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Recovering Adam Smith’s Ethical Economics

Contemporary economists have been eager to claim Adam Smith and his ‘Invisible Hand’ as an early forerunner for modern ideas of people as self-interested, utility-maximising creatures. The truth, as Thomas points out, is a good deal more complicated than that.

Adam Smith

Originally published at The Philosopher’s Beard. Gratefully reproduced here with permission from the author.

“While some men are born small and some achieve smallness, it is clear that Adam Smith has had much smallness thrust upon him.”Amartya Sen

Adam Smith is famous for founding economics as an independent field of study by synthesising and systemizing classical economics in The Wealth of Nations. But he was also a significant moral philosopher in his own right who deserves to be recognised alongside his close friend David Hume as a key figure in the Scottish Enlightenment. Smith saw economics as a branch of moral philosophy, and he saw capitalism as an ethical project whose success required political commitment to justice and freedom, not merely an understanding of economic logistics.

These days Adam Smith is most familiar to us as an economist, and specifically as the defender of the famous Invisible Hand of free-market economics, wherein the private self-interested actions of private individuals, mediated through free markets, generate results that are good for all. The market-system comprehends the true level of demand for any good and provides the appropriate incentives – profits – for producers to adjust their output to match. No external intervention or guidance is necessary. A great deal of contemporary (neo-classical) economics can be understood in terms of translating Smith’s Invisible Hand metaphor into a systematic theoretical form, with a particular emphasis on the economic efficiency of perfectly competitive markets.

Anyone who cares to read Smith’s Wealth of Nations for themselves will find an economics discussed and justified in explicitly moral terms…

However the popular view of Smith that has resulted from this emphasis is twice distorted. Firstly, it is based on the narrow foundations of a few select quotations from The Wealth of Nations (WN) that are taken in isolation as summing up his work (Smith only mentions the ‘all important’ Invisible Hand once), and secondly these quotations have been analyzed in a particularly narrow way. Both selection and interpretation have been driven by contemporary economists’ interest in justifying orthodox economic methodology and their peculiar (Mandevillian) assumption of the selfish utility maximising homo economicus. The Chicago School economist George Stigler once famously declaimed, “I bring you greetings from Adam Smith, who is alive and well and living in Chicago”. What such ‘historians’ have achieved is the diminution of Smith’s economics to those bits which can be claimed to be early (and flawed) fore-runners of contemporary economic concepts and techniques.

But anyone who cares to read Smith’s Wealth of Nations for themselves will find an economics discussed and justified in explicitly moral terms, in which markets, and the division of labour they allow, are shown to both depend upon and produce not only prosperity but also justice and freedom, particularly for the poor. With those concerns in mind, it should not be surprising that Smith was a staunch and vehement critic of those particularly grotesque sins associated with early capitalism: European empires and the slave trade.

Continue Reading →

The tyranny of difference

This journal is part of a series on living and working in Singapore.

Race in Singapore is complicated. I am in no position to provide either a full or an authoritative account, but allow me to share some interesting things I have learned and noticed.

Singapore is multi-racial and multi-religious. Given its location and history as a trading hub, this should not be at all surprising. Around half the population at any given time are foreigners – the local residents are a mix of ethnic Chinese (around 74%), Malay (13%), Indian (9%) and Eurasians and others (4%). Buddhism, Taoism and Confucianism are all well represented, as are Christians, Muslims, Hindus and Jews.

On the one hand, there is a zero-tolerance attitude towards anything that offends Singapore’s multi-racial, multi-religious status. Recently, for example, a union chief made an insensitive comment about Malays on her Facebook page and was fired within 24 hours as a result of the public backlash. Comments that promote ‘ill will and hostility’ between races are prohibited under the Sedition Act, which has resulted in occasional fines and imprisonments.

This tough stance is partly due to the 1964 race riots which loom large in the national consciousness as an event no-one wishes to see repeated. Singapore at that time had recently become independent of British rule and had merged to become a state of Malaysia. Tensions were caused between Malaysia’s policies of pro-Malay affirmative action and Singapore’s advocacy of a ‘Malaysian Malaysia’ backed by its largely Chinese population. These Malay/Chinese tensions ultimately spilled onto the streets during celebrations of the prophet Muhammad’s birthday. In the ensuing riots, 23 were killed, several hundred injured and 3,000 people were arrested.

Explicit racial ‘segregation’ goes back further to the early days of British settlement, when Singapore was becoming unruly and unsafe as a result of rapid and uncontrolled growth. The city was divided into four ethnic enclaves as part of the 1822 Raffles Plan – a European Town, a Chinese kampong (village), an area for Malays, Arabs and Muslims called Kampong Glam, and Chulia Kampong for ethnic Indians. Present-day Kampong Glam, Chinatown and the city’s downtown core still echo these planning decisions, while most of the ethnic Indian population gradually relocated to what is now Little India.

