Anyone of my generation would recall the copious amounts of indoctrination being applied upon us in school. There is this particular piece of Malthusian absurdity which I would like to debunk today. It is called
“Singapore has no natural resources, and the only thing we have is people, therefore we must make full use of our human resource”
Some think that this is to justify treating human beings like numbers on a balance book. To me, the greater evil that this piece of propaganda has inflicted upon Singaporeans is the creation of a mistrust of capitalism, and an addictive reliance on government meddling in our everyday lives. It is time we discarded that myth that we lack natural resources, and realise that Singapore has never lacked natural resources. The fact is that throughout human history, there has ever only been one natural resource, and that is human ingenuity and creativity.
A lump of iron ore is just a thing lying in the ground. Without human hands to shape it, without human intelligence and ingenuity to put that iron to use, a lump of iron ore has no meaning, no purpose and no use. Crude oil pumped from the ground is just black goo. Prior to the invention of machines that use petroluem as fuel, crude oil had absolutely no value whatsoever, was not considered a “resource”. The only reason why things in the ground and sea can be extracted, and refined, moulded and manipulated into things of value, is because humans have exercised their ingenuity and creativity into thinking up these processes.
Furthermore, evidence from economic history hardly justifies the idea that possessing mineral resources correlates with economic prosperity. A popular term for this phenomena amongst economists is “resource curse“. A clear distinction must be made here: the assertion is not that all countries possessing mineral resources must be poor. Rather, it is those countries in which mineral resources have been wholly controlled and owned by the State which have remained poor, corrupt and inefficient. This contrast is neatly evidenced by comparing countries in sub-Saharan Africa with United States and Australia (the ownership of minerals discovered under the ground in Australia is generally vested in the Crown/the government, but the license permits to mine and exploit the minerals are awarded to independent commercial entities e.g. Rio Tinto or BHP Billiton).
In fact, I would argue that the primary reason why Singapore has prospered, is precisely because we do not have mineral resources. Given the command and control tendencies of the powers that be, Singapore is truly lucky and blessed that we are free from this resource curse. However, the way in which our natural human ingenuity has been managed certainly leaves much to be desired. Of course, by the metrics of test scores and international prizes, a small segment of our population has done well, but by the more amorphous measure of creativity, entrepreneurial spirit and wealth-creation, we have much less success to boast about.
The question is, given that we have ample amounts of the ONLY real natural resource numbers of people, which is the basis of the only real natural resource, why have we not fared better. The answer lies right in the beginning of this post: because we have all been grouped collectively into this thing called “human resource”. The powers that be are trapped within a Malthusian mindset, and imprisoned by a deficient understanding of the origins of wealth. By managing people as numbers on a balance book, and using their control of the education system to value certain spheres of knowledge over others, they have distorted the free will that drives market processes, and have suppressed the one thing that makes “human resource” truly valuable: our natural human ingenuity.
This article has been cross-posted on Singapore Angle.
Economic Growth, by Paul M. Romer: The Concise Encyclopedia of Economics: Library of Economics and Liberty
Natural Resources, by William J. Baumol and Sue Anne Batey Blackman: The Concise Encyclopedia of Economics: Library of Economics and Liberty
Julian Lincoln Simon - Wikipedia, the free encyclopedia
The Growing Abundance of Natural Resources
Resource curse - Wikipedia, the free encyclopedia
20 Comments
I think that The Corporation cannot be faulted for pointing out that the only resource we have are the people.
However, they can most certainly be called to task for the way they set about developing, and underdeveloping, the propensities of the people.
I say that the biggest blow to local creativity is in the BNP style ‘ethnic cleansing’ that had been taking place here whereby the various ‘races’ are racialised and one brought to prominence whilst the others are made to suffer diminution via a variety of ways and means. This deprived the inhabitants the chance to grow from cultural exchange and amalgamation that would most certainly have resulted in extremely vibrant and creative minds. However, The Corporation probably realised that such minds would seriously affect their longevity in the unhallowed halls of power. And thus, the choice was probably made to go ahead with it.
