Working Paper – Neoliberalism and its human rights impact on Singapore (Part I)

2 Jan

Preface:

The idea for this working paper came about as I begin to study the vast amount of literature concerning neoliberalism and human rights. It was also born out of a sense of frustration that few scholarly studies have taken the trouble or approach to dissect the relationship between PAP’s economic ideology and its human rights record. While this paper is far from comprehensive, its lays out, what I believe, a possible groundwork for future studies along the same vein.

Abstract:

Since independence, the benefits of free trade and open markets have been promoted by the PAP and unquestioningly accepted amongst scholars and within the general population as a necessity given the city-state’s lack of natural resources and its small physical size. It is argued that free trade and a favourable climate for business in Singapore supports the local economy while safeguarding its national security. Some scholars have claimed that free trade promotes democracy in various ways such as increasing the level of education and wealth of its population who would then go on to demand an increasing voice and role in political participation and more accountability from their government. Nevertheless, the economic success narrative of Singapore which sees an increasing and more literate middle class appears to contradict this oft-held belief that free trade opens up political space. Instead, Singapore’s civil society continues to be dominated by the ruling party. Contrast to the commonly held-assumptions, this paper proposes that free market ideology and neoliberalism is a significant factor in the suppression of the promotion of democracy and human rights in Singapore.

The history of neoliberalism

Free market ideology and neoliberalism are terms describing the economic theory which claims the market should be the platform for people’s lifestyle choices. Underlying this hypothesis is the belief that the market be free from governmental interference since it is ‘self-regulating’. The market works as it is kept in balance by forces of supply and demand which are in turn, determined by the rationality of consumers. In a more comprehensive definition, provided by David Harvey (2007, p.2),

‘Neoliberalism… proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets. Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary… State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly second-guess signals (prices) and because powerful interest groups will inevitably distort and bias state interventions…’

This definition of neoliberalism which is now accepted as common wisdom was not popular in the West until the early 1980s with the electoral victories of the conservative parties in the US and UK. In both countries respectively, the former President Ronald Reagan and Prime Minister Margaret Thatcher were trailblazers in the Western world for a series of neoliberal reforms that were heavily influenced by the philosophies of right wing thinkers, Friedrich Hayek and Milton Friedman. According to Thatcher’s  biographer, she was driven by a vision of adopting a ‘fundamental  philosophy of anti-socialist economics… the Government should cut public spending, cut taxes, keep tight control of the money supply, refrain from detailed intervention in the economy and generally trust the operation of the free market’ (Campbell 2003, p.5). Competition is central to these ideas,

‘because it separates the sheep from the goats, the men from the boys, the fit from the unfit. It is supposed to allocate all resources, whether physical, natural, human or financial with the greatest possible efficiency… People are unequal by nature, but this is good because the contributions of the well-born, the best-educated, the toughest, will eventually benefit everyone. Nothing in particular is owed to the weak, the poorly educated, what happens to them is their own fault, never the fault of society’ (George 1999).

The championing of neoliberal ideas by both powerful Western states coupled with the demise of Communism and the Cold War sees the Eastern Bloc joining the rest of the world in the march towards globalisation:

‘Deregulation, privatization, and withdrawal of the state from many areas of social provision have all been too common. Almost all states, from those newly minted after the collapse of the Soviet Union to old-style social democracies and welfare states such as New Zealand and Sweden, have embraced, sometimes voluntarily and in other instances in response to coercive pressures, some version of neoliberal theory and adjusted some policies and practices accordingly…’ (Harvey 2003, p.3).

Much of the credit for the popularity of neoliberalism must also be attributed to the massive influence of international financial and trade institutions such as the IMF, World Bank and World Trade Organisation. Universities, think tanks and state institutions have also internalised these values to such an extent, that

‘in short, [neoliberalism] become hegemonic as a mode of discourse’. Furthermore, neoliberalism has infiltrated beyond the institution and into the individual. It ‘has pervasive effects on ways of thought to the point where it has become incorporated into the common-sense way many of us interpret, live in, and understand the world’ (Harvey 2003, p.3).

