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Liberty and Asian Values



Is Libertarianism merely a western ideal?

Find out in this powerful video the inexorable ties between the ideas of freedom and our asian values.

The Problem of Authority

It is often said that the government derives its powers from a “social contract,” whereby the people have granted these special powers to the government. The only problem with this theory is that it is factually false—I have not in fact agreed to have a government, to pay taxes, or to obey the government’s laws.

A number of suggestions have been made as to how, despite my protestations to the contrary, I really have agreed to all those things. Here I will just mention one, because it is the one most often heard in conversation. This is the suggestion that I have “implicitly” agreed to have a government merely by residing in the government’s territory. (“If you don’t want a government, simply move to Antarctica!”) Very briefly, the problem with this suggestion is that it presupposes that the state owns all the territory over which it claims jurisdiction, or that for some other reason it has the right to exclude people from that area. But there is no way to establish such a right on the part of the state, unless one has already shown that the state has legitimate authority. This therefore cannot be presupposed in an argument designed to establish the state’s authority. In this case, the statist’s claim seems analogous to the leader of a protection racket claiming that his victims have voluntarily agreed to pay him protection money, merely by living in their own houses. There are other ways in which social contract enthusiasts claim that we have accepted the social contract, but as I explain in the book, each of them falls to equally serious objections, which show that the social contract does not come close to satisfying the generally accepted principles of real, valid contracts.

Another popular suggestion is that, in democratic nations (about half the world today), the democratic process confers authority on the government. The motivation behind this view is initially puzzling. Recall that the problem is to explain why the state may undertake actions that would be considered rights violations if anyone else were to perform them. Typically, if some type of action violates someone’s rights—for instance, theft, kidnapping, or murder—the action will not be converted into an ethically permissible, non-rights-violating one if a larger number of people support the action than oppose it. If you’re in a group of friends, and five of them decide they want to rob you, while only three oppose robbing you, this does not make it ethically permissible to rob you. Similarly, even if every law were directly authorized by a popular referendum of everyone affected by the law, it is unclear why this would render legitimate a law that would otherwise have been a rights violation. Matters are only more problematic in a society in which a minority of people vote, and they vote merely to select representatives who may or may not keep their promises, and may or may not do what their supporters wanted.

But doesn’t the government have to coerce us in the ways that it does in order to maintain itself in existence, so that it can provide law and order? And without government, wouldn’t society degenerate into a constant war of everyone against everyone? The first thing to note about this argument is that it could at most justify a tiny minority of all the powers claimed by any modern state. Perhaps the government must make laws against violence and theft and provide a court system to adjudicate disputes, in order to prevent a Hobbesian war of all against all. But why must the government control what drugs you may put into your body, what wages you may pay your employees, how much wheat you may grow on your farm, and whether you buy health insurance? Why must they subsidize agribusiness, send rockets to Mars, fund the arts, provide college loans, and run their own school system? The question is not, “Why are those programs beneficial?” The question is, “How are those programs justified by the threat of the Hobbesian war that would supposedly result from anarchy?”

-- Michael Huemer, The Problem of Authority

As hurricanes have hit the US, a debate has been raging over the role of markets and governments in disaster prevention and post-disaster relief.

Only this week, the Nobel Prize-winning economist Joseph Stiglitz pointed out what he described as an “obvious lesson”, which was that “markets alone won’t protect you” from natural disasters. This, he explains, is because markets are subject to market failure, which means that “collective action becomes imperative”.

According to Stiglitz, markets fail in such scenarios because individuals have “no incentive to take adequate precautions” on their own, which then means that “effective government investments” and “strong regulations” are necessary.

This would be an interesting point, if it were not actually a straw man argument. Free market economists (whom Stiglitz, unsurprisingly calls neoliberals), have not made the claim that markets alone could protect society from natural disasters. This markets-alone-can-protect-you-and-save-you belief is a mythical creature entirely of Stiglitz’s own construction, which he uses to justify his pro-government conclusions.

What so-called “neoliberals” have argued is that markets form an essential—though not necessarily the only, or a sufficient— component of disaster prevention, and more critically, in post-disaster recovery. While we should welcome all sources of aid, the last thing we should do is to impair the contributions of the market in this respect.

The necessity of the market mechanism is most clearly seen in post-disaster situations, where essential goods are in short supply. In such situations, prices of essential goods naturally rise to reflect their relative scarcity, and higher prices create an incentive for entrepreneurs to enter the market. The result is that higher prices, through price gouging, help resources get to the people who need them most.

Such behaviour has been severely criticised across the political spectrum. But let’s not forget that the price gouging is not defended by its supporters as the sole and sufficient means to alleviate shortages. It isn’t a panacea, but it does offer one option for those in need. And while governments should engage in relief initiatives, that is not a reason to block the market process, which is precisely what has occurred through widespread anti-gouging laws.

There are, of course, be those who would come to the aid of others out of pure altruism after disasters. Yet, altruism is not inexhaustible, and the last thing we should do is prevent those who wish to earn money while also helping others from doing so.

Unfortunately, that is precisely what happened in the aftermath of Hurricane Katrina, when the praiseworthy efforts of Walmart and other private-sector retailers in bringing essential goods to the scene were stymied by the bureaucracy of the Federal Emergency Management Agency (FEMA).

Lest I be accused of a “market fetish” that is emblematic of “the neoliberal gospel”, I should clarify that there’s more to be said in defence of markets in addition to just “price-gouging is great”.

In the area of disaster prevention, for example, Stiglitz has conveniently neglected to mention the unintended consequences of government regulations on construction patterns in coastal areas. By underpricing insurance, the NFIP has created a moral hazard by improperly incentivising overdevelopment in flood prone areas.

This is particularly relevant in the case of Florida, which has just been subject to Hurricane Irma’s wrath. Florida is no stranger to hurricanes, having been hit multiple times in its history. Yet, despite this clear threat, the coastal population has grown at a rapid rate, with a denser population now than ever before, exposing more people and property to natural destruction.

The federal agency tasked with disaster management, FEMA, is itself prone to inefficiencies, and has often impeded more effective relief efforts on a local-state level. Its well-documented limitations should provide caution to those who would embrace Stiglitz’s call for “strong regulations”. The limitations of such centralised disaster-relief bodies is no surprise, as pointed out by the economist Peter Leeson; such bodies lack knowledge of local circumstances and are relatively weak in adapting to on-the-ground conditions.

