Legend of Lee Kuan Yew
As promised from last week’s article, this week I want to cover some of the lessons I gleaned from studying the life of Lee Kuan Yew. The man who decided that national building should be a speedrun challenge. Most founders build successful companies, but this guy built a country within his own lifetime, what an absolute chad. Charlie Munger even has a bust of Lee Kuan Yew in his house.
As a public figure, the general consensus opinion of Lee Kuan Yew is that he’s polarizing. Most people laud him for his main accomplishment of transforming Singapore from a malaria filled swamp to a first-world city-state but disagree with some of his tactics, such as banning chewing gum and spitting, which are generally seen as an overreach of personal liberty and boundaries. His style can be encapsulated with the phrase: “Ruthless pragmatism”
“I was never a prisoner of any theory. What guided me were reason and reality. The acid test I applied to every theory or scheme was, would it work?” - LKY
A brief history of modern Singapore, it was originally established as a trading port by the British in 1819. Business in the China-British India trade route was booming and having a port near the Straits of Malacca was of great importance to any self-sovereign corporate entities with a fully functioning navy (cough VoC cough British East India cough). As the importance of Singapore grew, it eventually became a crown colony in 1867 and steadily grew its population with migrants from nearby China and Malaysia.
During World War II, Singapore had to endure a brutal occupation by the Imperial Japanese Army. Numerous atrocities were committed during this time period, including the infamous Sook Ching massacre. It was during these times of immense hardship that the Singaporeans realized that in order to survive in the future, they cannot be reliant on anyone else. The colonial powers will always seek to preserve their own self interests, and sacrifice the populace when it no longer benefits them.
After the war, Singapore reverted to British rule. The city itself was in ruins, the war had destroyed most of the essential infrastructure, including electricity and water supply systems, telephone services, and the harbor facilities at the Port of Singapore. There were shortages of everything from food to medicine. Unemployment was high and crime was rampant. The years that followed saw increasing resentment of British rule as they failed to help improve the welfare of the Singaporeans, and the push for anti-colonialism grew stronger.
In comes a young, charismatic, Cambridge-educated lawyer named Lee Kuan Yew. With the Political Action Party (PAP), they were able to win a landslide victory in 1959, elevating Lee to the first seated Prime Minister of modern Singapore. In a twist of irony, many businesses initially left Singapore for nearby Kuala Lumpur, believing that the PAP was founded on communist ideology. However Lee and the PAP would prove far more pragmatic than anyone could have envisioned.
Singapore at this point is still extremely vulnerable. They have no resources of strategic value, very little land to work with (fun fact: Singapore is about 1/5th the size of Rhode Island), and they barely had a navy to ward off nearby pirates. Lee knew that the welfare of his new fledgling nation is inextricably tied to the welfare of his citizens, and thus his government prioritized an Economic Development Board to spearhead an investment drive, and make Singapore an attractive destination for direct foreign investment.
“As a nation, we must have other goals. Economic growth is not the end itself. After the success of the economy, you want to translate it into high standards of living, high quality of life, with recreation, the arts, spiritual fulfillment, and intellectual fulfillment. So, we are also spending considerable sums for the arts, which will create a more gracious society.” - LKY
Even with some modest success in the 1960s with their new economic policies, the PAP still believed that they were too small to compete effectively on the world stage. Therefore, in 1963, Lee Kuan Yew and the PAP made the decision to formally integrate Singapore as a state of Malaysia with the Malaysia Agreement. However this merger was flawed from the start, and was quickly dissolved in just two short years.
Again this highlighted one of Lee’s key tenets: find what works and do it, and if it doesn’t work, cut ties quickly and move on. The merger could’ve easily dragged on for years, but Singapore was able to rip of the band-aid and got themselves out of a messy situation quickly. Most countries would have to fight tooth and nail to gain their independence. Singapore got theirs by being too small and poor.
Despite all the headwinds, one undeniable advantage Singapore inherited is its geography, Singapore has always been prime real estate for developing a world-class shipping/harbor/airport industry, Lee probably had a tacit understanding of Metcalfe’s law even though he never studied network engineering. In life you should always seek to maximize your advantages and minimize your disadvantages and Singapore invested massively to position itself as a preeminent regional hub and a gateway to Asia.
Instead of seeing multinational corporations as capitalistic first-world exploiters, Lee saw them as important partners to enable Singapore to lift themselves out of poverty. Human beings are social and communal creatures and corporations by extension are just collections of people. By providing conducive business environments, you attract the human capital who want to build and innovate in your backyard. Low taxes and stable regulations were the milkshake that brought all the corporations to the yard.
During Lee’s tenure, the economy remained as dynamic as its people. During the beginning of the reforms, attention was paid to developing simple industries such as textiles and basic manufacturing. However, as more capital and new multi-national corporations moved in, Singapore welcomed industries that are higher up on the value chain: Oil-refining, semiconductors, biotechnology all became a staple part of the economy, buttressed by financial services.