People say that LKY made singapore in a huge success. However, all he managed to do was to regularise the one-way transmission of the fruits of exploitation whilst keeping the population numb and dumb. This of course has its price. A totally dumbed down population of sinocentrics.
The problem this poses when singapore is thrust into a globalised market with regards to the need for intelligence and creativity is of course circumvented by way of bringing in ‘foreign talent’. But, of course, the local population have been rendered way too docile to realise this and predictably blame themselves, with the aid of The Corporation, for their own docility. However, it is a win-win situation for The Corporation as the vast resources they had accumulated over the manufacturing phase in singapore can now be used to invest in the creative produce of other countries. The local population are told to keep their expectations low as this is the only way that the consequences of The Corporation’s mismanagement of the population can be averted. However, their condition has worsened since the British left and the people, due to their youthful age have little memory of it that will enable them to make an intelligent and most informative comparison.
Hey there! A very interesting blog you’ve got here
So, you’re a libertarian, huh? I’m afraid my political persuasions are at opposite ends to yours. I’m a social democrat myself.
I chanced upon your blog through Rajan R. A former-Malaysian here
You a law student at NUS? I’ve got a couple of friends there as well.
Cheers then!
I agree that it’s a myth that Singapore has no natural resources. We had a lot, and we still do have some, but it’s a matter of how we choose to use or waste/abuse it. For example, look at how we wasted our precious soil by conccreting over ite soil. Today, there’s hardly any left for farming, and we have to import the soil for food and we also import soil indirectly when we import food. We always say we don’t have land, but look at how we waste it on building excessive golf courses (we have the highest density of golf courses in the world). See also http://www.singapore-window.org/sw00/000906bt.htm
On your point that the only natural resource is human ingenuity, I’m afraid I disagree. No amount of human ingenuity so far has involved creating food etc out of a vacuum. And let’s not forget that much of human creativity has been inspired by nature itself. So human ingenuity must be complemented by natural resources. Without theese natural resources, ingenuity alone does not take us very far. See also
http://www.mnforsustain.org/partridge_e_j_simon_and_perilous_optimism.htm
joseph:
I don’t see a problem with building golf courses. The owner of the land should be able to do anything they want with the land. Whether a use of land is efficient or not is not determined by YOUR criteria, or mine, but by reference to whether the owner of the land thinks it is. The simple fact is that all land owners face opportunity costs: if they stupidly build golf-courses when it could be put to some higher valued use, then they would pay the price for it, as they lose out in terms of the return on the use of the land.
This scenario changes of course, when the owner of the land is te government. The sorts of costs and incentives they face are completely different from private landowners. It is also for this reason why governments are notoriously bad at managing resources like land.
………………..
I stoped reading Partridge the moment I see the word “entropy”. I find it amusing when people who have no proper understanding or training in theoretical physics attempt to use it to justify their stand.
The problem with the owner deciding on land use is that the golf course may be the highest valued use, If land were developed according to its highest value, most of it would be commercially or industrially developed. And those that are not can be converted to gated luxury apartments for the highest bidders around the world. Then the rest of us who can’t afford the to pay for to rent these properties, and can move to JB.
I stopped reading Julian Simon the moment I saw the word ‘economist’. I’m sure economists living in their abstract world understand the real world best. Liberty is well and good, but what about those too poor to afford it?
joseph:
I think you forget that value varies according to market conditions. You assume that the highest value must mean commercial or industrial development, but that is not always true. Oversupply of commercial or industrial space means that the prices would fall: relative to other uses, the value would become lower. For an example, just check out the price of rents in factories in Jurong, Tuas, or the smaller ones in Ang Moh Kio. They are not perfect examples as they are still owned by the government, and yet even the government cannot defy the laws of supply and demand.
The same would apply to your scenario of luxury apartments: if there ever were a situation where everyone starts building luxury apartments on their land, the prices of such apartments would depreciate to the extent that it would not be beyond the reach of average people. Of course such a scenario is unlikely, because no developer would be so stupid as to build “luxury apartments” willy nilly without considering real world factors.