Of course, this is not to say that markets work perfectly, according to textbook idealisations. Since markets are human constructions, and humans are imperfect, markets can often fall short.

Yet, in the emerging field of mainline economics, the case for the market doesn’t rest on an idea of perfection. While markets may fall short, what is needed is a comparative analysis of whether they remain superior relative to political institutions, especially in dealing with problems of incentive and knowledge. Imperfect markets may still be preferred over the imperfections prevalent in governmental bodies.

So while markets are not perfect, this field of mainline economics has produced a large body of research demonstrating how local communities and voluntary associations are more resilient than commonly assumed, in coping with collective action problems in post-disaster situations.

Important contributions include Laura Grube’s Community Revival in the Wake of Disaster: Lessons in Local Entrepreneurship, which draws from cases of recovery efforts after Hurricanes Katrina and Sandy, examines how local entrepreneurship promote community recovery. The combined research efforts of the Mercatus Center at George Mason University investing post-Katrina recovery have culminated in an oral-history account How We Came Backwhich shows the resilience of self-governing communities.

While Stiglitz is not wrong to claim that markets alone cannot protect you from disasters, his claims may ultimately be beside the point. His argument can be easily turned on its head: government alone cannot protect you from disasters. Free, private, self-governing communities can, and often have devised mechanisms to come together, provide collective goods, and recover from even the deadliest disasters.


This article was first published on CapX by Bryan Cheang, President of Students for Liberty Singapore and a graduate student in the Department of Political Economy at King's College London.


Productivity is important to the well-being of an economy. Today each man and woman enjoys a standard of living much higher than that of their ancestors as an outcome of higher productivity.

Mainstream economists – these are the economists trained by the majority of colleges, universities and MBA programmes - rightly appreciate this fact. Paul Krugman, Nobel Prize winner and self-proclaimed Grand Master of the mainstream states that productivity isn’t everything, but in the long run it’s almost everything. And that is an interesting statement.

The Pieces of the Puzzle
But from here things get a bit confused. Around 1956, a Robert Solow together with a gentleman named Swan created a mathematical contraption, and aptly called it the Solow-Swan Model. It is one of these very simple things that everybody and yet nobody really understands where a nonlinear system of ordinary differential equations models the evolution of the per capita stock of the capital. You follow what I mean.

In plain language, Robert Solow calculates the separate effects on economic growth caused by labour, capital and a most mysterious residual called total factor productivity. He was awarded the Nobel Prize in Economics for his work in 1987.

Today mainstream economists use the Solow-Swan Model (plus its derivatives) and proudly speak of the productivity of labour and the productivity of capital.

This is nonsense. It is based on the illusion that it is possible to determine the shares that each of the various complementary factors of production has physically contributed to the turning out of the product. It doesn’t make sense.

The Scissors
If a man cuts a sheet of paper with a pair of scissors, it is impossible to ascertain quotas of the outcome to the scissors (or to each of the two blades) and to the man who handled them. We could ask, for the sake of the argument, which of the two factors at work here caused the increase in productivity. Is it labour or capital? Put in this way, the answer must be: capital (the scissors).

And then there is the small matter of total factor productivity (TFP). I never really grasped what TFP exactly stands for, but it is something like “Things got a bit better. We don’t know exactly why. We can’t explain it through physical capital or labour. Best guess there is some improved knowledge, technology, likely enhanced efficiency.” TFP in other words, alludes to efficiency.

The great economist Israel Kirzner says this about efficiency: If you want to go uptown, don’t take the downtown train. To transcribe this to the man with the scissors, “If it gets a bit dark, ask someone to switch on the light.”

The Puzzle in Pieces
More seriously, the year Robert Solow received his Nobel Prize he is quoted as saying you can see the computer age everywhere but in the productivity statistics. Here is the Nobel laureate who calculates how productivity grows an economy. And he says computers contribute nothing because he can’t see it!

This is shocking. If Robert Solow is correct, it means that the whole IT industry – IBM, Microsoft, Oracle, SAP, Amazon...you name it – have no reason to exist because they don’t provide any value to their clients. The clients buy useless unproductive stuff.

Maybe there is something seriously wrong with the Solow-Swan model. And maybe - unlike the IT industry! - it has no value. And maybe we should hand Robert a pair of scissors.

The Productivity of Labour
Some proclaim that the correct approach to calculate productivity is to take into account no more than the input of labour. The logic here is that labour is the only input that can be measured in units, in example, worker-hours.

The input of capital - not even to mention the mysterious TFP - should not be considered because it can’t be measured in units. For starters, what exactly is capital? There is bank capital, liquid capital, fixed capital, working capital, human capital, capital stock, capital structure, capital value.

How to define out of all these different types of capital a common unit for measurement? Meters, litres, cups, pints, tablespoons, kilos, pounds, chunks or why not scissors? Perhaps in case a company has good looking male workforce,... hunks? Because it is impossible to sensibly measure a unit of capital, better is to ignore capital – and its contribution to productivity - altogether.

Unfortunately a labour-only based approach also quickly reaches confusion.

The Scissors and the Fingers
Which of the three fingers holding the scissors contributes more to output? In the picture you see above, it was my hand that was holding the scissors. And I honestly couldn’t tell you which of my fingers contributed more to the outcome of cutting the paper. My thumb, my index or my middle finger?

And just as with the fingers on the scissors, in the real world it is impossible to calculate exactly what the contribution is of every employee to the bottom line of the company. Surely, some employees are more productive (and hence more valuable) than others. But how to calculate each individual’s productivity and the resulting contribution to the company?

Marginal Productivity
Here is where mainstream economists introduce the concept of marginal productivity in an attempt to solve this piece of the puzzle. Marginal productivity is the deduction in net output caused by the elimination of one worker. The employer can use this information to calculate how much that person brings to the business and how much he or she should be paid.

But things are not as simple as it sounds. In some cases there are several factors that are indispensible to create the final output. To isolate the “marginal productivity” of one worker sounds easy but is difficult and impractical in reality.

Productivity and The Beatles
Robert Murphy, a young and brilliant economist, explains this issue with a nice example. How do The Beatles split the proceeds from their concert performances? How much would the proceeds fall if Paul McCartney didn’t play? Or John Lennon? In each case most likely by more than 50%. And therefore McCartney and Lennon would each seem to deserve more than half of the proceeds. That doesn't make sense.

