Ha-Joon Chang does a brilliant job trying to make slightly more obscure bits of Economics accessible to the public and in so doing, demonstrate the significance of understanding the history of the development of economic thought.
Using Economics
Author Archives: Kevin L
Modes of Productivity
Excellent piece on Productivity.
Lucky Breaks for the Port
Several lucky breaks provided a huge push for Singapore growth, escalating volume of east-west trade, and raising the importance of Singapore as a trading hub. For 50 years from 1830, the world saw several significant changes that changed the global economic conditions and the shifting political weights leading to further entrenchment of Singapore’s position a major global port.
Improvements in seafaring technologies
Seafaring technology was improving rapidly after the emergence of Singapore as a port; the first experimental steamships started in the early 1800s and then by 1830s, regional steamboats were running around in Europe as well as along the coasts and rivers of United States of Americas. Ocean-going steamships followed and the first steamship (by Peninsular & Oriental Steamship Co.) carrying mails (passengers, and parcels) arrived in Singapore in 1845.
Steamships shortened the voyage between the east and west significantly, whilst it used to take months (and would vary according to seasons) to sail from London to Singapore, the advent of steamships reduced this journey to approximately 40 days throughout the year. Improvements in the next decade would shave the time down to a single month. This drove up not only the trading activities but also encouraged more visitors to Singapore who would hang around for a short-term stay.
Opium Wars & opening of China market
The end of the first Opium War concluded in 1842 with the signing of the Treaty of Nanking that forcibly opened up the Chinese market to imports from the west. The Chinese market proved attractive to the Europeans and even the Americans who were (unfortunately) buying huge volumes of opium in Turkey to be sold in China. Some of these opium of course ended up within the Singapore market but that is a story for another day.
The ceding of Hong Kong to the British provided a permanent base in the South China sea, further providing for this whole string of territories that help to connect the west to the east for British merchants. Trade between the west and the east grew significantly as a result and these trade flows all will have to pass through Singapore at least for some services.
The turmoil during the First and Second Opium wars also contributed to mass immigration of Chinese in search of more stable lives and also jobs. This particular wave of immigration ensured the dominance of the Chinese ethnic group on the island and also provided a huge youthful workforce with a taste for hardship and hunger for improvements. This labour base ensured that trade services develop and there were sufficient crew to service the incoming vessels.
Opening of Suez Canal
The opening of Suez Canal in 1869 provided further push to east-west trade through shortening of the voyage between Europe and Asia. Trading ships no longer had to sail down to the Cape of Good Hope and up again towards the Gulf of Aden. Trade volume through Singapore almost doubled just within the single year progressing from 1869 to 1870.
The status of a free port continued to attract trading ships as well as merchants. The rival ports of Jakarta (then called Batavia) and Manila levied tariffs and thus were less attractive. American, Jewish, Armenian, Indian, Chinese and Arab traders started setting up trading houses in Singapore. The diversity and multiculturalism was at the heart of this colony; just as its growth and development was powered by the world events. In that sense, Singapore was never quite ‘left-behind’ nor ever unplugged from this world system after the British established themselves.
Entrepreneurship in Singapore
Brought on a little tour of Block 71 today. It’s a wonderful little place for entrepreneurs and business-starter wannabes to try and work on their ideas or start work on their ideas without too much capital nor too much expense. Rental is mostly free, particularly in the co-working space; power is free too so you can be your first employee at a desk and get free power, sometimes with free coffee and potentially free events to attend. Life probably has never been so good for an entrepreneur.
Of course, the costs associated with failure is significant given the opportunity costs. Most of these kids can command pretty decent amount of pay in the existing tight labour market; but I think that place offers a kind of co-working experience, ideas-exchange and tinkering culture that would prove valuable for these entrepreneur wannabes.
