Here is yet another Son of Singapore who left his country to work elsewhere. Dr Tan Chong Kee, the founder of the now defunct news website Sintercom, tells The Independent Singapore why he left, the new venture in the US he is involved in and about his country’s “myopic model”.

When did you leave Singapore? Where do you live now? What do you do there?

I left in 2007 and now live in San Francisco. I am working at a social enterprise start-up called Bay Bucks where we are creating a regional currency for the Bay Area to foster economic justice and sustainability. I will tell you the story behind this.

The year after I moved to San Francisco, the infamous 2008 global financial crisis struck. It was a frightening time when many shops on Market Street (it is like Singapore’s Orchard Road) shuttered, several of my friends nearly became bankrupt, and a start-up I was working at failed. The sense of doom was palpable and pervasive. People talked about “the end of capitalism as we know it.”

That led me to start reading about global financial and monetary system in an attempt to understand what had happened. And what I learned shocked and saddened me. For those who are interested, here is a good video explaining why the subprime mortgage grew the way it did to create the crisis:
[fvplayer src=”http://youtube.com/watch?v=qqUGoVez8xg”]

A bus driver told me his story of how when his mortgage was almost paid off, bank representatives persuaded him to cash out on the equity in the home with a very low variable interest rate loan to help pay for his children’s university education and to use the remainder cash to do home improvements. He then found out the following year that the interest had spiked, was unable to pay the interest and the bank tried to repossess his home. The stress of losing his family home was so great that it destroyed his marriage. Fortunately, Occupy Wall Street helped him and his story got into national media. The bank quickly modified his loan, allowing him to keep his home. He was lucky. He got off with only a broken family. Many families lost a lot more.

The mechanism banks use to create the money for mortgage is even more shocking. Here is a video that explains it:
[fvplayer src=”http://youtube.com/watch?v=rC720Cl3N-0″]

The key insight is that banks create the money they lend through double entry accounting. The mortgage document where you promise to pay $X each month is called an “asset”. Based on this asset, they can create from thin air an amount equal to the principal of your loan to lend you, and charge you interest for that privilege.

Blue pill, red pill

Remember the scene in The Matrix when Neo had to choose between the blue pill and the red pill? My blue/red pill moment is learning about what money really is. The story about money is similar for any country that is part of the global financial system today although the details may differ slightly. Banks in most countries are not as predatory as those in Wall Street. But the overall picture is still similar: banks prefer lending for mortgages rather than businesses because real estate is seen as a safe collateral. But easy credits for housing drives up home prices (called a housing boom, or asset appreciation, as if it is a good thing), which makes it even more profitable to invest in housing.

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This spirals upward, sucking more and more money from productive uses to speculative uses until housing prices peak and collapse. Banks then say they are too big to fail and get a bailout. On the way up, the money they channel towards real estate undermine small local businesses both in terms of availability of small business loans and rising rent. On the way down, even more money from taxpayers is channelled towards them and decimates social safety nets. Head they win, tail we lose. Interestingly, Malaysia seems more willing to address the problem with the global monetary and banking system than Singapore. Here is Dr Mahathir speaking about the power of banks to create money and how interest on debt can wreck the economy at the 3rd Riba conference in Kuala Lumpur in 2012. Riba is an Arabic word that means interest on debt, or usury:
[fvplayer src=”http://youtube.com/watch?v=4mOrVHrklZU”]

The problem with money being created is that debt goes even deeper than these videos showed. Singapore is not the only country obsessed with GDP growth. Most developed countries face the same problem: When GDP growth is high, people feel better off; when it is low or near zero, people feel worse off. Why is that? You would have thought when there is no growth for one year people should feel just as well off as the previous year. The reason is that GDP needs to grow at a comparable rate as interest in order for the economy to stay afloat. Anything below that, the default rate on loans will rise.

This is a direct consequence of issuing money as debt. GDP must grow fast enough to generate enough profits to pay interest on old debt. But in order to grow, companies must borrow more money to expand, resulting in an ever-higher spiral. Through the money we use, we are locked into the exponentially accelerating GDP growth train even if it is heading towards the precipice of climate change and mass extinction. World governments are dragging their feet on taking effective action to forestall climate change because none is willing to risk economic and financial collapse, and none is willing to change our current economic structures to prevent such a collapse.

My red pill moment was when I realised that until we change the money we use, we are doomed to repeat the same folly over and over again. We have already gone past the safe limit of 350 ppm carbon in our atmosphere, the limit that world governments agreed is the absolute maximum in order to ensure climate changes do not become catastrophic. To quote Charles Eisenstein who put it even more forcefully: “Today’s national and supranational currencies have become a blight on this planet. Created through interest-bearing debt, controlled by financial elites, tracked by the surveillance state, and necessitating endless growth, money as we know it is a primary agent of inequality, injustice, and gecocide.”

This is why I started a regional currency called Bay Bucks based something called the mutual credit system. Mutual credit means the community itself becomes, in a sense, its own bank, issuing credit to each other. This credit has by design zero interest on debt, and is backed by local businesses using their own goods and services, rather than created by banks using other people’s real estate as collateral. The key to succeeding in a Bay Bucks economy is cooperation and community building.

What made you leave your country? Will you return to live and work here?

