Ethos Issue 6, Jul 2009

Singapore’s Political Economy: Two Paradoxes
Bryan Caplan

Economist Bryan Caplan, noted for his insights on public choice, visited Singapore in November 2008. His observations address how “economically efficient, but politically unpopular” policies might successfully be carried through a democratic system, and sheds light on the environment in which public policy is made and implemented in Singapore.

Puzzle #1: It frequently adopts policies that economists would call “economically efficient, but politically unpopular”.¹ For example, Singapore has near-unilateral free trade, admits large numbers of immigrants, supplies most medical care on a fee-for-service basis, means-tests most government assistance, imposes peak load pricing on roads, and fights recessions by cutting employers’ taxes. These are policies that could easily have cost politicians their jobs in many other democracies, yet they have stood the test of time in Singapore.

Puzzle #2: Even though Singapore follows the forms of British parliamentary democracy, it is effectively a one-party state. The People’s Action Party (PAP) has held uninterrupted power since the country gained Home Rule in 1959, has never received less than 60% of the popular vote,² and has always enjoyed an overwhelming majority in Singapore’s Parliament—it currently holds 82 out of 84 seats.

To put these paradoxes in perspective, we need to review the Median Voter Model, the workhorse of studies in modern political economy. In the Median Voter Model, two political parties compete for votes by advocating a “platform”—a bundle of policies. Citizens in turn vote for the party with the platform closest to their ideal policy bundle.

Setting aside various complications,³ the Median Voter Model implies that competing political parties tend to offer policy platforms that centrist voters regard as ideal. This also implies that a rival party should be able to match a dominant party’s electoral success simply by mimicking its centrist platform. As a result, parties rarely achieve lasting political dominance.

Despite its abstractions, the Median Voter Model usually fits the facts of actual political behaviour in democracies around the world. However, it also highlights why Singapore’s political economy is so puzzling. Singapore persistently adopts policies that would have been overturned by the democratic process almost anywhere else on earth, but the same party keeps winning election after election by a landslide. Why doesn’t a rival party promise to abolish unpopular policies and soar to power? How, in short, is Singapore’s political-economic equilibrium possible?

First, Singapore has several legal opposition parties;⁴ they may face minor indignities but hardly live in mortal fear of the PAP.⁵ Pressure from the dominant party is a feeble explanation for the opposition’s near-total failure to gain political office, given that many countries (such as Pakistan) demonstrate vigorous electoral competition despite far graver dangers.

Second, while there are unusual restrictions on political expression, these shield people from criticism, not policies. Opposition candidates who avoid personal attacks against PAP politicians can and do freely attack specific policies as ineffective or unfair. An opposition candidate could safely campaign on a platform to abolish Electronic Road Pricing or slash immigration. Indeed, an opposition candidate could safely campaign on a platform to rein in politically-motivated defamation suits. In the Median Voter Model, embracing these positions would quickly usher opposition politicians into power—assuming, of course, that the median voter genuinely wants the changes in question.

Page 1 I 2 I 3 I 4 I 5