The truth is “economists living in their abstract world” is an easy charge to make, and yet it is merely a trite cliche in reality. That might have been applicable if your knowledge of economics is limited to A’Level or University textbooks, but modern economics scholarship is far from being abstract or unrelated to the real world. Perhaps you might want to update yourself on the latest economics literature.
My assertion that “environmental philosophers” should not dabble in theoretical physics on the other hand, is at least based on real world facts. Would you be predisposed to trust a lawyer to perform open-heart surgery on you?
If the government were a private developer and only market priciples prevailed, everyone would be turned out of their HDB flats, and the land freed up would be put up to the highest bidder. Somehow, I don’t think public housing is going to win the bidding. It would probably be economically more efficient to build spacious luxury flats or perhaps casinos or recreational facilities for the global wealthy. Where would the workers live? How about Batam and JB? The point I’m trying to make here is that economics considers a land use efficient when it is of the highest value amongst the alternatives. Unfortunately, value is measured acording to willingness and ability to pay, rather than need, so no mattter how important and how willing to pay I am for a need, it matters little if I’m not able to pay to meet the need. Perhaps you should familiarise yourself with the literature on ecological economics to understand how narow and abstract conventional economics is. Start with the wikipedia entry, then move on to Herman Daly and Robert Costanza.
Even leaving out the point on entropy, the article from Partridge makes a number of arguments to rebut Julian Simon’s arguments. We are increasingly meeting our insatiable increasing short term consumer by displacing the increasing cost of doing so geographically as well as temporally. Certainly, we may have the ingenuity to live sustainably (maybe nuclear fusion will one day be a reality), but even the best solutions take time to be invented and implemented. In the meantime, we still need to learn to live within the limts of our natural resources. There is certainly enough to meet our needs, but not our greed. Economists suggest we do so efficiently, but I think we should do so equitably when equity and efficiency conflict.
To return to the point which started this exchange, human ingenuity is important an important resource, but not exclusively so. Human ingenuity needs must be complemented by matter and energy to meet human needs. Just as Singapore must not under-rate the importance of its human resources, it underrates the importance of its natural resources at its own peril.
joseph:
the wikipedia entries only summarize personal information.
firstly, I think you make an assumption that “highest value” is static. Why should it be more economically efficient to build casinos or spacious luxury flats or recreational facilities for the wealthy? You merely assert that these examples are the highest value use, but ultimately these are just your assumptions. I contend that the meaning of “highest value” changes all the time. You have to take into consideration supply and demand. Why would anyone want to build more luxury apartments if no one wants to buy them?
Furthermore, you also assume that the only reason private entities would ever consider selling is by charging the highest price per unit. Real-world facts run contrary to your assumption. Where there is intense competition between entities, prices fall. Profits do not merely take the form of highest price per unit, but can also be maximised by increasing total sales volume, and that can also be done by competing on price.
Additionally, you seem to have an overly optimistic view of HDB. Either you do not live in public housing, or you have never dealt with the buruaucratic muddle that is the HDB. I doubt that other Singaporeans hold such favourable views about the HDB as you do. You don’t need to be a private entity to turn people out of their homes.
You imply that private ownership of land is somehow immoral as it does not allow for people who have the need to access the good. My counter-argument is that it is immoral to think that just because you have a need you can coerce others to provide you access. I have yet to find an example in the world where ownership of all lands vest in the State, and the people are not oppressed or deprived of their natural liberty.
You seem very good at rejecting arguments because it’s not someone is not qualified to comment, or because it’s someone’s personal view. I assume that since you’re a lawyer or law student, I should therefore reject your personal views on economic issues outright without even bothering to consider their merits.
Can we at least agree that public housing is very unlikely to be the highest value land use if land could be freely bought and sold in an open market without social restrictions (including restrictions on foreign ownership)? If so, then , I suggest most Singaporeans would be outbid from their homes. So, the efficient solution would then be to move them to where land cojuld be cheaper - Batam perhaps?
