The Financial Wisdom and Financial Legacy of Mr Lee Kuan Yew

Mr Lee Kuan Yew was the first Prime Minister of Singapore. After he vacated the Prime Minister position, he became the Senior Minister and then Minister Mentor.  He died in 2015. He was a very famous politician. (See https://en.wikipedia.org/wiki/Lee_Kuan_Yew).

There is an aspect of him that is not much publicized. He had great financial wisdom. With him as the leader, the Singapore government kept on increasing its wealth. There is so much money, shares, bonds, buildings and land parcels owned by the Singapore government that it is doubtful anybody really knows the total wealth of the Singapore government.

The Singapore government has never put a number there. Speculations by non-government people have put the number at $500 billion to $1 trillion. (One Singapore dollar is about US$0.70). Compare this with the annual government expenditure of about $50 billion. There aren't many governments around the world that can run for 20 years without a single further tax dollar.

But the wealth of the Singapore government is really a lot more. Because the speculations have never included land value and the many buildings owned by the government. Do you know that it will take 56 man-years to come up with a number for the land value? (That means 56 man working together will take 1 year to produce the total worth, or 1 man working alone will take 56 years). Here is the official statement from the Ministry of Finance, Singapore: "The Accountant-General said that it would take 56 man-years to conduct a complete valuation of the physical assets, even though he had already produced the listing (without valuation figures)."

The above is just a glimpse of the wealth amassed by the Singapore government under the leadership of Mr Lee Kuan Yew.

What is his financial wisdom?

He put into law that every elected government cannot withdraw money from the Singapore reserve, except under very strict conditions. And he created an elected President to help enforce this. The elected President has to approve withdrawals from the Singapore reserve.

He put into law that any surplus money after each term of an elected government will mostly be put into the Singapore reserve.

He put into law that any sales of land must put the money into the Singapore reserve. Land is a very valuable resource in Singapore. Land sales recently have been about $10 to $25 billion a year. That is, land sales alone could be about half the size of the government budget. But it is squirreled away into the Singapore reserve.

This financial wisdom is implemented even at the lower level of Town Councils. Every term of an elected Town Council can use the town council reserve only for very specific items. Again, any surplus after one term will mostly go into the town council reserve.

Unlike some old folks who store their wealth under their pillows, he set up two sovereign wealth funds to actively manage the Singapore reserve and to grow through investment.

The Singapore government loves surpluses and reserves. Every government and semi-government organization has lots of reserve. As a side note, this love for huge reserves has permeated non-government organizations, including charity organizations.

In very simple terms, he believed that almost anything and everything that the government does must lead to a positive financial position. Even a non-financial policy to control the car population in Singapore scoops in billions of dollar every year.

The legacy of his financial wisdom is seen today not only in the gigantic Singapore reserve but, most importantly, in the many ways that the Singapore government makes huge money. Describing them all will need a long post. The important point to note is that the Singapore reserve is still growing very very fast.

(A future post: Comparing the financial wisdom of Mr Lee Kuan Yew and Mr Jay Hammond, who was an ex-Governor of Alaska)

Lee Kuan Yew wanted everywhere.

From blogging4myself

The current Prime Minister of Singapore hopes a future Prime Minister will be another Lee Kuan Yew. (Sep 2013)

Lee Kuan Yew is in demand everywhere. Right across the globe, Jamaica also longs for a Lee Kuan Yew. (Benevolent Dictator, Anyone? Sep 2013, by Ronald Mason)

"Enough. No more loose talk of our potential to be the greatest little country on earth. It's time to realise the dream. The thoughts of a benevolent dictator came in the acknowledgement of the 90th birthday on September 16 of Lee Kuan Yew. The Sustainability Institute has published an article titled 'Singapore leads the good life under a benevolent dictator."

It is also time for Singapore to have a Jay Hammond, the leader who established a permanent citizen dividend.

Governor Jay S. Hammond Day. July 21st

Remembering a great man, Jay Hammond, the first leader of a citizen-ownership democracy, where citizens own the country and get a citizen dividend.

1. Extracted from
http://gov.alaska.gov/parnell/press-room/full-proclamation.html?pr=6197

Governor Jay S. Hammond Day

WHEREAS, Jay S. Hammond was born on July 21, 1922, in Troy, New York, and went on to serve two terms as Alaska’s fourth Governor; and

WHEREAS, Governor Hammond presided over the State of Alaska during a time of tremendous growth, including the construction of the Trans Alaska Pipeline System and the first development of Alaska’s North Slope oil resources. He worked to strengthen a diversified Alaskan economy based broadly in our wealth of renewable resources, encouraging the pursuit of Alaskan agriculture and establishing the Alaska Permanent Fund Dividend; and

NOW, THEREFORE, I, Sean Parnell, Governor of the State of Alaska, do hereby proclaim July 21, 2012 as:

Governor Jay S. Hammond Day

in Alaska, and encourage Alaskans to remember his service to our state and honor his memory on his birthday.