So, different races and religions by and large co-exist distinctly but peaceably in Singapore, which is no small accomplishment. That most Singaporeans are bilingual and speak a common language (English) no doubt helps. However, that is only half the story. Continue Reading →

Christmas Everyday

This journal is part of a series on living and working in Singapore.

You may not know it, but Kenny Rogers’ Christmas album is an astounding piece of performance art. Simply titled ‘Christmas’, it displays a self-confidence that reflects Rogers’ honest-to-goodness heartland values, an ebullience that nonetheless masks moments of great insight and vulnerability.

Rogers’ first Christmas album (for yes, we are blessed with four others and a best-of collection) is a product of 1981, a time in which a newly-elected Ronald Reagan offered hope to a nation battered by oil shocks, the Iranian hostage crisis and economic stagflation. A time when AIDS was on the horizon, Pope John Paul II had an attempt made on his life, and Greece entered the Economic Community. Some might say that a Christmas album by a three-time Grammy-winning country artist is hardly a medium in which to detect the beat of history, but could there be more here than meets the ear?

For instance, a soberly-rendered version of ‘My Favourite Things’ is immediately followed by a soaring rendition of ‘O Holy Night’ – a juxtaposition that seems to point to a concern with the tension between the material and the messianic, the everyday and the eternal. Or perhaps it is a paean to lost innocence, expressing the sentiment that ‘brown paper packages tied up with string’, once such a treasured possession, may now be of uncertain providence and indeed hint at the possibility of terrorism.

Rogers’ layering of meaning is masterfully understated. On first listen, ‘Christmas Is My Favourite Time of Year’ may appear to express a straightforward sentiment. But on each hearing, the opening line teases more possibilities – ‘How wise the wisemen must have been to find the child in Bethlehem’. Is there a suggestion here that the ‘wise’ men were in fact not so, that they had help? Or does he mean that they are wise because they recognized the guidance they received for what it was? Is the artist in fact offering us lessons here for the role of government in an individualistic society, a theme that would come to characterize the Reagan years? Rogers, coyly, doesn’t say. But the track is followed by ‘White Christmas’, which seems an odd inclusion given Rogers’ Texan heritage and in contrast to the rest of the album’s Americana (eg Kentucky Homemade Christmas). Perhaps Rogers is instead hinting here at Europe’s anxiety over Greece’s controversial entry to the community, the dreams of a ‘white’ Christmas an allusion to fears that they will no longer be ‘like the ones we used to know’.

At just 33 and a half minutes, Kenny Rogers’ ‘Christmas’ offers far too little chance to ponder such conundrums. How fortunate then that I have been blessed with the opportunity to listen to this album of such rich and extraordinary diversity over, and over, and over again, on loop, for the past week and a half. Rogers has been my constant companion in the office thanks to my colleague who, despite all the possibilities offered by recorded music, felt that this CD, and only this CD, was the right choice with which to fill the air. It was, I feel, the right decision. Rogers’ country drawl, heartland humility and Christian sentiment has provided both musical and spiritual accompaniment to my working hours. Each time the opening track rolls round I smile and, twitching only a little, think ahhh yes, truly it is ‘Christmas Everyday’. ◾

Stricken from the record

This journal is part of a series on living and working in Singapore.

A few weeks ago, around 100 Chinese bus drivers employed by one of the two public transport operators did not show up for work. The incident has quickly become a heated national story, one that reveals many of Singapore’s social and political idiosyncracies.

Bus strike

Being a bus driver is a low-paid profession. Like many jobs the locals don’t particularly want to do, the majority of the workforce is comprised of foreign labour. The group of Chinese drivers were protesting what they felt were unfair wages and conditions in comparison to their Malaysian and Singaporean colleagues, who had just received a payrise while the Chinese workers had not. 102 drivers based in a depot in the country’s north did not show up for work on November 26 – as a result, services were disrupted. The transport operator (SMRT) organized temporary workers to be brought in the following day in case the protest continued, which it did.

The police took in several dozen of the drivers for questioning and after a couple of days announced that 29 of the drivers would be ‘repatriated’ (ie deported) back to China after the ‘illegal strike’. The rest would be warned but allowed to return to work, except for one ringleader who was given a six-week jail term. The government also publicly criticized SMRT for not better attending to its HR practices and for allowing such a situation to develop. Following these developments, Singapore’s consulate in Hong Kong was picketed and the Chinese government dispatched officials to Singapore to investigate the situation to make sure it was being handled ‘appropriately’.

So, what’s going on here? Continue Reading →

The narcissism of minor difference

This journal is part of a series on living and working in Singapore.

