Sunday 15 June 2014

US and S'pore: Parallel paths on the road to independence

By Peter A. Coclanis, Published The Straits Times, 13 Jun 2014

DO YOU recognise this country? It had a long, tortuous path to independence and experienced tensions with the former colonial power (over when its military forces would leave the country and on what terms). There were also suspicions between erstwhile allies, as well as economic dislocations, market disruptions and the need to re-orient economic life. Social upheavals, including rioting and other forms of civil unrest, were common. The country needed to create a new defence posture (in a tough neighbourhood), establish a stable governing structure and develop a sense of nationhood. Meanwhile, it struggled to establish credibility in the international community and make commitments to protect and promote contracts and property rights.

Sounds familiar? If so, you know your American history. The above outline is a description of the United States in the 1780s. This was the period after the American Revolution but before the adoption of the Constitution. That it sounds so similar to the situation Singapore faced upon gaining its independence 49 years ago is worth pondering as the country prepares to celebrate half a century of independence.

The American Revolution resulted in a nasty and brutish war lasting from 1775 until 1781. The US came out of the war independent but economically and politically weak, surrounded by suspicious and potentially hostile powers far stronger militarily than itself.

Once a peace treaty with Great Britain was signed in 1783, previously submerged - or at least contained - internal tensions resurfaced. The constitutionally weak and ineffectual central government was incapable of addressing these problems, much less reducing them. During the 1780s, the country was clearly adrift. The economically dreary decade was marked by poor prices for US agricultural products, trade disruptions, chaotic monetary policies, large government debts and little investor confidence.

It was only towards the end of the decade that a sufficient number of far-sighted American leaders mobilised. They replaced the weak, decentralised constitutional arrangement under which the US was then operating (the so-called Articles of Confederation) with a new arrangement, the Constitution, still in place today.

The new Constitution, which went into effect in 1789, established a federal system of government with power shared among the central government, the states and the people. The powers granted to the central government were far greater than had been the case under the Articles of Confederation.

This allowed for the emergence in relatively short order of an activist central government with both the "power of the purse" - taxing and spending authority - and sufficient authority and resources to protect, promote and encourage private property, and vigorously to uphold contractual rights.

Indeed, some wags, assessing the US Constitution, have argued that there are only three concerns expressed therein: private property, private property and private property. In any case, under the new governing arrangement, the US was able, in the 1790s, to righten its economic ship, stabilise its fiscal and monetary systems, and establish an orderly banking system. It also issued bonds to be used for developmental purposes, earned the confidence of the international investment community and positioned itself on the path to self-sustained growth.

Now cut to Singapore circa 1965. As members of the "pioneer" generation reading this essay well recall, the situation in Singapore in the mid-1960s seemed every bit as dire as that in the US in the mid-1780s. Singapore came out of the short-lived federation with Malaysia facing great economic instability. Trade was stagnant and unemployment was high (around 14 per cent). Its traditional role as an exporter of raw materials and agricultural commodities produced on the Malayan peninsula was also no longer viable.

Its larger, powerful neighbours were also deeply suspicious, and the British military presence on the island was soon to be a thing of the past. Fortunately, Singapore's founding fathers found ways to ensure that the new nation not merely survives but thrives. Taken together, the constitutional order created and the policy initiatives embarked upon stabilised the economy, created social order, dampened ethnic tensions and established a reasonable defence posture.

Once these essentials were in place, the People's Action Party Government developed a growth strategy that encouraged capitalist development via property protection, transparency, probity, contract enforcement, the rule of law and stable labour relations. Both the US and Singapore faced all kinds of adversity. Their responses to adversity - particularly their market-friendly policies - were similar in many ways despite the fact that the two countries were born centuries apart.

Singapore's responses were not perfect. Most commentators today would agree, for example, that its short experiment with import substitution was not helpful. But its economic policies did set the nation on the path to growth and development more quickly than the US policy initiatives taken in the years after its own independence. This is something worth knowing - and, indeed, noting with some pride - as Singapore approaches the golden anniversary of its independence.

The writer is Albert R. Newsome Distinguished Professor of History and director of the Global Research Institute at the University of North Carolina-Chapel Hill. He was Raffles Professor of History for a semester in 2005 at the National University of Singapore and he is currently teaching in Singapore.

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