Amen of the Week:
“America is not on the decline… Why do I believe in the long-term success of the US?… Every year, thousands of bright and restless immigrants are allowed into America, settle and become successful in various fields. These immigrants are innovative and usually more adventurous, or they would not have left their own countries. They provide a constant source of new ideas and bring about a certain ferment within American society, a buzz that you will not find in China. America would be far less successful without them…. Because the US is able to embrace these immigrants, help them integrate and offer them an equal chance of realizing the American dream, there is a continuous inflow of talent that contributes, in turn, to the creation of new technology, new products and new methods of doing business… That is why I am in favour of sending (Singaporean) students on scholarships to Britain instead, because I am sure they will come back.”
- Lee Kuan Yew, Former PM of Singapore
(from One Man's View of the World by Lee Kuan Yew, 2013)
This week I’m in Singapore. On my ride from the airport, I was surprised to see that this place looks and feels even richer than four years ago on my last visit. The state of a country's public restrooms is, in my mind, the perfect measure for how advanced a society is. On this score, Singapore makes America look decidedly third world. Airport bathrooms have touchscreen monitors that allow you to rate their cleanliness. How’s that for customer service and accountability?
Given my recent focus on great founders, I thought it appropriate to dedicate this week’s note to the founder of modern Singapore, former PM Lee Kuan Yew (aka “LKY”). Under LKY’s iron fist leadership, Singapore rose from a tiny third-world country in the 1950’s to become one of the world’s wealthiest, most sophisticated first-world countries. It’s a misnomer to call Singapore “emerging”. It has decidedly emerged.
Now is an interesting time to visit the place. LKY passed away earlier this year, and Singapore held the first elections in his absence this past Friday. It was a resounding endorsement for LKY’s party, now led by LKY’s son, who my friends say is even more popular than his father.
LKY’s legacy is a study in paradox. Despite his notorious restrictions on freedom of speech (not to mention, the freedom to chew gum), my conversations with cab drivers and friends here elicited only genuine respect, if not adoration, for LKY. Last week’s election certainly reflected this. This support surely perplexes many Western outsiders, though a visit to the country helps open your eyes to the seduction of LKY’s pitch. It’s like Disneyland – complete with a ferris wheel. These are not dumb people being repressed in a Banana Republic. Singapore oozes sophistication and prosperity. But again, there is paradox. My Uber driver explained, “LKY was a great, great man. But he was evil. Those who stood in his way disappeared. But that’s what he had to do to get things done and make Singapore great. Just look around you.”
What can we, as investors, learn from Singapore’s smashing success? Four things come to mind:
People matter.. A lot. When LKY took power in the 1950s, Singapore was a country with no natural resources and a very poor, uneducated population. One strong leader led it from third-world to first-world within a single generation. Investors often underestimate how much value a leader can create (or destroy).
Our biases can blind us. Had I been an investor in the ’60s and ’70s reading of LKY’s autocratic, very un-Western approach, I would have likely doomed him to failure. My political/philosophical hard-wiring would have prevented me from conceiving that Singapore was on course to become the world’s third richest country per capita (America is sixth), with a lower infant mortality rate and longer life expectancy than the US’s.
Bad stuff may not be bad enough to matter. Some of LKY’s policies were contrary to what worked for the US, and no doubt, these hampered Singapore's progress. Yet, many of his policies were completely consistent with those that made America successful. For instance, Singapore has low taxes and is ranked among the highest globally on the economic freedom index. Singapore, as with many investments, had negatives that could have distracted us from the positives that ultimately mattered.
You have to see it for yourself. Field research matters. The only way to "get" Singapore - or anything - is to go see it for yourself. You'll never truly understand a place/person/company without experiencing it up close with your own eyes and ears.
Yours in the Field,
Frank Byrd, CFA
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