The Singapore Delusion: Why Brexit Will Fail, part 3

In this third part of the series (part one is here, and part two here), Richard looks at the Singapore-on-Thames concept…

Singapore has seen extraordinary levels of growth over the last decades.

Where Western countries have long-term average growth rates in GDP per capita of around 2% a year, Singapore saw nearly a decade of real gdp growth of 12.7% per year from 1965-1973.

Who could not want that, the average citizen seeing their income double every six years, above inflation. Even the worst off would see substantial increases in income, services, wellbeing…

But the idea that a mature economy like the United Kingdom could achieve these growth levels is simply the worst kind of economic illiteracy.

The Singapore growth surge – like Hong Kong, Taiwan, Japan or even Ireland before, and like China is now apparently beginning – is not really linked to their government’s economic model at all. All of these economies have had very different approaches to regulation, whether totally controllingly high as in Taiwan or China or chaotically free-wheelingly low as in Hong Kong.

The source of every economic miracle is not an “-ism”. It’s people.

What linked all these economies is:

  • firstly, starting from a very low base introducing industrialisation and infrastructure (vastly increasing productivity);
  • secondly, opening themselves up to free trade (vastly increasing opportunities);
  • and thirdly, a demographic transformation when more of the population are in the working age workforce (again vastly – but temporarily – increasing productivity).

Third World countries are typically high-birth rate, high infant-mortality with roughly a third of the population as dependent children; developed, Western-economy type countries are low birth-rate high survival to old age with roughly a third of the population dependent pensioners. When a country moves from one to the other, there’s a period of high survival, so more of the population become workers entering the economy adding productivity; but lower birth rates mean there are fewer dependent children, while for a generation there are not yet larger numbers taking productivity out of the economy on retiring.

Those are all one-off changes. Once you have roads, factories and the internet, you have it, you can’t step beyond the West; once you are open to world trade you’re open, you can’t get more open; and it is only in between the high birth and high survival states, when the country’s population is made up of a high productivity working age workforce with low levels of dependency, that you achieve that super-high growth rate.

It can only happen at most once for every economy. Britain had our industrial revolution and demographic shift 200 years ago. Short of Logan’s Run-style eliminating all pensioners, we won’t have that again. And I for one will not be sacrificing our parents and grandparents on the altar of growth!

Most significantly of all, the growth surge stops. As they hit Western levels of GDP per Capita, as their populations mature and retire, those Asian and Celtic tigers settle into Western-style steady 2% (give or take a bit) growth.

Yes, there are variations between Western economies. America has less regulation than the EU, and slightly higher growth. But they only have two-and-a-bit percent growth, not >10%. And at a cost of much greater social inequality.

Britain has historically tried to be somewhere between American growth and European equality. Brexit means we have now fallen behind on both counts.

You can’t turn the clock back to 1979 and run the Thatcher revolution again, because we are still in the Thatcherite economic paradigm, even as it all unravels. And you certainly can’t turn the clock back to 1779 and run the Industrial Revolution again.

Singapore-on-Thames is impossible.

What you can do is bolt-on a booster form of that generational miracle in miniature in the form of immigration. Free movement of people brings in many extra people at the young, driven productive workers stage, which is why it boosts economies.

Imagine if we had given passports to the people of Hong Kong in 1997, as Paddy Ashdown called for, and many had come to settle in the North East, creating a new super-productive Hong Kong in Sunderland. The economy of the region would have been transformed immeasurably.

Far from taking local jobs, migration actually creates a need for more jobs, as migrants create the need for new shops, surgeries, schools, plumbers, restaurants… And because people who migrate are almost by definition the ones with “get up and go”, they are more likely to create new businesses and thus even more new jobs.

Cosmopolitan cities like London are dynamic economies precisely because of the new people coming there – migrating within the UK as well as into the country. And it creates a virtuous circle as the dynamism encourages more people to migrate.