Free market ideology in Singapore

Since independence and up to the mid 80s, the PAP government has primarily adopted an economic program that is dominated by state-led firms, foreign investments and economic control. More specifically, it ‘relied on a partnership between its economic bureaucracy and transnational corporations, rather than on its own private sector or domestic capital developing in competition with foreign corporations’ (Haque 2004, p. 229). Lepoer (1989 a) elaborates,

… Although Singapore billed itself as a free-enterprise economy, the economic role of government was pervasive. As governing body for both the nation and the city, the government was responsible for planning and budgeting for everything from international finance to trash collection. The government owned, controlled, regulated, or allocated land, labor, and capital resources. It set or influenced many of the prices on which private investors based business calculations and investment decisions…’

This broad strategy was soon modified and replaced by a neoliberal agenda. At the Singapore’s Ministry of Trade and Industry website (2005a), it claims that the government adopts a ‘free market system’ where possible; and that it ‘does not intervene in the economic decision of firms, unless overriding social or political concerns prevail… As a result of our openness, Singapore has benefited from the presence of foreign MNCs’.

More specifically, the Ministry (2005b) has highlighted six broad strategies to achieve these goals: external ties; competitiveness and flexibility; entrepreneurship and Singapore companies; twin engines: manufacturing and services; people; and restructuring. On external ties for example, ‘We need to embrace globalisation, and continue linking ourselves to the developed economies, to attract investment and expand our markets… As a major trading nation, we continue to strongly support the multilateral trading framework of the World Trade Organisation (WTO)…’. On corporate taxation under competitiveness and flexibility, ‘we must keep the burden of taxes on the economy as low as possible, especially direct taxes on companies and individuals…  the labour market and wage system must be made more flexible’. On entrepreneurship and singapore companies, ‘We need to refocus safety nets on the truly needy, and minimise the people’s dependency on the State. An individual’s success must depend on his own efforts and abilities, rather than on handouts from the State… All GLCs should be run on strict commercial principles and be subject to the discipline of the market’.

While these aims and strategies reveal that the PAP government is intent on deregulation, privatisation, competition, and a strong faith in the market place, detractors have argued that the Singapore government has not adopted neoliberalism wholeheartedly. Yeung claims that measures such as the strict controls on bank credits and loans in the early 1990s and the 1996 property speculation curb measures was a far sighted move which prevented the country from slipping into a recession during the 1997 Asian financial crisis (2000, p.147). In contrast, Ong (2007, p. 178 cited in Kanna 2009, p. 18) believes the crisis is a watershed moment as the Singapore government, ‘reposition itself as a hub for the global knowledge-driven economy’. More importantly, neoliberal polices have exacerbated the gulf between indigenous and Western global values:

‘“A kind of biosociality” has emerged in which Singaporeans often have to question deeply held beliefs to fully participate in the new neoliberal order (Ong 2007, p. 184). Examples include pharmaceutical-industry provocations of Malays to overcome reservations about surgery and organ transplants, and the problematization of Chinese values of guanxi, kin- and community-based definitions of economic competition. Thus, according to Ong, the ethical and symbolic implications of being Singaporean are being reshaped by environments dominated by global pharmaceutical firms and other multinational corporations in which the figure of the Western entrepreneur takes precedence over that of the “traditional” Chinese merchant (Ong 2007, p. 185—189)’ (Kanna 2009, p. 20).

As the PAP appeal to Singaporeans of the need for globalisation, more specifically the benefits of corporate- capitalist globalisation, it has since made more substantive and wide-ranging economic reforms that benefits global investors. On privatisation, the PAP has allowed foreign competition in the banking and insurance sectors which were traditionally reserved for the local players. Privatisation has also extended to public services previously provided by the state such as electricity, power, health services and law (Haque 2004, p.230). In the name of efficiency, regulatory bodies have been transformed into smaller autonomous agencies that behave more like business outfits. In the 90s, the personnel system was decentralised permitting these agencies to recruit their own low and middle-level employees while opening up a revolving door for business-sector executives to join the public service at any level (Haque 2003; Tay 1999 cited in Haque 2004, p. 233).

The strongest indicator of the Singapore government as an advocate of neoliberalism is the extent of faith placed on the financial sector. As the French academic, Bourdieu (1988) stressed, the ‘neoliberal utopia of a pure and perfect market is made possible by the politics of financial deregulation’. This recognition of the importance of the financial market started as early as the 70s and began expanding since. By the 80s, ‘the focus was on further diversification, upgrading, and automation of financial services. Emphasis was placed on the development of investment portfolio management, securities trading, capital market activities, foreign exchange and futures trading, and promotion of more sophisticated and specialized fee-based activities’ (Lepoer 1989 b).