A similar logic could be applied to the scissors. If I was to hold the scissors with just my thumb and my index finger, and I calculate the marginal productivity of each finger by eliminating the other ... very difficult to cut a piece of paper with one finger! The elimination of one worker changes the marginal productivity of the other workers.

Not Almost Everything
Going back to Paul Krugman’s statement. Productivity isn’t everything, but in the long run it’s almost everything. It is not a bad statement. But productivity isn’t everything. What if almost all companies achieve great productivity, but sadly they all produce the wrong product, things that nobody wants. The Soviet Union was very productive at producing the wrong stuff.

Productivity is not almost everything. Productivity is the by-product of the free market economy at work.

Do you think that Mark Zuckerberg is lying awake at night wondering whether his 10,000 or so Facebook software developers are more productive than Satya Nadella’s 50,000 Microsoft engineers? Or is Elon Musk, the electric car guy, having sleepless nights whether his employees are as productive as Starbucks’? If this were the case, then every business worth its salt would have a Chief Productivity Officer reporting directly to the Chief Executive Officer.

To research for this article, I spoke with Andrew Bryant, a self-leadership expert. Andrew has coached over 20+ years hundreds of entrepreneurs and business leaders across the world to answer the eternal question ‘Why, What, and How’. Andrew told me he experiences time and again how great self-leaders impact their organisation’s performance through influence, which itself is driven by intention. Labour that knows ‘Why’ it is acting takes (the ‘How’) more ownership, is creative and collaborates, aims to work productive and ... delivers (the ’What’) better results.

Solving the Puzzle
Here is how productivity comes about.

Competition, savings and investments lead to increased division of labour and accumulation of productive capital to the right place at the right time. As a result, presently available resources are used in a better and more efficient manner and generate a greater supply of future resources. Profit & Loss steers this process.

Tom Woods – Internet Entrepreneur, historian and prolific author - writes that “Profit & Loss is how a business determines whether it is serving its customers well or not. That is because there are countless resources that can be combined in a countless number of ways, to produce a countless number of goods and services.”

How can a business know whether it is using scarce resources in the most value-productive way? And once it knows what to produce, how can it know whether it is producing that thing in a way that’s least wasteful? The answer is Profit & Loss, not productivity.

The lure of profit and the discipline of loss is what keeps Mark Zuckerberg, Satya Nadella, Elon Musk and for that matter - all other businessmen and entrepreneurs - alert!

One more for the Road
While mainstream economists insist on the importance of productivity, they also insist that an economy functions smoother when there is a bit of inflation. Now, one of the key outcomes of productivity is that it leads to lower prices. While inflation leads to ... higher prices.

So on one hand, it is good that prices go down, while on the other hand, it is good that prices go up. Which one shall it be? This is an inconsistency in mainstream economics which I pointed out in an earlier article titled “Productivity, Inflation and Chickens”.

To be continued
This is part 2 in a series of articles I wrote to highlight some of the many subjects where mainstream economists have lost their common sense.

Part 3 in this series will be about debt and how mainstream economists want us to believe that some debt is more equal than other.

This article is dedicated to J.


Sources:
Andrew Bryant, Self-Leadership – How to be a more Successful, Effective & Efficient Manager from the Inside Out (McGraw-Hill - 2012)
Bob Murphy, Lessons for the Young Economist (Lesson 9 – p129-131)
Henri Ghesquiere, Singapore’s Success, Engineering Economic Growth (Chapter 1 - p19-21)
Ludwig von Mises, The Anti-Capitalistic Mentality (Chapter 4 – p86-87)
Robert Solow, We’d better watch out, New York Times Book Review (July 12 1987 – p36)
Roger Garisson, Austrian Capital Theory, presented at Mises Week 2017 (July 24 2017)
Tom Woods, Economics should teach about “Queerness”, say students (Email Oct 4 2017)



Bart is the Founder of Economica Action Pte Ltd, an international coaching and strategy provider. He also advises on the economics of climate change as a director at Climatekos. His specialties are in economics, business strategy, coaching and digital marketing. This article was first published here: https://www.linkedin.com/pulse/common-sense-vs-economics-part-2-puzzle-bart-remes/

Part 1: An Introduction to Uncommon Sense

I am an economist. I have chosen this controversial title and sub-title to point out the lack of common sense in mainstream economics. That is, the economics as is taught at the majority of colleges, universities and MBA programmes.

Economists trained by this system all too often lack a serious sense of perspective. Economic reality appears very different to them than to the common man. They view the world through mathematical formulae.

In a mathematical equation you could write:
                Common Sense + Mainstream Economists < Common Sense

Nassim Taleb, author of The Black Swan, has a valid point when he says that “The tolerance for nonsense in economics is monstrously high. In engineering it is close to zero. If a bridge collapses, economists would spin a story. In engineering you build another one.”

A terrible disaster wreaks havoc and ruin. It is followed by an expert insisting that the devastation will be good for the economy. A classic example, mainstream economists want people to believe that World War II got America out of the Great Depression. Steve Keen, an economics professor who sees himself a contrarian, had no qualms saying such during an interview with The Big Picture RT.

Bombing and destroying things. Conscripting 11 million people – men between the age of 18 and 40 are drafted away. They are replaced by older men who aren’t as physically productive and by young people and women who have never been in the labour force before. Who have no work experience. On top of that, the entire economy is being subject to abrupt and extreme resource constraints. And these are the conditions in which America recovered? Isn’t there something fishy here?

New York Federal Reserve President William Dudley said recently in an interview that “Hurricanes Harvey and Irma will lead to increased economic activity... it actually lifts economic activity because you have to rebuild all the things that have been destroyed by the storms.” I am not sure Sir Richard Branson and the 1000s of other people will agree they actually had a great day when Harvey and Irma visited their houses and destroyed everything.

No, terrible disasters like wars, hurricanes and other catastrophes are not good for the economy. Vast sums of money may be splurged to repair and rebuild, but every dollar spent on cleanup and reconstruction is a dollar that could have been spent to enlarge the economy’s reservoir of material assets. Instead, it has to be spent replacing what was lost. It is the tragedy of vanished wealth and opportunity, to say nothing of immense human suffering!