I walk to get the morning peak hour train to work, feeling confident in knowing what to do having established a routine. I board at Sengkang, a town far out in the north-eastern suburbs where Westerners are hardly seen. As I wait for the train, another white guy sidles up, also dressed for work. We give each other an irritated glance that says ‘Stop cramping my style dude, I’m the only calmly cosmopolitan white guy in this neighbourhood.’ I wonder where he’s staying. Probably in one of those condominiums, detached from everything. Not in a HDB flat boarding with a local like me. Standing, I glance across the crowded carriage and meet his gaze briefly before his eyes dart away, probably wondering the same thing. I look away and let go of the handrail, concentrating on balancing my body with the movement of the carriage, like I’ve done this so many times before. I look over. He’s reading the Straits Times. I yawn and start reading the Straits Times ON MY IPAD. Ha.

As the ride keeps going and the carriage fills up to bursting point, our eyes meet a few times more as we think loud thoughts at each other. Which stop are you going to get off at? In the financial highrise heartland or somewhere more authentic? It’s getting tense — there’s only a few more stops to go. Then the doors open and an old sunburnt English couple get on wearing ill-fitting sarongs and brandishing a map. I glance at my nemesis and suddenly all is forgiven as he returns my smug, self-satisfied smile. Amateurs. ◾

A runway success

This journal is part of a series on living and working in Singapore.

Changi MRTI read an article in The Age the other day about the congestion problem getting to and from Melbourne Airport. There is no rail link, but the Skybus service is designed to provide a 20-minute direct shuttle service to the city. Which is great, but in peak times it’s been taking up to nearly an hour.

How to solve this? The rail link has been talked about for 55 years now, but there’s no sign of it anytime soon. A bus lane has been proposed for the Tullamarine Freeway (easy and cheap to implement) but there is resistance from the toll road operator, who wants compensation for the lane of traffic they will lose, and the airport, who want compensation for the loss in car park revenues because more people will take the bus.

There is a world in which this all makes total sense. It’s a world where it’s cheaper and more efficient to build private roads and private port facilities and run them on market logic. Such a world might exist, but I don’t think it’s the one that people experience each morning and evening on the way to and from Tullamarine. In the world I inhabit, at least in my mind, it makes more sense to start by asking what an airport is for (getting people and stuff in and out of the city as cheaply, quickly and comfortably as possible) and then working out how to make a really good one (it’s good to the extent that it does what it’s for). But my opinion doesn’t count for much. Continue Reading →

Thanks for the mammaries

This journal is part of a series on living and working in Singapore.

On the other side of our tiny office, Annie is pumping milk at her desk. As a gay man, this is one of those things that I am aware happens in theory, but have no practical sense of what it actually entails, like bra fasteners or Mila Kunis.

It just sort of happened. She said she was going to do it and I, being the progressive, well-adjusted 21st century guy I like to think I am, said sure, go ahead. But now I’m skulking at my desk unsure what to do as I listen to a noise that sounds like a frog trapped in a yoghurt machine. It fills the whole room — rrrrrrrrbrrrtshlup, rrrrrrrrrrbrrrtshlup — all the more disconcerting because I have no idea what is actually happening to produce it. Should I make light conversation? Turn on the radio? What is the etiquette here?

I’m tempted to leave the room, especially as I need to pee, but I don’t want to risk copping an eyeful or making a sudden movement that might startle her and cause untold irreparable damage. Besides, she had said she would do it fast. Was this to ease my discomfort? Or perhaps I’m supposed to be impressed — maybe pumping milk has a competitive element I had not considered. Continue Reading →

Office Quest

This journal is part of a series on living and working in Singapore.

If you ever played one of those old 80s text-adventure games, you’ll remember with frustrated fondness how difficult it was to make yourself understood. This is because the program only understands a limited and specific set of vocabulary and procedure, and has very little appreciation for context. What a sense of accomplishment and possibility when you finally stumble across the right formula and the game allows you to progress!

Bureaucracies are like text-adventure games.

You find yourself in an office. What would you like to do?
>> Ok, so what are we trying to do here?
>> Talk to colleague
Who do you want to talk to?
>> Talk to researcher
The researcher is in a meeting. Try this afternoon.
>> Talk to supervisor
“Have you got anything to show us yet?”
>> Ask supervisor what they want me to do
The supervisor asks you to produce a report for the department meeting.
>> Get background paper
You read the background paper. It refers to a research survey that has since been carried out.
>> Do you want me to interpret findings?
You cannot INTERPRET FINDINGS without the survey data.
>> Get survey data
The survey data has been emailed to your computer.
>> Go desk
You are at your DESK.
>> Use computer
It won’t log in.
>> Use login details
It won’t log in.
>> Get login details
You already have them.
>> Log in with login details
You can’t do that.
>> Call helpdesk
You call the helpdesk but no-one answers. Would you like to LEAVE MESSAGE or REMAIN ON HOLD?
>> Remain on hold
After a while someone answers. “How can I help you?”
>> Get help to log in
“Do you have a login account?”
>> Give login details
“It seems your account hasn’t been activated yet.”
>> Activate account
>> Give job request form
You don’t have it.
>> Get job request form
How do you want to get it?
>> Get job request form from intranet
It won’t log in.
>> Get job request form from supervisor
The supervisor is in another OFFICE.
>> Call supervisor
You are already on the phone. Continue Reading →

Moving Forward

This journal is part of a series on living and working in Singapore.

