Singapore – Speaking in a virtual discussion on Wednesday (July 22), Senior Minister and Coordinating Minister for Social Policies Tharman Shanmugaratnam noted that state size was not all that matters in the post-Covid reality. A new social compact which directs markets and communities towards public goals is a must.
The Lee Kuan Yew School of Public Policy (LKYSPP) held a forum hosted by associate professor of practice James Crabtree and joined by Bloomberg editor-in-chief John Micklethwait, Financial Times global business columnist Rana Foroohar and Mr Tharman. The discussion was called “After the pandemic – the rebirth of big government? State capacity, trust and privacy in the post-Covid-19 era.”
Mr Tharman first said that Covid-19 had intensified the challenges already faced by many countries and fast-forwarded some slow-moving ones that were already there. Thus, navigating the post-Covid world requires “a certain activism” on the part of the government. There is little confidence that governments around the world could address challenges very well if they stick to old ways, said Mr Tharman. History has shown that growing larger and spending more would not be a feasible and effective way for countries to tackle these challenges, he said. “Fundamentally, we need a new compact, between state and markets, state and community, that makes the most of the energies of the markets, of entrepreneurship, of innovation, but uses markets not just to achieve private gain but to achieve public purpose.”
Beyond going back to large states, Mr Tharman emphasised a going back to a “sense of moral purpose in government, having the confidence to convince the population that these are the right things to do – and we’re all going to have to organise ourselves together to achieve it – and an ability to focus the resources of the state on what matters most, rather than everything.”
“So you don’t necessarily have to be very large, but you have to be very good at the most important things you should be doing, and go about it with the spirit of an activist.”
Re-centre government and fiscal policy on key public goods
Healthcare and education were two key public goods mentioned by Mr Tharman, which advanced and emerging economies needed to re-centre government and fiscal policies towards. “A challenge of using markets, private finance, private entrepreneurship, private innovation, to develop public goods and to serve public purpose, is I think, a fundamental fiscal policy challenge and a fundamental approach or orientation that we have to take when we think about the role of government,” said Mr Tharman.
“So if you focus on public goods and try and do it well, and you try and leverage on the energies of the private sector and communities, you have an effective state.” Sometimes, you need a crisis to refocus on the fundamentals, said Mr Tharman. “Social compacts make for a better future for everyone.”
In a local context, Mr Tharman noted that although Singapore does not have a big government, it is a highly progressive one when it comes to social security, healthcare and education. “And I think it will get a little more that way in the years to come,” he added. However, contributions will have to come from wealthier individuals. “Everyone should contribute something more as societies get older, but fairness dictates that things have to stack up in favour of the poor and middle income.”
Watch the full discussion here.