TILAK DOSHI
(by Tilak Doshi and Peter Coclanis)
The United Kingdom has been in managed decline since 2008. The dismal performance of the British economy — characterized by slow growth, low productivity, and stagnant wages — has been the subject of much analysis in recent years. The Institute for Fiscal Studies (IFS) has highlighted that the UK’s recovery from the 2008 financial crisis has been the slowest on record, even weaker than the recovery following the Great Depression in the 1930s and the early 1920s slump.
The authors have spent part of their careers in Singapore and have written extensively on the city-state’s economic growth since its independence. On several occasions, we have been asked about what lessons the Singapore experience might hold for Britain. We believe that an assessment of just what lessons can be derived from the Singapore’s policy-mix that would be of relevance to Britain’s economic stewards would be useful.
The Record
Before we proceed with the “lessons” part of this article, it would be useful to briefly compare the economic performance of both countries since the 1960s when Singapore became an independent nation-state. UK’s economic growth experience needs to be measured against comparable developed economies such as France, Germany, the EU area and the US. As a rapidly developing country, Singapore for much of its history is not comparable to a matured economy like the UK. Nevertheless, Singapore’s per capita GDP had already exceeded Britain’s by 2010 ($47.2 thousand and $39.6 thousand respectively in current US dollars). For all intents and purposes, Singapore can be broadly considered as a developed market economy by 2000 when Singapore’s per capita GDP was slightly less than the UK’s according to World Bank data.
Growth per capita in the UK over the last sixty-odd years peaked in the 1980s under economic reforms when Prime Minister Margaret Thatcher brought about financial deregulation, reduced income tax, privatized certain industries, and reduced the power of trade unions. It slowed markedly in the 2000s (1.2%) and dropped sharply in 2020–2024 (0.3%). Singapore, facing the same external conditions as Britain — financial crisis in 2008/9, Covid in 2020/21, the energy price spike with the start of the Ukraine war — did much better in both GDP growth per capita and labour productivity.
Much of the analysis of the British economic performance focuses on these external reasons (including Brexit). The UK’s poor performance relative to its peers in Europe and the US is blamed on the specifics of tax, welfare and other policies such as the inordinately costly “net zero” subsidies, mandates and regulations. Our purpose here is not to engage in the minutiae of policy debates explaining the poor British economic performance. Instead, we provide a high-level assessment of comparative performance of two different economies ruled by governments with radically different philosophies. We assert that it is the stark contrast in their views of the world and human nature that explain the contrast in the economic performance of the two countries.
Not Keynesian and Not Fabian
Perhaps the single most important aspect of the Singapore government’s approach to public policy is its core conservatism, or rather classical liberalism, that reflects the insights of Adam Smith. One of the abounding ironies that stand out in this tale of two nations is how Singapore’s social and economic policies reflect Smithian insights into the wealth of nations more so than in the great sage’s own homeland. We submit that the remarkable economic success of the small city-state, with a population of under 6 million, reflects Smith’s aphorism rather well:
“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”
The tone set by Singapore’s visionary first prime minister Lee Kuan Yew, widely respected as “father of the nation”, is crucial to understanding Singapore’s governing philosophy. Lee—famously referred to in the 1960s as “the best bloody Englishman east of Suez” by British Foreign Minister George Brown– tasked his key right-hand man Dr. Goh Keng Swee to serve as the economic architect of what has become known as the Singapore economic miracle. A key principle that Dr. Goh held to steadfastly explains the contrast between the dismal performance of Great Britain and the stellar one of Singapore’s.
Dr. Goh was determined with his insistence on prudent public finance. Dr. Goh was a Victorian through and through. He wrote favorably, for example, about the British “self-help” moral reformer Samuel Smiles. According to Goh, the cardinal virtue of state was the principle that the public budget should be in balance, if not in surplus, and that deficits were to be tolerated only in extraordinary circumstances. Dr Goh’s early advocacy of prudent fiscal and monetary policies—unusual in the 1960s and early 1970s when neo-Keynesian policies were in vogue around the world– helped to establish a sound basis for the “easy taxes” favoured by Adam Smith. This was in keeping with Adam Smith’s dictum that “what is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.”
Compare that to the experience of post-war UK (except for the Thatcher interregnum) where a liberal Keynesian/Fabian consensus indulged in profligacy to win elections and construct a paternalist welfare state with endemic budget deficits and inflation. In its application to public finance, the tenets of popular Keynesianism were directly opposed to the Smithian virtues of prudence and small government with “easy taxes.” Lord Keynes himself seemingly believed that a small group of enlightened policymakers would, for the greater public good, defy sectional and vested interests which clamoured for public handouts.
