[Editor’s note: This story originally was published by Real Clear Wire.]
By Tilak K. Doshi & Peter A. Coclanis
Real Clear Wire
Singapore gained attention in the world press last week as reports emerged of neighboring countries accusing the city-state of paying Taylor Swift to engage in a series of concerts exclusively, without allowing other concert venues in Southeast Asia to vie for the superstar’s services on her worldwide Eras Tour. But two recent events that went unnoticed carry far more momentous consequences for the city-state and the Southeast Asia region.
On February 15, the London-based Institute of Economic Affairs tweeted a link to a new Fraser Institute study of Singapore’s economic miracle. IEA – Britain’s oldest free market think tank – argues that economic freedom was key to the approach that turned Singapore from an impoverished Third World backwater on the eve of its independence in 1965 to one of the world’s richest countries.
Just two days earlier, the Paris-based International Energy Agency announced the establishment in Singapore of an IEA Regional Cooperation Centre, “which will work with all countries in Southeast Asia and beyond to enhance energy security and accelerate clean energy transitions.” This will be the energy agency’s first office outside of its headquarters in Paris, France. IEA (Paris), quite unlike its London-based acronym-sake, subscribes to the climate change agenda that calls for massive government intrusion into energy markets “to save the planet.”
Will Singapore and its Southeast Asian neighbors continue to hew toward free markets to promote economic development, or will they follow the examples of countries in Europe and North America in pursuing “clean energy transitions” by policy mandates which curtail the use of fossil fuels? The livelihoods and prospects of hundreds of millions of people in the region depend quite literally on the answer to this question.
Free Markets, or Collectivist Net Zero?
The Fraser Institute report examines the island-nation’s remarkable economic rise over the past sixty years, which surpasses in some measures even the records compiled by the likes of South Korea, Taiwan, Hong Kong, and Japan. It explores what other nations can learn from Singapore’s story. It also sheds light on matters other than economic growth, such as healthcare, education, and social welfare.
A few key themes emerge out of the report: the emphasis on personal responsibility; the vital importance of markets, incentives, and free trade; and the government’s flexible, open-minded, “pragmatic” approach to public policy, promoting policies that worked without getting hung up on labels.
The report’s authors see Singapore’s rise not as a simple textbook case demonstrating how “free market” or “laissez faire” capitalism was responsible for the island nation’s success. The government’s role was too prominent in many social and economic sectors for that argument to work. Yet it is hard to deny that the government’s overall approach to economic policies was informed by certain abiding beliefs in basic capitalist principles: economic freedom (and with it, self-reliance), the rule of law, private property rights, competition, openness, and the efficacy of material incentives. It was this basic orientation more than anything else that enabled Singapore’s world-leading growth record since the late 1960s. This was “capitalism, with Singaporean characteristics.”
And that’s what makes the news regarding Singapore’s partnership with IEA Paris rather incongruous. Singapore’s partnership will be a “strategic asset” for the agency, according to Tan See Leng, the Republic’s Second Minister for Trade and Industry. Dr. Tan believes that the partnership will “energize the region’s decarbonisation journey, while continuing to provide advice on energy security and resilience.”
The policy posture that IEA Paris recommends for its members would cause Lenin much envy. IEA Paris would have governments cease all investments on coal, oil, and gas projects, and recommends government support for investments in “clean” energy industries such as wind, solar, and electric vehicles. Its “net zero by 2050” mantra would make European agriculture “sustainable” by reducing hydrocarbon-based fertilizer use, keeping increasing amounts of land fallow, and convincing people to eat less meat. It also would have governments bet taxpayers’ money on hydrogen and carbon capture and storage – unproven technologies that have yet to achieve commercial viability despite huge investments over recent decades.
The Real World Intrudes
Since 1870, Singapore’s development path has incorporated oil storage and trading, and over time the island-state gained its status as the “East of Suez” hub for oil refining, petrochemicals manufacturing, and trading. But in October 2022, turning its back on its investments in oil and gas – accumulated over more than a century – Singapore committed to “net zero emissions by 2050” as part of its long-term low-emissions development strategy. How will it fare a quarter century from now when the utopia of “net zero” arrives? And will Southeast Asia – comprised of 700 million inhabitants living in eleven extremely diverse countries, some at very low levels of economic development – follow its example?
We can already see where the “decarbonization” path recommended by IEA Paris will lead. In a report published last week, Gordon Hughes – a former adviser to the World Bank and professor of economics at the University of Edinburgh – puts it unambiguously: the plan is simply “posturing about targets that are patently not achievable and might be economically ruinous.” As one commentator observed, “[t]he idea that hydrocarbons – a natural resource whose use from medicines to reliable energy is ubiquitous in modern industrial society – can be removed within less than 30 years is ridiculous.”
Professor Hughes clearly articulates the fundamental tensions between energy transition and energy security. He goes on to state that “China, India and Indonesia are among the many countries in the rest of the world whose leaders are not fools and can draw their own conclusions about the realism and consequences of the energy transition as currently pursued.”
Singapore’s partnership with IEA Paris may well be a regrettable decision. Ironically, its Southeast Asian neighbors are more likely to emulate Singapore’s historic “pragmatism” and decide their own destinies along Adam Smith’s path of free markets and human flourishing – the one described by IEA London.
Dr. Tilak K. Doshi is an energy consultant, a fellow at the Global Research Institute at the University of North Carolina-Chapel Hill (USA), and a Forbes contributor.
Dr. Peter A. Coclanis is Albert R. Newsome Distinguished Professor of History and director of the Global Research Institute at the University of North Carolina-Chapel Hill (USA).
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