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SINGAPORE must avoid the “slippery slope” of excessive individualism, populism and short-termism, which have gained “dangerous traction” of late and become dominant driving forces in the politics of some of the world’s largest economies, said Transport Minister and Second Finance Minister Chee Hong Tat on Wednesday (Aug 28).

“If we allow these three ‘isms’ to affect our politics in Singapore, they will  also likewise adversely impact our ability as a society to plan long-term and formulate sound economic policies,” he said in his speech at a dinner hosted by the Economic Society of Singapore.

Also at the event was Emeritus Senior Minister Goh Chok Tong, an honorary fellow of the society.

Elsewhere, there is an ongoing debate on how the responsibilities between markets and the government should be balanced, he noted.

One camp believes that markets cannot be relied upon to deliver inclusive social outcomes, and better policy intervention is needed to secure a fairer share of prosperity and tackle intergenerational problems. This is in contrast to the “market-liberal” view, which emphasises the primacy of market-based policies, free trade and deregulation.

Singapore’s approach is to do what is practical and effective for its context, said Chee. “We are pragmatic and not ideologically-driven, preferring to focus on what works in the context of our society.”

Singapore thus prefers to rely on market solutions as much as possible, but will be prepared to intervene when necessary “in a decisive and targeted manner”, such as during market failures, he added.

Chee outlined three areas in which the government can play such a role. First, it must ensure that essential public services, such as public transportation, are adequate.

Here, Singapore’s hybrid private-public approach, done via the bus contracting model, has injected regulated competition in the bus market, which in turn has improved reliability, efficiency and the commuter experience.

At the same time, the government is able to respond more quickly to evolving needs as the central planner. Last month, it committed up to S$900 million over eight years to enhance the bus network for residential areas currently less connected and farther away from existing transport nodes.

Second, the government must support people in adjusting to shocks and help them manage the cost of transitions.

For instance, during the Covid-19 pandemic, Singapore had to preserve its core industries – such as aviation and tourism – to prevent “long-term economic scarring”, but it also had to ensure that workers in affected sectors remained employable through upskilling.

Additional effort was thus put into supporting these sectors through the Job Support Scheme and Aviation Workforce Retention Grant, said Chee. This enabled the sectors to bounce back quickly when borders reopened.

This is unlike other economies, which took a short-term view by laying off workers and thus could not take advantage of the subsequent travel boom as quickly, he noted.

In the case of the inflation shock in 2022, brought about by Russia’s war in Ukraine, the government’s support was “calibrated to avoid distorting price signals and preserve the right economic incentives for household behaviour”.

“The easier and more populist approach would have been for the government to fix prices and dole out broad-based subsidies,” said Chee.

“But it was important for us to do the right thing and not just pursue what is easy and convenient, because the best way to deal with inflation in the longer run, is to ensure that our firms are more productive, our workers are more skilled and adaptable, and their real incomes can continue to rise over time.”

Lastly, the government has to plan and build ahead of demand to catalyse further investments. This may mean taking calculated risks, such as making the decision to consolidate Singapore’s port terminals and expand them at a single location in Tuas in 2012.

At the time, global container shipping was facing a downturn, noted Chee. Singapore could have thus taken a shorter-term perspective and maintained status quo with its existing port terminals, to avoid sinking in more capital and risking stranded assets.

“Fortunately, the government remained steadfast in adopting a long-term strategic view. If we did not invest for the future, we would risk falling behind,” he said.

Good economics requires good politics to achieve its desired outcomes, said the minister.

“We need to have the political courage to do the right thing… as well as the political skill to persuade the majority of voters to support the changes, so that we are able to implement economically-sound policies,” he said.

“Good economic outcomes would in turn earn broad-based support for good politics, so we can have a virtuous circle that will benefit our society in the longer run.”