The spendthrift public policies of the British welfare state —and ensuing fiscal meltdowns and foreign exchange crises including begging bowl visits to the IMF – have been widely written upon. The open border, and the lavish benefits accorded to illegal immigrants, over the past several years have only added to the burdens of the welfare state on taxpayers.
Reflective of the stark contrast between the Britain’s liberal welfare state and Singapore’s flinty approach to state-aid for the destitute and the disabled can be seen in their relative tax rates. Singapore’s flat corporate tax rate of 17% is significantly lower than the UK’s main rate of 25%. The city-state’s lack of capital gains taxes gives it an edge for businesses with significant investment gains. Singapore’s incentives for startups and exemptions further enhance its appeal for new or growing businesses.
Singapore’s top personal income tax rate (24%) is much lower than the UK’s (45%), and its exemption of capital gains and dividends contrasts sharply with the UK’s taxation of these income types. Furthermore, the difference in import duties between Great Britain and the “free port” of Singapore with zero-duty tariffs on almost all its imports adds to the overall tax differential.
UK’s Godly NHS vs. Singapore’s Co-Pay Health System
The healthcare systems of the two countries provide another interesting vantage point in assessing the differences between the political leaderships and characteristic governing philosophies of the two countries. It should be noted that in the UK, with the significant exception of the Thatcher years, the Conservative and Labour governments shared the same fundamental beliefs in social and economic policy orientation.
The NHS is the closest thing British people have to a religion. No politician can dare announce it is not fit for purpose, nor even hint to allowing some level of privatization in the institution. Yet, despite spending approximately 20–30% higher per capita than Singapore, Britain’s health system yields inferior outcomes. Singapore boasts one of the world’s highest life expectancies at 84.8 years, compared to Britain’s 80.4 years and in terms of another key indicator–healthy life expectancy at birth—Singapore beats the UK by 3.5 years
Stark differences in the healthcare systems show up in other ways as well. Estimates based on NHS data show that the median wait for elective (non-emergency) procedures like hip replacements or cataract surgery is around 12-14 weeks, with over 6 million people on waiting lists by late 2024. Comparable waiting times in Singapore hospitals are 2 – 4 weeks.
Singapore’s founding political leaders like Lee Kuan Yew and Goh Keng Swee, both having lived and studied in England, realized that free healthcare sounded “civilized” but was bound to fail once human nature and system incentives were considered. A key part of their healthcare system was ensuring that hospital charges involved some level of “co-paying” to ensure that no abuse of a free service was involved.
The government introduced the “Medisave” scheme where every employee had to contribute a portion of his or her salary to a medical insurance system that covered part of the costs of healthcare. Ensuring there was no incentive-dissipating pooling system, each Medisave account can only be used by the corresponding contributing employee. Being aware that sovereign consumers know best of their own needs, the government ensured that all healthcare providers, public and private, displayed their costs so that patients could assess the costs of treatments upfront. Consumers could choose their own level of services and amenities regarding their healthcare (private or semi-private hospital wards, for example) On almost every count, where UK’s NHS absolved people of responsibility, Singapore ensured that the health system did not entertain free riders.
Every Man A Knave
In healthcare, as in housing and across all sectors of society generally, the Singapore government intuitively shared David Hume’s view that:
in contriving any system of government, and fixing several checks and controls of the constitution, every man ought to be supposed a knave, and to have no other end, in all his actions, than private interest. By this interest we must govern him, and, by means of it, make him, notwithstanding his insatiable avarice and ambition, co-operate to public good.
In cases when an elevator-speech compression is required in response to the question as to what policy lessons Singapore provides Great Britain, we have typically responded: “Singapore’s leaders were, and are, not bleeding-heart liberals.”
Post-war British political leaders, by and large, were more at home with the naïve beliefs of the Fabians Sidney and Beatrice Webb rather than their great homegrown political philosophers Adam Smith and David Hume. Ironically, despite their deep exposure to Fabian ideas, Prime Minister Lee Kuan Yew, the Cambridge-educated lawyer, and Goh Keng Swee, the LSE-trained economist, practiced classical liberalism faithfully to see the economic miracle of Singapore unfold in their lifetimes.
Dr Tilak K. Doshi is the Daily Sceptic’s Energy Editor. He is an economist, a member of the CO2 Coalition and a former contributor to Forbes. Follow him on Substack and X.
Dr. Peter A. Coclanis is Albert R. Newsome Distinguished Professor of History and Director of the Global Research Institute at the University of North Carolina-Chapel Hill.
A version of this article was first published in The Daily Sceptic (https://dailysceptic.org/2025/04/09/why-singapore-thrives-while-the-uk-is-in-constant-decline/)
This article (Why Singapore Thrives While the UK is in Constant Decline) was created and published by TILAK Doshi and is republished here under “Fair Use”
Featured image: Unsplash
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