DPM Tharman provided four strategies to achieve inclusive prosperity

By February 22, 2017Current

TL;DR – Probably the most insightful thing you’ll read today.

We had earlier written about what DPM Tharman thinks inclusive prosperity is and why Singapore needs it.

In the same speech that DPM Tharman gave at London School of Economics and Political Science (aka LSE), he pointed emphasised that current strategies won’t work. Instead, DPM Tharman provided four strategies for countries to achieve inclusive prosperity.

It’s a very long speech, over an hour long, but an important one. It lets us in on the thinking process of the Government, what challenges it thinks we face, and how it intends to bring Singapore onward.

If you cannot spare the time to watch the speech in full, please at least read this.

Current strategies won’t work

DPM Tharman explained that both market fundamentalism and the traditional strategies of the left won’t allow countries to achieve inclusive prosperity.


Firstly, market fundamentalism. Left to the market, problems aren’t only stubborn, they tend to multiply. Economists have explanations for this.

Take joblessness as an example. Once people lose their job, if they don’t get job quickly, they lose their skills, or employers feel they have lost their skills. It makes it even more difficult for them to get a job, setting them down a vicious cycle. Economists call this hysteresis. And hysteresis contributes the faster rate of increase in joblessness. This is a consequence of market fundamentalism.

And it’s not just the economic market.

Fundamentalism in the social market also results in stubbornness and multiplication of problems. The invisible hand of social culture is as powerful as the invisible hand of the market. Left to market, the advantages and disadvantages that you start off with tend to multiply. As a result, people tend to segregate over time.

Likewise, traditional strategies of the left aren’t going to work either. Traditional social democracies, which is what has characterised the centre left in Europe and the advanced world, are tired and not going to rekindle hope. The social democratic model has evolved in the direction of redistribution as a means of mitigating the inequalities of the market.

However, that hasn’t helped very much in broadening of opportunities before the redistribution kicks in. This traps a significant segment of people in a situation of dependence on the state. It also puts immense strain on the state. It’s unsustainable, and doesn’t work.

Given the failure of market fundamentalism and the growing irrelevance of the old social democracies, we need new strategies and ethos in politics. DPM Tharman suggested that states should be focussed on these three critical objectives:

  • Fostering social mobility and opportunities for all, so that people are able to earn their own success
  • Regenerating individuals, neighbourhoods and towns, not just redistribution
  • Actively integrating people, particularly in multi-ethnic societies

To achieve these objectives, DPM Tharman suggested four strategies:

  • Education
  • Increasing innovation and the quality of jobs
  • Constantly regenerating housing and neighbourhoods
  • Staying open economically

1. Education

Education is the most fundamental economic and social strategy. It is the most fundamental way which we can revitalise social mobility. And it’s not just the formal education that we have come to know.

DPM Tharman was emphatic that we should intervene early in a child’s life to reduce deficits people can be born with. Why?

Because early intervention has long term benefits on cognitive and non-cognitive skills needed to do well later in life, in the job market, in society, and in bringing up families. That’s why DPM Tharman emphasised:

“All over the world, we have to focus on this area of public policy – early interventions, without the convenience of schools, but having to work in communities and work in families, doing it in a way that isn’t so intrusive and doesn’t remove the dignity that parents want to have in bringing up their children. But we have to intervene more actively to ameliorate the deficits that one can be born with.”

Of course, schools are still important.

However, traditional school systems must balance the tension between differentiation and uniformity. Strategies that focus on the form of egalitarianism, where everyone studies the same thing at the same pace with the same curriculum, tend to have very in-egalitarian outcomes. Too large a proportion of students who drop out or leave school with nothing in their hand. Not a good strategy for equity.

On the other hand, too much differentiation if its too early also risky. It creates sense of elitism. So we have to be careful about that balance. But we must be willing to differentiate so that education can be tailored to each child’s starting abilities, deficits that need to be closed, the ability to follow a pace of learning that they find comfortable to follow.

We need to accept the fact that if we want to develop everyone’s potential, we will need some customisation. It’s fairer to them, and they leave school with something real in their heads and a certain self-confidence that they can go on in life.

But beyond any structural changes, the most important determinant of the quality of an education system is the quality of its teachers. That’s why DPM Tharman stressed that it’s paramount to get it right policies on how you recruit, how you reward, how you develop teachers in their careers, how you promote based on performance.

Lastly, DPM Tharman thinks that we need to move away from the over-academisation of tertiary education. All over the world, there’s been this mindless trudging in the direction of a academic college education that is not suited to individual abilities and to maximising abilities and not suited to the needs of even the most modern societies. In USA, 45% don’t complete college education, and 45% of those who complete get jobs that don’t require a college degree.

That is wasteful both to family resources and state resources. And inequitable. It’s not the best way to develop individual potential. Some people are suited to it. But we have to redress that bias and move toward a system where there’s a better bridge between theoretical and real world learning, between the academic and the applied, maximises most individuals’ ability to learn and retain what they’ve learnt and prepare them for the jobs of the future.

2. Increasing innovation and the quality of jobs

DPM Tharman stressed that technology is not destroying all jobs. There are two stories.

The first is job polarisation. Jobs are created at the top and at the bottom. But the jobs in the middle are being eroded.

The other story is of the middle. A very large number of jobs in the middle that aren’t being taken up because individuals do not have the skills that employers want and employers aren’t investing in the skills that they need.

