TL;DR – What you need to know in 3 minutes.
Did you know?
Singapore’s political rockstar met the love of his life, Jane Yumiko Ittogi, a lawyer of Chinese-Japanese heritage, at his alma mater.
OK, now that we get that little lovey-dovey tidbit out of the way… (More about DPM and his family here.)
So DPM Tharman was recently back in his alma mater, the London School of Economics and Political Science (aka LSE). He wasn’t just there to reminisce his university days. While he was there, he gave a lecture about Inclusive Prosperity. He explained what he thought was inclusive prosperity and why we need it.
Lack of inclusive prosperity led to “shocks” of 2016
While those two events may have been shocking when they happened, if we looked at the social and economic undertows in USA and UK, we shouldn’t have been surprised. What are these undertows?
The three undertows that led to the great rifts of today
DPM Tharman highlighted three.
Firstly, the economic conditions have deteriorated. Middle class incomes in much of advanced world have stagnated. Joblessness, particularly amongst the young, is rising. A surprisingly large number of young in Europe are on the outside looking in. Even in the USA, which had seen the best recovery from the global financial crisis, significant numbers of people drop out from labour force.
Secondly, social mobility has slowed in much of the advanced world. In USA, during the 80s, 90% of mid-30s had higher incomes than their parents when they were in their mid-30sld. Today, only half mid-30s individuals in the USA have higher incomes than their parents have in their mid-30s. In the industrial mid-west, where the votes swung the most in favour of Trump, that proportion is less than half. Going backward is the norm.
That is absolute mobility, where this generation is compared to their parents. Relative mobility is also important. That is the reshuffling that takes place at each generation. It’s the belief that where you are shouldn’t determine where you end up in life. Relative social mobility, the fluidity in society, is important in preserving a sense of fairness. The relative social mobility is, as DPM Tharman put it, “stubbornly low”.
The combination of these first two undertows – the stagnation of middle class incomes and the stubbornly low social mobility – is a potent mix. It gives people a sense that the system isn’t fair.
As if that’s not bad enough, there’s a third undertow that exacerbates the problem. And that is the erosion of sense of togetherness in society.
In advanced world in 50s and early 60s, there’s a prevalent sense of “we”. Today, it’s “them” versus “us”. And it’s no longer just the convenient divisions of economic class. Now it’s the whole multitude of divisions: rural versus urban, more educated versus less educated, conservative in social values versus more cosmopolitan.
The erosion of the sense of togetherness is further compounded by two factors. First, multiculturalism in traditional form hasn’t worked out well. Unexpectedly, children of the immigrants, feel more alienated than their parents. Second, religious strife has been globalized.
These three undertows have led to great rifts in the advanced world.
The downfall of the political centre as a result of these rifts
As a result of these great rifts, we now see a loss of trust in traditional politics and in government, and in particular a weakening of the centre in politics. As DPM Tharman said:
“More perniciously, the parties of the centre are chasing the shadows of the populist extremes, in order to stay alive in politics”
This decline didn’t just happen over the last year.
Political scientists trace the decline in trust back to the 1960s during what was called the cultural wars. Last year was the culmination of that long decline and loss of trust. Voter apathy is an expression of that. In the last US election, 45% of voters didn’t vote. A greater percentage of Britains voted in Brexit, but amongst the young, it was relatively low.
DPM Tharman didn’t say it, but we got a sense that if these rifts were allowed to grow, it would rip society asunder. While a large country like USA may be able to recover from these rifts, a small nation like Singapore won’t. That’s why it’s so important that we pursue inclusive prosperity.
How so? And what exactly is inclusive prosperity? We think that DPM Tharman gave the best description of what inclusive growth and prosperity is.
Inclusive prosperity is…
According to DPM Tharman, it is
“… about individual effort, hard work, thrift, responsibility of the family, but also collective support, so that we are protected from the vagaries of life. The core values were always about personal and family responsibility. And it’s on that foundation that we now need a lot more activism on the part of the state and partnerships between the state, civil society, business enterprises, unions, and a range of other groups of individuals to breathe life into this new compact. Left on their own, individuals will find it hard to cope and to erase the deficits that they start life with, the disadvantages of life that they start with…
And the true hope comes form enabling individuals to develop their capabilities to the maximum and as much as possible to reduce the disadvantages that they start off with. That has to be the spirit that has pervade our politics – help those who start with less to achieve the most in life and help everyone to contribute to the public good through their own abilities and effort. That is a truly inclusive society.”
Only by doing what’s needed to bring about inclusive prosperity can we revitalize the politics of the broad centre, heal the rifts of society, and bring back a sense of togetherness. For a small nation like Singapore, that’s the only way we can continue to survive and thrive.
Click here for the four strategies DPM Tharman needs Singapore needs to achieve inclusive prosperity.