What I am concerned about is that this sort of spirit remains only within the tech sector without spewing into the more traditional sort of engineering-based industries. The real economy is still stubbornly reliant on manufacturing to grow. The rise of services is simply an accounting illusion; manufacturing increasingly outsource some of their process design and engineering to third party ‘consulting firms’ which are services. Therefore, value that was previously treated as being generated from manufacturing now becomes re-classified as services. The economic activities taking place is still the same. The bulk of these ‘new services’ are just repackaging and most of the staff or ‘entrepreneurs’ are merely ex-employees who have started these new businesses to capture the benefits of increasing outsourcing.
Yet in order for things to be changed, there has to be more cross-pollination. By far, there is no evidence that the consulting services yielded more engineering innovation in their respective spheres. If anything, the increase in competition only serves to drive improvement in slightly more superficial things such as more user-friendly 3D modelling graphics or better visuals that have little impact on the actual carrying out of the projects. In other words, the kind of market competition we have been generating may not actually be good. This is something for our economic ministries to ponder over…
Raffles’ Port City
In 1819, when Sir Stamford Raffles came to strike a deal that made Singapore a British colony, the population of Singapore is approximately 150. In 2 years, the population rose to 5000 mostly as a result of the establishment of the port providing ready access to population from other centers. By 1860 however, the resident population ballooned to around 80,800 comprising mainly of “temporary” immigrants coming from India, China as well as from the surrounding islands. This wasn’t purely luck or a matter of economic policy. Several things the British did was particularly important for encouraging the trade flows through Singapore and pushing the growth of Singapore into an important center for trade in the region.
Just 5 years after the establishment of Singapore as a free port under British rule, in 1824, the English and the Dutch brokered a deal to exchange Bencoolen (or Bengkulu in Sumatra) for Malacca. This was particularly important; the other port that was controlled by the British in the region was Penang, which the English established since 1790; the location was not that popular since ships from the east will still have to pass through the Straits of Malacca before reaching Penang.
With Penang and Singapore under the control of the British, the rivalry between the English and the Dutch in the region meant that Dutch control of the Straits of Malacca through possession of Malacca was a significant bottleneck. The Anglo-Dutch Treaty of 1824 resolved the rivalry (somewhat) by allocating spheres of influence, opening up the entire chain of territories – Penang, Malacca and Singapore to British control and thus greater incentive for the Royal Navy to maintain the safety of the trading ships passing through the Straits of Malacca. The Dutch Navy was given the same responsibility on the side of the straits closer to Indonesia. Before that, piracy was extremely rampant along that straits and the numerous islands around provided safe bays for pirate ships. Stepping up security in these waters gave way to higher flow of trading ships thus facilitating the boom of the port of Singapore.
By 1825, the population of Singapore went past the 10,000 mark. And in 1826, the British East India Company officially took on Singapore as a colony of the British Empire after John Crawfurd signed a second treaty with the Sultan of Johor and the Temenggong, which extended British control of Singapore over to the entire island instead of just the port. The formation of the Straits Settlement consisting of Penang, Malacca and Singapore happened in the same year with Penang designated as the capital. In 1830, the capital was shifted to Singapore, further entrenching the important institutions of British governance in Singapore.
The decisions made by British to build up and enhance the value of Singapore and the injection of top civil servants and managerial talents into Singapore due to its designation as capital of the Straits Settlements (and subsequent establishment of the Straits Settlements as a crown colony in 1867) played an extremely important role in shaping the economic, political and administrative environment which proved extremely favourable to Singapore. The strength of governance has always been an important quality our growth has been attributed to – and it seems to have dated back way before the country’s independence.
Singapore Economic History
During my days doing my Masters, I had always wanted to start working on studying Singapore’s Economic history, primarily because we should be learning from the way we developed and not blindly attributing it to some brilliance on the part of individuals or organisation. To break down the black box and understand the practice of growth is something I endeavour as an Economist while the reluctance to attribute our development to specific individuals but rather to consider it down to naturalistic observations about policy, culture, and zeitgeist is my responsibility as an informed voter.