I have nothing against the private ownership of land; what I do have a problem with is that land use should be determined purely by market forces. The truth of the matter is that there is no true private ownership of land in most developed societies. Owners may have a number of ownership rights, but one significant right - the right to determine land use either reserved to the State or at least co-exercised between State and owner. And fortunately, if we let market forces exclusively determine land use, we might in theory have economically efficient land use decisions, but even in theory, this would not leave many important social land use needs and the private needs of the poor unmet. It is true that where the State owns the land, people can also be oppressed and deprived of liberty, but I think that has more to do with the type of government than the fact of State ownership. In most societies, at least in most democratic societies, the government would be more accountable to society than private owners to meet socially important land use needs.
I don;t what you mean about the immorality of coercing others to providing me access to meet my needs. But isn’t private ownership equally a form of coercion on others to recognise the owner’s access too? While that is not immoral per se, it would be immoral if the owner inisted on excluding others even if it means that those excluded are thereby deprived from access to natural resources to meet their exxential needs (think Locke’s second proviso to the natural right to own land).
joseph:
I think I have been misunderstood. The premises of yours which I disagree with, I do so not because I think you are not qualified or because they are your personal views, but rather because they are assumptions. I have said so clearly that I think they are assumptions, and I think they are wrong because those assumptions are based on a static view of what constitutes value. My contention is that value is a dynamic concept which changes over time and with the changing needs of the people.
I don’t look at housing in terms of public or non-public. Housing is housing. The only reason why housing becomes public is because the landlord is the government. The question then should be rephrased: is government provision of housing more beneficial to Singaporeans than private? My answer is no.
when you say Singaporeans would be outbid from their homes, what do you actually mean? Do you mean to say that poor Singaporeans competing with rich interests to buy land? If you do, then my question is, who are they buying from?
I think you have mistakenly looked at the question of ownership purely from the perspective that only rich people own land and poor people do not. The fact is that one of the greatest levellers of wealth is home ownership. The unfortunate fact for Singaporeans is that since the vast majority of Singaporeans do not, and cannot, own their own homes, their wealth is dissipated in the form of eternal payments to Singapore’s largest landlord. You know who I’m talking about.
If people owned their own homes, they would be free to buy and sell their homes and/or land, and capture the full value of that transaction, thus be able to escape from the poverty trap.
I think you would be hard pressed to find any democratic society in which the State owned 95% of the land in the country.
I’m aware that this discussion is becoming off-topic because it started out being about whether human ingenuity has the one and only resource, but since you, the blog owner don’t mind, it’s fine with me too.
OK, jsome clarification first. In the first paragraph of my earlier post, I was referring to your fondness for dismissing arguments (eg on entropy, and then on the Wikipedia entry ecological economics). I am merely noting that going by your stated reasons for rejecting such arguments, no one should take your views on economic issues seriously.
I think I’m also being misunderstood. To clarify my viewpoint. it’s not really about ownership in general, but how land use should be determined (and along with that also natural resource use) that I’m talking about. In particular, I am in favour of land use being decided through politcally accountable means rather than through market forces because although the market may allocate land use efficiently (in eoconomic terms), the market is blind to the equitability of the distribution whereas most democratic government should at least be better at being equitable and socially sensitive than markets. So even if the government owns the land, I still have a problem if it determines land use according to which is the highest economically valued land use rather than take social needs and the essential needs of the poor (eg basic housing) into consideration. The question then is which is a better way to determine land use, privately through open market, or publicly through politically accountable regulations.
The point about public housing is an example. If land use were determined by market forces, there would not be any housing for the poor whose need cannot be translated into effective market demand because they are too poor (this is what I mean by public housing - sorry if I confused you into thinking that I was referring to housing owned by the government) because while shelter is important, it is unlikely that the poor are going to be able to pay a higher price to buy the land from whoever owns the land if land use is determined purely by market forces (with no restriction on foreign ownership). You say that one of the great levellers of wealth is home ownership - I agree. But do you think that the poor would be able to own their homes in land scarce Singapore if land use were determined purely by market forces (with no exclusion of foreign ownership)? I suggest not. So I take it then, that you think it’s great that land should be set aside for home ownership for the very poor even there are economically more valuable uses to which the land can be put,
joseph:
I think we disagree on the mechanisms to achieve equitability. Your assertion is that government action will create just outcomes, whereas I believe that state action is inherently oppressive, and that only market forces will create just outcomes. On this point, I don’t think we can ever come to any agreement, as we have very different perspectives.
