在人类文明史上，哪个国家是靠政府管制做起来的？几乎没有。

— 陈志武, 《陈志武专访：正视我们的不幸福》

Which country in recorded history was built up by its government? Practically none.
— Zhiwu Chen

the test tube washer artpiece

TODAY has a recent article on the oversupply of life sciences graduates in the Singapore labor market. Ironically, while there appears to be a large excess of life sciences graduates at the bachelor’s level, there is correspondingly a woefully short supply of PhD graduates. (See also the very illuminating response article about realistic job prospects for aforementioned B.Sc. life science graduates.)

The problem here is (from an economic perspective) obvious: supply-side economics simply doesn’t work when it comes to the labor markets. This, to a large extent, is because human capital is not a fungible resource. A CEO is not perfectly substitutable for a toilet cleaner, which is not perfectly substitutable for a scientist, for example. Not to mention that there are a lot of sunken costs in training a PhD holder. Tuition, fees, and opportunity costs all add up to quite a staggering sum (which once could cynically claim to measure using a proxy such a scholarship bonds).

So much has already been said by people such as Mr Wang, Sg Entrepreneurs, gecko, Fox, BL, Insane Polygons [1] [2] [3], and the double-0-project, among many others, about the latest news from the life sciences front in Singapore, so all I will do here is to highlight that such concerns are from new, and in fact are somewhat dated.

One of the first to recognize this as an important problem is Paul Krugman, an economist at MIT who, amongst other things, is known for a critical article on Singapore entitled “The Myth of Asia’s Miracle: A Cautionary Fable“. The whole thing is worth a read, but in particular one should note the following passage:

Between 1966 and 1990, the Singaporean economy grew a remarkable 8.5 percent per annum, three times as fast as the United States; per capita income grew at a 6.6 percent rate, roughly doubling every decade. This achievement seems to be a kind of economic miracle. But the miracle turns out to have been based on perspiration rather than inspiration: Singapore grew through a mobilization of resources that would have done Stalin proud. The employed share of the population surged from 27 to 51 percent. The educational standards of that work force were dramatically upgraded: while in 1966 more than half the workers had no formal education at all, by 1990 two-thirds had completed secondary education[...]

Even without going through the formal exercise of growth accounting, these numbers should make it obvious that Singapore’s growth has been based largely on one-time changes in behavior that cannot be repeated. [...] A half-educated work force has been replaced by one in which the bulk of workers has high school diplomas; it is unlikely that a generation from now most Singaporeans will have Ph.D’s. [...] So one can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to those of the past.

But it is only when one actually does the quantitative accounting that the astonishing result emerges: all of Singapore’s growth can be explained by increases in measured inputs. There is no sign at all of increased efficiency. [...] Singapore’s economy has always been relatively efficient; it just used to be starved of capital and educated workers.

Singapore’s case is admittedly, the most extreme.

(Aside: The article mentions a Ms. Tsao Yuan, who tried to present her work back in 1982 arguing that Singapore’s growth could be characterized as entirely resource-driven, instead of having anything to do with intrinsic gains in productivity. Perhaps ironically, she apparently now serves on the board of OCBC Bank, Keppel Corporation and Pacific Internet.)

Perhaps ironically, the scenario of many Singaporeans getting PhDs, deemed unlikely by Krugman, might not be so unrealistic after all. What is perhaps the most worrying conclusion that can be drawn from this latest piece of news from home is the growing disparity between current policy and current economic situation.

Far-fetched, you might scoff, to draw such a conclusion from such flimsy evidence, but when you line it up against the Far Eastern Economic Review’s indignant editorial about Singapore continuing to practice its “Draconian colonial-era laws” , it might not be that far off from the truth.