From independence, freedom and truth

Economy

No unemployment, no corruption and no taxes: the success we shun

Fernando del Pino Calvo Sotelo

April 14, 2015

In 1959, two leaders took over in two countries faraway from each other and both remained in power for decades. The methods they applied were diametrically opposed and the results, starkly different. One of them achieved a resounding success while the other failed miserably, with no excuses or extenuating circumstances. The first one was Lee Kuan Yew, one of the greatest political figures of the 20th century, Prime Minister of Singapore for 31 years (1959-1990) and its strongman until his recent death. He transformed what was once a poor Third World country into one of the wealthiest and most highly developed nations on the planet in little more than a generation. Singapore did not have natural resources and its geographical location did not give it a serious competitive edge compared to its many neighbours. What made the difference was the formula for success that Lee Kuan Yew decided to use: a free market economy, low taxes, the rule of law and a small government.

Let’s take a sober look at the results. Today, Singapore enjoys a per capital income that exceeds that of the United States and doubles Spain’s, and remains the top country in the world for ease of starting a company and doing business, while Spain ranks 33rd, in between Poland and Colombia. Singapore is the world’s 7th least corrupt country, immediately after Switzerland and the Nordic nations, while Spain is number 37, six spots below Botswana. Singapore enjoys the best Health System in the world, according to Bloomberg’s latest annual rating, while Spain ranks 14th. In the extremely important field of education, Singapore once again ranks number 1 in the PISA report, while Spain has to be contented with its 29th place. Taxes are very low in Singapore: those who make 25,000 euros per year pay an income tax rate of 1% (yes, you read it right, 1% compared to 24% in Spain). Those who make 50,000 a year pay 4% income tax (30% in Spain), while those who make 100,000 euros a year pay less than 9% (43% in Spain), the maximum marginal rate being 20% (56% in Spain in the insurgent region of Catalonia). Capital gains are tax-exempt (in Spain, they are taxed 24%), VAT is 7% (21% in Spain) and naturally there is no inheritance tax, (41% in some regions of Spain) or wealth tax (which has been abolished worldwide, except in France, although in the poorest and most underdeveloped regions of Spain it is 3.75% of wealth, nearly triple the rate in France) These are the hard facts: judge for yourself.

Lee Kuan Yew was not born a free market champion. In his early years he flirted with the fallacy of socialism and its halo effect, but his extraordinary intelligence and legendary pragmatism soon enabled him to change and make Singapore one of the world’s freest economies, taking advantage of globalisation rather than complaining about it like that toothless grunting old woman called Europe. He recruited the best and the brightest for public positions, demanding high qualifications and utmost integrity, and paying salaries that were competitive with those of the private sector, achieving a clean and efficient government. Instead, Spain has created a swamp of stagnant and corrupt waters overpopulated with politicians of rising mediocrity. The current Prime Minister of Singapore, who is the son of Lee Kuan Yew, graduated from Cambridge with honours, spent several years in the Army, earned a Master in Public Administration from Harvard and speaks English, Chinese and Malaysian fluently, plus some Russian. Compare this biography with that of our past and present political “leaders”.

Incorruptible, Lee Kuan Yew understood that laws were made to be obeyed by everyone, power holders included, without excuses and without exceptions. In Spain, unfortunately, the opposite holds true: the laws do not apply to all citizens and to all territories equally, the judicial branch is highly politicized and the rules are not only arbitrary, but change constantly and capriciously as well. Singapore has shown us the way to a society where unemployment and poverty barely exist, where there is no corruption, where the laws are strictly obeyed and where the citizens are proud to belong to a common project. Many Western observers, who appear to idolize democracy with the same fervour as they paradoxically deplore and attack individual liberties, are perplexed by this success and feel the need to criticize political aspects that focus on the hardship of some of Singapore’s laws and on the lack of political alternation, in spite of elections taking place periodically. What about Andalusia, Spain’s southern region, may I ask, where the Socialists have been in power for 41 years in a row (including the current term), but where unlike Singapore, unemployment rates are 34%, poverty is everywhere to be found, the population is uneducated, corruption is rampant and the GDP per capita is below Greece’s and similar to the African nation of Equatorial Guinea?

Without a doubt, Lee Kuan Yew was an enthusiast of clean and efficient government, of social order, individual responsibility, respect for the law and hard and honest work, but at the same time he didn’t hide his scepticism towards universal suffrage and freedom of expression if they attacked his principles and threatened, in his view, Singapore’s achievements. Obviously, a country’s success can never be attributed exclusively to its leader but rather to all of its citizens, and no society, being as it is a human endeavour, is free of defects and shortcomings, some of them of utmost importance. Singapore is no exception.

I shall finish here. The other person who came to power in 1959 was an opportunist disguised as a patriot and the unfortunate country he took over was Cuba. At the time, Havana was a much more modern city than Miami, according to the memoirs of Cuba-born businessman Fernández-Pujals. The new leader decided to apply the tenets of Socialism to the letter (except on himself, as is always the case). Compare Havana and Miami today and you will see the inexorable results of various decades of socialism: a country immersed in poverty, economically and socially depressed, drowning in the putrid waters of the Marxist tyranny, a country where 10% of the population has chosen to flee at the risk of their own lives.

We’ve had fifty-five years to compare the two extremes: on the one hand, the success of a completely free market and, on the other, the total, unconditional failure of extreme Socialism. Even so, blind to the evidence, weakened by ideology and ignorance, in Spain we are yet to set course decidedly towards an economy based on free markets, low taxes and the rule of law, the same that has proven to be successful time and time again all over the world. Nobody here has heard of Lee Kuan Yew and no political party follows Singapore’s economic program, but everyone knows Fidel Castro and we even have this new Marxist-Leninist radical party called Podemos (disguised as harmless populism) that would love to apply Cuba’s model in our own country.

In his moving farewell speech, his son noted that Lee Kuan Yew “achieved what had seemed impossible”. We could also achieve this in Spain, but we lack the right leadership. I also wonder if we have lost the necessary capacity of personal sacrifice and the willingness to take responsibility for our own lives.

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