Caplan 2009 Singapore’s Political Economy

Singapore’s Political Economy: Two Paradoxes
Bryan Caplan
Ethos, 6, july 2009
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 madeand implemented in Singapore.

SINGAPORE VERSUS THE MEDIAN VOTER MODEL Singapore, when compared to almost any other democratic country, has two deeply puzzling features. 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 mostmedical 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, theworkhorse 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 centristvoters 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 whySingapore’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


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See especially Ghesquiere, H., Singapore’s Success: Engineering Economic Growth (Singapore: Thomson Learning, 2007). Mutalib, H., Parties and Politics: A Study of Opposition Parties and the PAP in Singapore (Singapore: Marshall Cavendish Academic, 2004): 5. 3 See e.g. Cooter, R.,The Strategic Constitution (Princeton, Princeton University Press, 2000): 17-49. One seemingly strong assumption—that preferences are one-dimensional —has received a surprising degree of empirical confirmation. See e.g. Poole, Keith, and Howard Rosenthal, Congress: A Political-Economic History of Roll Call Voting (New York: Oxford University Press, 1997).
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landslide. Why doesn’t a rivalparty promise to abolish unpopular policies and soar to power? How, in short, is Singapore’s political-economic equilibrium possible? EXPLANATION NO. 1: SINGAPORE IS NOT REALLY A DEMOCRACY One common conclusion is that Singapore must be—despite its Westminsterian pedigree—a thinlyveiled dictatorship, which informally suppresses political rivals and rigs its elections, which in turn allows the...