Good government: You can put a value to it

By Janadas Devan

WHY did Singapore succeed and so many other post-colonial states didn't?

The answer to that question often takes the form of a litany: Singapore got the fundamentals right - political stability, meritocracy, an incorruptible administration. It instituted the rule of law, ensuring the sanctity of contracts and property rights. It made the right economic choices: Welcoming multinationals when the reigning wisdom was import-substitution, hewing to prudent fiscal and monetary policies, choosing to leap-frog the region and hook up with global markets, and so on and so forth - the litany is long.

And, of course, every item in it is correct. But it still leaves unanswered a crucial question: How come Singapore made the right choices? After all, it is not as though these choices are lodged in some secret book of state-building recipes. But why did only a few choose to apply those recipes and most didn't?

About 25 years ago, Dr Goh Keng Swee made a remark that I think provides a clue. He was then Deputy Prime Minister and Education Minister, and had introduced 'moral education' into Singapore schools. At a private gathering, responding to a discussion of how different the moral systems of Singapore's component cultures were, he summed up his moral philosophy thus: 'It is simple,' he growled. 'You do good, you will be rewarded. You do wrong, you will be punished.'

Few philosophers will endorse that statement but I'm convinced this simple moral regime explains the choices independent Singapore made in its formative years.

Mr Lee Kuan Yew, Dr Goh and their other colleagues made the right choices because they, and the people they led, were animated by a set of values that made possible correct political, economic and social choices. Leadership - for there was nothing automatic about translating inherited values into viable state institutions - consisted of insisting on the primacy of those values and refusing to compromise on them.

You do good - don't accept bribes, don't run up huge fiscal debts, don't take the easy way out - you will be rewarded. You do wrong - compromise on meritocracy, give way to atavistic impulses, promise people freebies - you will be punished. It was a moral regime a child could understand but one only a stout-hearted people could have applied systematically.

Social scientists sum up such values as a country's social capital. Till recently, most of them believed this was unrelated, 'conceptually', to formal state institutions. They believed, for instance, that Japan's 'superior growth performance in its high-growth period was due not to culture (that is, informal norms) but to formal institutions such as industrial policies that in theory could be adopted by anyone,' as Professor Francis Fukuyama of Johns Hopkins University observes in his valuable recent book, State-Building: Governance And World Order In The 21st Century.

But as he goes on to argue, this 'is very unlikely to be true'. 'The institutional quality of economic planning agencies in Japan, Korea and Taiwan did not emerge out of a technocratic how-to manual; it had its roots in a mandarin bureaucratic tradition specific to each country... The view that government office presents an opportunity for predatory rent-seeking is one that could have become widespread, but did not.'

The same opportunities were present in many other new states and they did become widespread there. In some countries, government served as the locomotive of rapid growth and, in others, it became an incubus sucking the life blood out of society. Obviously, it is not the formal structure but the informal infrastructure that matters. And obviously, it is not government as such but certain kinds of government (or mis-government) that should be the objects of opprobrium.

And yet, as Prof Fukuyama observes, the dominant trend in world politics in recent decades has been to limit the state. In politics, centre-right parties have gained power in many countries; in academia, neoclassical economists like Milton Friedman have gained ascendancy.

Much of this was justified. The state sector did become an obstacle to growth in many countries. But as the world discovered during the 1997-98 global financial crisis, 'the problem was that although states needed to be cut back in certain areas, they needed to be simultaneously strengthened in others'. By 2001, even Prof Friedman was admitting that he had been hasty in urging emerging economies to 'privatise, privatise, privatise'. 'It turns out that the rule of law is probably more basic than privatisation.'

Prof Fukuyama - a conservative himself, who once spied the 'end of history' in the victory of liberal capitalism over communism - now makes a distinction between the scope of state activity and the strength or capacity of the state. The first, 'which refers to the different functions and goals taken on by governments', can be curtailed with beneficial effects for societies. The second, which refers to 'the ability of states to plan and execute policies and to enforce laws cleanly and transparently', cannot be curtailed without risking disaster. That was the lesson of the 1997-98 crisis - and a lesson that remains germane even in Singapore, as it further liberalises its economy and opens up its society.

Another lesson was highlighted by Sept 11: Weak or failed states are the source of the world's most serious problems, including terrorism. State-building is going to be one of the 21st century's most crucial undertakings, notes Prof Fukuyama, but the trouble is there is no science of government, only an art.

I will discuss next week why the world must engage in state-building in weak states despite this limitation but the essence of the problem can be summed up briefly: There is no manual detailing how values - 'You do good, you will be rewarded; you do wrong, you will be punished' - can be translated into formal state structures.

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Posted August 28, 2004