Common sense in economics may be in dire straits, but fortunately never was lost entirely and never will be. A story goes that Gaston Eyskens - Dean of the economics faculty at the University of Leuven in the 1950s - addressed students at the start of every academic year with following words:

“Young Ladies and Gentlemen. Economics is the study of people competing for scarce goods to fulfil their needs and wants. Scarce goods are categorised under Land, Labour and Capital. There is however one very scarce good that people do not compete for, because everybody believes they possess enough of it. That scarce good is ... the Common Sense.” Now, that makes sense to me!

This is the first of a series of articles I wrote to highlight some of the many subjects where mainstream economists - even those who call themselves contrarian - have lost their common sense and get things seriously wrong.

In the next article I will explain how mainstream economists create a lot of confusion on the very essential concept of Productivity!


Sources:
Albert Hahn, Common Sense Economics (1956)
Jeff Jacoby, Beware of the Broken Window fallacy (September 11 2017, FEE.org)
Henry Hazlitt, Economics in One Lesson (Chapter 3 The Blessing of Destruction)


 
Bart is the Founder of Economica Action Pte Ltd, an international coaching and strategy provider. He also advises on the economics of climate change as a director at Climatekos. His specialties are in economics, business strategy, coaching and digital marketing. This article was first published here: https://www.linkedin.com/pulse/common-sense-mainstream-economics-part-1-bart-remes/

Singapore is rightly heralded as a beacon of economic success and one of the freest economies in the world today, placing near the top of economic freedom indexes. Sizing up to only about two-thirds of New York City, the country is but a speck on the world map. Casually referred to as a “Little Red Dot”, this colloquial nickname for the prosperous city-state today is embraced by its own populace, despite its origins as a derogatory remark.

The case of Singapore is strong evidence for how tightly economic prosperity is tied to a high degree of freedom to trade.

In 1971, when the British yanked their safety net out from under Singapore in a bid to cut their own spending, Singapore’s early government jolted into action. With a realistic understanding of their lack of natural resources and space limitations, the early leaders of post-independence Singapore embarked on a strong, export-led, market-oriented economic path.

To what does Singapore owe its success? To answer this question, it is necessary to look at Singapore’s earlier history - an area that has largely been neglected in mainstream discourse but extensively explored by historians. A look into the early development of Singapore unveils its steep and robust foundations in free trade.

So, how far back should one go? Why not back to 1819, when the British first stepped onto the shores of Singapore?

The Founding Grandfathers
The country’s first Prime Minister, Lee Kuan Yew, is often recognized as the father of Singapore. If that is so, then the grandfathers of Singapore would rightfully be three men: Sir Stamford Raffles, who founded the trade settlement, William Farquhar, whom Raffles put at the helm of Singapore in his periodic years of absences, and John Crawfurd, whom Raffles appointed to succeed Farquhar.

To Raffles, Singapore was two things: (1) a treasured British colony that thwarted the monopoly of naval trade then held by the Dutch in the eastern seas, and (2) a sanctuary he hoped would one day be “the pride of the East.” Despite the fact that Singapore was not yet officially a British possession, it was the bold vision of Raffles that paved this eventuality in 1824 under Crawfurd.

Singapore’s greatest “natural resource” is its location. The island is situated at a perfect choke point along the Straits of Malacca, one of the busiest maritime sea routes which connects the West with East Asia. Raffles’s high hopes for Singapore stemmed from the fact that he understood the unique geographic advantages that the island offered. As W. G. Huff puts it, “Geography can be thought of as a natural resource like, for example, mineral deposits in the sense that both are 'superior' land. The 'natural resource' of Singapore - an island of just 225 square miles - was location.”

Raffles tapped this “natural resource” to its fullest, advertising Singapore’s ports as free of tariffs, imposed minimal port charges and banned customs duties - an alternative that proved enormously attractive to most neighboring ports of the time that were subjected to extortions, unstable laws, heavy duties and other restrictions. The trading settlement also enjoyed a natural deep-water anchorage that enabled the luxury of deep-water berthing. Both these factors made the port of Singapore unrivaled by any other in the region in its time.

Not Territory, but Trade
In the very same year that he stepped foot in Singapore, Raffles’s intentions were plain as he wrote in a letter in June 1819: “Our object is not territory but trade; a great commercial emporium and a fulcrum whence we may extend our influence politically as circumstances may hereafter require,” and to develop “the utmost possible freedom of trade and equal rights to all, with protection of property and person”. It was at this point in history that this poor and unknown fishing village began to undergo its most radical transformations.

These instructions were relayed to Farquhar in Raffles’s year-long absences. As First Resident and Commandant of Singapore (1819 - 1823), the early Singapore port grew and prospered under his four years of careful supervision. However, Farquhar also went against Raffles’s instructions, legalizing gambling dens and sales of opium and alcohol in order to raise revenue. Coupled with his lax attitude to the slave trade amongst other administrative disagreements, this eventually led to a falling out between the two men, and Farquhar was replaced by Crawfurd in 1823.

Like Farquhar, Crawfurd shared Raffles’s strong free-market beliefs and pushed his laissez-faire policies even harder than Raffles would have himself. Crawfurd kept the tariff-free port and also abolished port charges, anchorage, and other fees. Crawfurd also found a delicate middle ground for gambling houses with Raffles, choosing to license the activity while regulating and taxing them at the same time. Under his administration of three years, Singapore saw a dramatic upswing in trade and revenue.

Championed by its leaders and the merchant communities, a no-restriction immigration policy was a critical attribute to its early economic growth and success. As a result, many Chinese immigrants were attracted to the free and bustling trading port of Singapore. From the 1830s to the late 1860s, Singapore’s population quadrupled.

A Free-Trade Faith
The common denominator of the grandfathers of Singapore was their economic philosophies - capitalism and free enterprise were at the root of their beliefs. The first leaders of colonial Singapore were staunch classical liberals who professed strong beliefs in economic freedoms, preaching and practicing the gospel of free trade every step of the way.

Laissez-faire was the norm and a free economy was fiercely ingrained in the institutional context of Singapore’s society. The historian C.M. Turnbull writes in her magnum opus A History of Modern Singapore: “The principle of free trade was accepted by the East India Company’s Board of Control in London in 1826 and thereafter defended zealously by the Singapore merchants. Free trade became a sacred cardinal principle and any threatened infringement was opposed vehemently as commercial heresy.”

