How to think like SM Lee Hsien Loong

 

Whether you like him or not, PM Lee Hsien Loong presided over a successful reign that generated a massive amount of wealth for the country. After 2011, when the PAP lost Aljunied, he managed a quantifiable rebound in life satisfaction and happiness for all Singaporeans based on Gallup polls. As he settles into becoming Senior Minister, I can imagine journalists jockeying for positions to publish his memoirs or approach to leadership, which academics will study for decades to come.

But what if I told you that a book already exists about how SM Lee thinks?

Apparently, SM Lee was trained by a famous academic named Richard Zeckhauser from the Harvard Kennedy School. This nifty book by Dan Levy summarises Zeckhauser's thinking approach into a number of simple maxims that are practical and useful for lay readers. I think internalising these maxims would make it easier to discern SM Lee's leadership style once the book arrives in a few years. 

Here are a few points I have attempted to internalise to my work. 

a) When faced with a complicated problem, consider the extreme or simple cases.

Before attempting to figure out how to motivate people to pursue FIRE, we can look at the extreme case of how a successful situation can look like. Twenty years ago, my approach was to live on dividend income and then farm my entire take-home pay to super-size the portfolio to become a millionaire. I did not know what retirement looked like, but I definitely understood the prestige and status accorded to millionaires. 

These days, when I am crafting a solution for students, I need to come up with a more universal or simpler approach to FIRE. So, my idea is to try to generate $100 of passive income on average a month. $24,000 into a dividend portfolio yielding 5% can get the job done, and saving $2,000 monthly for a year will let someone try the idea on for size. 

Both approaches help explain financial independence, and folks can only discuss more complicated topics like safe rate of withdrawal or Monte Carlo simulations from other sources when they think that this can be sustained longer for themselves.

b) Think in terms of quantifiable probabilities.

This idea is to learn how to think about probabilities and revise them as we get news from the markets. 

Right from the start of 2024, I was betting that bringing down inflation in the US would be problematic, so my affairs are structured to consider cuts starting in 2025. The wonks are betting a 50-50 chance that a revision will start in November. 

Until September, this 50-50 will be revised when inflation results are reported. It is a superior way to invest, as if the probability drops, I can delay pivoting from, for example, DBS to FCT for my portfolio. 

 

c) Thinking at the margins

The biggest weakness of lifestyle design around FIRE is the idea that one can resign abruptly after reaching financial independence. We are still determining what happiness levels we will feel when we trade all our working hours wholesale for leisure time. 

So, this idea of thinking at the margin is the solution to the problem of Early Retirement. Your question should instead be: If you reduce an hour of working time to add one hour of leisure, will this result in greater life satisfaction? And then you keep making this trade-off until adding an hour of leisure no longer adds satisfaction to your life. 

There isn't a lot of corporate flexibility to allow you to progressively reduce your hours at work in practice, so a person can quit his day job after financial independence, get a short holiday, and then gradually increase his freelancing time to see whether it can increase his happiness. 

My issue has always been doing bullshit jobs in a toxic work environment. In a better environment where I can feel that I am contributing, increasing my exposure to work may make me happier. 

Anyway, this is a pretty nice book that teaches policymakers how to think, but I think that anyone can benefit from reading it. If it can sharpen the mind of one of the top mathematicians in the world and assist him in running our country, maybe more people in society should be taught this.