The debate about the role of Capitalism in our modern economy has become increasingly heated in recent years as critics on left continue to blame it for numerous problems such as increasing inequality, Environmental degradation, Corruption and many other ills, while those on the right have rejected its globalist side claiming that the cause of their economic decline has been Globalization while still keeping its populist side by also blaming regulations.
A look at the data for average income levels that those critics have some justification, the mantra that a rising tide lift’s all boats has been proven increasing hollow and should perhaps be renamed a rising tide sinks per boats, as the income for the bottom 20% of Americans has remained less than it’s value then at the start of the millennium while the income of the richest has recovered to record levels
Average income for almost everyone has at best stagnated for upper-middle class and at worst declined for the poor. The rich who make their fortune via capital have seen their wealth skyrocket as Stock-market and the value of other investment assets have more than recovered from their pre-2008 levels. This, however, doesn’t have to be the case let’s journey to the sunny island of Singapore and take a look at how their capitalist economy is fairing
We can truly see that a rising tide has lifted all boats here as the income of all groups have continued to rise despite doing so at different paces, while it’s obvious that the top 10% has been the main beneficiary of the growth, all quintiles have continued to rise especially the middle-class which has seen their come increase more than 40% since 2000 unlike in America where it has remained stagnant. The poor have also benefits albeit not as much as they should in a booming economy have seen their wages rise 34%. On the face of it comparing a city such as Singapore to a place as huge as the United States might seem a little silly but there quite a few similarities between Singapore and the rust-belt
Singapore used to be a manufacturing powerhouse having been one of the largest builders of Hard-drives and other electronics in the region but manufacturing has shrunk as industries moved overseas due to high labour costs. In America if an industry was moving out, local politicians would have run to the owners asking him his reasons for leaving, Perhaps he would have gotten a sweat-heart deal with low taxes which is little more than corruption as it gives him a huge advantage over the competition or the creation of a protectionist tariff. In contrast, when Singapore First Prime Minister Lee Kuan Yew was considering removing the protections tariffs on the car industry, A factory manager approached him and said that the factory would close if the tariffs were removed, The prime minister then berated the manager for trying to rent-seek from the economy and told him to close the factory. Instead, we looked for new industries instead of trying to retake old ones,
Instead, Singapore looked for new industries instead of trying to retake old ones, manufacturing might have left but we turned ourselves into a business centre for the region having headquarters of thousands of companies. We created one of the largest financial hubs in the world by having a consistent set of regulation, we had low taxes not just for a few companies but for every company. We had low regulations but they were subject to consistent enforcementAmericae america where the regulaition enforcment is often haphazard even at the best of times.
Singapore never embraced capitalism as a religion unlike so many in America, it was alway nothing more than a useful tool when government interference and companies were required there was never any hesitation to get involved. The provision of non-luxury housing is something that almost all big cites have struggled with yet Singapore was able to solve it long before they started having problem. There was no need for band-aids like regulation such as a requirement to build affordable housing or something similar, instead, the government simply bought most of the land and built the housing themselves which it then subsidised the purchase off.
While San-Francisco and other cities struggle with the problem of balancing the economic value of luxury housing with the provision of affordable housing due to a governmental paralysis preventing it from taking any deceive change to the status-quo. America need to relearn how to be pragmatic with economic and regulations. Capitalism isn’t the cause of Americas ill’s, it’s simply the scape-goat for Americas poor excution of economic policies