welfare into a true workfare program the way Singapore does.
Yet the proof is in the pudding. The United States has 10 to 12 percent of its population living below the poverty line while 0.05 percent of Singaporeans do. Twenty-three in 10,000 Americans are homeless while virtually no Singaporeans are.
Meanwhile, Singapore’s entire government spending represents 18.4 percent of its GDP while the United States’ public social spending alone represents 20 percent of GDP.
What accounts for the paradox between the country that spends less on welfare with lower poverty and homelessness rates? I’m sure economists, historians and anthropologists will debate this for decades.
Lee Kuan Yew’s theory was fairly concise:
In American culture an individual’s interest is primary. This makes American society more aggressively competitive, with a sharper edge and higher performance. In Singapore, the interests of the society take precedence over that of the individual. Nevertheless, Singapore has to be competitive in the market for jobs, goods and services. On the other hand, the government helps lower income groups to meet their needs for housing, health services and education so that their children will have more of an equal chance to rise through education. We have given every student, regardless of language, race or religion, equal opportunities for education and employment. Hundreds get scholarships every year, over 150 to go to universities abroad. All are judged and rewarded according to their performance, not their fathers’ wealth or status. Economic progress has resulted from this and made life better for all. This has checked communist subversion and recruitment, especially of good cadres.
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