Do entrepreneurs need democracy?
Established businesses love Singapore's political predictability. But does that same order quash new ones?
Otium Den recap:
Pro-natalism doesn’t work. Communities do.
Britain needs muscular citizenship
AI vs The Industrial Revolution
I know that my bi-monthly musings can often sound like a paean to Singapore. If only Britain did this like the city state, it would be so much better off.
Singapore thinks longterm. Policy doesn’t bend to every fleeting whim. But that obduracy is made possible by political apathy. The People’s Action Party’s (PAP) grip on power isn’t just a result of press control and nine-day election campaigns. Ask a Singaporean about politics and you are unlikely to elicit a forthright response. Such neutrality is generally born of disengagement rather than fear of saying the wrong thing.
The upside is a government which gets on with things instead of chasing polls. Consistency compounds, and capital flows to a predictably business-friendly regime. Singapore’s founding Prime Minister Lee Kuan Yew always argued that people care more about prosperity than democracy. So far, so true, as citizens prove willing to sacrifice a little of the latter for more of the former.
But is there another trade-off to this trade-off?
Does Singapore’s political order quash entrepreneurialism? The country’s biggest media outlet, The Straits Times, recently confronted that conundrum. Given Singapore produces top students, why aren’t there more entrepreneurs? Perhaps a practical consequence, it suggests, of living in a small country. Six million residents is hardly a mass market.
However, bigger opportunities lie close by. Singapore shares a maritime border with Indonesia, the world’s fourth most populous country. It is just 600 miles south of Vietnam, one of the world’s fastest growing economies. In other words, given the relative know-how and capital depths in Singapore, it should be a hub for start-ups to target the wider region.
And yes, it has famous domestic success stories that did exactly that. The ride-hailing app Grab is one example. It commands a 70% share of the wider regional market. But I’d argue it demonstrates execution over ideation. Grab took a proven model from Uber and localised it. It received strong backing from Singapore’s sovereign wealth fund Temasek and it benefitted from Singapore’s early deregulation of the industry. I don’t mean to pettily undermine its achievements in driving Uber out. But it was never a crazy moonshot idea that someone took a punt on.
Singapore’s younger citizens aren’t immune from the fabled colds of American sneezes. They imbibe start-up rhetoric from self-improvement podcasts and the like. But there’s a chasm between the chatter and the action. 37% of students say they have given “repeated serious thoughts” to founding a business. Yet only one percent are active founders, under half of the OECD average.
Hence, there is some substance to more informal thoughts on Singapore’s perceived lack of “hustle”. A local on X argues that “Singapore’s system is so well-designed that the rational move for a smart person is to never leave it.” There is, he argues, an established route from its flagship university NUS to its flagship bank DBS. Work hard, don’t rock the boat, and you’ll be earning $120,000 (£70,000) by 30. Another user adds less politely, “running a startup in Singapore is so negative EV (expected value) that you select for retards who failed out of the system.”
That explains why small bootstrapped businesses can be viewed sceptically. Starting one suggests there is something wrong with you. It’s an impression I gauged from running my own venture here. Local suspicion only subsided once we had a financial track record and sales tax registration that showed we had some clients.
You see the same trend with the mature start-ups Singapore attracts today. OpenAI established its APAC headquarters here in 2024. The city-state’s order makes it the obvious place for the tech behemoth to expand its regional reach. But providing safe harbour is a very different proposition to dynamic cultures where companies like this begin. The same story persists in the entrepreneurs who make Singapore their home. Facebook’s co-founder Eduardo Saverin is one of Singapore’s richest residents. But it’s a place for him to protect and invest his vast fortune, rather than make it.
Britain’s current malaise makes Singapore’s problem - the career opportunities are too good to launch a start-up - look like a good one to have.
But there is a deeper link here between political and entrepreneurial cultures. Dynamic forms of both speak to a marketplace of ideas. It engenders a sense that things could always be different. And it widens horizons. It’s no coincidence that orderly regimes like Singapore also tend to lack much of a cultural hinterland.
Nor is it a coincidence that Britain, one of the world’s oldest democracies, has such outsized commercial and cultural influence. Things that perhaps live on more vibrantly through the descendants of its political dissidents in America today. But Britain nonetheless still punches above its weight in the entrepreneurial arena. It ranks in the world’s top top three start-up ecosystems (above Singapore) and London remains Europe’s number one start-up hub.
It’s a tribute to a spirit that survives in spite of political dysfunction. Britain’s democracy has shaped a culture of ingenuity, expertise, and even eccentricity that forms the foundation of an entrepreneurial class. But that same democracy now chases a popular sentiment that views entrepreneurs as wealth hoarders, rather than creators.
So we get punitive legislation in the form of Labour’s new Employment Rights Act that makes a bad hire an existential risk. Or increasing dividend taxes that incentivise business owners to optimise expenses instead of maximising profits. Or struggling capital markets where pernicious pension reforms and equity taxes are undoing the London Stock Exchange’s historic preeminence. Great British companies subsequently pursue American listings where policy doesn’t impede liquidity.
Britain has something rare, and must ask the electorate if they really want to throw it away. Because Brits will always create great companies, and the wealth and jobs that follow them. Do we want those founders and workforces to stay in Britain? Or take their nascent success stories to greener pastures elsewhere. There are plenty ready to welcome them.