There’s a market failure. It’s a mismatch of supply and demand. The story of the middle is important.

Even in USA, a society that has moved furthest in the introduction of technologies in the workplace, there is no lack of middle-skilled, middle-income jobs. We have the urgent task and important work to do in filling these good quality middle-income jobs.

That means upgrading the skills of every worker and investing in people at different points in their lives, not just when they are young. All our systems are too front-loaded to the first 18 or 22 years of their lives. That’s the way it was. In the old days, you left school and you got a job. It no longer works.

Today, we have what’s called the paradox of skills. Employers need people with skills, not just paper qualifications. But every employer will tell you very honestly that skills don’t last very long either, because the half-life of technology has gotten shorter. The skills you had 10 years ago get depleted very quickly and you need new skills.

That’s the nature of the economy. It means we have to invest in people at regular points of their lives, not just when they are young. New infrastructure, new form of funding, new partnerships between state, educational institutions, private training providers, employers, unions, and individuals. It requires us to experiment with new forms of learning for people in their careers. Not matter of going of to do course in a university or polytechnic.

Instead, we need a whole range of options. In particular, nearness to job is a imperative.

In Stuttgart, DPM Tharman visited a firm that had a production line just for learning. It mimicked identically what a real-life production line was about. Experienced staff work with apprentices who start off knowing very little, but step by step, everyone can learn and pick up the skills required.

DPM Tharman asked the manager how they went about learning in addition to learning on the job. Apparently what they do is that they pull people out, pull teams of people small seminar rooms for bite-sized learning. Each “bite” is half an hour. And they immediately applied what they learnt. Such bite-sized learning, at the work place, at the community, and even at home, is what is needed.

Traditional social partnerships that were part of traditional social democracies – businesses and unions – need to be reinvented. Traditional bargaining relationship had to do with wages or preservation of jobs. Now have evolve to developing the skills of the future in every individual. As DPM Tharman put it:

“Tripartite relationship is real asset in helping working individuals prepare for the future, quite apart from the regular task of wage negotiations and so on. “

According to DPM Tharman, in Singapore, that is our single most important economic and social strategy – investing in people through their lives. It’s called SkillsFuture.

3. Constantly regenerating housing and neighbourhoods

DPM Tharman pointed out that how we shape up in education and in life depends not just on ourselves, and our family. To a large extent, it also depends on our society, the people we grew up with, the people we meet at the street corner, the people we go to school with. A whole set of influences, positive and negative, shape our aspirations, that allow us to escape what we start from.

That’s why neighbourhoods and housing matter.

That’s why Singapore has adopted a unique housing policy. It revolves around helping people own their homes. Singapore is a home ownership society. In bottom 20% of Singaporeans by incomes, 80% own their homes. This is possible because we give people a grant coming out of the government budget. Two-thirds of young individuals get a grant to buy a HDB flat once they get married.

This is a capital endowment that we give most Singaporeans. It’s a one-off capital endowment, and you own your home. DPM Tharman stressed that this creates a different ethos within the family and the neighbourhood.

Next, we design our neighbourhoods so that people from different social-economic backgrounds have opportunities to interact with one another. Unlike the social housing in the west, where there are only people of lower social-economic status, every public housing neighbourhood in Singapore has people from the poorest to the upper-middle income group in the same.

The combination of these two policies mean that there are no disadvantaged neighbourhoods in Singapore. As a result, within any given neighbourhood, home prices, appreciate at roughly the same rate. From the smallest apartment to the largest, everyone sees home prices appreciate at roughly the same rate based on the performance of the overall economy and the avoidance of serious social problems.

Furthermore, we regularly refresh the neighbourhoods, do renovations, make sure that if something is broken, we fix it quickly. That also makes people feel that no neighbourhood is disadvantaged. This creates a different ethos,  a different mood, one of sameness, of ownership, of inclusivity.

4. Staying open economically

DPM Tharman pointed out that the real logic of the benefit of economic openness isn’t about demand. It’s the supply-side. Participating in international markets provides the discipline at the micro-level within enterprises and each teams in the enterprises to keep learning, innovating, and improving. It creates a more dynamic environment that raises productivity and incomes.

New social compact

The underlying philosophy of these strategies is the need to build a new social compact of collective and individual responsibility. It’s about collective responsibility reinforcing individual responsibility – if you put in effort in school, the state is going to help you more.

If you want to own a home, the state will help you own a home. If you want get a job, the state will give a tax credit if you are low paid to help you stay on in the job. If you want to upgrade your skills, the state will subsidise it very heavily.

After listening to DPM Tharman’s speech, we can’t help but wonder whether the true objective of the Committee on the Future Economy (CFE) is to chart a path for Singapore to achieve inclusive prosperity.

While we agree that neither the CFE nor DPM Tharman have provided an exhaustive list of strategies and measures we need to put in place in order to achieve inclusive prosperity, what they have provided are good starting points.

But seven CFE strategies and 23 Industry Transformation Maps (ITMs) alone aren’t enough. As anyone working in startups know, ideas are cheap, the devil’s in the execution.

So it’s all the more important for all Singaporeans to work together with guts and gumption to build on the ideas of the CFE, come up with better ones, and, most importantly, implement them.



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Author CRC

Working on a startup is a scary crazy process. To destress, I write random stuff.

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