Looked at the other way, it is not a coincidence that some of the areas that are most economically depressed – and that voted most strongly for Brexit – are also the areas of low immigration, or net emigration as people born there prefer to leave.

But Brexit, all Brexits, are built on hating immigrants, and this is already driving people away and driving the economy down.

“Immigration is good” isn’t just about Liberal Values. It’s about those values being the only real foundations for building a more prosperous future together.

To be concluded…

[In part 4: Brexit’s biggest flaw – hubris leads to nemesis]

[this article has been edited: in paragraph 2, “40%” has been replaced by “12.7%”; in paragraph 3, “every couple of years” has been replaced by “every six years”.

Originally the author used exaggerated figures for growth in Singapore in making the point that claims of super-high levels of growth for a post-Brexit UK are ludicrously exaggerated.

We are happy to use evidenced growth figures for Singapore, and this in no way alters the argument.]

* Richard Flowers has been a Party member for 20 years. He’s campaigned in many an election, stood as a local councillor, and Parliamentary candidate, was Chair of Tower Hamlets Liberal Democrats, and in 2020 will be Liberal Democrat candidate for the Greater London Assembly constituency of City and East. Thanks to Liberal Democrats in government, he is married to his husband Alex Wilcock. He also helps Millennium Elephant to write his Very Fluffy Diary.

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  • Singapore has a strong work ethic, disciplined education system, good pensions backed by an actual pension fund, an excess of social housing (presumably the govn started out owning huge chunks of land), very low tax rates even to the extent of NOT taxing overseas income from exports… throw in the web and a well educated populace who speak English. Before Gordon Brown wrecked the economy Sterling was 3 SD now it is 1.8, which tells you what the market thinks of the two economies and their relative future.

    The UK has tried just about everything from inflation, excess money printing, mass nationalization that created laughable products, huge welfare spending to Thatcherite tax cuts, the latter at best twice the levels in Singapore. The Tory right want very low taxes and minimal welfare rather than a huge, lumbering State BUT are not being very honest about it, waiting post election to say that, of course, if Brexit is to succeed then this is what needs doing. Likely that a majority of people will benefit greatly from this so it may even be an election winner five years down the line. especially if Labour move even further to the left.

  • The Singaphore delusion, is quite wide spread but what does Singaphores economy thrive on well it is the one thing Depeffle is saying he will stop immigration.

  • Mark Littlewood 30th Nov '19 - 3:11pm

    What on Earth is the source for Singapore’s GDP growth being 40%? That would essentially mean the Singaporean economy nearly doubling in size every 2 years. Or growing by a factor of nearly 30 every decade. Yep, that’s right – average salaries going from c £30,000 to about £1,000,000 in a decade. And rising to £30m pa a decade later.

    The entire article is based on a wild statistical inaccuracy or enormous misunderstanding by the author.

  • Richard Flowers 30th Nov '19 - 6:17pm

    Mr Littlewood has missed the point.

    I’m saying that the overblown claim for “Singapore style growth” from the Brexit supporting camp cannot be met.

    As he’s saying even Singapore cannot meet their claims for Singapore, that really only proves my point more.

  • Malcolm Todd 30th Nov '19 - 6:51pm

    Richard Flowers
    Okay, but where did this 40% figure come from. You say “Where Western countries have long-term average growth rates in GDP per capita of around 2% a year, Singapore has seen nearer to 40%.” Now you say that is “their [=the Brexiteers’] claims for Singapore”. But what source have you got for that?

  • Mark Littlewood 1st Dec '19 - 9:15pm

    The person making the overblown claim is you, Mr Flowers. I have never known anyone else claim that Singapore experiences growth of about 40% per annum. If anyone has claimed it, they are as wildly inaccurate as you are. As another poster on here has asked, what’s your source and can you please share it? Or do you accept your 40% statistic is a wildly inaccurate fiction? You’ve exaggerated by about a factor of five (depending on which year you were specifically referring to)

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