On the issue of home ownership however, I think we might have a little bit of common ground. I don’t actually think that there should be land set aside for the poor per se, as such restrictions on land use merely creates the same kinds of situation as state ownership of land. If poor people are not allowed to sell their homes for large amounts of money, then how will they ever capture the wealth from home ownership?
My argument is more along the lines of the INITIAL distribution of land should be apportioned from the State to the poor. And then thereafter, it would be up to the poor to decide for themselves how they wish to deal with the land: live in it, improve upon it, sell it or whatever they wish.
I would like to add that long ago before nationhood, much of the land in Singapore is privately owned, and majority of these owners were our poor ancestors who came here in search of a better life. They settled on unused or unowned land, lived on it, and cultivated it in their own way. The greatest travesty came when the State compulsorily acquired those lands at values below what they would have obtained from private transactions. After that, they were all bundled into leasehold HDB apartments.
This is the story of public housing.
Again, I have no problems with who ‘owns’ the land as long as land use is not exclusively determined by the land ‘owner’ for personal gain, but through socisally accountable regulation.
As an aside, what puzzles me is why a hard-core econmic-minded person like yourself would approve of the State initially distributing land to the poor and fragmenting it in this way - why do you not advocate that the State do the economically rational thing and sell it to the highest international bidder?
We must have been learning a different history. I learnt that long ago, when Singapore became a British colony, the Crown owned all the land, but the East India Company was the de facto owner and started giving out (presumably for consideration) freehold titles. So if your ancestor was one of the first few settlors who bought the land cheap then sold it for a profit, good for you. But later migrants would not have been able to afford housing ownership if not for these compulsory acquisitions at below market values and subsequent setting aside for low-income housing.
joseph:
I believe my version of history to be correct. As a British colony there was no registration system of land ownership (which was a later Australian innovation), and ownership was proven by title deeds, as you noted. What happens is that as much as EIC transacted freehold titles for consideration, any squatters living in the non-developed areas of Singapore were entitled to claim adverse possession against the EIC after living on that land for 12 years. And believe me, there were many many such families living in the ulu regions of Singapore. The few who were lucky enough to know the law, or have the advice of someone who did, successfuly claimed titles from the British colonial government.
I actually obtained my version of history by speaking to many old people. This is what i call “economics in the field”. Practical rather than abstract, you know?
Speaking of which, my ancestors actually were pig-farmers living in Jurong who had their land compulsorily acquired, and then bundled off to live in HDB. Keep in mind that the compulsory acquisition scheme did not compensate for the land in those days, only for fixtures built and any crop cultivation or livestock. That should answer your question as to whether they profited from the land.
The implication from your question clearly shows you to have a misunderstanding about economics. Economics is not about being evil or treating people badly. Economics is about “soft hearts, hard heads”. I care about people and society, I just disagree that state action is the way to solve problems. The reason why I believe in redistributing the land to the poor, and letting them transact freely, is because I find the notion of the government profiting from land sales to be repugnant. Rational self-interest should be the province of individuals, and not governments. If anything, governments should never be allowed make profits, nor to act in its self-interest.
Thanlk you for your history lesson. I think it is true that there were gainers and losers in the compulsory and acquisition scheme. If not for the scheme, which acquired land compulsorily at below market prices, many of the schemes for social benefits could not have been realised. My father came from Malaysia, and rented a room until he cojuld finally afford a 3 room HDB flat (some years after after marriage). So I think, if not for this scheme which caused your parents to lose out in the process, my parents would have had to wait a lot longer before owning their own property. This may not have been an efficient use of land, but whether this was an equitablle or wise use of land, that’s at least debateable.
