It never fails to amaze me that in the three pillars of policy -
housing, education and health - Singapore has achieved what even the US
cannot.
How did we accomplish this? Our carrots are accompanied by sticks.
Take
housing for example. Under both Clinton and Bush, the US Executive
forced lenders to relax their lending standards to accommodate
low-income minorities. The resulting NINJA loans, catalyzed by
securitization, helped cause the largest financial crisis the world has
ever known.
Back home, the Singapore Government basically guarantees every Singaporean access to mortgage finance at subsidized rates. The carrot.
I
don't know how to underscore the sheer generosity of this. Anyone who
has ever purchased knows that the first port of call is not your agent,
but your broker. No loan, no deal.
Suffice to say
that a few years ago, the typical Australian was paying more in mortgage
interest than the typical Singaporean earns annually. Young
Singaporean couples can house-hunt with confidence, knowing their
deposit will not be jeopardized by financing issues.
The price of all this? The government garnishes your wages, eliminating the risk of default. The stick.
The beauty of the Singapore system lies in its simplicity. Carrots, balanced by sticks.
