Lee Kuan Yew's wisdom

I have promised to stick to economic related issues. But I just can't resist telling everyone Lee Kuan Yew has said something.

No comment needed. Lee Kuan Yew is better than Sun Bin. He is Sun Zi. There has nothing Lee Kuan Yew said in the past that I could find fault in. I need to wait for him to get a lot older, maybe he could make a careless mistake and I can find something to say....but I am happy we have such bright mind in our species. With him here we are not afraid of competing with the aliens, or E.T. :))

Original link in Der Spiegel, excerpt below.

August 8, 2005

"It's Stupid to be Afraid"
Singapore's first-ever prime minister, long-time government head and current political mentor Lee Kuan Yew talks about Asia's rise to economic power, China's ambitions and the West's chances of staying competitive.

The elder statesman Lee: "We run a meritocracy."

SPIEGEL: The political and economic center of gravity is moving from the West towards the East. Is Asia becoming the dominant political and economic force in this century?
Mr. Lee: I wouldn't say it's the dominant force. What is gradually happening is the restoration of the world balance to what it was in the early 19th century or late 18th century when China and India together were responsible for more than 40 percent of world GDP. With those two countries becoming part of the globalized trading world, they are going to go back to approximately the level of world GDP that they previously occupied. But that doesn't make them the superpowers of the world.

SPIEGEL: Their leading politicians have publicly discussed the so-called "Asian Century".
Mr. Lee: Yes, economically, there will be a shift to the Pacific from the Atlantic Ocean and you can already see that in the shipping volumes of Chinese ports. Every shipping line is trying to get into association with a Chinese container port. India is slower because their infrastructure is still to be completed. But I think they will join in the race, build roads, bridges, airports, container ports and they'll become a manufacturing hub. Raw materials go in, finished goods go out.

SPIEGEL: You've been the leader of a very successful state for a long time. Returning from your time in China, are you afraid for Singapore's future?
Mr. Lee: I saw it coming from the late 1980s. Deng Xiaoping started this in 1978. He visited Bangkok, Kuala Lumpur and Singapore in November 1978. I think that visit shocked him because he expected three backward cities. Instead he saw three modern cities and he knew that communism -- the politics of the iron rice bowl -- did not work. So, at the end of December, he announced his open door policy. He started free trade zones and from there, they extended it and extended it. Now they have joined the WTO and the whole country is a free trade zone.

SPIEGEL: But has China's success not become dangerous for Singapore?
Mr. Lee: We have watched this transformation and the speed at which it is happening. As many of my people tell me, it's scary. They learn so fast. Our people set up businesses in Shanghai or Suzhou and they employ Chinese at lower wages than Singapore Chinese. After three years, they say: "Look, I can do that work, I want the same pay." So it is a very serious challenge for us to move aside and not collide with them. We have to move to areas where they cannot move.

SPIEGEL: Such as?
Mr. Lee: Such as where the rule of law, intellectual property and security of production systems are required, because for them to establish that, it will take 20 to 30 years. We are concentrating on bio medicine, pharmaceuticals and all products requiring protection of intellectual property rights. No pharmaceutical company is going to go have its precious patents disclosed. So that is why they are here in Singapore and not in China.

SPIEGEL: But the Chinese are moving too. They bought parts of IBM and are trying to take over the American oil company Unocal.
Mr. Lee: They are learning. They have learnt takeovers and mergers from the Americans. They know that if they try to sell their computers with a Chinese brand it will take them decades in America, but if they buy IBM, they can inject their technology and low cost into IBM's brand name, and they will gain access to the market much faster.

SPIEGEL: But how afraid should the West be?
Mr. Lee: It's stupid to be afraid. It's going to happen. I console myself this way. Suppose, China had never gone communist in 1949, suppose the Nationalist government had worked with the Americans -- China would be the great power in Asia -- not Japan, not Korea, not Hong Kong, not Singapore. Because China isolated itself, development took place on the periphery of Asia first.

SPIEGEL: Such a consolation won't be enough for the future.
Mr. Lee: Right. In 50 years I see China, Korea and Japan at the high-tech end of the value chain. Look at the numbers and quality of the engineers and scientists they produce and you know that this is where the R&D will be done. The Chinese have a space programme, they're going to put a man on the Moon and nobody sold them that technology. We have to face that. But you should not be afraid of that. You are leading in many fields which they cannot catch up with for many years, many decades. In pharmaceuticals, I don't see them catching up with the Germans for a long time.

