A new book, Values at the Core: How Human Values Contribute to the Rise of Nations, by Thomas Grandjean and Tan Chin Hwee, shines light on the values that sustain economic systems. One of those values is trust, which complements the more familiar variables of work, thrift, risk-taking, free markets, political stability, and fiscal and monetary policy. Trust is an intangible that makes the political economy function by upholding its social fundamentals.
There is one corrosive element which literally makes trust rust. That is income inequality. It can result in a rigid and stratified social system that sharpens the class contours of political contestation and weakens the social fabric. Singapore can preserve the admirable advances it has made in maintaining social harmony since Independence by looking at the experience of nations where trust is high.
The authors register the correlation between trust and equality by citing the example of Nordic countries. Those nations, where social trust is the highest in the world, also display the lowest levels of income inequality. By contrast, Latin American countries, where citizens are the most distrustful of others, feature among the most unequal.
Once that inequality becomes structural, citizens stop believing that the government acts in their best collective interests and prefer to think that it formulates policies in order to favour one group over others depending on its electoral imperatives.
Singapore should pay heed. There was a time when popular trust was inherent in upholding the endeavours of a leadership driven by democratic socialist ideals of economic redistribution in a society moving up the ladder of global development from a low economic base. Trust came easily then.
That economic base has risen exponentially, thanks to the state keeping faith with a populace which, on its part, was willing to countenance even unpopular policies in the belief that whatever hurt some now would benefit all in the near, tangible future.
But these are different times. Singapore has to compete in a nastier world for vagrant capital and fleeting talent that is truly global, compared to the 1970s, when that competition was limited by the Cold War which put the socialist sphere of the Soviet Union outside the capitalist globalisation led by the United States.
To preserve trust in these times requires engaging the demand for equity in a population that has outgrown the early provenance of Singapore. The government’s efforts to counter income inequalities will be key to the continued role of trust in upholding Singapore as its citizens know it. The good news, reported last year, is that income inequality here tapered to its narrowest in almost two decades, with government transfers and taxes helping to narrow the income gap. The challenge is to keep up the good work of redistribution without affecting Singapore’s global competitiveness.
According to the book’s authors, there are exceptions to the correlation between income inequality and trust. In Germany, for example, social trust has not declined in spite of income inequalities that have risen since the 1980s, the book says.
However, that outcome could be the result of high levels of trust that were built up over previous generations and that have been transformed into resilient values that take time to erode. Singapore could well be like Germany.
Indeed, there is no guarantee that Germany will not be forced to go the way of nations such as the United States and the United Kingdom, where social trust has declined in the wake of their wild embrace of the neoliberal ascendancy which makes markets the final arbiter of human affairs.
Essentially, few citizens trust unelected markets over democratic states which they have empowered and mandated to regulate private profit in the public interest. This is true everywhere.
A failure to resolve income inequality in Singapore today may result in diluting its future down the road. Singapore would not cease to exist as a sovereign state, of course: Latin American states continue to exist merrily in spite of the receding role of citizens’ trust in them. But Singapore would not remain the country that its citizens inherited from the moment of Independence in 1965.
The author is co-general editor of the Singapore Chronicles series published by IPS and The Straits Times Press.
Top photo from Freepik.