Raffles, she wrote, “...reflected the most advanced radical, intellectual, and humanitarian thinking of his day. The type of society he aspired to establish in Singapore was in many ways ahead of contemporary England or India… he established in Singapore a free port following the principles of Adam Smith and laissez-faire at a time when Britain was still a protectionist country.”

The transformation from a third-world fishing village to a metropolis is largely (and rightly) attributed to the late Lee Kuan Yew. Yet, the role of the grandfathers of Singapore in this transformation is often neglected. In A History of Singapore, historians Ernest C.T. Chew and Edwin Lee echoes Turnbull and attributes Singapore’s early success to free trade and immigration:
“It (Singapore) succeeded because it was an island enclave of uninhibited private enterprise, open to all races, without any religious or linguistic qualifications. It was also a free port. Except for a short interlude at Penang between 1786 and 1801, the idea of permitting trade without simultaneously taxing it was virtually unknown in the East at this time. Trade in ports under Western colonial rule were either subject to monopolies or higher duties and all kinds of restrictions, while the ports, great and small, under local rule were heavily taxed and were often subjected to all forms of exactions imposed at the whims and fancies of their rulers. Trade sometimes seemed to be tolerated rather than encouraged. Free port status, which attracted both Asian and Western traders, was one of the principal reasons for Singapore’s rapid success.”
If Lee Kuan Yew constructed the first-world metropolis that stands today, then the very first bricks for the foundations of Singapore’s economy was laid by the founding grandfathers who erected laissez-faire institutions that to this day remain deeply entrenched. This set Singapore on the road to prosperity as the leading port of South-East Asia, establishing the bedrock that the modern metropolis rests on today.

 This was first published on the Foundation for Economic Education.


Sonny Liew’s recent triple award win at the Will Eisner Comic Industry Awards has led to a resurgence of much-needed conversations on the topic of funding for the arts. An op-ed on the Straits Times by ex-Nominated Member of Parliament Calvin Cheng has propelled this discussion further, as many netizens from the corners of the web arise to disagree heatedly with him.

For one, I am very glad that Singaporeans are speaking up for the state funding of the arts. Indeed, art is extremely important. It is the embodiment of our shared cultural values as a country and the very essence of our national identity as a society. While I personally don’t watch many productions or plays that are funded by NAC (I much prefer American content like Game of Thrones and Westworld), a certain subset of the population obviously do consume these works. So who am I to say otherwise?

But while I pondered the necessity of government funding the arts, I came to a dreadful realisation.

Why isn’t dating state-funded too? Just like art, love and romance permeate the social fabric of our society - and we want to keep them flourishing. When I stroll down Orchard Road on Friday evenings, I see happy couples, hand-in-hand with glistening eyes only for each other. When I look on Instagram, I am swept away by vivid imagery of my friends celebrating their lovey-dovey relationships, anniversaries, marriages and childbirths. Love is in the air!

But not for all of us. What a shame that hundreds of thousands of Singaporean men and women remain single, utterly deprived of the bliss and wonders of love and marriagehood! These unwedded and partnerless individuals are just as deserving of the loving embrace of a partner. This is not only a disgrace, but a grievous injustice!

To fix this disastrous status quo, here’s what I propose.

The government should fund, nay, must fund dating. Yes, I have given this a fair bit of thought. The state must play an active role in facilitating the coming-together for potential lovebirds. Without the planting of this initial seed, there can be no eventual blossoming.

Just like local artists deserve more funding and empathy from art consumers who may not be particularly interested in state-funded works, so too do singles deserve the empathy of attached and married Singaporeans i.e., those who have drank deeply from the well of love.

Just like how state funding will invigorate and breathe life into the arts industry to raise the lack of consumer demand, state funding will too raise the market demand of single Singaporeans in the arena of love.

Hear me out. Abolish the current half-assed Social Development Network dating services that we have. What we need is a full-fledged and dedicated statutory board that is run by the government. Call it the National Love Council (NLC). The sole purpose of this council will be to “to nurture the romantic relationships of peoples and make it an integral part of life in Singapore".

As far as I can tell, Singaporeans are a materialistic bunch. This is good - we can work this to our advantage. NLC will vet and verify singles who are deeply in need of the TLC that they lack, with individual grants of $10,000 - $30,000, depending on how long they’ve been sexually inactive. With the use of these monies, singles can put their thriftiness aside and splurge on expensive restaurants and gifts for their dates. Alternatively, they can opt to take their grants in the form of vouchers to redeem at aesthetic surgery clinics or gym memberships.

With swelling wallets, attractive physiques and sharper noses (if they so choose), the market demand for these now-appealing singles will rise. Sounds great, doesn’t it?

But what about those singles who aren’t moved by monetary gifts, the ones who defy the rigid assumptions of homo economicus?

Have no fear - there’s nothing more funding cannot solve. All we have to do is dip just a little further into our tax coffers. NLC can set up and organise a series of programmes to train these singles. They will acquire the best dating coaches and pick-up artists from around the world and send these undesirable singles for dating classes with these professionals; literary and culture lectures, sex yoga classes, seminars on “How to Impress Your Date Intellectually”, you name it. How wonderful it all sounds - it almost makes me giddy with excitement to be single!

Most Singaporeans will find themselves in complete agreement with me, because I am such an awesome and brainy “current affairs writer” who is able to tackle every viral topic with an opinion that demonstrates nothing less than brilliance. But even I cannot appease everyone.

I already fully expect what some of these despicable naysayers will retort with. These dreary pessimists (you know, the kind who goes on and on about government having the conundrum of choosing what to fund) who have nothing but hatred in their heart for singles will undoubtedly complain about the unfairness of it all. I can already hear them, eagerly yearning to infect all of us with their gloom: “Why should married Singaporeans fund the dating of singles? Why should those of us who are attached pay out of our pockets for those who aren’t?”

To that I need only respond with a privilege-checking line of rhetorical questioning: Don’t you care about finding love for singles? Aren’t you concerned for their overwhelming loneliness? Will you be an uncultured barbarian, like those who oppose art funding because they don’t understand the value of arts to our society? Will you stoop to the level of these primitive philistines who have zero appreciation for the beauty of love?

