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Singapore’s addiction to population growth

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Published : 2013-02-18 19:38
Updated : 2013-02-18 19:38

Singaporeans are raring to do something extraordinary: protest.

That might not seem like a big deal with the Arab Spring uprisings; Chinese journalists taking to the streets; and thousands of typically docile Japanese rallying against government policies. But tropical Singapore is the land of quiet brooding, where mass street demonstrations are as common as snowstorms.

What has people so riled up? Well, people. The impetus for the Feb. 16 march is a report that the tiny island’s population may rise by as much as 30 percent to 6.9 million by 2030. This seems to be the government’s answer to the question of how to sustain prosperity in one of the most crowded and expensive cities in the world.

The signs of overcrowding and urban stress are palpable to any visitor. Prices are surging, public services in a nation famed for nanny-state tendencies are slipping and some of the finest infrastructure anywhere is buckling under the strain. Locals blame the influx of immigrants, which Prime Minister Lee Hsien Loong’s ruling party touts as one key to Singapore’s success in the years to come.

The city-state, with about half the area of New York City, has 3.3 million citizens and 2 million foreign residents, many of whom have contributed greatly to Singapore’s growth in finance and construction. Yet complaints that overseas workers deprive locals of jobs and drive up housing prices fill the air. Singapore is the third-most-expensive Asian city and ranks as the sixth most costly in the world, according to an Economist Intelligence Unit ranking of 131 cities.

Singapore may well serve as a case study for what happens when leaders try to offset slowing economic growth with immigration and increased birth rates. There are lessons that Japan or Italy would do well to study. All of it is turning into a political liability for Lee, the son of Lee Kuan Yew, who is regarded as the father of modern Singapore.

The erosion in his party’s popularity is accelerating after the release Jan. 29 of a white paper that contained the 6.9 million figure, which it calls a projection, not a goal. Lee Hsien Loong has since said the number of people will be “significantly” lower than the report suggests. Will Singaporeans buy that?

“The new population policy is anti-Singaporean and it threatens our existence and livelihoods,” says Gilbert Goh, 51, an advocate for unemployed citizens and an organizer of a protest planned for this week.

Sadly, some of the rants one reads in the media and online veer toward xenophobia. If Singaporeans are so livid, they should stop supporting Lee’s party. After all, isn’t the government, by seeking to import more human capital, telling its own people that they lack the skills to compete? Anyone who doubts Singapore is serious only has to look at accelerating efforts to reclaim land from the sea for development, giving the city the room for population growth.

The real question, as public angst rises, is whether the opposition is justified. Former United Nations demographer Joseph Chamie says it is. To Chamie, the view that it’s almost always better to have more and more people is the human equivalent of what Bernard Madoff did with money, something he calls “Ponzi demography.”

The human-pyramid scheme works like this: Population growth, either through births or immigration, boosts demand for goods and services, increases borrowing, boosts tax revenue and adds to corporate profits. Everything seems grand and leaders take a bow. It’s a bubble, though, and it eventually bursts when population growth stalls. Incomes top out, high debt crushes consumption and investment, the need for public assistance rises, environmental degradation increases and angry people take to the streets.

As households are left to pick up the tab once Ponzi demography runs its course, government leaders issue dire warnings about economic decline if the flow of fresh talent stops. This will sound familiar to Singaporeans as Lee’s People’s Action Party sketches out a dystopian future without adding wealthy bankers and low-income workers to the nation’s ranks.

Singapore needs to find another way. The era of easy growth is over. Just as economies such as Japan and South Korea are seeing the limits of their export-led models, Singapore’s formula has run its course. Raising the productivity of its current workforce would be more potent for a developed, open economy looking to compete in a region dominated by the cheap labor and manufacturing of China and India. Singapore should focus as much energy on incentives for its existing residents to innovate and start new businesses as on adding more bodies.

Not only is Singapore toying with liberalized immigration, it’s also revving up a campaign to persuade Singaporeans to wed younger and reproduce. It is an odd push for Lee. Four decades ago, concern about overpopulation prompted his father to urge a delay in nuptials and to have smaller families. Today, amid a birthrate of about 1.3 children per woman, efforts to encourage bigger families border on the offensive. Just check a new website, “Hey Baby.”

Singapore’s addiction to population growth sends a simple and disconcerting message: The country has run out of ideas to increase economic vitality, aside from encouraging people to procreate or immigrate. Ponzi demography, indeed. 

By William Pesek

William Pesek is a Bloomberg View columnist. The opinions expressed are his own. ― Ed.

(Bloomberg)

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