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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Random fact for the day

I came across the following in a research paper about the benefits of “clustering” of financial services and other industries:

“Singapore is a country, which, 40 years ago had the same GDP per head as Uganda. Now, it is the richest country in the world, with GDP per head of $57,238 I 2010, according to the IMF, putting it ahead of the US, Japan, Hong Kong and Switzerland.”

Seems like a classic example of how some places are actually blessed by a dearth of natural resources.

9 comments to Random fact for the day

  • Ian Bennett

    Regarding the “dearth of natural resources”, I recall being told that “Tiger Beer” was marketed as a wholly-local product,although the barley came from America, the hops from England, the yeast from Germany and the water from Australia. The only truly local input was the tin from which the containers were made. And, of course, the imagination to create the concept.

  • One thing Singapore does have is a strategic location more perfect than no more than a couple of other places on earth, and they have taken advantage of that. I am not sure if that counts as a natural resource, but in a way it may be one. (Stamford Raffles understood this perfectly when he took the place from the Sultan of Johor in the first place).

    There are other places with equally strategic locations (most notably Egypt) who haven’t taken advantage of it, though. One problem is that strategic places become the target of bigger powers. Singapore remains a strategically fragile place.

  • Ian: Last month, I sat down in a Chinese restaurant in the town of Renau in the Malaysian state of Sabah in Borneo. I attempted to order a bottle of Tiger. I was then asked if I wanted “Original” or “Non-original”?

    My response to this was “Huh?”, but on being told that “Non-original” was 10 ringgits a bottle, whereas “original” was 15 ringgits a bottle, I stated that “non-original” would be fine, and the “non-original” Tiger performed its job perfectly well. As it happened, the “non-original” was brewed in Malaysia, and had the words “Malaysian duty not paid” written on the back of the bottle. Further investigation revealed that it had been produced for consumption in the Malaysian Federal Territory of Labuan, which is a tax free zone, as well as being a convenient place for people from Brunei (a prohibition state) to go when they want to have a drink. It had then been smuggled into Sabah without the payment of taxes. The “original” Tiger had been brewed in Singapore, and had been brought legally to Sabah, with a full set of taxes being paid somewhere along the way. The question was a weirdly coded way of asking whether I wanted to pay tax on my beer, or not.

  • The Wobbly Guy

    LOL.

    Do note, however, that a high average GDP per capita does not necessarily translate into higher quality of life. As the popular retort against such reports goes, “so what, where’s our Swiss standard of living?!?”

    The socio-economic-political situation here is darkening rapidly, as the gap between the haves and have-nots increases, leading to frustration, envy, and severe resentment of foreigners. The squeeze is also, to put it mildly, torquing off a lot of people… and state planners are determined to increase it further.

    I think my country is one of those places that shatters conventional wisdom – minimal welfare state, but still intense immigration pressure by dint of superb infrastructure and myriad opportunities for the skilled and well-equipped. It’s squeezing out and marginalizing many of the locals, and they have nowhere to go, at least here in Singapore.

    One solution, of course, is for them to uproot themselves and their families and seek greener pastures… but that too, will have drastic consequences.

  • Quentin

    And how does Singapore fare on the Free Speech front? Not that well, I fear.

  • Paul Marks

    Perhaps Jim Rogers has picked the right place to base himself.

    However, I am concerned about that government controlled investment fund that all Singapore citizens are made to “invest” in (compulsory investment is a tax).

    What does it actually invest in?

  • The Wobbly Guy

    @Quentin,

    Free speech? What’s that? 😉

    @Paul,

    The CPF system is, IMHO, a hideous compromise to:
    a) force compulsory retirement savings onto people who otherwise are too stupid or shortsighted to prepare for their old age
    b) provide the state with a huge pool of funds to play with
    c) provide sufficient interest from the investments to offset inflation
    d) have a secure value and guarantee of payout (supposedly)

    The problem with all this is point b. What happens when the investments fail? Ahhh… can I DON’T think about it?

  • Yes. You have a situation where retirement savings are compulsory, the savings are put into a large fund that the government has significant control of, which owns (as an example) the national airline, which is supposed to make a profit and generate returns from which people’s pensions are ultimately supposed to be paid.

    As to whether this is in practice any different from having taxes, a state owned airline, and a traditional state pension scheme paid from taxes, I guess we will eventually find out. But yes, there do seem to be way too many (essentially) state controlled and state favoured projects in the investments of that huge pool of cash.

    The success of the scheme appears to rely on the assumption that the Singapore government will be able to manage things more competently than governments have been traditionally been able to manage things. Some governments in the past seem to have been able to do this for a time, but none have been able to do it forever.

    Tangentially related, I note that Singapore Airlines’ Australian low-cost subsidiary has just been grounded for repeated safety violations. I bet that has led to some interesting conversations behind closed doors in Singapore.

  • Ivan

    I am in Singapore and would dearly that 57,000 (USD?) income. The fact is most Singaporeans (@85%) are just getting by with 20-40000 being the median range. When one considers, that an average Honda costs in the region of 100,000 SGD and a 3 room government apartment between 200,000 to 300,000 SGD, the average income does not leave a lot over for splurging.