The bottomline is this. I’m all for Singaporeans taking steps to improve themselves in the market of romance. Some of them join dating classes voluntarily. Some of them take on a gym membership. In short, some of them do try to improve themselves by their own merit. But let’s face it: We have a problem on our hands and the government needs to step in to help some of these poor suckers. Not all men is endowed with a chiseled jawline and the charisma like that of Benjamin Kheng from The Sam Willows. Not all women are graced with the natural beauty like that of Fann Wong and Zoe Tay.

Some of these Singaporeans are fast approaching 30 and time is of the essence. If the government doesn’t start taking action by funding and helping them, who the hell will?



The author is a member of the Students for Liberty Singapore. You can reach out to him here.


Perhaps one of the most misused devices for arguing against classical liberalism has been the social contract “Taxes is the price we pay to live in society” is something one might hear to argue for state intervention and taxation. Before we dive into how social contract theory and classical liberalism interact, it is important to note that it is not the only explanation for the foundation of political society, but one among different ways that classical liberals rationalise it. Even within social contract theory, there are branches of thought. Ultimately, I aim here to explain how some classical liberals view the social contract, which other classical liberals will find as a contentious explanation for political society and that its conclusion is not necessarily statist. For anyone interested in another explanation for political society, I would direct you to Nozick’s Anarchy, State and Utopia. In here, Nozick uses an invisible hand explanation that also sits well in the classical liberal tradition.

Let’s start with a little use of imagination. Imagine that you and your family are living in a time where life is “short, nasty and brutish” and where “force and fraud are the cardinal virtues”. It is a constant battle not just to survive nature but also other groups who might kill you or rob you for your hunt of the day, a practice your family and you participate in as well. Simply put, the struggle is real. How do you solve this terrible situation? You could try and strike a bargain with the other groups that you would not invade them in exchange that they act in equal restrain. Perhaps with a stroke of luck, a brief period of respite allowed for ease from the nastiness of invasion and all individuals in each group like that ease. The ease where no one would kill you, kidnap you into slavery or steal your food and tools. Having known the ease known as peace you can focus on making better tools and building better settlements. In either method, the social contract is formed explicitly or implicitly.

This life is what Hobbes calls in The Leviathan, the state of nature. Doesn’t sound too fun does it? It is not uncommon for me to hear “This is why we need government!” as the answer to this state of affairs. While it is true that this was also Hobbes’s answer to the problem, it does not make it a necessary conclusion that government – or in Hobbes’s case a sovereign with unlimited power – should arise.

The social contract does not tell us what ought to be done for us to uphold the contract only what we must not do in order to uphold it. What we must not do then is invading the life, liberty and property of each other. If we think of it this way, we are upholding the social contract when we do not take what is not ours, whether by coercion or fraudulent means whether socially, politically or economically. The social contract entails the recognition of each individual’s right to themselves, their autonomy and their property. If this is so, how does the social contract – which is the agreement not to invade and coerce each other – allow the notion of a coercive and invasive institution?

This is where Rousseau comes in, with The Social Contract. Rousseau argues that the collective is an individual and supersedes the individuals that compose it. He boils down his theory of the social contract to this:
“Each of us puts his person and all his power in common under the supreme direction of the general will, and, in our corporate capacity, we receive each member as an indivisible part of the whole.”
It is perhaps in this vein that we get this conclusion of the necessity of government. Yet there is something off about this line of thinking. What is the general will? How do we know the general will if one is all and all is one? If I am the general will as you are, how would either of us know the supreme direction to be taken when we disagree? A great deal of hocus-pocus is required to rationalise the general will. Rousseau’s rationale is this:
“As long as a number of men gathered together regard themselves as a single body, they have only a single will, which is concerned with the survival and well-being of all of them.”
Again this raises more question than answers. The assumption that there exist uniform desires and degrees of desires in each of us does not correspond to reality. This mystical general will then has no value so far as we can see in determining any direction, moreover the subtle claim of the general will’s moral supremacy is unsubstantiated as well.

How does classical liberalism view social contract theory?

Within the natural theory framework that some classical liberals – like Locke and Hobbes – adhere to, the social contract is the mutual recognition between individuals to acknowledge the natural rights of individual sovereignty, which is violated by force and fraud. However, it is up to only this point that Hobbes is being followed, since his premise while strong is reasoned to an unnecessary conclusion, as mentioned before. It is here that Locke becomes a beacon. Locke saw that government was only meant to uphold the life, liberty and property of citizens. This government is necessarily built upon consent and the first object of consent is the rules of government and decision-making. Here Locke argues that consent to majority rule is a condition for government to be formed. We see then that government is very limited.

As set out before, that even within social contract theory there are variants, of which there is Gauthier and Narveson. They both set out the social contract in the form of a Prisoner’s Dilemma, within which individuals would want to maximise their gains and the result being the social contract. The assumption here is that we are all rational agents and that values are subjective. Given that nothing has inherent value but the one that we as rational agents impute to it, consent arising from a mutually advantageous exchange lends itself to the creation of the social contract. This approach is thoroughly minimalistic and gives one a better view of the various approaches to social contract theory.

Of course social contract theory is not without its weaknesses, namely how can we prove that the contract actually exists or if at any one time in history this occurred and why are any of us bound to a contract that we did not agree to. These are questions that demand answers since they threaten the foundation of social contract theory, namely consent.

It is not uncommon for the accusation of “hyper-individualism” to be thrown at classical liberal thought. However, that is a result of conflating the political and the social use of individualism. No one is born in a vacuum and we have communities that we belong to, but that does not immediately translate into extending political action into the social sphere. Within the social sphere an individual is free to do whatever he pleases except using force and fraud. Whatever lifestyle is chosen is equally acceptable and norms are developed by participation to whatever degree one chooses to. This allows individuals to express themselves free from coercion by virtue of the social contract.

Hopefully when one is thinking of invoking the social contract as a call to state intervention, one will question if it requires the use of force. Laws and policies are necessarily backed by force and the social contract does not mean that we get to rob each other blind through a third party i.e. government by mere votes. Individuals willingly doing good for their fellow men instead of being extorted is the purpose of the social contract and the classical liberal call.



This article is written by Job Lee, member of Students for Liberty (Singapore). Job is a fresh graduate of law from the University of Northampton and is temporarily working in the belly of the beast at Strata Titles Board as a case officer.