As you point out, economics is amoral. I too disagree with many State actions, but I have an even dimmer view of economics and the market as an amoral means of solving many social problems. Whereas, the State is at least obliged in theory to take into account social and equity concerns, the market has absolutely no such obligation.
Whether or not goivernments should act in the self interest or in the people’s interest, I believe an economist would agree that a government should act rationally, and I’m guessing that selling land at a subsidy or worse, giving it away cannot be considered rational (economically speaking) whether from a self-interest or people’s interest point of view. The economic thing to do must be to put land to the highest valued land use as determined by the highest offer for the land from a prospective buyer. The underlying rationale here is not profit, but efficiency.
joseph:
I still disagree with you that a free market in land would necessarily mean house prices beyond the reach of poor people. The fact that you acknowledge that there are gainers and losers in such expropriation also means that you see how redistrubtive actions always end up zero-sum in outcome: someone must lose in order for someone else to gain. Even worse, the State will always find some way to benefit at the people’s expense: your father might be able to afford to “buy” a HDB flat, but the fact is that it will never really be his, or your family’s.
I think the perspective should not be from one of obligations. In theory the State is obliged to do certain things, but in fact and practice that is seldom the case. Think of it this way: in a free market, participants people transact with each other out of free will, business only survive and prosper when they give people what they want, those which fail to do so will fail and disappear. Conversely, governments face no such constraints: States possess coercive power that no other private actors posses, they have the means to entrench their power, and the power to ensure their own continuity. Obligations without enforceability has no meaning.
I also thank perhaps you might not have seen my point about rational self-interest. Rational self-interest is about individuals, not governments nor any other organisations. Remember that a government’s only source of revenue is taxation. A rational government would tax people as far as possible to maximise revenue, while not too much to the extent where they kill their golden goose. As such, a rational government is anathema. We do not want a rational government, we want a government that would govern in our best interests.
How can that happen however? It can only happen when they are accountable to us. How can they be accountable to us? By the ballot box. The question however, is how can they be accountable to us by the ballot box, when they control the land we live on, the homes we live in, the amount of wages we are paid, the information we receive, etc etc almost every single thing in our lives?
I don’t know if I can get my point across to you, but I hope you see this. Democracy has no hope, and governments cannot be accountable, if private property rights are not safeguarded, and a free market be allowed to constrain the power of governments.
Han: Letting the economy work purely based on free-market concepts does not work. That mechanism is not perfect, and has some negative effects. Hence the reason why government intervention and regulation is still required from time to time. Also why there aren’t any country which operate their economies purely based on libertarianism principles.
Go social democracy!
Hi,
I am not sure why you use the phrase “Malthusian” in your post.
The Malthusian growth model suggests that population growth, which is exponential, would exceed that of the resources necessary to support it, its growth being linear, and would therefore place a limit on growth.
However, while the post is primarily about the latter, there is no mention of how it relates to population growth. Furthermore, some complications in using the term may arise in treating population itself as a resource.
Care to elaborate (could you just drop me a msg on my site to let me know you’ve replied, thanks)?
k:
When you say “treating population itself as a resource”, you have indicated to me that you have not understood the main thrust of my post.
My post is not about treating people as a resource: my point is about not treating people as anything at all.
We must move away from an instrumentalist view of what “resource” actually is, and recognise that only when people are allowed to truly determine for themselves what they want to do without some meddling bureaucrat meddling in their decisions, can human ingenuity and creativity truly flourish.
By your language, it suggests to me that you are still looking at the issue from the perspective of the government, when my point is about removing government from the picture altogether.
Hi,
You mentioned that:
” Malthusian absurdity which I would like to debunk today. It is called
“Singapore has no natural resources, and the only thing we have is people, therefore we must make full use of our human resource”
The use of the term “Malthusian” was directed at “human resource”, and has no bearing on your main point. What I was querying you about was the use of the term Malthusian, which I would like you to elaborate upon regarding its use in calling “human resource” a “Malthusian absurdity”.
My reply was not about your main point, but rather to clarify the use of certain economic terms.
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