Charlie Munger 12 Things Lee Kuan Yew Taught Me

12 Things Lee Kuan Yew Taught Me About the World

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“It’s no accident that Singapore has a much better record, given where it started, than the United States. There, power was concentrated in one enormously talented person, Lee Kuan Yew, who was the Warren Buffett of Singapore.”
                                 — Charlie Munger

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Singapore seemed destined for failure or subservience to a more powerful neighbor. The country is by far the smallest in Southeast Asia and was not gifted with many natural resources. Lee Kuan Yew thought otherwise. “His vision,” wrote Henry Kissinger, “was of a state that would not simply survive, but prevail by excelling. Superior intelligence, discipline, and ingenuity would substitute for resources.”

To give you an idea of the magnitude of success that Lee Kuan Yew achieved, when he took over, per capita income was about $400 and now, in only about two generations, it exceeds $50,000.

Here are 12 things I learned from Lee Kuan Yew about the world and the source of many of our present ills reading  Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World.

1. You need a free exchange of ideas. “China will inevitably catch up to the U.S. in absolute GDP. But its creativity may never match America’s, because its culture does not permit a free exchange and contest of ideas.”
2. Technology will change how governance operates. “Technology is going to make (China’s) system of governance obsolete. By 2030, 70% or maybe 75% of their people will be in cities, small towns, big towns, mega big towns. They are going to have cell phones, Internet, satellite TV. They are going to be well-informed; they can organize themselves. You cannot govern them the way you are governing them now, where you just placate and monitor a few people, because the numbers will be so large.”
3. Don’t try to install a democracy in a country that has never had one. “I do not believe you can impose on other countries standards which are alien and totally disconnected with their past. So to ask China to become a democracy, when in its 5,000 years of recorded history it never counted heads; all rulers ruled by right of being the emperor, and if you disagree, you chop off heads, not count heads.”
4. Welcome the best the world has to offer. “Throughout history, all empires that succeeded have embraced and included in their midst people of other races, languages, religions, and cultures.”
5. It’s about results, not promises. “When you have a popular democracy, to win voices you have to give more and more. And to beat your opponent in the next election, you have to promise to give more away. So it is a never-ending process of auctions—and the cost, the debt being paid for by the next generation. Presidents do not get reelected if they give a hard dose of medicine to their people. So, there is a tendency to procrastinate, to postpone unpopular policies in order to win elections. So problems such as budget deficits, debt, and high unmployment have been carried forward from one administration to the next.”
6. Governments shouldn’t have an easy way out. “American and European governments believed that they could always afford to support the poor and the needy: widows, orphans, the old and homeless, disadvantaged minorities, unwed mothers. Their sociologists expounded the theory that hardship and failure were due not to the individual person’s character, but to flaws in the economic system. So charity became “entitlement,” and the stigma of living on charity disappeared. Unfortunately, welfare costs grew faster than the government’s ability to raise taxes to pay for it. The political cost of tax increases is high. Governments took the easy way out by borrowing to give higher benefits to the current generation of voters and passing the costs on to the future generations who were not yet voters. This resulted in persistent government budget deficits and high public debt.”
7. What goes into a standard of living? “A people’s standard of living depends on a number of basic factors: first, the resources it has in relation to its population . . .; second, its level of technological competence and standards of industrial development; third, its educational and training standards; and fourth, the culture, the discipline and drive in the workforce.”
8. The single most important factor to national competitiveness … “The quality of a nation’s manpower resources is the single most important factor determining national competitiveness. It is a people’s innovativeness, entrepreneurship, team work, and their work ethic that give them the sharp keen edge in competitiveness. Three attributes are vital in this competition—entrepreneurship to seek out new opportunities and to take calculated risks. Standing still is a sure way to extinction. . . . The second attribute, innovation, is what creates new products and processes that add value. . . . The third factor is good management. To grow, company managements have to open up new markets and create new distribution channels. The economy is driven by the new knowledge, new discoveries in science and technology, innovations that are taken to the market by entrepreneurs. So while the scholar is still the greatest factor in economic progress, he will be so only if he uses his brains—not in studying the great books, classical texts, and poetry, but in capturing and discovering new knowledge, applying himself in research and development, management and marketing, banking and finance, and the myriad of new subjects that need to be mastered.”
9. Earning your place in history … “A nation is great not by its size alone. It is the will, the cohesion, the stamina, the discipline of its people, and the quality of their leaders which ensure it an honorable place in history.”
10. Weak leaders rely on opinion polls. “I have never been overconcerned or obsessed with opinion polls or popularity polls. I think a leader who is, is a weak leader. If you are concerned with whether your rating will go up or down, then you are not a leader. You are just catching the wind … you will go where the wind is blowing. . . . Between being loved and feared, I have always believed Machiavelli was right. If nobody is afraid of me, I am meaningless. When I say something … I have to be taken very seriously.”
11. We are fundamentally competitive. “Human beings are not born equal. They are highly competitive. Systems like Soviet and Chinese communism have failed, because they tried to equalize benefits. Then nobody works hard enough, but everyone wants to get as much as, if not more than, the other person.”
12. The value of history: “If you do not know history, you think short term. If you know history, you think medium and long term.”

 

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Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World offers Yew’s timeless wisdom.