Singapore has little choice but to manage its housing market closely: it has a population of 5.5 million people on an island of just 278 square miles, the equivalent of the entire population of Denmark living in a city the size of Lexington, Kentucky. But as a nation born by accident and populated by immigrants, Singapore has taken the additional step of effectively forcing geographical integration. There are, for example, legal caps on the proportion of people from a particular ethnic group who can live in a particular neighborhood, or even apartment block.
“This is intrusive,” admitted Shanmugaratnam. Some people, he conceded, would describe this kind of policy as social engineering. They would indeed. But his point was that policymakers end up as social engineers whether they like it or not. The question is simply whether they do their work “upstream,” by preventing segregation and concentrated poverty, or “downstream,” using policy to try and deal with the consequences of segregation. This was a lesson not lost on the Americans in the audience. It was perhaps the most thoughtful argument for progressive paternalism I have heard.
The Deputy Prime Minister insisted that social policy should not simply be seen as a “residual” of economic policy, something we pay for once we’ve secured growth, but as an important element in creating economic stability and success. For example, one result of Singapore’s strict neighborhood integration policies has been to ensure that home values increase across the board, which keeps wealth inequality in check: