Wednesday, June 24, 2009

Take a look at Singapore

June 19, 2009

By David J. Rothkopf

MAYBE the problem in the United States isn't that we're paying our business executives too much. Perhaps it's that we pay our government officials too little.

The Obama administration made headlines last week by appointing yet another czar, this one to ensure we don't pay too much to the executives of the financial institutions the US government has bailed out. They have also made noises about trying to tackle the broader issue of executive pay in the United States.

The second point is idle posturing that almost certainly will amount to little constructive change. The first has already sent the companies the government bailed out scurrying for the exits of the Troubled Asset Relief Programme and it will be a while before we see whether this is a healthy step or an unhealthy one, with institutions hopping out of their hospital beds before they are fully cured. I also can't help but wonder if cutting executive pay is the best way to attract the kind of brains and efforts that will be needed to fix our busted banks.

Meanwhile, I have arrived in Singapore, home according to one count, of the 30 highest paid government officials in the world. And trust me, given the extraordinary success this city state has enjoyed, none of the people whom I met complained that those officials were overcompensated. This country wants the best minds in the government and recognises that they have to pay to get them there, otherwise they go to work in the financial community, sell their souls and ultimately add to the overcrowding problem that is currently one of the biggest social issues facing Hell.

Come to think of it, the overcrowding in Hell probably plays directly into the hands of management down there. I know this because I was in Mumbai airport last night. And for all my enthusiasm for India, Mumbai airport, thronged with people as the late night flights prepare to depart, hot, fetid and chaotic, would have had Beelzebub feeling right at home. In fact, I think I may actually have seen the Prince of Darkness himself there. He was manning a security line and he gave me such a thorough pat down that I think we are now engaged.

It would have been unbearable were it not for the staff of Singapore Airlines (SIA) who met us - mere ticket holders albeit of premium tickets - at the door and whisked us through the crowds and ultimately onto the plane. And once on the plane, I knew exactly how Dante felt once he had left Virgil behind and reconnected after all those years with his old squeeze Beatrice.

Suffice it to say that it does not appear that SIA is even in the same business as American Airlines or United. From the meticulous, exceptionally well-appointed aircraft to a seemingly enthusiastic commitment to service, the airline that was one of the first of the businesses created by the Singapore Government after it gained its independence in 1965, is achieving its strategic goal. It makes you want to travel through Singapore on every flight.

Then you arrive at Singapore's Changi Airport and you are powerfully reminded that the excellence of the airline is not a fluke. This is the best airport in the world: spacious, efficient and attractive. It is the perfect preparation for Singapore itself, almost certainly the best run political entity on the planet.

Admittedly, the country, led from the start by the man who is now known as its Minister Mentor Lee Kuan Yew, has practised what I would characterise as a constrained form of democracy. But few places have ever so compellingly made the case that what is traded away in terms of the occasional citation for spitting gum on the sidewalk is more than made up for in a society that is prosperous (Asia's second richest), innovative and safe.

It is a government that has led the way by behaving in many ways like a corporation, taking ideas like competitiveness and strategic planning seriously. (At dinner with a senior business executive who is one of the country's great entrepreneurial success stories, she said: 'In the beginning, in Singapore, the state was the entrepreneur.' And that was said with a genuine appreciation for all the state achieved in that role.) Even in the midst of a global recession, the Singapore Government has been seen as not just responsive, but creatively responsive, promoting retraining of workers and focusing on new growth industries.

Part of the credit must go to its unique system of senior government official compensation. Ministers are paid via a formula: two-thirds of the average of the eight highest salaries in six key professions - lawyer, accountant, banker, multinational executive, local manufacturer and engineer. As a result, in recent years, the President and the Prime Minister have made in excess of US$2 million (S$3 million) a year in salary and other ministers in excess of US$1 million. The result is that many of the best minds will be found in the government and there is zero corruption.

Want an example of innovation? The President, Prime Minister and ministers took an almost one-fifth pay cut this year because of the recession. What? Accountability among public officials? Real incentives? Imagine the loud 'gag' you would get out of the US government as they choked on these ideas.

I could go on about innovation here, but while we're on the subject of incentives, one last thought. Yesterday, I noticed that in exchange for taking those 17 alleged Uighur terrorists, Palau was getting US$200 million from the US government. That's US$14 million or so per terrorist. And incentives being what they are, I immediately concluded that I want some of that terrorist action.

I will take 100 of them or however many they have left. A hundred will fetch me US$1.4 billion. With this, I will spend maybe US$200 million on a small island on which to house them. Maybe I could buy Devil's Island from the French space agency - which apparently currently controls it - for about that much. Then I would set aside another US$200 million to care for the prisoners (at US$50,000 each per year for an average of 40 years). And I'll pocket the billion as my fee. US Secretary of Defence Robert Gates or his representatives can contact me at Foreign Policy to work out the details.

The writer, the author of Superclass: The Global Power Elite And The World They Are Making, is a visiting scholar at the Carnegie Endowment for International Peace and President and CEO of Garten Rothkopf, an international advisory firm Foreign Policy.

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