Self-interest points way to city states

RECENT predictions that Quebec may secede from the federation of Canada remind me of a talk last month in Singapore by George Yeo, the minister of information and health. He pointed to a new economic trend: the rise of city states coinciding with the gradual dismantling and/or reorganisation of nation states. His main point was that because of revolutionary changes in technology and communications, big may no longer be best.

Six months earlier, Allan Gottlieb, former Canadian ambassador to the United States, although bemoaning the trend, also pointed to the possible break-up of Canada and the future rise of city states or regional groupings acting in their own interests.

In this context, Quebec could well seek to align itself economically with eastern US states. And western Canadian provinces could break away to integrate more deeply with thriving US Pacific Coast states. In the latter case, the regional economic integration is already happening.

The fact that regional economic groupings are the wave of the future has been widely forecast but mainly on a large scale, as in the European Union or Nafta (the North American Free Trade Agreement). The re-emergence of thriving autonomous city regions is the new element in the debate that bears watching. Proponents see a new pattern of competition and economic co-operation not unlike Europe before nation states, with international organisations like the old Hanseatic League providing loose co-ordination.

Kazakhstan, Shanghai, the Baltics and the new Palestinian state are good illustrations of Mr Yeo's point that increasing competition for human talent and investment is taking place at city/region level. Nation states are breaking up economically. States with populations of less than 10 million now make up two- thirds of the UN. This does not mean large nation states will disappear; it simply means their powers to tax, deliver services and redistribute wealth are weakening.

The rapid urbanisation of vast areas of the global economy, whether in Mexico or Asia, also supports Mr Yeo's admittedly biased view that the era of city regions has arrived. He notes that China has divided itself administratively into nearly autonomous city regions of two million to 10 million people. Each must resolve problems of urban planning, housing, crime control, transportation, education, job creation and attracting investment.

If Mr Yeo is correct and technology is breaking up the world into city regions, then Asia in particular will be the place to watch. Unprecedented urbanisation involving more than two billion people is predicted with the surge of population from the countryside to cities.

Singapore, for all of its successes, is not a model for everyone. Its rigidities are not desirable or translatable in other parts of Asia or in Mexico. However, as a relatively new city state, it is extraordinarily useful to study.

Because of its small size, big port and lack of natural resources, Singapore had to adopt the Japanese-inspired export growth model. It built its own structures, however, in other key areas. No revenues are contributed to a central government; no subsidies are collected. It adopted something akin to a supply- side socialism in that it massively subsidises housing, education and health care. The poor and sick are helped but not unless they exhibit 'a sense of gratitude and commitment to help themselves'. Officials describe this as socialism structured to increase production, not consumption.

The welfare programmes that exist are channelled through the family, not a government bureaucracy. Its social security system, the Central Provident Fund - which amounts to a retirement account for every individual - is being copied in regions of China.

To avoid overlords, land concentration and other evils of the past, Singapore limits leaseholds to 30 years for industrial land and golf courses, and 99 years for housing.

Immigration is rigidly controlled - for every two babies born, Singapore allows in one migrant.

Crime is not tolerated; when it exists, punishments are harsh. In a bid to prevent problems with minorities, Singapore created Group Representation Constituencies under which political parties must field multi-racial slates in parliamentary elections. The result is a highly educated, low-crime, rigidly controlled and prosperous city state that works.

Expect more of them in Asia - and elsewhere, as even some older Western societies are exploring some of Singapore's production-oriented socialist programmes.

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