For one, the idea of Singapore as a location suited for trade really started way earlier than we initially had thought; and it has gone by various names: Sabana (2nd Century), Pulau Ujong (3rd Century), Simha-pura (transliterated somehow to ‘Singapura’ – 11th-13th Century and used later on as well), Tamasek (around 1330s), Temasek (circa 1689) and finally Singapore. It gained some importance as a port in 14th Century with trading by merchants as far as China, gaining some immigrants along the way; subsequently as a regional port under the Sultanate of Johor in 16-17th Century. In 1613 however, some Portuguese supposedly destroyed a settlement around the main river, killing most commercial activities on the island until Sir Stamford Raffles landed in 1819, reviving the port status of the territory.
It was indeed, no special original brilliance of Sir Stamford Raffles that helped Singapore become positioned as a entre-port; rather, his effort was the recognition of the need for British navy protection, garnering the resources required to build up this port and rallying support to keep this port a tax-free one that would help enjoy endless flow of ships and traders. The status of a free port was definitely innovation within the British Empire at that time. This particular innovation we inherited much later and became an important economic policy.
Training Philosophy
I believe in learning. And behind all that slogging for grades, what I really see is development of ability, and acquisition of skills. Grades and scores may be performance/progress indicators or checkpoints for me to assess my development, but in no way defining me.
When it comes to work, I absolutely believe that training is necessary – not so much developing our skills from scratch. No one can reverse all the bad habits of speech (eg. fillers, pet words, etc.) within a day or even a week but such training sessions serves to consolidate what we already know into one place and focus our application in various areas, often in a more disciplined manner. So many people I’ve come across in life have so much potential but the environment does not encourage them to shoot for the longer term goals of self-improvement, only the short-term objectives of completing the work on-hand.
At any workplace, there are only 2 kinds of things that you can take with you when you leave. One is your track record (project references, achievements) and the other is your skills. In every project, we should seek to emerge from each one more capable and being able to deliver more or better in the next one. We should never be falling back on something we have already done. In other words, the only way to avoid becoming too comfortable with one’s position is to keep focusing on potential. And that means, while there is the 2 kinds of takeaways – what we should be putting our attention on is our skills.
Therefore, hurry to brush up skills and pull up socks, not to meet deadlines (though that eventually must be met anyways).
Thinking on your feet
I just went through a course on effective presentation skills and it was mentioned that Q&A is actually the most important part of the presentation – in fact so important it is more important than the presentation itself. After all, Q&A is where it is much harder to prepare and you are more vulnerable. I remember the trainer saying, some people are just born able to think on their feet and others will have to develop the ability to do so over their life.
It actually got me thinking about it. What set people apart in this sense? How was Tharman able to answer Stephen Sackur so quickly about the Trampoline that the host was a little surprised and stumped for a bit? It’s actually through preparation. It isn’t quite ‘born’, as we would think of. The truth is all of life is preparation. The way you spend every moment in your life, whether you have chosen it or not, is preparation for all of the moments ahead. And having the habit of thinking, having thought through different things, having pondered over issues far and wide or about things in the periphery of the related topic, is part of all the preparation that brought you to the point of being able to ‘think on your feet’. It might feel like you had a stroke of genius at the moment or people might have thought so but it’s not genius. It’s hard work, dedication and devotion to the topic area or issue implicated.
So prepare well for all the times ahead you have. And think; it sure takes practice but you get better.
Justified by Faith
Listened to Tim Keller’s Sermon again and thought this line was worth noting down:
“Forgiveness is you may go. Free justification is you may come.”
And then I got to listen to another sermon by Michael Baughen, and another line he shared struck me too:
“Religion is about achieving, the gospel is about believing.”
Yet it’s so tough because we are told we have to give an account of ourselves – so ‘despite’ this so-called free grace, our deeds are fruits of the faith and the surest manifestation of our lacking in our faith. In Jerry Bridges’ ‘Respectable Sins’, he quotes from older writers who calls for believers to:
“Work as if it all depends on you, and yet trust as if you did not work at all.”
