The Singapore model: lessons for the new PM from Lee Kwan Yew

Labour has sneered at talk of ‘Singapore-on-Thames’ as a post-Brexit economic model, while the tax-cutting wing of the Conservatives has embraced it with a passion. But neither seem to know much about how Singapore actually achieved its remarkable prosperity. Lee Kwan Yew, the country’s prime minister from 1959 to 1990 (and one of the greatest national leaders since 1945), transformed Singapore from corruption, division and poverty by moral, fiscal, social and market acts of genius which gave people a new sense of hopeful purpose.

First, the moral genius. The population of Singapore was bitterly divided by racial and ideological antagonisms that had left the country isolated from its neighbours. A decisive early act of moral courage by LKY was to jail for abuse of office the financier who had bankrolled his election campaign. By wrecking his future campaign finance, it convinced all factions that he was seriously committed to the new and attractive common purpose of achieving public sector integrity. Volodymyr Zelensky’s commitment to stay in Kyiv worked in the same way. Self-sacrifice was hardly Boris Johnson’s style, but the implication for the choice of party leader is to find someone who sacrificed preferment to remain uncontaminated by association, instead of toadying to power.

The fiscal genius included low taxes on businesses, but this was enabled by heavy stealth taxation of land appreciation. Through the power of compulsory land purchase, with compensation permanently frozen at 1973 valuations, the state gradually bought two-thirds of Singapore’s land area, reselling it to developers at much higher market prices. This reflected the sound moral and economic sense first advocated by Henry George, the vastly popular American writer. George, whose idea is now recognised as an economic theorem, recognised that the gains of land appreciation in New York were due to those who worked, not those who owned the land.