Liquidated - Parallels between Wall Street and the Singapore Civil Service

I recently finished reading Liquidated by Karen Ho. It wasn't an easy read; in fact I skimmed through large chunks of it. Satyajit Das was right in saying that it reads like a doctoral dissertation.

Still, what struck me were some of the similarities between Wall Street investment bankers and how the Singapore civil service governs the country. Perhaps because I had been reading Constructing Singapore concurrently that the similarities popped right out. The parallels may or may not be spurious though; I'll leave that up to the readers of this post to decide for themselves. 

First: Wall Street investment banks like to hire the best students from the best universities. Harvard and Princeton are the main hiring grounds, and potential hires are feted and treated like rock stars. Although I attended a relatively second tier institution in the United States during my time in university, even I felt the lure of the investment banks. All week during career week, students came walking out of the Glass Pavilion (an exhibition space in my school) carrying coveted swag from the banks.

Ho in her book postulates that the reason why Wall Street banks focus their hiring almost exclusively on the top universities is because they in effect leverage on the stellar reputation of top-tier universities to give themselves the sheen of prestige and extraordinary capability. That in turn helps to capture business. e.g. Goldman Sachs hires only the best students from Harvard. If you hire Goldman to represent your corporation, you've got the smartest guys in the room playing on your team.

It's not important that the people the investment banks hire really are individuals of the highest calibre. What's really the most important thing is that the perception that Wall Street investment banks hire only the best legitimizes why they can charge the astronomical fees they charge and how they can get away with the financial equivalent of murder when things fall apart. After all, if the smartest guys couldn't have saved the day, whocouldhaveknown???

In my mind, this doesn't seem so different from how the Singapore government insists on academic excellence in its highly credentialed acolytes, and has metrics like the infamous Current Estimated Potential. It's part of the reason why the government can make the boldfaced claim that we have to pay the highest ministerial salaries in the world to keep the good people we have in government, even if the actual performance of our ministers seems to be mediocre unremarkable. 

Second: In her book, Ho talks about the myth of "increasing shareholder value". It's like a religion to investment banker types. Everyone in investment banking drinks the Kool-aid and uses the shareholder value argument to justify all kinds of business actions, such as mergers and acquisitions, even though years of academic research have shown that M&As typically destroy more value than they create. But investment bankers can't just sit on their asses doing nuffin'. Got to git them fees rollin' in.

The irony of course, is that the more bankers talk about creating or increasing shareholder value, the less they actually improve it. The opposite is truer more often than not.

Within the Singapore context, the concept of shareholder value is obviously irrelevant. Instead, here, GDP growth is the overriding concern. And every civil servant in Singapore is subject to what I call the tyranny of KPIs.

With regard to GDP growth, the problem is not growth per se, but the quality and sustainability of that growth. What use is growth if it is goosed by massively unsustainable immigration policies, finanical repression (think forced savings, high residential property prices, and low interest rates paid on depositors' funds) and suppressed wages? Worse, the positive aspects of growth are not spread evenly but accrue to those at the top of the income ladder. Yet we reward our highest civil servants and elected officeholders chiefly on the basis of this number. Is it any wonder that we have achieved spectacular GDP growth, but that the fruit of this Pyrrhic victory is bitter indeed?

As for KPIs, the concept is not unsound in theory, but excessive adherence to KPIs blinds the user to other, less tangible measures of performance. If something cannot or will not be measured, then it can't be important, can it? One is reminded of that story of the man searching for his lost keys beneath the streetlamp on a darkened street.

Like the red herring of shareholder value that bankers put forth, we have ministers and CEOs and other high priests telling us that such and such KPIs have been met or even surpassed. That everything is going according to plan. Yet that fails to assuage the disquietude in so many of us, that there are things happening here which are viscerally wrong. Like income inequality. Housing (un)affordability. Rising costs and the fast fading possibility of a comfortable retirement. Or any retirement for that matter. Of how this Singapore ... this place, just doesn't feel like home anymore.

Third: The investment banking industry has notoriously low job security. Job turnover is tremendous. You would think that investment bankers, hired and fired so easily, would have some empathy for the massive numbers of layoffs they're directly responsible for when they advise their client companies to layoff and outsource operations to cheaper countries. Turns out to be the opposite, according to Ho's research. Apparently, it is precisely because bankers have to hustle all the time in their highly volatile industry that they have precious little sympathy for others who can't do the same. Not being able to scramble when the times call for it is considered by bankers to be a personal failing rather than an unfortunate consequence of circumstances.

The highest levels of government in Singapore operate the same way. It's dog-eat-dog within the Admin Service, as is well known, and everyone there aspires to be the top dog. As a purported meritocracy, it was designed that way. A fall from grace from that height would be ... crushing. As a corollary, our senior commanders in the SAF devote great amounts of energy feathering their own nests and constantly keep half an eye on that coveted ministerial, GLC or statboard position for post retirement.

In such a situation, the problems that ordinary people face become mere abstractions, to be described in clinical terms like "structural unemployment". The same sentiment underlies brazen, clueless and flippant exhortations of workers to work "cheaper, better, faster".

That the highest levels of our government are paid handsomely for their work could in fact, be part of the problem, and it's not just me saying this. Research from Harvard indicates that "The More Leaders Make, the Meaner They Get."