That was all helpful, now on to living a life justified by faith.
Forgiveness, not Tolerance
It’s been a long time since I actually sat down to write an article, not to mention an article about my faith. I must say I haven’t been particularly attentive to the gradual shifts that are taking place in the world though I have my eyes set upon the economy, the structural things in the economy of Singapore. Having spent more than the past 4 years being abroad, I always thought I could share some new perspective about Singapore – how things are different here or the same. And more important, how much we have come to be part of ‘the world’.
The debates of the world that sets groups of people up against each other can stem from a variety of factors and in particular, culture seem to be highlighted. While globalization is said to make the world more homogenous, the role in its ability to bring cultures together so they may clash and interact in more profound manner is understated. In the clashing of cultures, and attempt to reconcile things, I believe that we have not become more polarized but allowed ourselves to accept sub-par standards of clarity that generates even more controversy. The refusal to clarify often stems from sensitivity – political, racial, religious or whatever. And one that I would like to highlight here is our messing up of the concepts of tolerance and forgiveness.
First, we look at the concept of forgiveness, which is more or less lost in this modern world. And the reason is that we have lost the concept of sin. We no longer think about transgressions the way we do. We think of it as a single-sided thing involving a mistake – the outcome and consequences that one has to bear is solely attributed to the system in place. The one that the victim has to bear no longer is part of that picture. This very subtle shift towards self-centeredness as a whole society is probably something people have observed time and again but seemed, by and large to be praised rather than resented. The ‘mistakes’ is therefore to be dealt with through the penalty of the system, a punishment that allows you to ‘pay’ for the mistake rather than to be forgiven of it. There is absolutely no mention of forgiveness in this whole cycle – the culprit doesn’t need to be forgiven by the victim, just to be released or ‘dealt with’ by the system of justice. And there is no wonder why we find that justice and forgiveness is incompatible. This is because we see punishment as diametrically opposing to forgiveness – and that if one were to consider wrong-doing a ‘sin’ then punishments are but necessary ‘sins’ against ‘sinfulness’.
Forgiveness, rather, has to do with a pardon of the deed itself that still involve a cost from the deed – not so much the punishment that is just a fraction of the true costs, designed to attempt to pass on the cost the deed creates back to the perpetuator. Of course, God and all of us realize this merely serves to multiply the fallen-ness in the world when this punishment is not meted out by God. Only God, who is able to renew and restore, can also channel His wrath righteously at the perpetuator. Not even the victim, bearing just part of the cost of the deed (as God bears the other part) can be qualified to take revenge, having no means whatsoever to restore his state through his revenge. Vengeance therefore, can only be of the Lord’s. As victims, what we can offer on our part is only ‘forgiveness’ and that is to bear that cost inflicted upon ourselves and carry it no further. As culprits/sinners, all we can do is to ask for forgiveness, from the victims and from God Himself.
By now you might have realized that what we have always thought forgiveness is, or involves, is tolerance. But it isn’t. We can think of tolerance as something that has elements of overlap with forgiveness but misses the mark. I would say one could capture their relationship with a Venn diagram where the overlapping part involves the bearing of costs of the deed. What does not overlap that is in Tolerance, is that of being indifferent to the deed itself as a matter of principle. Forgiveness, on the other hand, by virtue of its necessity having arisen from the presence of a ‘sin’, will have to involve rejecting the deed. It would require that the deed in itself be considered morally wrong. Forgiveness does not allow you to ignore the evilness of the deed; rather, it fundamentally requires you to trust in and place your hopes on the repentance of the one who is forgiven. Tolerance requires nothing of that sort; rather it involves an inner stoicism that is rejected by Christians as the path to salvation. To believe one is tolerant can breed self-righteousness and that is why people who preach tolerance are themselves non-tolerant of people seen as intolerant. They might not have observed the irony but that by itself already shows that tolerance is not the lifeboat that can take us out of this mess in conflicts – whether it is about abortion or homosexuality, or Amos Yee. It is forgiveness.