If you were a parent and could only pick one trait to be taken on by your children, which one would you prefer? How about if you were a teacher and were deciding the principles by which you approach educating your students? Or if you were the government managing a citizenry?
As we get further away from an actual relationship at a one-to-one level, we tend to begin to favour good behaviour often at the expense of good intentions. Because intentions are not as quantifiable as behaviours, we choose to use the quantifiable trait as a proxy for the non-quantifiable one instead of recognizing they can be different. Yet if one was a parent, he/she knows and could probably tell the difference. So does that mean the background values/intents/principles are different in developing a child, education a person or moulding a nation?
While on the surface this might seem philosophical, there are huge policy implications and considerations when we uncover what we are prioritizing as part of our values. Carrots and sticks may make for good behaviour but that means that enforcement is external and it fosters good behaviour without encouraging good intentions. The strong ability of our government to focus on incentivization for behavioural change without addressing underlying values and intentions should not be seen positively under certain circumstances. As the country matures and people become more educated, we need to ask ourselves if it is still behaviours we are targeting – or intentions? Do we just want to stay at dealing with the hard stuff? The soft stuff are genuinely hard to handle but it must be done. We have more resources than ever to handle these – are we thinking enough about it? Or at we still obsessing over growth statistics?
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.
While reading about Bihar’s Recovery, it dawned on me the importance of basic government structures in an economy. This sort of realisation had come to me while I was reading about the Haiti crisis and I really think all students of Economics should remind ourselves of the government structures working in the background implied in what we call a ‘Free Market’.
As observed from the article on Bihar, which interestingly is where the Buddha gained enlightenment (according to historical records), the state’s investment in infrastructure, maintaining order, a culture that respect the rights of all citizens (that can only be created from top down) often influenced very much by the enforcement of laws, as well as giving people freedom to pursue the market activities.
When we argue about the importance of not having government interventions in markets, and that state presence should only emerge in the case of market failures, we often neglect the notion that a government is in place in the background to honour the legal tender and anarchy is not the ruling ideology of the day. Trust in the free market is also important and it is upheld by law and order, which once again, falls on the government. As we’ve seen from the earthquake in Haiti, more room for market and less state is not always a good thing. Yet after acknowledging the need for a state we want to combat its advancement into various aspects of society that are usually governed by culture or self-organizing.
Maybe working on the margins of that would help Bihar discover this balance of state and market spaces.