2. Extracted from
http://www.akbizmag.com/Alaska-Business-Monthly/April-2013/Legislature-Honors-Late-Alaska-Governor-Jay-Hammond/

Legislature Honors Late Alaska Governor Jay Hammond

Friday, April 12, 2013, Juneau, Alaska – Alaska’s fourth governor’s legacy was honored by the Alaska Legislature today with the Senate’s unanimous passage of House Bill 130. The bill, sponsored by Representative Paul Seaton, establishes July 21 of each year as Jay Hammond Day.

“Governor Hammond was a great Alaskan leader and believed that Alaskans should embrace the ownership of their resources,” Seaton, R-Homer, said. “His life experiences as a Bush Pilot, Fisherman, Wildlife Agent, Municipal and Legislative leader gave Jay Hammond a unique and dynamic perspective as Governor. He was the right man for a time of significant change in Alaska and helped chart a course for Alaska that has served us well.”

3. Extracted from
http://gov.alaska.gov/parnell/press-room/full-proclamation.html?pr=6556

WHEREAS, during his first term as Governor in 1976, voters passed a constitutional amendment to establish the Permanent Fund and in 1982 the first dividend was distributed to qualified Alaska residents; and

WHEREAS, Alaskans continue to benefit from his contributions and his legacy of entrusting the people of Alaska with the future of our great state.

NOW, THEREFORE, I, Sean Parnell, Governor of the State of Alaska, do hereby proclaim July 21, 2013 as:

Governor Jay S. Hammond Day

in Alaska, and encourage Alaskans to remember his service to our state and honor his memory on his birthday.

Dated: July 19, 2013

The Alaska Dividend, by Jay Hammond

Diapering the Devil: How Alaska Helped Staunch Befouling by Mismanaged Oil Wealth: A Lesson for Other Oil Rich Nations.
JAY HAMMOND

(From this book: The Governor’s Solution: How Alaska’s Oil Dividend Could Work in Iraq and Other Oil-Rich Countries. 2012)

This is a long story of the Alaska Dividend, written by Jay Hammond, the first leader of a citizen-ownership democracy.

It contains many gems. Here's one.

"Folk from elsewhere seem far more aware of a dividend program’s potentials than many Alaskan politicians who covertly hate it simply because if they can’t get their hands directly on those dividend dollars, it compels them to consider cutting budgets or advocating new taxes. Both actions demand intestinal fortitude, seemingly in short supply these days."

It has profound lessons for setting up a citizen dividend programme. Politicians will always want to use it for other things. Alberta's Heritage Fund died at the hands of politicians. Alaska's Fund survived when voters chase away politicians who tried to get their hands on the fund. Even when citizens are lucky to see such a fund, constitutional protection and continuous citizen vigilance are needed.

Here's another gem.

"The State of Alaska elected to put a portion of its vast Prudhoe Bay annual royalty revenue into a citizens’ Permanent Fund for investment in securities. Each year a dividend from this Fund is dispersed to every Alaskan citizen. This Fund was the first to recognize the full rights of citizens to share directly in the income from public assets." (Originally by Vernon Smith in WSJ)

A citizen-ownership democracy is a democracy that recognizes the full rights of citizens to income from common wealth (public assets). Oil is just one form of common wealth.

Jay Hammond - first leader of a citizen-ownership democracy.

Jay Hammond
From www.sitnews.us

Jay Hammond has a place in history.

Jay Hammond was the governor of Alaska from 1974 to 1982. During his time in office, Alaska started the Alaska Permanent Fund and started paying annual dividends to Alaskans. Part of Alaska's oil revenue is placed in the Alaska Permanent Fund. Investment returns are annually distributed to all Alaskans.

Alaskans have been getting their citizen incomes for each of the last 31 years.

Jay Hammond was the founder of the first citizen-ownership democracy where citizens get an annual citizen income from the state's wealth.

The New York Times called him the Governor of Alaska who paid Dividends.

Jay Hammond was also called the Father of the Alaska Basic Income. Before he died in 2005, he tried to get the Alaska model adopted by other countries. He also fought to put more of Alaska's oil revenue into the Alaska Fund.

"If half of oil tax revenues went into the fund, as Hammond envisioned, every Alaska family of four could expect to receive more than $16,000 this year."

His policy benefits Alaskans long after his governorship, and even after his death. 

Did he give out charity to Alaskans through this Fund? No. He instituted a system that gives out what the Alaskans rightfully deserve as owners of Alaska. He is a great man. Other politicians deprive citizens of their rightful citizen income.

(Note: The concept of the Permanent Fund is originally championed in 1969 by then-governor Keith Miller and Anchorage Times publisher and editor Robert Atwood.)

Follow-up (24 April 2014)
Many other names come up in various records about the Alaska Permanent Fund and dividend.
For example,
Hugh Malone (Hugh Malone's life taught Alaska true meaning of statesmanship)

"Hugh's primary goal in public service was to make sure the people of Alaska got a fair share out of the enormous bounty of oil wealth created by the discovery of the supergiant Prudhoe Bay oil field on state-owned land.

Hugh would soldier on against apparently impossible odds to win victory after victory. At the beginning of the 1982 session, all the smart money said that the Legislature would never pass a bill that would provide permanent fund dividends equally to all Alaskans -- but with the help of Hugh (then in the minority), Gov. Jay Hammond, and a tiny band of activists, that is the program we have today."