A Brief Overview
Singapore is a young country, having only gained independence from the British in 1965. Since then, the country has been ruled solely by the People’s Action Party (PAP), headed by the revered statesman Lee Kuan Yew who is often credited as the “founding father” of Singapore. He passed away at the age of 91 in 2015.

The country’s ethnic diversity is made up of predominantly Singaporean Chinese (76%), with Malays (15%) and Indians (7%) in racial minorities. The population on the whole is English-speaking. For a small country the size of only 719.1 km² (that’s ⅔ the size of New York City), Singapore hosts a dense population of 5.61 million (as of June 2016). Citizens are less than two-thirds of the population (3.41 million), while foreign workers and non-residents make up 39% (2.19 million) of the population. The success of Singapore’s relatively high intake of foreign workers in past decades has likely in part to do with the ruling party’s staunch stance against a traditional welfare state. Foreign workforce growth has however slowed in recent years due to citizen unhappiness.

The PAP’s official philosophy is one of meritocracy and pragmatism, although this has been fiercely challenged by Singaporeans for the inequalities it entrenches. The government has been rated highly on the Economist’s crony-capitalist index, although it is also often held up as a an exemplary model for lack of corruption.

Economic Haven
As one of the Four Asian Tiger economies that saw rapid industrialization in the second half of the 20th century, the city-state of Singapore today is often held up as a standard of how embracing free and open economy measures can lead to prosperity.

Within libertarian circles, Singapore generally enjoys a good reputation for its economic freedom. The country often comes out on top of the rankings of the annual Index of Economic Freedom as well as the Fraser Institute’s Economic Freedom of the World Index as one of the freest economies of the world. Property rights are secured and respected (it should be noted however this has not always been the case historically), contracts are enforced and its government is often touted as an ideal corruption-free bureaucracy, ranking 9th in the 2016 Rule of Law Index.

Singaporean citizens also enjoy one of the relatively lowest tax rates in the world, based on a progressive tax rate that starts at 0% (individuals making an income below $22,000 annually are exempt from taxation) and caps at 22% for an income above S$320,000. There is no capital gain tax and its inheritance/estate tax has been abolished as of 2008.

The State Monopolies: Housing, Health Care, Education, Transport
The Singapore government’s approach to health care, housing and retirement lies in the Central Provident Fund (CPF), a mandatory savings pension plan. Singaporeans are required to pay 20% of their monthly salary into an individual CPF account, while employers contribute an additional 17%. These CPF funds may only be withdrawn at the age of 55 in partial amounts, although it may be used for a variety of purposes such as the purchasing of medical insurance or public housing prior to that.

The Housing Development Board (HDB), the public housing arm of the state, houses more than 80% of the population in high-rise apartment homes. An average four to five room flat in Singapore costs about 215,000 USD – 360,000 USD while a private condominium would range from 700,000 USD to 860,000 USD.

Education is largely monopolized by the state from the primary school level up until the university level (although private universities, too, are regulated by the state’s Committee for Private Education). Its local universities such as the National University of Singapore and Nanyang Technological University are ranked among the highest in the world, while private universities are usually considered to be an inferior choice. It is also worth noting that primary education in Singapore is compulsory. While students can choose their subject combinations in at the secondary (middle-school) level, there are subjects that may not be opted out of such as the Social Studies classes, a subject often criticized for a one-sided portrayal of the nation’s history by the ruling party of the day.

What about transport? Due to its small geographic size, Singapore is notorious for its sky-high car costs to prevent congestion; a Toyota Prius could cost about 150,000 USD. Because of this, its public rail and bus public transportation is heavily relied on by the general populace, and is often lambasted by citizens for its inadequacies and occasional breakdowns although it is comparatively efficient when held up against public transportation systems around the world.

A Civil Rights Disparity
Singapore suffers from a severe lack of press freedom, ranking at an alarming 151 in the World Press Freedom Index (see also the 2017 Freedom Of The Press Report by Freedom House), below authoritarian countries such as Russia and Pakistan. The Newspapers and Printing Presses Act requires anyone setting up a print newspaper to be registered with the local government, and therefore be bound by severe rules and red tape. As such, traditional media has been monopolized by the state, a state of affairs that persists so until today. The advent of the internet and social media in the early noughties has however brought about some media diversity, although they are also fiercely monitored and gazetted under the Broadcasting Act.

Buttressed by restrictive laws such as the Films Act, media content like films or comics that are deemed to be seditious can be and are easily and swiftly censored. In a recent case, 17-year-old blogger Amos Yee was jailed after being found guilty under the Singapore Penal Code for “wounding religious feelings” through his YouTube videos. The state also controls public broadcasting from television to radio. Opposition politicians such as J.B. Jeyaratnam and Chee Soon Juan has been sued by the ruling Prime Minister himself as well as political dissidents and bloggers (see Roy Ngreng).

In the realm of LGBT rights, the government maintains the illegality of homosexual behavior, a delicate status quo much supported by some religious communities. Gay establishments are allowed to legally operate however, and these boundaries have been slowly challenged by LGBT activists at the annual LGBT Pink Dot event.

Singapore is perhaps most well-known for its non-tolerance of drugs. Drug users can be jailed or housed in rehabilitation centers for up to three years and drug traffickers face the death penalty.

The infamous Internal Security Act (ISA) although designed to target mainly communist threats of the past, is today used for arrests and searches without the need for a warrant in the name of preserving public order and national security, and has been used several times in modern history.

Singaporean males are also subject to mandatory conscription of up to two years by the age of 18, a law that has been in effect since 1967. Civil ownership of guns are outlawed in Singapore and the issue of gun rights does not permeate the political sphere whatsoever.

The political arena
Political actors face overwhelming restrictions and limitations in Singapore.

The organization of elections are not carried out under an independent body. Instead, they are organized under the Prime Minister’s Office. This means that the announcement of constituency boundaries (announced with as little as 8 weeks before elections), the monitoring of campaign spending limits, designation of rally locations are all subject to the Prime Minister Office’s discretion. This decision-making process does not include  input from the opposition and is carried out behind closed doors.

Under the Elections Act, campaigning periods can be afforded as little as 9 days to a maximum of 8 weeks. Opposition parties have not been afforded any more above the bare minimum of 9 days since 1963. In addition, the methods and techniques during election campaigning is fiercely constrained. For instance, the Films Act prohibits the production of political films or videos while the Public Order Act restricts public speeches or assemblies unless a permit has been issued.