An ardent critic and opposition politician, Dr Chee (2008), has traced the further liberalisation of the financial market in the late 90s, following the aftermath of the Asian financial crisis. The government passed secrecy banking laws with the amendment of the Banking Act in 2001; and trust laws in 2004 allowing foreigners to avoid inheritance legislation in their home countries. A leaked email by the former chief economist of Morgan Stanley, Andy Xie, insinuated that Singapore attracts money laundering activities while in 2006, Merrill Lynch noted that the super rich Indonesians living in Singapore commands a wealth estimated at US$87 billion. The Indonesian government believed most of these money came from criminal activities in Indonesia (Chee 2008 a). According to the Tax Justice Network blog (2009), Singapore is a tax haven where,

‘… the legal environment it provides: strict banking secrecy laws, no register of trusts and foundations, neither company accounts nor company ownership details are placed on public record. On the regulatory side, the island-state is not rated by the Financial Action Task Force as meeting its compliance requirements, and on international cooperation Singapore has virtually no tax information exchange agreements (and even if it did have such agreements would not be able to honour them since little of the information required for effective information exchange is obtained in the first place). A tax evader’s paradise, backed by a repressive state’

Temasek Holdings & GLC – national firms or MNCs?

While some Singaporeans may still consider Temasek Holdings and Government Investment Corporation (GIC) as a ‘state’ corporation or the national investment arm, such views are hardly substantiated. Even though they are funded by residents’ savings in the form of a national saving scheme, the CPF; or the foreign national reserve, it would be more accurate to consider these entities as private corporations whose fundamental goals are to maximise profits and increase its worth in the international financial markets. It is therefore not surprising when the GIC urges governments to ‘keep their capital markets open to sovereign wealth funds, because protectionist measures could hurt the global economic recovery’ (Ismail & Adam 2009).

Like multinational corporations, these entities have the inner workings of corporations. They embody management structures and operation procedures that behave exactly like them. The GIC which is a global investment firm that manages Singapore’s foreign reserves, is composed of a hierarchy of different boards of directors and various committees which follows an investment process (see http://www.gic.com.sg). Similarly, Temasek Holdings has a board of directors and management team (see http://www.temasekholdings.com.sg). Like most corporations, l osses are viewed as part and parcel of its normal life. This could be inferred from the business as usual attitude with the loss of US$41.6 billion by GIC in the fiscal year ending March 2009, marking it one of the ‘worst years for the sovereign wealth fund’ since it was established in 1981 (Paris & Venkat 2009). What is also characteristic of these firms are their overseas questionable predatory practices. At times, they have stirred up local resentment. In Thailand, Temasek’s acquisition of telecommunications giant, Shin Corp was believed to have endangered national security. This caused a national uproar  resulting in mass demonstrations against the Thaksin government (Straits Times 2006). Similarly, in Indonesia, Temasek was accused by a workers’ union for price fixing as it hold shares in two of the country’s main phone operators, PT Telkomsel and Indosat (Sijabat 2006). Since Temasek is run as a corporation, it has no qualms in selling off ‘national’ assets to foreign investors. In 2008, it finalised the sale of all its three electricity companies (Chen 2008).

Human rights impact of neoliberalism

In its foreword for the Amnesty International 2009 report, the international human rights organisation linked the impact of neoliberalism to human rights issues:

‘… It is also clear that not only have governments abdicated economic and financial regulation to market forces, they have failed abysmally to protect human rights, lives and livelihoods.

Billions of people are suffering from insecurity, injustice and indignity. This is a human rights crisis’ (Khan 2009, p. 6).

Furthermore, instead of benefitting developing countries, free market policies are creating human rights problems as business and political elites conspire to profit from the misery of the poor:

‘Many experts point to the millions lifted out of poverty by economic growth, but the truth is that many more have been left behind, the gains have been far too fragile – as the recent economic crisis shows – and the human rights costs too high. Human rights were too often relegated to the backseat as the juggernaut of unregulated globalization swept the world into a frenzy of growth in recent years. The consequences are clear: growing inequality, deprivation, marginalization and insecurity; voices of people protesting suppressed with audacity and impunity; and those responsible for the abuses – governments, big business and international financial institutions – largely unrepentant and unaccountable’  (Khan 2009, p. 7).

Naomi Klein, an opponent of corporate globalisation, went so far as to argue that neoliberalism has in fact played a major role in perpetuating some of the human rights violations since the mid 70s. She contended that free market policies are often unwillingly imposed upon people immediately after a major catastrophe since the national psyche is still in a state of shock (and hence, unable to mount effective resistance). This is known as the shock doctrine:

…Seen through the lens of this [Shock] doctrine, the past thirty-five years look very different. Some of the most infamous human rights violations of this era, which have tended to be viewed as either sadistic acts carried out by anti-democratic regimes, were in fact, either committed with the deliberate intent of terrorizing the public or actively harnessed to prepare the ground for the introduction of radical free market “reforms” (Klein 2007, p. 9 – 10 ).

– to be continued (Part II)

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