Would social market economic model take Kenya to Singapore?

The popular view is that the Singapore dream will replace the hustler story as 2027 approaches. The proponents have about two years to test the narrative and hypnotise us. Never mind hustler-dynasty story has been slowly forgotten.

Who is surprised by that? Will Singapore’s narrative be as effective? Time will tell. A new narrative could also be spun.

One of the least debated issues is what economic model will take us to Singapore.

Politically, we settled on a variant of the US model with counties mimicking the State without commensurate resources.

In education, we opted for the Eastern model, found in China, Japan, and you guessed it right, Singapore.

Never mind Rwanda and Ghana have something similar. We love copying; it’s easier than starting from first principles.

Back to the economic model, why not use countries that started from almost nothing after the Second World War (WWII) devastation as our benchmark?

I got Germany and Japan in mind. Japan’s post-WWII economic model mirrored that of the United States.

Remember General Douglas MacArthur’s occupation from 1945 to 1952?  

The Japanese post WWII economic model focused on key reforms: land, education, human capital and export growth.

Support from the US and boom from the Korean War also explain the Japanese rapid growth after WW II.

In addition, democracy was reinforced, including women’s voting and redefining the role of the emperor.

The reforms were so successful that we talk of the Japanese miracle.

What of Germany?

Germany’s recovery after World War II was another miracle.

Germany benefited from the US Marshall Fund. What could be our Marshall Fund equivalent or McArthur occupation? Starting from zero after WWII was advantageous for both countries.

They picked more efficient technology and re-examined their socio-political systems, which are hard to change.

Another secret to the rise of Japan and Germany is that, despite the war, their core values and beliefs, the soul of the nation remained unlike in the colonies where national identity was muted or destroyed. New identities were also forged, today called countries.

They are a work in progress. What are Kenya’s core values? In Germany, the economic recovery was partly driven by the social market economic model.

AI defines it as a blend of free-market capitalism and social policies, a middle ground between pure capitalism and socialism.

It drives economic growth and social welfare by combining individual freedom, private enterprise, and fair competition with State intervention to provide a strong social safety net, equal opportunity, and social cohesion.

At its core is the centrality of the individual in the economic system, not the State. Compare that with communism. Who is central in our economic system? In the constitution, it’s the individual.

Economically, the State is slowly gaining the upper hand. We all remember the one-party era and the economic stagnation that went with it.

Ever wondered why communism failed? The government should be a referee in a social market economic system, ensuring the rules are kept, not making abrupt laws or regulations. Are our regulations optimal?

Do we use new regulations, new laws and policies to benefit the majority or a few?  Noted how the referee runs as much as footballers?

What EPL (English Premier League) team do you support?  The social market economic model ensures the greatest prosperity for the greatest number of citizens; no citizen is left behind. Read that again.

That’s why it has a well-functioning welfare system, either funded by taxpayers or other sources like insurance. 

Do we have maximum prosperity for the greatest number of people in Kenya? That dream has dogged our nation since the founding of the republic. Is inequality not one of our scourges?

Doesn’t corruption lead to even greater inequality?  The social market economic model gives capitalism a human face.

Economic power

Other characteristics of social market economics include subsidiarity, responsibility at the lowest possible level.

Was that the spirit of devolution? In Kenya, the centre fears losing political and economic power.

The national government should only perform tasks that can’t be performed at the local level. The principle applies to countries in the European Union. 

Add strong property rights, ensuring fair competition, good monetary and fiscal policies.

We love stability and predictability. What of progressive wealth redistribution using the tax system? Remember the progressive tax system? To those who have more, more is expected of them in taxes.

The model allows individuals to live their economic lives in dignity and freedom with low inflation, low unemployment rates and social cohesion. 

The model, like a pair of scissors, combines the innovation and ruthless efficiency of the free market with social equity. No one can dispute that Kenya has embraced innovation and the market system. The compassionate part, the social part, is missing.

That has been filled by private welfare: the harambees by friends and family members. Has the social market model worked? Yes, Germany is a leading economic power in Europe.

The Scandinavian countries, with their variants of social market economics, are also success cases. 

The other indicator of the model’s success is the number of refugees flocking to Europe to benefit from it. Want further evidence? Why has the European Union been so successful? 

While the model has been criticised for bureaucracy, it has worked and is closer to our African systems. We should consider it as the conveyor belt to Singapore. If you have lived in Europe and the US, you can easily see and sense the difference between American capitalism and the social market system. 

Keen observers will note that the social market economic model focuses on the soft part of the economy, the philosophy and dignity of citizens.

The hardware part, like roads, rails, ports, housing and infrastructure are implied. Remember Europe and its philosophies starting from Greece? Let us ask loudly, what will happen after we get all the roads, rails, houses etc?

Shall we be happier and self-fulfilled? Does it surprise you that the social market economic system is inspired by Christianity?

In trying to turn around our economy, there is no silver bullet; we should pick what can work in our unique context and run with it. It does not matter if it’s from the east or the west, or even from our traditional societies.

Happy New Year, citizens of planet Earth.