SPIEGEL: That wouldn't feed anybody who works for Opel, would it?
Mr. Lee: A motor car is a commodity -- four wheels, a chassis, a motor. You can have modifications up and down, but it remains a commodity, and the Chinese can do commodities.

SPIEGEL: When you look to Western Europe, do you see a possible collapse of the society because of the overwhelming forces of globalization?
Mr. Lee: No. I see ten bitter years. In the end, the workers, whether they like it or not, will realize, that the cosy European world which they created after the war has come to an end.

SPIEGEL: How so?
Mr. Lee: The social contract that led to workers sitting on the boards of companies and everybody being happy rested on this condition: I work hard, I restore Germany's prosperity, and you, the state, you have to look after me. I'm entitled to go to Baden Baden for spa recuperation one month every year. This old system was gone in the blink of an eye when two to three billion people joined the race -- one billion in China, one billion in India and over half-a-billion in Eastern Europe and the former Soviet Union.

SPIEGEL: The question is: How do you answer that challenge?
Mr. Lee: Chancellor Kohl tried to do it. He did it halfway then he had to pause. Schroeder tried to do it, now he's in a jam and has called an election. Merkel will go in and push, then she will get hammered before she can finish the job, but each time, they will push the restructuring a bit forward.

SPIEGEL: You think it's too slow?
Mr. Lee: It is painful because it is so slow. If your workers were rational they would say, yes, this is going to happen anyway, let's do the necessary things in one go. Instead of one month at the spa, take one week at the spa, work harder and longer for the same pay, compete with the East Europeans, invent in new technology, put more money into your R&D, keep ahead of the Chinese and the Indians.

SPIEGEL: You have seen yourself how hard it is to implement such strategies.
Mr. Lee: I faced this problem myself. Every year, our unions and the Labour Department subsidize trips to China and India. We tell the participants: Don't just look at the Great Wall but go to the factories and ask, "What are you paid?" What hours do you work?" And they come back shell-shocked. The Chinese had perestroika first, then glasnost. That's where the Russians made their mistake.

SPIEGEL: The Chinese Government is promoting the peaceful rise of China. Do you believe them?
Mr. Lee: Yes, I do, with one reservation. I think they have calculated that they need 30 to 40 -- maybe 50 years of peace and quiet to catch up, to build up their system, change it from the communist system to the market system. They must avoid the mistakes made by Germany and Japan. Their competition for power, influence and resources led in the last century to two terrible wars.

SPIEGEL: What should the Chinese do differently?
Mr. Lee: They will trade, they will not demand, "This is my sphere of influence, you keep out". America goes to South America and they also go to South America. Brazil has now put aside an area as big as the state of Massachusetts to grow soya beans for China. They are going to Sudan and Venezuela for oil because the Venezuelan President doesn't like America. They are going to Iran for oil and gas. So, they are not asking for a military contest for power, but for an economic competition.

SPIEGEL: But would anybody take them really seriously without military power?
Mr. Lee: About eight years ago, I met Liu Huaqing, the man who built the Chinese Navy. Mao personally sent him to Leningrad to learn to build ships. I said to him, "The Russians made very rough, crude weapons". He replied, "You are wrong. They made first-class weapons, equal to the Americans." The Russian mistake was that they put so much into military expenditure and so little into civilian technology. So their economy collapsed. I believe the Chinese leadership have learnt: If you compete with America in armaments, you will lose. You will bankrupt yourself. So, avoid it, keep your head down, and smile, for 40 or 50 years.

SPIEGEL: What are your reservations?
Mr. Lee: I don't know whether the next generation will stay on this course. After 15 or 20 years they may feel their muscles are very powerful. We know the mind of the leaders but the mood of the people on the ground is another matter. Because there's no more communist ideology to hold the people together, the ground is now galvanised by Chinese patriotism and nationalism. Look at the anti-Japanese demonstrations.

SPIEGEL: How do you explain that China is spending billions on military modernisation right now?
Mr. Lee: Their modernisation is just a drop in the ocean. Their objective is to raise the level of damage they can deliver to the Americans if they intervene in Taiwan. Their objective is not to defeat the Americans, which they cannot do. They know they will be defeated. They want to weaken the American resolve to intervene. That is their objective, but they do not want to attack Taiwan.

