Today's Wisdom - Singapore, Petrodollars and Dostoevsky

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When Singapore was expelled from Malaysia in 1965, Lee Kuan Yew cried on national television. The tiny island city-state had no natural resources, no military, a population of just two million people split between Chinese, Malays, and Indians who had recently experienced race riots, and an economy that depended entirely on being a trading port for a country that had just kicked them out. Most observers assumed Singapore would either collapse into poverty, get absorbed by Indonesia, or become a client state of a larger power. Instead, Lee Kuan Yew spent the next three decades turning Singapore into one of the wealthiest and most efficiently governed places on Earth through a combination of ruthless pragmatism, authoritarian control, and policies that made the country irresistible to foreign capital. By the time he stepped down as Prime Minister in 1990, Singapore's per capita GDP had gone from $500 to over $12,000, and it had become the cleanest, safest, and most business-friendly city in Asia.

Lee's strategy was built on a few core principles that he never wavered from, even when they were politically unpopular. First, he made Singapore a paradise for multinational corporations by eliminating corruption, establishing English as the business language, and offering tax incentives that made the city more attractive than Hong Kong or Tokyo. He personally courted CEOs, promising them political stability, rule of law, and a workforce that would be educated to their specifications. Second, he solved the housing crisis by building massive public housing estates through the Housing Development Board, which eventually housed over 80% of the population in government-built apartments that Singaporeans could buy with forced savings from a mandatory pension scheme called the Central Provident Fund. By making citizens homeowners, Lee gave them a stake in the country's success and reduced the appeal of communist or ethnic nationalist movements. Third, he prioritized education with an almost obsessive focus on meritocracy, funneling the brightest students into government scholarships and civil service positions while streaming others into technical training. The education system was brutal, high-stakes exams at age 12 determined your entire future, but it produced a workforce that foreign companies fought to access.

The cost of Singapore's success was political freedom. Lee banned opposition parties, sued critics for defamation into bankruptcy, controlled the press, and used internal security laws to jail dissidents without trial. He justified this by arguing that Western-style democracy was a luxury that poor, divided countries couldn't afford, and that Singapore needed discipline and stability before it could handle pluralism. He restricted freedom of assembly, banned chewing gum to keep the streets clean, and caned vandals as public deterrence. Lee's defenders say he did what was necessary to prevent Singapore from becoming another failed post-colonial state. His critics say he built a gilded cage where people are wealthy but not free. The uncomfortable truth is that both are right. Singapore works, but it works in a way that would be politically impossible in most democracies, and Lee Kuan Yew knew it. He once said, "I'm not saying that everything I did was right, but everything I did was for an honorable purpose." Whether you believe that probably depends on how much you value prosperity over liberty.

Below - One of Lee Kuan Yew’s most famous speeches, using the Singapore Airlines dispute as a reference, Lee outlines the leadership required for the nation's success.

In 1971, President Nixon abandoned the gold standard in what became known as the "Nixon Shock," severing the link between dollars and physical gold. This created what’s called fiat currency, money that has value only because the government says it does. Two years later, OPEC triggered an oil crisis by cutting production, sending prices quadrupling and causing economic chaos across the West. Nixon faced a dilemma: how do you maintain global demand for dollars when they're no longer redeemable for gold? The answer came through Saudi Arabia. In 1974, the two countries struck a bargain that would define the next 50 years of global economics. Saudi Arabia agreed to price nearly all its oil sales exclusively in U.S. dollars and recycle its surplus petrodollars into U.S. Treasury bonds, while America provided military protection, advanced weapons systems, and political support. Within years, every major oil-producing nation adopted the same model, and the petrodollar system became the invisible architecture of the global economy.

The mechanics of how this benefits the United States are extraordinary. Because oil remains the most traded commodity on Earth and nearly all of it is priced in dollars, every country that wants to buy energy must first acquire American currency, creating permanent structural demand that exists regardless of U.S. economic performance. This allows America to print money without triggering the inflation that would devastate other nations, because those excess dollars get absorbed by foreign governments and corporations stockpiling reserves for energy purchases. It also means that other countries effectively finance U.S. government spending by holding Treasury bonds, allowing America to run trillion-dollar deficits and maintain the world's largest military without facing the fiscal consequences that would bankrupt smaller nations.

