3/3 GLOBALISATION AND RICARDIAN ECONOMICS : THE NEO LIBERAL TRAP

26 September 2025

Trilogy:

1. The Collapse of the American Empire (1/3).
2. Singapore: How to Avoid the Same Fate (2/3).
3. Globalisation and Neoliberalism: The Ricardian Trap (here and now 3/3).

Globalisation and Neoliberalism: The Ricardian Trap

1. The Promise of Ricardo
The theory of comparative advantage says each country should specialise in what it does best (this is not dissimilar to OTOP : one tambon one product) then trade freely across borders. Everyone doing what their best at was supposed to make everyone richer, creating efficiency, innovation, and cheaper goods for all of us.

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2. From Promise to Practice
However, in practice, globalisation and neoliberalism took Ricardo’s idea and ran with them just a bit too far.

• Capital, goods, and people flowed without restraint. Take people. Immigration is a great answer to shortages of labour. Labour shortest years might arrives for demographic reasons or simply because there is a growing demand that the producer can no longer meet. But hey wait a moment, what do the native peoples, the Host population, think of this? What do they think of piling up foreign cultures religions languages ... different cultures ... all into their living space?
• What happens if manufacturing jobs are shut down in a rich country because it's cheaper to ship the work abroad to low cost labor countries what happens to the work traditionally done by local people?
• And what happens to the wages of local people if they're now in competition with migrants? Wages stagnate
• Look at capital flows the work has gone abroad and with it the prophets but the reserve currency is a reserve currency used for international trade where will a foreign company or government store it's wealth maybe not in its local currency which is depreciating against the dollar they will want to store it in us treasuries that added demand is going to raise the price on us treasuries and asset values generally. So foreign demand for treasuries, corporate bonds, equities, real estate... raises asset prices eg the cost of a home goes up beyond a a price local people can afford. Those lucky enough to already own assets see those values go up while those without have only debt increasing debt.
• Deficits widen, debt balloons, and societies became more unequal - it was so easy to borrow or print so much easier than raising taxes.

The winners were global corporations, financiers, and the very small proportion of the population who seriously owned assets. The losers were the workers in industrial economies who saw their purchasing power drop decade after decade.

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3. The American Collapse
The US embraced this model most fully. You can see how it shifted from production to consumption, and from industry to finance - I would call this papering over the debts Twin deficits (trade and budget) became structural, debt piled up, and the reserve currency status only encouraged fiscal and monitoring irresponsibility. What began as Ricardo’s elegant logic ended in de-industrialisation and imperial overreach.

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4. Singapore’s Escape Route
Singapore is at an early stage of the debt cycle. It could follow the US path — financialisation, overvaluation, complacency, hubris — or it could chart a smarter course.

• Protect industrial capacity.
• Invest in productivity and innovation.
• Resist easy debt and speculative bubbles.
• Stay neutral in geopolitics.

This means basically pursuing cooperation in a spirit of respect with your neighbours and certainly don't get involved in any military adventurism - that would be a route that leads to debt, death and immiseration even if it might plump up the assets of the elite before the finish.

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Conclusion
Globalisation promised prosperity through Ricardo’s "comparative advantage". Neoliberalism turned that promise into a trap. America fell into it. Britain before it too. Singapore now faces the same choice: repeat the cycle, or stay small, stay smart, stay productive.

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2/3 CAN SINGAPORE AVOID THE RESERVE CURRENCY CURSE

26 September 2025

How Singapore could avoid the "exhorbitant priviledges of being a Local Reserve Currency Hub 

Early in the Debt Cycle

Singapore’s position today resembles the U.S.’s back in the early post-WWII decades: a trusted, stable, export-driven economy that others are happy to hold their monetary reserves in. But if it follows the same path unchecked, it risks repeating the late-stage debt cycle consequences we saw in Britain in1949 and now see in America.

Here’s what Singapore might be considering 

To avoid the pitfalls of being a local reserve currency, Singapore could:

1. Maintain Trade Surpluses and Real-World Competitiveness

• Singapore wants to resist the temptation to let its currency over-appreciate purely to meet reserve currency demand - not for trade / transactional reasons. All that this excess demand would do is to push-up asset prices. And this would favor those who have assets and not the majority who have mostly debt - thus exacerbating inequality and creating mounting social instability.

Singapore doesn't want this.

• Continue investing in high-value exports, 

Like advanced manufacturing, biotech, and green technologies, 

• And limit foreign purely speculative investment flows into government treasuries 

or corporate bonds, or stocks and shares, or its real estate.

• Gear industrial policy towards productivity and innovation

Taking care to avoid asset price inflation – ie controls to stop capital being disinvested from industrial and revested into financial assets. This is the planning and regulation behind sensible industrial policy, where the state focuses on the sectors of the economy it wishes to  promote. 