If you are a senior citizen in Singapore or have a physical disability, you can swipe your ID pass at traffic lights pedestrian crossings and they will stay green longer for on the next change (suitably cheesy video here). It is simple yet thoughtful innovations like this that are typical of the country’s attitude towards transport. Two out of every three trips are made using public transport (compared to around one in every four in most Australian cities), rail systems are tightly integrated with shopping, service and lifestyle facilities and fares are among the most affordable in the world while the transit network operates at a healthy profit despite receiving no government subsidy. Singapore introduced the world’s first vehicle congestion tax in the 1970s of the kind later adopted in many European cities. It built the world’s first totally automated, driverless subway system and operates the world’s longest single fully underground subway line at 35km.

This has all occurred since 1988 when the country’s first urban rail system opened for use. Meanwhile, the last new train line in Melbourne was built in 1985 and Sydney is still waiting for its second airport which was ‘fast-tracked’ in 1989.

Meaningful comparisons however are not easy, even if flippant ones are fun. The policymaking environment that makes such everyday miracles possible is a result of Singapore’s survivalist necessity more than it is the beneficence of surplus and abundance.

All decisions in Singapore are seen through a frame of land scarcity. There is simply not enough space to put roads everywhere, or for everyone to own a car. Besides, as the country’s transport master plan observes:

Simply building more roads will not solve our transport problems in a sustainable way because the demand for road space is insatiable. The more roads we build, the more traffic will be generated. Hence, the projected increase in travel demand must be met largely by public transport rather than by the car.

This perspective has led to a unique take on car-ownership. The number of registered vehicles allowed in Singapore is capped, with a strict quota of new registrations allowed per year (0.5% growth – a few thousand vehicles). Every two weeks a portion of this quota is put up for public auction in the form of a Certificate of Entitlement which allows you to own a car for up to 10 years. These CoEs are in high demand and bidding usually fetches between $60,000–$80,000 (AUS$47–$63k). On top of that there is the aforementioned congestion pricing when driving into the city centre, the registration fees, parking and the cost of the car itself. In other words, it’s not cheap. Needless to say if you proposed anything like that in Australia you’d be laughed out of the room quicker than you could say ‘whole-of-government approach.’

As soon as you step outside, it’s hard to avoid the remit of the Land Transport Authority — the statutory agency that looks after everything to do with roads, public transport, taxis and land use. The LTA is where I am working as an intern for the next few months. Specifically, I am part of a small policy and planning group that conducts market research, produces internal publications and houses the new LTA Academy, built to start sharing (and showing off) all that Singapore has learned achieved in transportation over the years. The Academy hosts international visitors, publishes a bi-annual academic journal and operates an interactive exhibit called LTA gallery which showcases Singapore’s transport history to schools and the general public (it’s more exciting than it sounds, which admittedly is a fairly low bar).

It promises to be an interesting experience. One of the LTA’s latest innovations is a smartphone app with all the usual journey planner and real-time arrival stuff, but which also features a snap-and-send function. This can be used for letting the LTA know about facilities in need of repair, or to dob in people who graffiti vehicles or cars that park in bus bays and so on. It’s a brave new world. ◾

Getting the Visa

This journal is part of a series on living and working in Singapore.

Getting the VisaI arrived at the rather colonially named Ministry of Manpower a few minutes before my appointment and was greeted by a furtive young Thai-looking man who told me I was late. He asked me to follow him quickly while making a gesture which I understood as ‘stay here’. Unsure what to do, I opted for what in hindsight was the most ridiculous option — following gingerly until he turned around, whereupon I would affect an attentive, though stationary, nonchalance.

This left us hovering awkwardly in front of an unattended counter. “I need to see your Visa, passport or MasterCard”, he told me. Looking him carefully in the eye while processing this information, I countered with “It’s all here in this file” and produced a credit card. “You haven’t paid yet?” he exclaimed. He took my documents to a lady around the corner, making the same ‘stay here’ gesture while telling me to follow and muttering “very bad, very bad.”

I should mention here that the young man’s behaviour seemed very out of character with the rest of the place, which was quietly bustling with proprietary efficiency. MoM is well signed, easy to find, and perhaps most surprisingly for a Saturday afternoon, open.

I took all this in while waiting in a comfortable chair near a little sign that read ‘Your sunshine, our support’ — a familiar customer service message delivered in that quaint and understated way that is so characteristic of Singaporean English. Continue Reading →