Tan Jee Say, in one of his many anti-PAP moves, has recently suggested that Temasek Holdings be dismantled. This was also the SDP's position during the recent General Elections. While standard economic arguments were offered for the idea, I wonder if the motive were not purely political.
Now, the standard economic arguments that GLCs crowd out the private sector has been repeated ad nauseum (e.g. my professors made such arguments when I took a course on the Singapore economy in graduate school) and do not require further exposition here. Because of such crowding out, it has long been argued that the Singapore economy would be better off if GLCs were privatised so that the government does not compete with the private sector.
In theory, the arguments sound good. In terms of improving the overall efficiency of the economy, the arguments certainly have some merits. Unfortunately, in reality, it may not work out so well and will have negative political consequences. The reason for this is that once the government sells off the GLCs, they will most likely end up in the hands of local tycoons and MNCs (most Singapoeans are too enslaved by their mortgages to afford to bid for such assets). What this means is that in terms of reducing the concentration of economic power, privatisation has little or no net impact, and merely results in the transfer of such power from the government into the hands of a small group of private sector players.
While the ideological purists and the die-hard anti-PAP people will say that such an arrangement is better than the current one, I think that it will mean the undermining of our democracy, as the tycoons and other big economic players will then be in a position of strength to dictate terms to the government, much like what is happening now in Hong Kong.
As much as Hongkongers like to believe that they have more freedom than Singaporeans, the reality is that policies there are mainly set for the benefit of the elite few. Granted that in HK, people are free to demonstrate, the fact that they cannot vote their government out means that they have no effective means of forcing a change in policy directions. Contrast this to what has happened here after the recent GE. As for the so-called freer press in HK, any adult with a working brain can figure out that the media is tightly-controlled over there by a few tycoons and that success requires the backing of the CCP back in Beijing.
In short, dismantling Temasek Holdings will not result in more economic freedom, but will lead us down the road to oligarchic rule by the unelected rich whom we cannot kick out via elections.
Having tried my hand at running a business, I can understand the frustrations of having to compete with GLCs (how do you compete against entities whose cost of capital is zero?), and so I am not suggesting that the current system is a good one. What I am saying is that the alternative proposed is worse.
If one assumes that Tan Jee Say is an intelligent guy, then one can only wonder about his agenda for suggesting that we hand power over to oligarchs. I am sure he is not naive enough to believe the economics he learnt in school.