SPIEGEL: Really? They have just passed the aggressive anti-secession law and a general has threatened to use the nuclear bomb.
Mr. Lee: I think they have put themselves into a position internationally that if Taiwan declares independence, they must react and if Beijing's leadership doesn't, they would be finished, they would be a paper tiger and they know that. So, they passed the anti-secession law to tell the Taiwanese and the Americans and the Japanese, "I do not want to fight, but if you allow Taiwan to go for independence, I will have to fight." I think the anti-secession law is a law to preserve the status quo.

SPIEGEL: Another critical point in Asia is the growing rivalry between China and Japan.
Mr. Lee: It's been dormant all this while, right? But I think several things happened that upped the ante. They possibly coincide with the policy of Japanese Prime Minister Junichiro Koizumi. There is this return to "we want to be a normal country." They are sending ships to Afghanistan to support the Americans, they sent a battalion to Iraq, they reclaimed the Senkaku islands, and most recently, they joined the Americans in declaring that Taiwan is a strategic interest of Japan and America. That raises all the historical memories of the Japanese taking away Taiwan in 1895. Then they're applying to be a permanent member of the Security Council. So, I think the Chinese decided that this is too much. So, they have openly said they will object to Japan becoming a member of the Security Council.

SPIEGEL: Well, the United States said the same to Germany.
Mr. Lee: Exactly. So, the whole process is trying to define the position for the next round, maybe in 10 to 15 years, by which time the world will be a different place.SPIEGEL: Can the Chinese convince their North Korean ally Kim Jong-Il to get rid of his nuclear program?Mr. Lee: North Korea is a riddle wrapped up in an enigma. The leaders in North Korea believe that their survival depends upon having a bomb -- at least one nuclear bomb. Otherwise, sooner or later, they will collapse and the leaders will be put on trial like Milosevic for all the crimes that they have committed. And they have no intention of letting that happen.

SPIEGEL: Who can stop them? The Americans?
Mr. Lee: Yes, but at a price, a heavy price.
SPIEGEL: Could the Chinese do it?
Mr. Lee: Possibly. By denying food, denying fuel, so they would implode. But will the Chinese benefit from an imploded North Korea? That brings the South into the North. That brings the Americans to the Yalu River. So, the North Koreans have also done their calculations and know that there are limits.S

PIEGEL: So Kim is in a strong position?
Mr. Lee: If I were Kim I would freeze the programme, tell the Americans you can inspect, but if you attack me, I will use it. That leaves the Americans with the problem of checking and verifying and intercepting ships, aircraft, endless problems.

SPIEGEL: Would that save Kim's regime?
Mr. Lee: In the long run I think they will implode sooner or later because their system cannot survive. They can see China, they can see Russia and Vietnam, all opening up. If they open up, their system of control of the people will break down. So they must go.S

PIEGEL: If the six party talks fail, do you foresee an arms race in Eastern Asia?
Mr. Lee: If the nuclear program is frozen, there won't be an arms race. Eventually, it is not in China's interests to have an erratic Korea nuclear-armed and a Japan nuclear-armed. That reduces China's position.

SPIEGEL: Many Americans fear that China and the US are bound to become strategic rivals. Will this become the great rivalry of the 21st century?
Mr. Lee: Rivals, yes, but not necessarily enemies. The Chinese have spent a lot of energy and time to make sure that their periphery is friendly to them. So, they settled with Russia, they have settled with India. They're going to have a free trade agreement with India -- they're learning from each other. Instead of quarrelling with the Philippines and the Vietnamese over oil in the South China Sea, they have agreed on joint exploration and sharing. They've agreed on a strategic agreement with Indonesia for bilateral trade and technology.

SPIEGEL: But the Americans are trying to encircle China. They have won new bases in Central Asia.
Mr. Lee: The Chinese are very conscious of being encircled by allies of America. But they are very good in countering those moves. South Korea today has the largest number of foreign students in China. They see their future in China. So, the only country that's openly on America's side is Japan. All the others are either neutral or friendly to China.

SPIEGEL: During your career, you have kept your distance from Western style democracy. Are you still convinced that an authoritarian system is the future for Asia?
Mr. Lee: Why should I be against democracy? The British came here, never gave me democracy, except when they were about to leave. But I cannot run my system based on their rules. I have to amend it to fit my people's position. In multiracial societies, you don't vote in accordance with your economic interests and social interests, you vote in accordance with race and religion. Supposing I'd run their system here, Malays would vote for Muslims, Indians would vote for Indians, Chinese would vote for Chinese. I would have a constant clash in my Parliament which cannot be resolved because the Chinese majority would always overrule them. So I found a formula that changes that...