The system is now being stress-tested in real time. Iran has effectively closed the Strait of Hormuz, which carries roughly 20% of global oil supply, since U.S. and Israeli strikes and may allow ships through only if cargo is traded in yuan rather than dollars. Saudi Arabia began accepting yuan for some oil transactions in 2023, Russia and China conduct bilateral trade in their own currencies to circumvent sanctions, and Brazil and Argentina are exploring alternatives. Yet the petrodollar isn't collapsing, and the reason is network effects. Think about why Twitter still dominates despite people hating Elon Musk and alternatives like Bluesky and Threads offering better features. It's because your friends, your professional network, and the journalists you follow are all still on Twitter, so leaving means abandoning the connections that made it valuable in the first place. The financial system works the same way. The global economy isn't just denominated in dollars, it's built on decades of contracts, insurance frameworks, derivatives, and pricing models all calibrated to dollar liquidity. Switching currencies would mean renegotiating every contract, recalibrating every hedging instrument, and convincing every market participant to move simultaneously. Even nations that despise American foreign policy, Russia and Iran included, still maintain dollar reserves because you can move billions instantly without crashing markets, something impossible with yuan or rubles. China has pushed yuan internationalization for over a decade, yet yuan represents less than 3% of global payments compared to the dollar's 47%. The petrodollar is fracturing, but replacing it would require rebuilding the entire architecture of international finance without triggering collapse, and nobody has solved that equation.

(Heads up if this book is still sitting on your to-read list, you might want to sit this lesson out, spoilers ahead.)

Most people know "Crime and Punishment" as "that Russian novel where a guy kills someone and feels bad about it," which is technically accurate but misses everything that makes the book devastating. The crime happens in the first 60 pages. The remaining 500 pages are Raskolnikov, a broke ex-student living in a closet-sized room in St. Petersburg, psychologically disintegrating under the weight of what he's done. He killed an elderly pawnbroker with an axe, convinced himself it was a rational act because she was a parasite who exploited the poor, and that extraordinary men like Napoleon aren't bound by ordinary morality. Then he discovered that philosophical justifications for murder work great in theory but collapse completely when you're standing over a body with blood on your hands. Dostoevsky wrote the novel in 1866 while fleeing creditors, gambling away money he didn't have under extreme pressure to meet publishing deadlines. He wrote it in a state of desperation and the result is one of the most psychologically brutal novels ever written.

What makes "Crime and Punishment" different from other novels about murder is Dostoevsky’s focus in what happens to a mind that tries to rationalize the irrational. Raskolnikov thought he could commit murder as a philosophical experiment, dividing humanity into ordinary people who follow rules and extraordinary people who make their own. He believed he was the latter, that killing a "louse" of a woman would free him to do great things with the money he stole. But the moment he kills her, his theory shatters. He didn't account for her half-sister walking in and witnessing the murder, forcing him to kill her too, an innocent he had no justification for. He didn't account for the paranoia, the fever dreams, the way guilt would seep into every conversation and make him confess in ways he didn't intend. The detective investigating the case, Porfiry Petrovich, barely needs evidence because Raskolnikov is unraveling in real time, dropping hints and contradicting himself out of a compulsion to be caught. Dostoevsky understood something most crime novels miss: punishment isn't what society inflicts on you but what you inflict on yourself the moment you cross a line you can't uncross.

The novel works because Dostoevsky had seen the worst of human nature up close and survived it. In 1849, he was arrested for participating in a liberal intellectual circle, sentenced to death, and taken to a firing squad where he stood blindfolded waiting to be shot. At the last second, a messenger arrived with a commutation, the execution was a mock performance designed to terrorize political prisoners. Dostoevsky spent the next four years in a Siberian labor camp, an experience that destroyed his health and reshaped his worldview. When he wrote "Crime and Punishment," he was writing from the position of someone who had lived through psychological torture and came out believing that suffering was the only path to salvation. The novel ends with Raskolnikov in a Siberian prison camp, the same place Dostoevsky had been, beginning the slow process of moral regeneration through suffering. Dostoevsky's point is that you can't outsmart your own conscience. You can build elaborate philosophical frameworks to justify anything, but the moment you act on them, the framework collapses and you're left alone with what you've done. That's the punishment, and it starts the second the crime ends.

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Until next time... A Little Wiser Team