Singapore, in fact, had so many problems on the eve of independence in 1965 that pundits predicted its early demise as a nation. A two-year federation with Malaysia had collapsed. The Chinese and Malay communities were at each others' throats. College campuses were roiled by leftist students. Communists had infiltrated the unions. A bomb claimed three lives in the inner city. On top of all that, Singapore had no army and was without resources or even room to grow. It had to import much of its water and food, producing little else beyond pigs and poultry and fruits and vegetables. Sewers overflowed in slums that reached across the island. Unemployment was 14 percent and rising; per capita income was less than $1,000 a year.
Lee Kuan Yew, the Cambridge-educated prime minister who led Singapore through six years of self-rule and the first 25 years of independence, was so anxious about the future he had trouble sleeping. His wife got a doctor to prescribe tranquilizers. When the British high commissioner arrived at his residence one day with an urgent message from her majesty's government, a physically exhausted Lee had to receive the envoy while lying in bed. "We faced tremendous odds and an improbable chance of survival," he wrote in his memoir. "...We inherited the island without its hinterland, a heart without a body."
Lee's father was an inveterate gambler whom Lee remembers turning violent after losing nights at the blackjack table and demanding that his wife give him jewelry to pawn. One of the first things Lee Kuan Yew did after independence was take aim at vice. He banned casinos. He slapped high taxes on tobacco and alcohol. He targeted drug traffickers. Singapore emerged as a no-nonsense, moralistic society not noted for humor or levity.
Lee stepped down as prime minister in 1990. He had presided over a generation of stunning economic growth, but no one considered Singapore a world-class city like London, New York or Tokyo. There was no magnet except business—no arts to speak of, no creativity, no unpredictability, not a hint of wackiness. And that was costing Singapore a lot of money in lost tourist revenue and expatriates who found Thailand or Malaysia more interesting. The job of fine-tuning Singapore and ushering in an era that didn't equate fun with guilt fell to the prime ministers who followed Lee—Goh Chok Tong and, in 2004, Lee's elder son, Lee Hsien Loong. The younger Lee instructed his cabinet ministers to look at ways of "remaking" Singapore.
Tourism accounts for only about 3 percent of Singapore's economy, and therein lies the motivation to fiddle with success: the pint-size country needs to stay competitive to survive, whether it's to cash in on the region's booming tourism market or to nurture an atmosphere in which creativity takes root. The bottom line for the government in most policy decisions is money—not money for greed's sake but money to provide the foundation for a stable, prosperous middle class that holds together an ethnically and religiously diverse population.
Lee Kuan Yew, who will turn 84 this month, spends time these days as an elder statesman for Asia, advising other countries how to prosper in a global economy. No one doubts his credentials. Singapore's per capita income has soared to $29,940, one of the highest in Asia. Its port is the world's busiest as measured by tonnage. Its national carrier, Singapore Airlines, is the world's most profitable and has been voted by readers of Condé Nast Traveler the best airline in the world 18 of the past 19 years. The airline has 9 new aircraft and 88 more on order, and will pay cash for every one of them. Singapore's homeowner rate (90 percent) is among the highest in the world, as is its literacy rate and penetration of broadband. In various annual surveys, Singapore is regularly at or near the top on the list of countries that are the most business friendly, most transparent, least corrupt, most economically free, most globalized and least enmeshed in bureaucracy and red tape.
All of which raises an obvious question: How did Singapore accomplish so much with so little while many other developing countries loaded with natural resources and plentiful land failed? The answer is good governance and a widely held belief that being second best isn't good enough. Instead of cronyism, Singapore embraced meritocracy. Salaries in the public sector—it's not uncommon for senior public servants to earn $500,000 a year—are competitive with those in the private sector, enabling the government and the military to recruit the best and brightest. At independence, instead of tearing down the overt symbols of colonialism in a burst of ultranationalism, Singapore accepted the reality of the past. English was made the language of business, schools and government, and streets with names like Queen Elizabeth Walk and Raffles Boulevard are reminders that Singapore's history didn't begin in 1965. Rather than playing ethnic groups off against each other, as some governments did, Singapore gave top priority to creating an integrated, racially harmonious society where everyone shared the fruits of prosperity. Quota systems, for instance, ensure that all public housing has a representative mix of Chinese, Indians and Malays.
"We have used meritocracy and pragmatism more ruthlessly than any government," says Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy. "And ours is the least ideological government in the world. It doesn't care if a principle is capitalistic or socialist. If it works, we use it."
The government, a parliamentary republic, operates like a corporate board of directors with a conscience and a mandarin upbringing. It micromanages every aspect of daily life, in some cases with extreme penalties. Drop a cigarette butt on the street and it will cost you a $328 fine. Spray-paint graffiti on a wall and you can be caned. If you are over 18 and caught with more than 15 grams of heroin, the penalty is mandatory execution. (Amnesty International says Singapore hanged about 400 people between 1991 and 2003, the highest per capita execution rate in the world.) Don't even think about jaywalking or speeding. Try urinating in a camera-equipped elevator in public housing and the police will come knocking.
If people develop bad habits, Singapore may step in with a behavior modification program, such as the government-sponsored Courtesy Campaign or the private-sector Kindness Movement. It might blitz the nation with TV ads and brochures and posters that stress the importance of being good and thoughtful neighbors. Past targets include: people who talk on cellphones at movies or fail to flush public toilets and couples who don't start their wedding dinners on time. (Couples who sent invitations urging their guests to be punctual were eligible to win $60 shopping vouchers.) When Singapore's birthrate soared, the government offered women incentives not to have children. When the birthrate plummeted, the state's Baby Bonus gave couples tax rebates and monthly child-care subsidies. To address Lee Kuan Yew's belief that intelligent couples should marry and have children to keep the gene pool strong, officialdom set up a matchmaking service complete with Love Boat cruises. It also gave it an Orwellian name, Social Development Unit, or SDU; young Singaporeans joked that SDU stood for single, desperate and ugly. (SDU hung up its cupid's quiver in late 2006. In 23 years, some 47,600 SDU members were married.)