SPIEGEL: ... and that turned Singapore de facto into a one party state. Critics say that Singapore resembles a Lee Family Enterprise. Your son is the Prime Minister, your daughter-in-law heads the powerful Development Agency...
Mr. Lee: ... and my other son is CEO of Singapore Telecoms, my daughter is head of the National Institute for Neurology. This is a very small community of 4 million people. We run a meritocracy. If the Lee Family set an example of nepotism, that system would collapse. If I were not the prime minister, my son could have become Prime Minister several years earlier. It is against my interest to allow any family member who's incompetent to hold an important job because that would be a disaster for Singapore and my legacy. That cannot be allowed.

The interview was conducted by editors Hans Hoyng and Andreas Lorenz.

Translated from the German by Christoper Sultan


Anonymous said...


I found the interview excellent in many regards, but I do have a few negative responses that may be worth considering:

That “cozy European world” where “workers sit on boards,” asking for vacation time—that was not the world of my parents or their parents. The worldview of this statement does not do any justice to the experience of the average worker in the west. Remember, one generation back for me—two maybe for you—lie those who experienced the Great Depression. The labor movement of the west was born in this crucible. It looked to the east—and communism—and found ashes and lies. (Am sure you have read “Grapes of Wrath.”) Through their frugality and hard work, the west was reborn. Many of these people are still alive—my mother is. There were no vacations. And, yes, labor should sit on corporate boards. But I can see why Mr. Lee would not be too thrilled about that.

To tell them, their children or grandchildren to go to Chinese factories and to inquire how long Chinese work or for what salaries, while it may seem celebratory of Chinese hard work, is, if anything, too condescending and dismissive—arrogant is a better word, I think.

Furthermore, all this is being said by one who is quite, quite comfortable—and very well-off. His dismissal of his nepotism is hardly believable. He may glory in the hard work of the average Chinese, but he makes sure his and his family’s pockets are well lined. We are to trust him that this is a meritocracy! Yup. Yup. That’s what kings say about their sons, except kings used God’s imprimatur. Lee just took out the middle man, God, and decided for himself. Great move.

Personally, I think Chinese should amend and unify their labor laws. Set wages on an equal footing. This should be done throughout the world. Work is work and it should be honored. That is where the level playing field should be.

As the situation is now, the rich and connected will simply play on whatever playing field best suits their pockets. China, South America, India, and other undeveloped areas are the playing fields they like best. All they ask is that the government and conditions be stable—oh, and that labor be cheap. They have no morality beyond these simple requests. Glasnost is not their concern. In fact, they are not particularly happy with it. It causes problems for corporate heads.

I see China going through a “similar” experience that some in the west have traveled. Glasnost will be its undoing. Meanwhile, the rich will simply milk China.


Sun Bin said...

I may be biased as I am a big fan of Lee KY, you know.

So let me try to defend him :)

1. "cozy european world". LKY is a capitalist and anti-communist. He is also a socialist, "paradoxically". But there is no real conflict if you understand what he has gone through (I read his autobiography - great book). I think his view is workers' benefit should be taken care of by a retirement fund and healthcare net, as he has done in Singapore. his view is that having workers on the board will distort the business efficiency and make large corporation less competitive against small companies without a board, or foreign companies. evenutally these companies will fail (like the airlines in US), and it is not good for the workers themselves. the essence of capitalism and free market is to let everybody focus on his own specialty. workers benefit should be protected, with laws and other means, not via a board seat.

2. His comments on china visit is to remind the children how hard working their grandparents were, and do not take anything for granted. the capitalist world is a cruel darwinistic world. you do not do the workers any good by concealing the cruel fact from them. in his view, the only way to save oneself in this cruel capitalistic world is to become more competitive, and fight under these rules.

3. I don't know if he did anything to help his family. no one has any evidence for such accusation. Singapore is the least corrupted country in this world. his stake is too high there. His son Lee Hsiang-Loong graduated at the top of his class in Cambridge mathematics. He might got better access to education and connection, without LKY's intervention.

