- By Stephen M. WaltStephen M. Walt is the Robert and Renée Belfer professor of international relations at Harvard University.
I’m back in Singapore for the first time in nearly two years, and what a difference two years can make. Back in 2009, Singapore was reeling from the after-effects of the global recession, which hit its trade-dependent economy particularly hard.
The island nation has regrouped quickly, however, and its economy reportedly grew by an astonishing 17.9 percent in the first half of 2010. The harbor is chock-full of ships again, construction is proceeding apace, and the government expects robust growth to continue.
I don’t want to go all "Asian values" on you, and comparing Singapore’s economy with that of the United States is risky at best. But I’ve been reading a few books and articles on the endemic corruption (or if you prefer, criminality), embedded within the United States political/economic system (and watching documentaries about it too). And it made me wonder how much this feature might have to do with the varying trajectories of the two countries.
Case in point: today’s Herald Tribune reports that Goldman Sachs has concluded that there’s nothing really wrong with how it does business. To quote the print version (not the online edition) Goldman decided "its operations need only a fine-tuning, not a complete overhaul." Hmmmm. I don’t know about you, but when a major investment bank has to get bailed out by the American taxpayer, and just paid a $550 million fine to settle civil fraud charges (not the first time Goldman has had to do something like this, by the way), one might reasonably conclude that there were more fundamental problems involved. Not from the point of view of Goldman’s present profits, perhaps, but from the point of view of what is good for the society as a whole. And the problem seems to be that maximizing political influence is as much a part of Goldman’s business model as the pursuit of economic gain itself.
Mind you, I’m not an economist, and I’m sure there are legions of people out there who would be quick to leap to Goldman’s defense. And I’m not really picking on Goldman, because the financial meltdown of 2007-2008 suggested that the rot was far more widespread. Instead what troubles a layperson like me — and maybe ought to worry you, too — is that we’ve just lived through the most significant global recession since the 1930s but don’t seem to have learned much in the process. That recession was triggered by malfeasance in mortgage and financial markets, and yet not much seems to have been done to create new arrangements that would prevent something similar from happening again. And the main reason isn’t conceptual or economic but political: financial interests give a ton of money to politicians, and — surprise, surprise — those same politicians tend not to take actions that these donors oppose, like significantly tighter financial regulations.
Singapore is far from a perfect society, and as I said at the outset, direct comparisons between its situation and that of the United States are somewhat dubious. But I can’t help but wonder if maybe we could learn a few things about political economy from them. Like not letting private money play an enormous role in politics, and paying civil servants enough so that more of our best brains choose public service over Wall Street.