Over the past half century, the tiny city-state of Singapore has developed arguably the most successful formula for growth and social uplift on the planet. Like the famous Singapore sling — a tropical cocktail blending gin, grenadine, sweet and sour mix, cherry brandy and club soda — the city’s mandarins created the perfect recipe for rapid economic growth by combining its strategic location and hard-driving, largely Chinese population, with first-class infrastructure, a relentlessly improved local workforce and an opportunistic immigration policy designed to fill gaps in the labor pool.
These policies turned what could have become just another steamy, racially divided, corrupt and crime-ridden Third World metropolis into a modern-day Venice with a stunning skyline, a per capita GDP higher than the U.S. and EU, and one of the world’s best-educated and disciplined workforces. It is a burgeoning financial center that in a recent survey, ranked fourth on the planet ahead of such self-important places as Tokyo, Chicago and Toronto. It stands fifth in the amount of assets managed by institutional investors, ahead of much larger countriessuch as Japan, Great Britain and Brazil.
Yet as Singapore approaches its 50th year of independence in 2015, the strategy that worked so well, so long, may have reached its expiration date. In the place of a once swaggering self-assurance, many Singaporeans have turned decidedly negative. In a 2011 Gallup survey, the percentage of city residents who things would be worse in five years was among the highest in the world, along with such more understandable countries as Greece, Italy, Syria and Spain.
Some ascribe these attitudes to traditional Chinese fatalism — particularly among those living in the diaspora — but China itself was not high on the pessimist list, and, for the most part, as Pew suggests, Asian immigrants to the United States, an increasingly Chinese-dominated group, are actually more optimistic about the future than most Americans.
Economics may be part of the explanation behind this growing negativity. GDP growth continues to chug along at 5% per annum — something the U.S. and the EU would die for — but real wages for ordinary Singaporeans have stagnated. From 1998 to 2008, the income of the bottom 20% of households dropped an average of 2.7% while the salaries of the richest 20% rose by more than half. Real median income for the middle class rose 11% from 2001 to 2010.
By contrast, between the 1970s and 2000, incomes doubled or better every decade.
The growing income equality is particularly troubling in a country that under the brilliant leadership of legendary Prime Minister Lee Kuan Yew and his People’s Action Party, combined a meritocratic mentality with a powerful commitment to social democracy.
To be sure, Singaporean living standards remain very high by Asian standards, even for those toward the bottom of the social order. Largely through the efforts of the state-owned Housing Development Board the vast majority of Singaporeans live in clean apartments, spacious by Asian urban standards, which they also own.
Yet structural changes in the economy, notably the growth of financial services, could accelerate the growth of inequality. Financial centers tend to have vast disparities in wealth (see New York and London). This gap may be furthered by the rising importance of tourism, where the city ranks fifth in the world behind New York, London, Paris and Bangkok. Add to this gaming — the city is about to pass Las Vegas — and you see a rise of both high-rollers and lower paid hospitality jobs.
Then there’s city-state’s paramount problem: its plunging fertility. Three decades ago Lee and his PAP were rightly concerned about the city’s overpopulation. Now the big problem is a rock-bottom low birthrate — with a fertility rate under 1.2 – barely half that necessary to replace the current population, which threatens to turn this ultra-dynamic city state into a giant old-age home.
The reasons for this plunge, according to demographer Gavin Jones at the National University of Singapore, lie largely in such things as long working hours and ever-rising housing costs, something that has been boosted by foreign purchases of private residences. With large apartments increasingly expensive, Singaporeans, particularly those with children, often think of emigrating to less expensive or at least roomier places such as the United States, Australia and New Zealand. One recent survey estimated that over half of Singaporeans want to migrate; the World Bank estimates upward of 300,000 Singaporeans have moved abroad, accounting for almost one in 10 citizens.
This emigration is taking place just as Singapore has turned increasingly to foreign workers to keep the economy humming, ranging from the relatively unskilled from neighboring countries and South Asia to some of the world’s most talented academic, technical and financial experts. Since 1970 the percentage of Singaporean citizens among the residential population has dropped from 90% to barely 63% today.
The growing immigrant presence has sparked some unease among Singaporeans. Some fear their city is evolving into what is sometimes called a “Hotel Singapore,” dominated by globalized culture, with its predictable glitzy panoply of shops, iconic structures and global restaurant brands. This reflects pressure in cities to conform to what the Dutch architect Rem Koolhass calls “a larger and seemingly universal style” whose impact on local culture he compares to “the disappearance of a spoken language.”
Fears of untrammeled globalization have been stoked by a recent government report, “A Sustainable Population for a Dynamic Singapore,” that suggested, in the name of global competiveness, that Singapore’s population expand to 7 million from its current five by 2030. Many natives saw this proposal, which relies heavily on immigrants, as a direct threat to their quality of life and job prospects . With 5.3 million people crammed onto an island of only 714.3 square kilometers, occasional flooding and train breakdowns, it is unsurprising that many feel the city-state is already crowded enough.
These factors are sparking, for the first time in decades, something approaching political conflict. In 2011, the opposition won six seats in Parliament, the most since independence in 1965. The ruling party’s share of the vote dropped from 75% in 2001 to barely 60%.
Most Singaporeans admire the accomplishments of the PAP, and the generally successful outcomes of its policies , but clearly there is a desire for a change of direction. How Singapore addresses these problems is important not just for the city-state, or even Asia, but the entire world. The Singaporean model remains an inspiration to city-builders , and how it meets its contemporary challenges could prove critical in an age where the majority of people live in urban areas.
The first step for Singapore’s reinvention lies with recognizing the seriousness of its challenges. The policies of the past may have worked impressively, but may not be as appropriate in the future. As my old Japanese sensei Jiro Tokuyama once noted: the hardest thing to do is how to unlearn the secrets of your past success. The ingredients in the cocktail that is Singapore need to be tweaked for a new era.
Fortunately, Singapore enjoys the social cohesion, the human capital, and capable leadership to make the necessary changes. One key element relates to focusing on how to nurture families once again, and to recapture that sense of Singaporean-ness that makes the place so special. It is not so much a matter of financial incentives — these have not worked — as in controlling housing costs, expanding space for families, and most importantly, finding better ways to balance life and work.
Already some initial steps to humanize the metropolis are taking place. These include a remarkable expansion and improvement of green space, and attempts to decentralize work around the newer state housing estates and commercial developments. Steps to increase the size of apartments, repurpose aging shopping and office structure for housing as well as encouraging more home-based work could also prove helpful. These changes will be critical if the world’s most successful city wants to remain so in the decades ahead.
Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared at Forbes.
Singapore skyline photo by Bigstockphoto.com.