4. Yes, it is easier to be said by someone who is well off (and from a well off family). But he did work hard to get to where he is today. We were not born equal. He did not pretend to say it is a fair world. What he meant by meritocracy is that is your are smart enough and hard-working enough, there is always a chance for you to move up the social ladder. You son may have the same opportunity as LEE KY had. Your grandson Lee Hsien-Loong's. But you and I are one generation behind. China is 2 generation behind US/EU/Japan.

I do agree with you that China should do more for the workers, esp. migrant workers and the peasants. I do not think minimun wage is the best solution though, because the law enforcement in China is a lot less effective than in the US. Chinese factory owner are a lot more ruthless and dishonest than thier counterparts in US. They would find their way round it. HK has minimum wage for foreign maids, HK$3270/month. Only the Philippino maid who speak good English get such wage. Many Indonesian maids only got $1000! Imagine what would be like in China.

China is going through the painful road to capitalism. the Dickens era in England. We would just hope that they can get through this as quickly as possible and that the poor workers do not have to suffer another 2 generations.

This world sucks. But LEE KY is giving a less evil to the Singaporeans, in fact, a much lesser evil than anywhere in Asia, or even the world, considering where they started in 1965.

Sun Bin said...

... and here is a view on China by stepping back a few steps for the bigger picture

Anonymous said...


Well said and argued. You may well be right about Lee. My remarks about nepotism in regards to him seem very wide of the mark. In which case, he is extraordinary man: someone of whom Plato would be proud. I mean that sincerely. If I have a chance, I will read his autobiography.

Yes, the capitalist world as presently fashion is at best amoral. It seems to have its philosophical roots in a rather simplistic form of Darwinism. But then each age has its paradigm of how it thinks the world works or should work. Much of what I am going to say has been said elsewhere and more forcefully.

We designed capitalism in the form it now takes, as if it were a law of nature. We can do better. We can grow up. Manmade systems are simply that: Made by man. They can be refashioned. A society—or an individual life--need not be based on this kind of competition. I personally think that a life based on this kind of competition is hollow at best.

Most people, even CEO’s, would not consider their personal life meaningful if they behaved as a corporation behaves. A corporation is a construct, an artifact. Consider the following:

A corporation treats any rival with suspicion. In today’s multinational world, you never quite know who your rivals might be since one firm can diversify into many areas. Paranoia rules.

A corporation seeks any advantage it can through any means at its disposal. These means including deregulation, tax cuts, industrial espionage, control of the media and the courts. In short, we have a very powerful citizen seeking to leverage every means to its personal advantage. Corporations now have some of the same legal status as individuals. The following link is interesting in this regard, in terms of past history and present realities.


Narcissism and selfishness are paramount values.

A corporation must amass wealth and power—profit—for its owners and its stockholders. Greed is important.

A corporation must work to keep other forces from lessening its power and or increasing its responsibilities. Self-preservation no matter what the societal costs.

We now have very powerful “people” among us who are narcissistic, selfish, and greedy.

We do have the power to re-define what a corporation is, to expand its sense of responsibility and purpose. In short, to use it for the common good.

I came to Brad’s site because I found a lot of very decent and very bright people trying to solve a problem. Brad and Nouriel are among those very decent and very bright people.

I, too, was concerned about a problem, although we have not touched it yet—and we will not touch it for another 4 or 5 years or so. I saw their problem as a narrow but central piece of my own concern: Global warming and the environment.

How we do business is absolutely central to this larger issue.

Anonymous said...

Oops that last post was mine.


Anonymous said...


Your last link does reveal the paranoia of the west. :)

Very good point.


Anonymous said...

It is not wise to make comment like "... but he(LKY) makes sure his and his family’s pockets are well lined." This can be defammatory and action taken against you. If you do not have the evidence (solid evidence to prove in court), please refrain from defaming anybody.

It is not wise. Whatever personal grudges, likes or dislikes, you should keep it private in your diary. A blog is a public diary and others can claim damages against you. Drink and dont drive. Write but dont drink the pen of intoxication.

Anonymous said...

Hey~ Awesome Argues!!!

I'm hereby to read your post by chance after googling "LKY" as keywords.

I'm a Chinese scholar in NTU and very much intereted in Economics & Politics esp. those issues on China. i'm in bridging course now and about to choose my faculty soon. I wannna do a double-degree of computing & business, yet i have to pass an interview mostly concerned with business issues. I think ur blog will be a great help for me to learn to handle those economical topics in English. Thanx a loooooooooooooooooooot to most dear Sunbin ><_><