The Political Donations Act disallows foreign funding to political parties and organizations that the government deems to be “political in nature” (news sites, activist groups etc). Large donations must be registered in name, deterring donors who prefer anonymity.

Cultural consensus
Despite the fact that the World Bank’s Ease of Doing Business Index has consistently ranked Singapore at the top, its government is oftentimes criticized by opposition politicians and citizens alike for its top-down fostering of a stifling intellectual climate through its public schooling education system that places a heavy emphasis on technocratic skills. Critics believe that this suffocates business innovation and creativity in the arts.

Voters are generally in favor of the ruling party’s authoritarian rule, although it is also worth noting that citizens are by and large politically apathetic. As the media in Singapore is state-controlled, the strongest opposition to the ruling regime is often found on the Internet through sociopolitical news sites, forums and social media.

Citizens in large part do believe that freedom of speech is an idealistic fantasy, and that mandatory conscription is necessary for the security of the country given our small population and precarious geographic location. Lastly, the notion that there is a role for government to regulate and monitor the activities of businesses and individuals (from Uber and Airbnb to smoking) is a widely-held belief. Of course, these are general sweeping statements, but they should provide a good starting guide to understanding the Singaporean cultural consensus.



This was first published on Students for Liberty.

Here's something that you might've missed if you haven't been looking carefully.

Did you know that Singapore's minimum age requirement to be a taxi driver is 30? It's almost hard to recall, but yes, it's true. Growing up, before Grab and Uber hit our shores, our roads were populated by older gentlemen who found a profession in driving cabs.

I have a few young friends who are Grab and Uber drivers, and I've always been intrigued by why they've decided on that as a career. My experience watching society's paradigm of the "taxi uncle" made me believe that it wasn't a job that young people found much interest in.

A fresh-eyed graduate still in university, my friend, whom we'll call James, is a part-time taxi driver who works with both Grab and Uber to get money to pay his school fees. He tells me that he enjoys the high profit margins, the flexibility of the job, and also the ability to make new friends along the way.

Since its inception, companies like Grab and Uber have greatly benefited ordinary citizens like you and me. Hate to stand along the streets and wait? Call an Uber. Want to pool? Call an Uber. These little luxuries were not available to us before they arrived, so imagine my surprise when it was made known to me that the government, instead of allowing this wonderful enterprise to grow, has decided to clamp down on this booming industry. Why would they do that?

Pirate Taxis

Doing some research, I found that the issue that we are facing is remarkably similar to the "pirate" taxis of the 1950s. Pirate taxis were the term to describe private cars that operated as taxis without the meddling hand of the government. They picked up passengers at negotiated rates and were often touted as economically beneficial and convenient.

In the debate on the Road Traffic (Amendment) Bill in 1957, late legislative assemblyman Mr. Lim Cher Kheng says:
"I still remember, Sir, during the Hock Lee riots and the strike by the Singapore Traction Company, that I suggested the relaxation of certain measures against the pirate taxis because, during that time, it could be said that our entire transport facilities had come to a stop and that the pirate taxis then rendered a valuable service. They were running in the most reasonable way. For example, I took three trips, one from Robinson Road to Alexandra Road, for which I paid 50 cents; from Bras Basah Road to Serangoon Road, I paid 70 cents, and from Changi Market to Changi Point, I paid 50 cents. I think it was a wonderful service to the public during that period."
The era of pirate taxis was a period of flourishing. What did Singapore do in response to this?
The government essentially declared war on pirate taxis syndicates through measures such as raising diesel taxes, and stronger enforcement like the suspension of pirate taxis drivers' licences for one year if caught and denoting pirate taxi operations a seizable offence where offenders could be arrested on the spot on the spot and charged the following day. -- 50 Years of Urban Planning in Singapore, Chye Kiang Heng
If you're shocked, you're not alone.

In the very same debate above, Mr. Lim Choon Mong, father of current MP Ms. Sylvia Lim leaves us with this very quotable gem.
"The existence of pirate taxis is an evil, not because it comes about of its own free will. It is created by our bad transport system. If our transport system had been good and if it had been convenient for everybody to travel by this means to their places of employment and homes, pirate taxis cannot exist: I should say that people would not even want to own private cars if the public transport system is good."
Indeed, if public services can sate the demands of the public, there would not arise a need for private services.

Unfortunately, that is not the case, and despite the constant calls for improvement, public taxi services are unable to match the efficiency nor quality of private hire cabs.

The Bane of Regulation

"Regulations are good - they protect the consumer!"

What happens when regulations trump common economic sense? On the surface, whilst the idea to protect citizens via the means of strict regulation has been always been thought of positively, what actually happens when lawmakers enforce such regulations to "promote competition" is that it creates an artificial barrier to entry; it entrenches the current status quo and makes it harder for entrepreneurs to go into the industry. Entrepreneurs will also find it harder to stay in business given the elevated requirements and operating costs.

Some very prominent examples include the telecommunication companies regulated by the Infocomm Development Authority of Singapore (IDA). Companies like Singtel, Starhub and M1 have very little incentive to improve the values that they offer - since any competitor that might want to come into the industry would have to pass the bureaucratic red tape of the IDA first. What this eventually leads to is less value-for-money for the consumer.

If one questions the veracity of this claim, simply observe the mass migration from existing telecoms to new entrant Circles.Life, and of how the established companies scrambled to maintain market share upon its launch. The discerning can also see that this is not merely isolated to telecommunication companies - Uber and Grab consistently have promotions because they're competing with one another for consumers to use their app, once again clear evidence that competition leads to better outcomes for consumers.

Some might, at this point, cry out indignantly - "What if companies want to be greedy and sell us defective products?"

To that, I point you to the expensive lesson that Samsung has learnt -- to this day it has not quite recovered from the stigma of exploding phones. It's precisely the profit motive that serves the consumer; it is healthy, free competition that protects them against monopolistic prices and exploitation. Government regulation inevitably erodes the latter while misguidedly championing the former.

If economic progress is something that we want, it is government intervention that we need to leave out of business. Indeed, be it taxis or telecommunications, the dire need for innovation and progress in our country is precisely why we cannot afford such "protection" for our companies.

All we need to do is to allow the marketplace to function.