Is Singapore too risk-averse for the digital age?

A product that insures against Grab price surges when it rains? Such a small-scale approach sums up why entrepreneurship is stifled here.

Singapore is justly renowned the world over for its many public policy successes, particularly in the realms of education and planning. The country boasts world-renowned universities, and younger students consistently excel in the influential Pisa (Programme for International Student Assessment) examinations, for example.

Policy wonks everywhere laud the Government for its patient investments in human capital and research and development, and for its long-term economic, infrastructural, and social planning. With these considerations in mind, Singapore seems well positioned to participate in, and benefit from, the fourth industrial revolution, as it is known.

Not so fast. Although I consider myself among Singapore's most ardent foreign admirers, two recent news items got me thinking about some possible stumbling blocks ahead. The first item, widely reported in the business press last month, relates to the initial public offering (IPO) of ride-hailing company Uber, planned for early next year. The company's valuation could amount to as much as US$120 billion (S$165 billion), a figure greater than the value of General Motors, Ford and Fiat Chrysler combined.

The second item relates to Singapore specifically. As The Straits Times reported in October, Singapore insurance provider NTUC Income has created a product that would offer consumers partial protection against surge pricing by ride-hailing firms when it rains - that would be Grab, most notably, with Uber out of the picture. The Straits Times reported that the plan, Droplet, "will pay up to 60 per cent of a commuter's trip fare or cancellation fee if he or she hails a ride through a ride-hailing platform and it is raining at the point of pick-up. To enjoy Droplet cover, consumers must purchase the 'rainsurance' at least a day ahead of their rides".

Two interesting items, certainly, but, other than having the ride-hailing theme in common, how are they related? And what do they tell us - or at least intimate - about education and planning in Singapore, and about the future of the country's economy?

Bluntly put, does a citizenry seen as ripe for an insurance product designed to protect it against surge pricing have the "animal spirits" - economist J. M. Keynes' term - needed to compete successfully in the digital age? To Keynes, animal spirits refer to emotional mindsets, with some people - entrepreneurs, for example - possessing brashness, confidence and boldness that transcend the dictates of reason.

To this writer, the creation of an insurance product offering partial protection against surge pricing suggests that Singaporeans' traditional caution, risk aversion and unwillingness to step out may still exist. Many commentators over the years have written of this problem - the paucity of private start-ups in Singapore that have successfully scaled up is telling in this regard - and the Government has tried to address this situation in various ways over the years.

The fact that NTUC Income is hawking such a small-bore product suggests that the island comprises rather hidebound and parochial people, focused on reducing petty irritants of daily life, not on pushing boundaries or expanding frontiers, much less aspiring to soar. To be sure, great entrepreneurs anywhere are few and far between. But can you picture many people like Peter Thiel or Elon Musk sprouting up in a place where people are seen as ripe for a policy such as that described above?

EMBRACING UNCERTAINTY

Almost a century ago, University of Chicago economist Frank Knight made the important distinction between risk, which is insurable, and uncertainty, which is not.

Economic trailblazers are willing to forgo insurability and embrace uncertainty in their quest for entrepreneurial glory.

Whether one is a devotee of Israel Kirzner, emphasising perceptiveness and opportunity discovery, or of Joseph Schumpeter, emphasising creative destruction, it is unlikely that either process will flourish in a culture where demand exists for insurance protection against surge pricing when it rains. Just saying.

And here is where education and planning in Singapore come in. Again, to cut to the chase: Are the institutional structures in place to support and sustain people possessed of animal spirits? Brilliant and creative, but quirky and difficult people? Or mavericks following unconventional trajectories and paths?

Why? Because transformative entrepreneurship historically has often been associated with such people, and it is likely that places congenial to them will shape the fourth industrial age.

In the US, Steve Jobs and Bill Gates were college dropouts. Ditto Mark Zuckerberg, Larry Ellison (Oracle), Jim Clark (co-founder of Netscape), Evan Williams (co-founder of Twitter), Jan Koum (co-founder of WhatsApp), and Michael Dell. David Karp (Tumblr), and Mike Hudack (Blip.tv, Facebook, Deliveroo) trumped the above luminaries, dropping out of secondary school.

Few students drop out of secondary school in Singapore (or even university), but how does the country handle students who take unconventional trajectories, who may be late bloomers, who aren't good test takers, or who just can't master their mother tongues? What are their pathways to success?

And it's not just a school/schooling thing. In Giants Of Enterprise, a classic study of America's business greats, Richard S. Tedlow, distinguished professor emeritus at Harvard Business School, argued convincingly that "every great businessperson has been in some way a rule-breaker", that many were extremely difficult personally, some were nasty, most maniacally focused, with many suffering from forms of mental "derangement", especially once they've succeeded.

Singapore may be justly renowned the world over for its many public policy successes but, the writer asks, can its educational and governmental systems, for all their virtues, accommodate, let alone support and sustain, rule-breakers with entrepreneu
Singapore may be justly renowned the world over for its many public policy successes but, the writer asks, can its educational and governmental systems, for all their virtues, accommodate, let alone support and sustain, rule-breakers with entrepreneurial potential without losing the qualities that have brought such systems well-merited international acclaim? ST FILE PHOTO

How does Singapore handle rule-breakers? Outliers, personality-wise? Is it adept at distinguishing the entrepreneurial wheat from the chaff within these groups?

Going forward, can Singapore's educational and governmental systems, for all their virtues, accommodate, let alone support and sustain, rule-breakers with entrepreneurial potential without losing the qualities that have brought such systems well-merited international acclaim? As importantly, should they try?

Before quitting, let's circle back briefly to Uber, which was co-founded by Travis Kalanick, one of the world's most brilliant - and brilliantly dysfunctional - entrepreneurs. Mr Kalanick - surprise, surprise - was also a college dropout (from UCLA), and was involved in a number of dicey start-ups, one of which ended in bankruptcy, with another ending up on the wrong side of the law, before co-founding Uber in 2009.

The ride-hailing firm experienced rapid growth, but was troubled by myriad legal problems, labour disputes and ethical breaches under Mr Kalanick's helm before he was forced out last year.

Although few people rued his departure from management, Mr Kalanick is widely considered a great entrepreneur and economic visionary, a person more responsible than anyone else for the rise of an app that is transforming what we mean by transportation and mobility.

Moreover, despite his ousting from the ride-hailing firm, he seems to have landed on his feet. He is only 42, stands to makes billions in Uber's upcoming IPO and, in August, paid more than US$36 million for the penthouse in a new high-rise building designed by Renzo Piano in New York City. And ride-hailing is sweeping much of the world. Not bad, I'd say.

My feelings are rather mixed about Mr Kalanick but, on balance, I think he's helped the global economy to operate more efficiently. Could a person with his background and prior track record emerge in Singapore?

If not, will the country ultimately pay a price? These are questions worth pondering by citizens and Government alike, perhaps while riding in a Grab on one of Singapore's many rainy days.

 • Peter A. Coclanis is the Albert R. Newsome Distinguished Professor of History and director of the Global Research Institute at the University of North Carolina at Chapel Hill. He has lived and taught in Singapore, and visits frequently.