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There were both personal and public reasons. I will discuss only the public reasons here.

I was disillusioned when I realised that I could not participate with integrity in Singapore civil society. It was a difficult decision because it was one between keeping my mouth shut and living comfortably in Singapore, and struggling in a foreign country where I had few friends, fewer income opportunities, and many cultural differences. It took me a few years to drum up the courage to take the plunge.

The US has many faults. But at least, it has slightly more space than Singapore for citizens to freely associate and initiate community projects. Despite the any social and economic ills facing the country now, for me, this sense of personal empowerment is worth the many other challenges I face here as a stranger in a strange land. Perhaps in the long run I may return to Singapore to live and work. But this is not likely in the short run.

Looking inside from the outside, how do you see today’s Singapore? Blogger Alex Au said Singapore has begun to fail? Do you agree? From the escape of Mas Selamat to the train breakdowns to the China bus drivers’ strike to the Little India riot, things are beginning to unravel. What do you think is the problem?

From the outside and from afar, it appears to be trying to keep an old model going past its time. By that I mean a model that posits economic development and rising consumption as both the means and ends of human development. In this model, all other human values are the handmaidens for economic growth. Education is for training an efficient and docile workforce, arts are for attracting foreign direct investments and talents, and families are for producing population growth to feed the GDP engine. Consequently, anything that does not make money is suspect.

This is a shockingly myopic model, blind to what profit maximization is doing to human society and our environment. And it is unsustainable because it is destroying the ecological conditions needed for human existence.

I used to think that such a short-sighted adherence to GDP growth was because it justified the founding social compact of economic development in exchange for personal freedom, which gave the PAP not just enormous power and reach, but also a sheen of moral imperative. Now, I realise that even though that was true in the ’60s – ’80s, since then, capitalism has also morphed into what I would call Late Capitalism, which is pulled by a tiger whose rider has no option but to keep hanging on for dear life.

This is not unique to Singapore. Singapore is actually mundanely similar to most other developed nations in this regard. In contrast to the earlier stage of capitalism characterised by the expansion of manufacturing, late capitalism is characterised by the rapid expansion of finance. The character of profits generation has fundamentally shifted. Instead of factories generating profits productively through making things, banks generate profits non-productively through trading derivatives. Frequently, the growth of financial markets is fuelled by low interest rates and cheap loans. This is what happened in the US last decade, and some analysts are saying it is happening in Singapore now. On this canvas, Singapore’s authoritarian political structure is of a minor colour variation. If you look at how many countries are now inching towards authoritarianism or fascism — Spain banning videoing of police atrocity, US arresting peaceful demonstrators and spying on everyone, Canada trampling on indigenous people’s land — you will see that although Singapore could be characterised as a recalcitrant or anachronistic state hanging on to authoritarianism when democratisation was sweeping through Asia in the 90s, the tide has now changed as she could instead be characterised as leading the shift towards a global corporatist future.

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If the golden age of Capitalism gave us a growing middle class and democratisation, Late Capitalism is giving us a growing underclass, super elites, and fascism. Singapore was perplexingly different from other nations when it bucked the democratising trend. Now, she is looking depressingly like everyone else.

Alex has written eloquently on the signs of local bureaucratic and administrative failure, and I generally agree with him. However, from afar, I cannot see such details. I can only see the larger failure of vision.

Given the grave damages that Late Capitalism is causing to the world, what we need is not more ingenious tweaks to keep the system going, but a fundamental re-think: if Communism does not work, and Late Capitalism is killing us, what new systems can we imagine that will better serve humanity and our ecosystem?

In turns out there are many. Gar Alperovitz and Richard Wolff, for example, are academics that argue for the co-operatives to replace the corporation as an organising entity for the new economy, and indeed, the Mondragon example is being emulated in many communities around the world. Last year, California created a new entity called the benefit corporation. This is a corporation that does not have to maximise profits but can pursue social or environmental missions. About 12 other states have passed similar laws. The public banking movement is advocating for state-owned banks that create money in a different way to avoid exponential compound interest. Brazil has created community currencies that solved many problems in its favelas. Ecuador has recognised the rights of nature in her constitution.

The world is starting to imagine a new future and putting in infrastructures to facilitate its creation. Singapore is missing from this conversation. This to me is the greater failure – a failure to think critically about the status quo and a failure to ask fundamental questions. Bureaucratic failures such as the escape of Mas Selamat, handling of strikes and riots, etc., are but symptoms of this greater failure. To be fair, this is a failure not just of the ruling party, but of the opposition party, the mass media, and to some extent, civil society as well. The Singapore government and the people are perhaps a little too preoccupied with the domestic power struggle, forgetting the larger tides sweeping the world.

I want to end by thinking about solutions. Perhaps one solution is for Singaporeans to engage more broadly with the world, to learn about new experiments, and to take part in them. It makes no sense to only talk about voting the PAP out at the next election while ignoring the larger global issues. Whoever takes over will face the same constraints. The problems that Singapore faces now have grown much bigger than the PAP. The PAP has shrunk from being a bully on a hill to being a bully on a sand hill in a beach playground, precipitously close to a gathering tsunami. Singapore’s future requires much more than a PAP reform or ouster. Singaporeans must thus think bigger and faster in order to find a real and lasting solution.