Creative Destruction

I just read this article from wayangparty, criticizing our local media with its biased nation-building agenda. Basically, writer Eugene Yeo accused journalist Chua Mui Hoong of once again writing a feel-good article with entirely baseless conclusions. In effect, it is just a piece of propaganda and just serves to show how deplorable the state of media is in Singapore.

Well, I've never read the original Straits Times article, but it appears that Chua Mui Hoong claimed that “the traits that helped it(Singapore) get to where it is today are precisely the same traits that will get it back on a firm footing in the current crisis.”

Eugene Yeo begs to differ, saying "The traits of our parents and grandfathers which propel Singapore from a Third to First World country today - namely thrift, industriousness, stoicism and tenacity to endure hardships are not reproducible in a younger generation brought up in the midst of material comfort."

My take is that even if we have the traits of our parents and grandparents, it is still not enough to emerge from this financial crisis stronger than ever. Okay, maybe with those traits we can pull through this, but to pull ahead of our competitors?

The main reason is because this time, it is the global economy in crisis. We simply cannot export ourselves out of the crisis when worldwide demand for our products have taken a significant slump. Even if we have "thriftness, industriousness, stoicism and tenacity", willing to work hard and accept low wages, it merely results in perhaps our exports being cheaper. It might help, but not much. It certainly would not place us in a leading position once the global economy starts to recover.

I feel the most important trait to place us in a good position to ride out the crisis would be creativity. Those of us who did economics will be familiar(or at least heard of) Joseph Schumpeter's Creative Destruction principle. To borrow a phrase from Sudden Debt, during a recession "the response should have been a strong flow of investment in new industries (creation) to replace those damaged by the downturn (destruction)".

This can only be done when there are entrepreneurs abound in the economy. I have already listed my views on the state of entrepreneurship in Singapore. This crisis will prove Singapore's entrepreneurial environment once and for all. If creativity really does thrive in Singapore, new innovative businesses will be set up amidst all the gloom and doom and will strengthen Singapore's standing in the international arena once we have ridden out the crisis.