“Hard-headed industrialists and bankers of developed countries never take unnecessary risks. They look round the world for places where there is political stability and industrial peace before they invest. In Singapore they find such a place. Hence the massive inflow of capital, machinery, technological know-how and banking expertise.” - LKY
In addition to needing to fix the economy, another major problem Singapore faced was housing. When Singapore gained its independence in 1959, only about 9% of the population lived in public housing. Singapore’s population was growing rapidly in the 1950s and most of the population were living in informal settlements or cramped shophouses. The Housing Development Board (HDB) was founded in 1960 to address this basic human need.
For the first few years, the HDB focused on building as much housing as quickly as possible. It was very much a case of quantity over quality. Very little in the way of communal planning was done, it was really just getting roofs over people’s heads and out of the slums. Singapore knew this wasn’t going to be a permanent solution but sometimes you need to build a MVP first in order to find your product-market fit.
LYK understood the importance of home ownership, way beyond the shelter it provides. When you have a mostly immigrant population, home ownership is an aspiration goal, something that one can look forward to working towards. He needs to ensure that this goal can become a reality for those that worked hard and contributed to the economy, and not just a pipe dream. Once this goal is achieved, it then permanently connects the prosperity of the individual to the prosperity of the country, creating a self-reinforcing loop.
Oh but we’re not quite done yet, LYK also saw the benefit of using housing to create social unity. By using clever arrangements of different sized flats and making use ethnic diversity quotas in public housing, Singapore aimed to blend the population to become distinctly Singaporean. It’s just much easier to be nice to your neighbor than it is the opposite. These policies stand in stark contrast to the redlining practices that were done in the U.S. around the same time period.
Today roughly 80% of the Singapore population lives in one of these public housing units. Instead of having to pick between affordability or high-quality, it’s possible to have both in Singapore. They proved to the world that public housing should not automatically conjure up images of decrepit and dilapidated homes.
“We have made home ownership the cornerstone of Singapore’s public housing policy – the vast majority of the population own, not rent, their homes. Ownership is critical because we were an immigrant community with no common history. Our peoples came from many different parts of Asia. Home ownership helped to quickly forge a sense of rootedness in Singapore. It is the foundation upon which nationhood was forged. The pride people have in their homes prevents our estates from turning into slums, which is the fate for public housing in other countries.” - LKY
As alluded to in my previous article, Singapore is a magnet of human capital. A small group of outliers can have a much more dramatic impact than a large group in the middle of the bell curve. A visceral representation can be seen in the 1992 summer Olympics with the basketball dream team. In order to be world-class in anything, you first need to have world-class people.
When Singapore took in foreign direct investment, they didn’t just focus on the present, but also where the future might be headed. The economy started with simple value-add industries before transition to more higher level, more concentrated industries, taking full advantage of their human capital and geographic ties. Education and continual upskilling of their citizens has always been a top priority.
When a diverse pool of talent collects in one place, magic starts to happen, you can see this in Silicon Valley for technology or Hollywood for entertainment. You can grow the talent yourself or convince the talent to come to you. The right answer is that you should do both. An educated society is also a polite society and to that extent Singapore has been at the forefront of primary and secondary education for as long as I can remember.
“Our way forward is to upgrade our levels of education, skills, knowledge and technology. Life-long learning is a must for everyone in this knowledge economy with rapidly changing technology.” - LKY
Perhaps the most controversial aspect of LYK is his leadership style. Some call it disciplinarian, some call it ruling with an iron fist. Although he operated with a heavy hand, it was with from a place of trying to solve a problem in order to make Singapore a more prosperous place.
A one party system is a double-edge sword: On one hand you can have a grand decades-long vision and be assured no outside party can derail it. However as a long running party you also cannot hide from its obligations. At some point the promises made to the people need to be converted to results. Singapore is a case study where the ruling party really did prioritize the welfare of the nation, even if some of those came at the expense of personal liberty. For comparison, their neighbor Brunei has much more natural resources than Singapore, but because of it, they seem satisfied with coasting along and did not bother cultivating any human capital.
Lee Kuan Yew is a veritable piñata of mental models for me. One can love him or hate him, but nobody can argue with the results. This guy played a one-city challenge on deity level in Civilization Real Life edition and won. My hats off to you sir, may you finally get the rest you’re seeking.
“Rest on laurels? I wish I could do that. No, you rest when you’re dead.” - LKY
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I know there’s many details here that I just glossed over, but there’s just so much you can squeeze into a 10 minute article. Also just a heads up, I might need to break from the weekly cadence as I’ll be out for vacation in the next few weeks! If I can cobble up enough words together I’ll publish something in two weeks time, but I don’t yet have enough written down to have a backlog of articles yet. Hopefully one day I’ll get there.
Some further reading:
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