2. Lesson from the U.S

America shifted from manufacturing to services too early and too aggressively. Why? 

Ricardian economics

Globalisation / neoliberalism, it's about the free movement of capital, goods and services, and people, each country specialises in what it produces most efficiently, and trades with the others without respect for borders, in the interests of efficiency.

While the larger markets so created, offer economies of scale, innovation and finally cheaper goods for consumers.

Globalisation. In pracrise, this meant outsourcing manufacturing jobs to countries where labour was cheaper

Growing twin deficits as America began to run a trade deficit, importing the things it no longer made at home; the profits generated by surplus countries were sent back into American treasuries for safety; it now became so easy for America to borrow and live on debt; this trade deficit was followed by "fiscal irresponsibility" is it with so much easier to borrow and print if necessary when you are the reserve currency rather than balance the books. This is what is bankrupting America.

Singapore doesn't want this either.

2. Control Financialisation and Protect the Real Economy

• Prevent the financial sector from becoming too large relative to GDP, a common symptom of reserve currency status

• Regulate speculative capital inflows and real estate bubbles as above – don’t let asset prices overtake wage growth, at the risk of loss of purchasing power inequality and in stage revolt by the people. 

Inflation is mostly the result of monetary expansion. Pegging the currency in some way to the price of gold or a basket of commodities wood restrain money printing because each dollar note is a promise to pay and that means it can be exchanged for gold but if you print there won't be enough gold in the Vault and ultimately you will have to dealing as Nixon did in 1971.

• Encourage long-term investment in productive enterprises, companies that make real things that people want - these will keep pace with any inflation because demand are in and supply are in balance ie not just paper assets - these are speculative such as derivatives options even the secondary market what do they add to the quality of life for real people?

This is where an industrial policy with tax and subsidy incentives, possibly even tariffs, could provide an answer.

Lesson from the UK

The City of London gained power at the expense of the Midlands and North - a cautionary tale. Watch the video linked above.

3. Strengthen Fiscal Discipline Without Falling Into Austerity

• Avoid easy borrowing just because foreign investors are eager to hold SGD or Singaporean bonds 

• Use surpluses and sovereign wealth (e.g. GIC and Temasek) strategically - means invest counter-cyclically, let the government support innovation, and cushion downturns using money saved during upturns

• Maintain low public debt levels to ensure flexibility in crises and especially at times of Higher interest rates avoiding interest eating into government Revenue. Singapore's debt is mostly non-tradable and domestic, which is a good non speculative buffer.

4. Promote Regional Multipolarity, Not Dominance

• As a local reserve currency in Southeast Asia, Singapore would be best off facilitating balanced trade, not dominating it.

• Work with ASEAN, China, and India to create a resilient multi-currency, multi-polar region.

• Encourage the use of local currency settlement mechanisms such as QRIS, rather than forcing all flows through SGD.

Reserve status breeds resentment if it becomes coercive. Singapore wants cooperative credibility - peace and prosperity matter more than dominance.

5. Build Financial Firewalls: Capital Controls and Macroprudential Tools

• Stay alert to hot money inflows and be ready to impose temporary capital controls or taxes on speculative flows. Speculators will run a mile at the thought of capital controls locking in their money.

• Maintain counter-cyclical buffers (like MAS’s policy tools) to dampen boom-bust cycles.

• Enforce strict property lending and banking regulation to avoid credit excess.

Singapore's history of pre-emptive tightening (e.g. cooling property markets) is a model to stick to.

6. Avoid U.S.-Style Geopolitical Overreach

• One of the reasons the U.S. mismanaged its reserve status is imperial overreach: policing the world for dominance and to control the flow of resources by coercion rather than Commerce. This kind of overreach means neglecting its domestic base.

• Singapore must resist aligning too closely with any one great power and especially avoid militarising its regional role these two are not in contradiction necessarily.

So best to stay a neutral, rules-based trading hub, not a junior partner in someone else’s hegemonic rivalry.... and that's what Singapore is doing.

Conclusion

Singapore can enjoy the benefits of regional reserve currency status without the late-stage downsides seen in the U.S., if it avoids the traps of over-financialisation ie finance overtaking manufacturing as a percent of GDP), currency overvaluation (from trade deficits where foreign profits are invested in deep and safe Singapore assets) and especially avoid the intangible geopolitical hubris that makes you think you're always right and deaf to the criticism of others.

It should aim to be a stable, modest, industrial-financial hybrid, not a financialised empire. In short:

Stay small, stay smart, stay productive

That’s how Singapore could outlast the cycle that for America is ending in the fourth turning.

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