President Tharman Shanmugaratnam of the Republic of Singapore visited MIT on Tuesday, meeting campus leaders while receiving the Miriam Pozen Prize and delivering a lecture on fiscal policy at the MIT Sloan School of Management.
"We really have to re-orient fiscal policy and develop new fiscal compacts," said Tharman in his remarks, referring to the budget policy challenges countries face at a time of expanding government debt.
His talk, "The Compacts We Need: Fiscal Choices and Risk-sharing for Sustained Prosperity," was delivered before a capacity audience of students, faculty, administrators, and staff at MIT's Samberg Center.
Tharman is a trained economist who for many years ran Singapore's central bank and has become a notable presence in global policymaking circles. Presenting a crisp summary of global trends, he observed that debt levels in major economies are at or beyond levels once regarded as unsustainable.
"There is no realistic solution to putting government debts back on a sustainable path other than having to make major adjustments to taxes and spending," he said. However, he emphasized that his remarks were distinctly not "a call for austerity." Instead, as he outlined, well-considered public investment can reduce the need for additional spending and thus be fiscally sound over time.
For instance, he noted, sound policy approaches can reduce individuals' health care needs by better providing the conditions in which people stay healthy. Lowering some of these individual burdens and investing in community-building policies can help society both fiscally and by enhancing social solidarity.
"The challenge is to make these adjustments while re-fashioning fiscal policy so that people can see the adjustments - they can see the value in government spending that their taxes are contributing to - and to make adjustments in a way that doesn't reduce growth," Tharman said. "You do need growth for solidarity."
In this sense, he proposed, "We need new fiscal compacts, new retirement compacts, and new global compacts to address the risks that are posed in the minds of individuals, as well as the largest risks" in society. Countries are vulnerable to a variety of shocks, he noted, calling climate change the "defining challenge of our time." And yet, he added, for all of this, sensible policymaking can encourage people, creating more support for public-minded governance.
"It is that sharing of hopes and aspirations that is at the heart of true solidarity, not the sharing of fears," Tharman concluded.
Before the lecture, Tharman was greeted by MIT Provost Anantha Chandrakasan, who presented him with a small gift from the MIT Glass Lab, and MIT Sloan Dean Richard Locke. Locke then made welcoming remarks at the event, praising Tharman's "remarkable leadership in international financial policy, among other things." After the lecture, Tharman also met with a group of MIT students from Singapore.
The Miriam Pozen Prize is awarded every two years by the MIT Golub Center for Finance and Policy, part of MIT Sloan. The prize, which recognizes extraordinary contributions to financial policy, was created to draw attention to the important research on financial policy conducted at the Golub Center, whose mission is to support research and educational initiatives related to governments' roles as financial institutions and as regulators of the global financial system. It is named for the mother of MIT Sloan Senior Lecturer Robert C. Pozen, who is also the former executive chairman of MFS Investment Management, and a former vice chairman of Fidelity Investments and president of Fidelity Management and Research Company.
In introductory remarks. Robert Pozen said he was "deeply honored" to present the prize, adding, "It's very unusual to have someone who is both a brilliant economist and an effective political leader, and that combination is exactly what we're trying to honor and recognize."
The previous recipients of the award are Mario Draghi PhD '77, the former prime minister of Italy and president of the European Central Bank; and the late Stanley Fischer PhD '69, an influential MIT economist who later became governor of the Bank of Israel, and then vice-chairman of the U.S. Federal Reserve. Draghi received the honor in 2023, and Fischer in 2021.
Tharman was first elected to his current office in 2023. In Singapore, he previously served as, among other roles, deputy prime minister, minister for finance, minister for education, and chairman of the Monetary Authority of Singapore.
Tharman holds a BA in economics from the London School of Economics, an MA in economics from the University of Cambridge, and an MPA from the Harvard Kennedy School at Harvard University.
MIT and Singapore have developed a sustained and productive relationship in research and education over the last quarter-century. The Singapore-MIT Alliance for Research and Technology (SMART), formally launched in 2007, is MIT's first research center located outside of the United States, featuring work in several interdisciplinary areas of innovation.
The MIT-Singapore program also provides MIT students with research, work, and educational opportunities in Singapore. Additionally, MIT Institute Professor Emeritus Thomas Magnanti, who was present at Tuesday's event, was the founding president of the Singapore University of Technology and Design, in 2009.
Tuesday's event also had introductory remarks from Deborah J. Lucas, Sloan Distinguished Professor of Finance at MIT Sloan and director of the MIT Golub Center for Finance and Policy; Peter Fischer, Golub Distinguished Senior Fellow at MIT Sloan and a former under secretary in the U.S. Treasury Department; and Robert C. Merton, School of Managament Distinguished Professor of Finance at MIT Sloan.
In her comments, Lucas said that Tharman "personifies the qualities the award was created to honor," while Fischer cited his emphasis on "the betterment of humankind."
Merton praised Tharman's "deep commitment for advancing financial policy in a way that serves both national and global arenas." He added: "You have always believed that policy is not just about numbers, but about people. And that sound financial [policies] serve the many, not just the few."
